Mumbai: Varun Kapur, a former India head of TPG Growth, has joined Indgrowth Capital, a public markets focused fund, as a managing partner.
“Varun has managed investments across regions such as India, Japan, China and Vietnam,” said Rajesh Singhal, founder and managing partner of Indgrowth Capital, which is currently raising a fund with a corpus of up to $100 million.
Singhal was a former principal managing partner at India Build-Out Fund (IBOF).
Saurabh Khandelwal and Aayam Banerjee from IBOF have also joined Singhal in the new venture.
The fund aims to initially raise around Rs200 crore in about three months.
“We have applied to markets regulator Securities and Exchange Board of India (Sebi) for registration and we expect to receive Sebi’s approval soon, following which we expect to reach a first close of its fund in a quarter’s time,” said Singhal.
The bulk of the capital will come from domestic investors, though the firm is also in talks with select overseas investors to be a part of the fund, Singhal added.
“We will be focusing on small- and mid-sized companies in the listed space, providing them growth capital, with ticket sizes of Rs30-50 crore. We are looking to begin with a $100 million fund,” said Singhal.
The fund’s investment strategy will be similar to that of IBOF, but the focus will be entirely on small and midcap listed companies.
“At IBOF all the investment we did were in the range of sub Rs500 crore or Rs1,000 crore entry valuations. We think that there is a lot of skill sets that we have in identifying some of the stories early on and we want to replicate that in the listed universe. As you go down the market cap ranking, the kind of research and information available is not sufficient for investors to look at those businesses, and we believe that is where the opportunity lies,” said Singhal.
Indgrowth Capital will evaluate smallcap and midcap companies in a style similar to private equity funds.
“The universe of target companies is changing to listed space, but the DNA is private equity and venture capital, identifying companies early on—that discipline of identifying and underwriting those businesses and carrying out the entire process is the same discipline we want to bring in the listed space,” he said.
Singhal and his former IBOF teammates will, however, continue to manage the IBOF portfolio, which now has just one investment left. “We are managing the residual portfolio of IBOF, which has only one company left now. We expect to exit that portfolio company also in the next few months. We have an agreement with the sponsors that we will manage the remaining portfolio, while also launching our fund,” said Singhal.
IBOF has made a total of six investments including CARE Ratings, Resonance Eduventures and Healthcare Global Enterprises Ltd.
The platform is owned by Asia focused private equity firm Quadria Capital Investment Advisors, which acquired it from Milestone Religare Investment Advisors Pvt. Ltd.
With their new fund, Singhal and Kapur join other private equity executives who have in the recent times stepped out of launched public markets focused funds.
In December 2015, former ChrysCapital managing director and private equity veteran Gulpreet Kohli announced that his new venture Mylen India Growth Capital had raised $100 million to invest in small and mid-cap listed companies.
Also in 2015, home-grown private equity firm Avigo Capital Partners’ managing director S. Harikrishnan quit the firm to raise a $100 million public markets fund under the label Blue Lotus Capital.