Homegrown private equity firm Kedaara Capital is in talks to raise a billion dollar fund, its third and largest so far, on the back of successful exits and investor interest for top fund managers, said two people aware of the matter, requesting anonymity.
Kedaara is an investor in firms including AU Small Finance Bank, packaging firm Manjushree Technopack and eyewear retailer Lenskart among others.
Kedaara was started in 2011 by former Temasek India head Manish Kejriwal, General Atlantic managing director Sunish Sharma and General Atlantic Principal Nishant Sharma.
“They have deployed about 75 percent of their current fund and have just begun conversations for the third fund. LPs (limited partners) are quite bullish and they could raise between $950 to a billion” said a person aware of negotiations.
It last raised a $750 million second fund in mid 2017, from which its investments include wholesaler Vishal Mega Mart, auto components firm Sunbeam Auto and small business lender Veritas Finance, among others. Prior to that, it raised a $540 million debut fund in 2013, one of the largest by a local fund at the time.
Investors in Kedaara- its LPs- include Canadian pension funds CDPQ and Ontario Teachers Pension Plan, German insurer Allianz and the International Finance Corporation (IFC) among others.
If it does raise a billion dollars for the third fund, it will be the largest so far by a homegrown PE brand. Multiples PE, founded by Renuka Ramnath, is currently raising a $900 million fund, while ChrysCapital raised an $850 million fund- its eighth, in early 2019.
“They have established themselves as a reliable PE brand, so even during a pandemic they can raise a large fund,” said another person tracking the firm, who did not want to be named.
Kedaara declined to comment.
Kedaara is generally open to acquire a minority or majority stake in companies established sectors. One of its largest deals was investing about Rs 5000 crore along with Partners Group to acquire Vishal Mega Mart in 2018, while it invested about Rs 350 crore in Veritas Finance in March this year.
It has also been able to clock exits consistently- a key metric for funds, especially as funds get larger, exits also have to get larger to justify large fund sizes. For instance, it earned a 6x exit on an investment of Rs 150 crore in Manjushree, when Advent International acquired a majority stake in late 2018. Some of its companies such as AU Small Finance, Mahindra Logistics, micro lender Spandana Sphoorty and Aavas Financiers have also listed in the stock markets, giving Kedaara part or full exits.
More recently, Kedaara has also been refining its strategy and eyeing stakes in late stage consumer internet startups, such as Lenskart. It also considered investing in fantasy gaming platform Dream11 and beauty and makeup retailer Nykaa, according to media reports and two people aware of the matter, but eventually did not pull the trigger.
This is similar to global private equity giants such as TPG and General Atlantic, which have been active in technology and internet investing in India.