TVS Capital Funds plans ₹1,000-cr third round

TVS Capital Funds, a mid-cap growth equity fund, plans to raise its third fund of about ₹1,000 crore even as it has roped in PE industry veteran Prasad Gadkari as Managing Director – Private Equity, to be based out of its Mumbai office.

Gopal Srinivasan, Chairman and Managing Director, TVS Capital Funds Ltd, told BusinessLine here on Tuesday that TVS Capital would like to raise about ₹1,000 crore in the third fund. As in the previous two funds, the firm will follow an India-first strategy; that is, it would first look to raise money from investors in India. However, unlike in the earlier funds, it will keep its options open for raising money from overseas investors.

Srinivasan said TVS Capital brought Gadkari on board to lead the new fund. Prior to this, Gadkari was with IDFC Private Equity, where he led deals end-to-end, sat on company Boards and managed exits. He brings with him domain expertise in healthcare, education, infrastructure and logistics sectors.

TVS Capital will look to start the fund-raise by the early part of next year, Srinivasan said. “Fund-raising is always difficult. The environment is always good or bad. In a good environment, you will have many more people trying to raise funds. There is no such thing as an easy fund-raising.” And, what helps a firm in the fund-raise process, is its pedigree and managerial team.

As in the previous funds, the third fund will focus on financial services, food and agriculture, and speciality retail. “We are thinking of adding one more sector. We haven’t decided which one,” Srinivasan said.

Would the TVS and Shriram groups sponsor the third fund also, as they had done in the case of the first two funds? “We haven’t yet come that far. We are just starting. We are certainly hoping TVS and Shriram will support it.”

Srinivasan founded TVS Capital Funds in 2007, with the TVS and Shriram groups being the initial sponsors. It raised about ₹600 crore in the first fund from a host of Indian investors that included leading nationalised and private-sector banks, and a similar amount in the second fund, from the investors in its first fund and a few new investors.

From ₹50-60-crore cheques that it wrote out of the first fund, TVS Capital has increased its investment in companies to ₹80-100 crore in the second fund; with the third fund, it plans to increase the exposure to ₹120-150 crore. “We will be doing growth, late-growth (stage investments). We might still do some late-stage VC.”

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