India fund breaks mould with record capital raising

MUMBAI: Kedaara Capital has broken the mold for Indian private-equity firms, raising a record US$1.7bil to put it on par with the deep-pocketed global players that have dominated the space for years.

Fresh off the capital injection, Kedaara is now betting its local expertise and deep knowledge of the health, consumer and finance sectors will make it easier to work with firms like Blackstone Inc and Carlyle Group Inc that are hunting for deals in the world’s fastest-growing major economy.

“Exits to global sponsors who have so much dry powder but not the same level of deal flow in the segment for larger deals will become a greater option for us,” Kedaara co-founder Sunish Sharma said in an interview from Mumbai.

While raising US$1bil or more is common for giants like KKR & Co, it’s rare in India, and Kedaara has now done it twice, following a US$1.1bil fund three years ago.

As it puts more fresh money to work, Kedaara’s portfolio investments could be targets for global players looking for majority stakes in fast-growing firms.

Blackstone alone aims to add US$25bil in Indian assets, while KKR and Goldman Sachs Group Inc are eyeing deals.

The new fund marks a watershed for Kedaara, a company backed by Clayton Dubilier & Rice LLC that was co-founded more than a decade ago by Sharma, along with Nishant Sharma and Manish Kejriwal, the former India head of Temasek Holdings Pte.

The three partners worked together at McKinsey & Co and have built a team of 40 executives, including 24 investment professionals. Sunish and Nishant Sharma – no relation – are the deal makers, while Kejriwal and Sunish Sharma manage investors and fundraising. The firm runs about US$5.6bil in assets.

Kedaara Capital Investment Managers Ltd, which counts several Canadian pension funds, insurance giant Allianz SE and HarbourVest Partners LLC among its investors, generated a gross internal rate of return of 40% to March 24 for its first US$540mil fund in 2013, Nishant said.

The latest fund, which closed last month, brought in new investors including Singapore’s GIC Pte and the University of Minnesota endowment, according to people familiar with the matter.

Kedaara is looking to make four investments a year from its latest fund, writing equity checks of US$75mil to US$200mil, while bringing in additional capital for larger deals.

Kedaara aims to take three companies public this year and in 2025, Nishant said.

“When you get a window for an initial public offering (IPO), you take it and don’t try to over-optimise it,” he said, adding that IPOs have been the dominant exit route for Kedaara, including Vedant Fashions Ltd and microlender Spandana Sphoorty Financial Ltd.

Kedaara has made 29 investments across its three funds in consumer-focused businesses, including financial services and adjacent industries like packaging materials.

Those include AU Small Finance Bank Ltd, whose stock has more than doubled since going public in 2017. — Bloomberg

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