Mumbai: Consumer-focused, mid-market private equity (PE) firm Lighthouse Funds said on Tuesday that it has closed its third fund, Lighthouse India Fund III, at $230 million ( ₹1600 crore), taking its assets under management to about $500 million.
Investors in Fund III include global institutions such as International Finance Corporation (IFC), the UK’s CDC Group, and German investment group DEG, as well as a number of large global endowments, pension funds and family offices.
Mint reported on December 13 last year that CDC Group plc, a development finance institution owned by the UK government, invested $25 million in the fund. Further, in December 2017 the PE firm had said that the third fund had received commitments of $20 million from International Finance Corp (IFC), the private investment arm of the World Bank group. It had achieved its first close at $150 million in March last year.
IFC AMC, its asset management unit, was also considering a parallel investment of up to $25 million in the fund, which would have taken the investor’s total commitment to the third Lighthouse fund to $45 million, the PE firm had said last year.
Lighthouse has backed several marquee brands such as ethnic snack food maker Bikaji Foods, premium ayurvedic personal care brand Kama Ayurveda, ethnic lifestyle brand FabIndia and leading sanitary ware brand Cera. Its other portfolio companies include laminates maker Stylam Industries, quick service restaurant chain Wow! Momo and value retailer V2 Retail.
Lighthouse plans to invest between ₹50 crore and ₹300 crore in the new fund, and aims to assist companies with operational enhancement, marketing and sales optimization, M&A, human capital enhancement.
The third fund has already made four investments. Mint reported on December 5 that it invested ₹250 crore to acquire a minority stake in Aqualite. In November, the fund invested₹160 crore in Duroflex, a leading mattress brand in south India. In September, it backed beauty retailer Nykaa with ₹113 crore, and in June it invested ₹83 crore in Tynor Orthotics, a manufacturer and exporter of orthopaedic and fracture aids. Nykaa also said last month that it has raised ₹100 crore from TPG Growth, the growth investment arm of the private equity firm, to take its valuation to ₹5000 crore.
Lighthouse had raised $100 million for its first fund in 2009, followed by a $135 million second fund. It has invested in 17 companies since then. Lighthouse closed its second fund in 2015 at $135 million, receiving a $42 million investment commitment from the US government’s development finance institution Overseas Private Investment Corporation.
“We’ve built expertise around consumer brands and we don’t plan to change that strategy. But that being said we would evolve as the market evolves and also look to back companies such as a Kama Ayurveda or Nykaa, which while different from traditional firms, fit into our strategy,” said Mukund Krishnaswami, partner at Lighthouse, in a phone interview.
Another private equity player, JM Financial Ltd is set to hit a final close of nearly ₹600 crore for its second private equity (PE) fund, Mint reported on April 29.
Lighthouse’s fundraise comes amid a surge in private equity and venture capital funding in the last couple of months, with deals and exits across sectors such as real estate and infrastructure, and a growing tendency to buy out firms.
Private equity and venture capital investments hit a record monthly high of $7 billion in March, growing more than twice as fast as the same period last year, according to EY’s Private Equity Monthly Deal Tracker, Mint reported on April 25. March 2018 had witnessed PE/VC investments of $3 billion.
As a result of the exceptionally high level of PE/VC investments in March 2019, the first quarter emerged as the best ever quarter for PE/VC investments, with investments worth $11.4 billion, 37% higher than the same period last year and almost a third of the value recorded in the whole of 2018.