IIFL Asset Management (IIFL AMC) is raising $200 million (Rs 12 billion-15 billion) for IIFL India Private Equity Fund, its second such. It will back businesses started by professionals and with a strong record in execution.
A Category-II alternative investment fund, the plan is to achieve a first close by July-end and to raise the money mostly from domestic investors, ultra high net worth individuals (HNIs) and family offices. They would be also allowed to co-invest in these deals, depending on how much they invest.
It has already identified two companies - a non-banking financial entity in the housing finance space and an eye-care company - backed by professionals with a proven track record.
The housing finance firm is backed by the chief executive officer and managing director of a listed firm during whose tenure the firm grew its loan book four times, net profit at 30 percent per annum and market capitalisation by 70 percent in four years.
The eye care firm is promoted by the COO of the fastest growing business. With 170 hospitals, it has grown at a compounded annual rate of 98 percent in the past five years.
The fund will back professionals with a strong execution record who want to create something big by leveraging their experience and networks. It will provide both seed and growth stage capital to them. There are professionals like V Vaidyanathan (ex-ICICI Bank) from Capital First or Ajit Isaac of Quess Corporation who have created huge value. Capital First, for instance, grew its loan book from Rs 40 billion to Rs 900 bn, even as its market cap grew six to seven times since listing.
Amit Shah, CEO of IIFL Asset Management Business, said: "The last decade has seen many professionals successfully embark on entrepreneurial journey. They have leveraged their past experience as professionals and accessed organised pool of capital from investors to create large enterprises. This fund has been set with a vision to back and promote such professionals."
"Historically, the available pool of capital was mostly foreign private equity capital. IIFL India Private Equity Fund is perhaps one of the first home-grown funds to back Indian professionals who have entrepreneurial aspirations," he added.
The fund will focus on professional entrepreneurs who are ready to ride the mega trend in fast-growing sectors like financial services, consumer, healthcare and technology. IIFL AMC had raised $150 million for its maiden growth fund in 2016, which has been fully deployed. It invested 50 percent of the capital in venture capital funds like Blume Ventures and 50 percent in 11 companies like Ratnakar Bank, AU Finance and Ujjivan. It has exited two of these companies.