Homegrown private equity player TVS Capital Funds on Tuesday announced the second close of its third venture capital fund, TVS Shriram Growth Fund 3, after the fund achieved its targeted corpus of ₹1,000-crore subscription. The fund has received commitments of ₹1,100 crore.

TVS Capital also announced that the fund has a structure that allows for a ₹500-crore greenshoe option (provision to make over-allotment) of which ₹100 crore has already been subscribed while another ₹150 crore is in the pipeline.

“We will remain open till next March for investors who chose to come later and the fund might even go up to ₹1,500 crore,” said Gopal Srinivasan, Chairman and Managing Director, TVS Capital Funds (P) Ltd. TVS Capital Funds is led by Gopal Srinivasan, and D Sundaram, former Vice-Chairman and CFO of Hindustan Unilever. The funds are jointly sponsored by the TVS group and Shriram group.

In October 2018, TVS Capital has announced the first close of the third fund upon raising ₹832 crore, and thereby exceeding the targeted corpus of ₹700 crore.

‘Signature fund’

Prior to that, TVS Capital has raised ₹586 crore each in two rounds in 2007 and 2012.

The two funds have backed companies such as MedPlus, DCB Bank, RBL Bank, WonderLa and online beauty and wellness platform Nykaa.com. TVS Capital currently has ₹1,164 crore of assets under management (AUM) in its portfolio.

“I would call the second fund our signature fund, which embodied our style of investing, primarily in financial services, business services and a little bit in niche consumer space,” Srinivasan said.

The company’s investment strategy includes investment in ‘venture growth’ which includes companies with 4-5 years of experience and those looking for a second or third round of funding and ‘late stage venture’ companies. The average ticket size of investment per company is ₹75-150 crore.

“Indian entrepreneurs are highly dependent on debt financing since getting equity finance has become a major challenge in our country,” said R Thyagarajan, Founder, Shriram Group, and a director on the board of TVS Captial.

Thyagarajan, who is also a lead sponsor of the fund, added that private equity and venture capital firms will play a major role in fostering entrepreneurship in future, and government should create necessary ecosystem to encourage such investments.

Lakshminarayanan, Former Vice-Chairman of Cognizant Technologies and director on the board of TVS Capital said, “Trust, good governance and clean operation of TVS and Shriram Group are transmitted to invested companies.”

Mulls credit fund

He also added that the company is planning to launch a ‘credit fund’ and various other products in addition to private equity.

TVS Capital also said that it has already invested 13 per cent of its targeted corpus. The third fund has so far invested in small finance bank Suryoday and supply chain solutions company Leap India.

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