Chennai-based equity firm TVS Shriram Growth Fund On Tuesday announced the second close of its Fund III at Rs 1,000 crore. The VC fund recently completed a decade and said that this fund will close as its next stage.
Gopal Srinivasan, Chairman and Managing Director, TVS Capital Funds, said at a press conference that it has a target corpus of Rs 1,000 crore fully subscribed to, and has also received additional commitments of Rs 1,100 crore.
He added that this fund close endorses the faith their limited partners (LPs) have in the company. Gopal said,
“There was a strong participation from our existing lead and anchor clients who have re-invested their Fund II commitments. It has given us confidence that our approach to curate the best ideas from our focus sectors to provide top quartile returns have gained widespread acceptance in the market.”
The fund has a structure that allows for a Rs 500 crore green-shoe option, of which Rs 100 crore has already been subscribed to. With the close of Fund III, TVS Capital now manages cumulative assets of Rs 1,664 crore.
In the past decade, TVS Capital raised three capital funds, and raised over Rs 586 crore each for its first fund in 2007, followed by its second fund in 2012.
The third fund will follow the successful strategy of the second fund, investing an average of between Rs 75 crore and Rs 150 crore per company. The fund will mostly focus on companies in food, financial services, lifestyle, and business services sectors.
Focus on growing the entrepreneurial ecosystem
R Thyagarajan, Founder of the Shriram Group, a Director on the board of TVS Capital and also a lead sponsor of the fund, said,
"Gopal has carried forward his entrepreneurial journey by helping budding entrepreneurs strategise to scale up their businesses, professionalising their management and governance systems so that they can be ready for public markets.”
With this close, TVS Capital will be among the larger managers of the rupee-denominated mid-market growth private equity capital in India.
“But we want to go beyond just private equity and look at different kinds of capital that can help the entrepreneurial ecosystem in India,” said Gopal.
He added that the fund is now going to focus on its long term goal of becoming an institutionalised platform. The idea, he explained, is to get a more diversified ownership and table.
Thyagarajan said that it is important that funds are built and created to support the entrepreneurial ecosystem in the country. He adds that if more jobs need to be created, there needs to be more startups, and there needs to be investment in these startups.
“As an investor, you need to be comfortable with the uncertainty of the investments you make and many times, your surprises will not be pleasant. But that is fine. As investors, you need to learn to work around that and help startups grow and thrive,’ he added.
He explained that their style of investing is slightly different. Gopal called it their brand of ‘Capability Capital’, which is built on the strength of the partners of the firm, supplemented by a wide ecosystem of advisors and successful entrepreneurs.
The portfolio and focus
Lakshminarayanan, Former Vice-Chairman of Cognizant Technologies and a Director on the board of TVS Capital, added,
"TVS Capital is leveraging advanced technologies in institutionalising its practices and is also thinking of diversification of its product base as well as widening of the ownership base of the firm between owners and professionals."
The fund has invested in the likes of Nykaa, Indian Energy Exchange, Suryoday Small Finance Bank, RBL Bank, and Duster Total Solutions. In its previous fund, TVS Capital had already returned 100 percent capital to its clients and is also on course to an end-of-life multiple on invested capital of ~2X.
TVS Capital's limited partners (LPs) represent leading family offices in India, high net-worth individuals (HNIs) as well as financial institutions and developmental financial institutions of the government.
The team adds that the fund has already invested over 13 percent of its target corpus within the first six months of its first close in the first two investments in Suryoday Small Finance Bank and LEAP India Pvt. Ltd.
(Edited by Saheli Sen Gupta)