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World Bank’s IFC to invest $40 million in Kedaara Capital’s new fund

LiveMint logoLiveMint 24-05-2017 Anuradha Choudhary

New Delhi: Private equity (PE) firm Kedaara Capital Advisors Ltd, co-founded by veteran fund manager Manish Kejriwal, has hit the road to raise its second fund and already received a commitment from International Finance Corporation (IFC), the private sector lending arm of the World Bank.

IFC said in a statement that it proposes to invest up to $40 million in the new fund, Kedaara Capital Fund II LLP, which will invest in 10-12 mid-market companies in India.

Its target sectors include logistics, packaging, specialty chemicals and ingredients, pharmaceuticals, and potentially finance companies.

“The fund is an LLP based in India and will pool funds from domestic and offshore investors through Kedaara Capital II Limited (a Mauritius limited liability company with limited life) and Kedaara Capital Alternative Investment Fund II (a trust settled under the Indian Trusts Act, 1882). The fund will focus on investments in Indian portfolio companies in equity, quasi-equity and equity-linked investments in businesses organized or with significant operations in India,” IFC said.

Kedaara has not formally announced the second fund raising. In November last year, Mint had first reported that Kedaara Capital Advisors was readying to float its second fund to raise around $600-650 million.

The firm raised its debut fund with a corpus of $540 million in 2013, in what was then one of the largest fund-raises by an independent, home-grown PE fund.

Canadian pension fund Ontario Teachers Pension Plan anchored the vehicle and was joined by other sovereign wealth funds, pension funds, family offices, fund of funds and endowments.

Kedaara was founded in 2011 by former Temasek Holdings Pte India head Manish Kejriwal, along with Sunish Sharma and Nishant Sharma, who were managing director and principal respectively of global PE firm General Atlantic in India.

The firm’s first investment was Rs200 crore in Mahindra Logistics Ltd in April 2014.

In its latest investment, the PE firm led investment of $100 million by a consortium of investors in Hyderabad-based micro finance institution (MFI) Spandana Sphoorty Financial Ltd in a $270 million round.

In the recent past, Kedaara has also seen some successful exits. In September, automotive components supplier Mahindra CIE Automotive, a joint venture between Mahindra Group and CIE of Spain, agreed to acquire a 100% stake in Bengaluru-based machine components manufacturer Bill Forge, for about $200 million.

Kedaara, which acquired 50% stake in Bill Forge last year for around $48 million, exited completely through the deal. In June, it exited Au Financiers Ltd, a retail non-banking financial services company and one of the 10 firms to receive in-principle approval to start a small finance bank.

“It has registered stellar exits in a short frame of time. It has made about 75% IRR (internal rate of return) in Au Financiers and about 55% IRR in Bill Forge,” a person familiar with the matter told Mint in November.

IFC directly invests in companies in India. It also has an active limited partner (LP) portfolio in India where it backs private equity and venture capital funds focused on India. Earlier this month, it proposed an investment of $10 million in the maiden $100 million fund of Stellaris Venture Partners, an early-stage venture capital firm founded by former top executives at Helion Venture Partners.

Prior to that, in March, it proposed an investment of $3 million in Bengaluru-based early-stage venture fund Pi Ventures and another $20 million in IDG Ventures India’s third India-focused fund in January.

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