[Funding alert] TVS Capital closes third fund with a corpus of Rs 1,550 Cr

TVS Capital Funds, a leading domestic private equity venture headed by Gopal Srinivasan, has successfully closed its third fund with a corpus of Rs 1,550 crore, with participation from Indian family offices and financial institutions.

The fund called TVS Shriram Growth Fund 3, had an initial target of Rs 1,000 crore and this PE player even managed to raise around Rs 350 crore during the period of COVID-19.

With this latest fundraise, the total assets under management for TVS Capital stands Rs 2,000 crore. “This marks TVS Capital Funds as the largest rupee-only capital fund, only through domestic sources,” said a statement.

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TVS Capital Funds Chairman and Managing Director Gopal Srinivasan remained extremely confident of India’s prospects  and said, “This is arrival moment for India after COVID-19.”

The latest fundraise is around 3-3.5x larger than its previous fund.

The major contributors to this fund are Indian family offices, domestic financial institutions and ultra-high net worth individuals (UHNI).

Around 34 family offices with a contribution of over Rs 10 crore constituted around 45 percent of the fund.

Financial institutions and insurance companies such as SIDBI, NABARD, HDFC Life, SBI Life, Bajaj Allianz, New India Assurance etc, have committed to contribute 22 percent to the fund.

The contribution of UHNIs has been 26 percent while the sponsors of the fund – TVS and Shriram Group — put in 7 percent of the corpus.

The investors of this fund also include former CEOs of technology companies like Infosys, Cognizant and Mindtree, besides several SaaS and consumer tech startup founders.

TVS Capital's key investment focus areas have been financial services, B2B, and consumer business. Its portfolio includes companies such as Nykaa, Go Digit, Suryoday Small Finance Bank, Wonderla Holidays, and Leap Logistics. It exited from Nykaa with a 6x return.

According to TVS Capital Funds CMD, the new fund will expand the scope of its investment horizon by going deeper into the segments they are focused on.

“We can participate with much larger rounds with a wider range of opportunities and also do more tech,” he said.

According to the TVS Capital Funds, its previous fund provided a gross internal rate of return (IRR) of 27.4 percent with net IRR being in the range of 15.6 percent to 17.6 percent.

The PE player said it is now geared to launch its fourth fund in two year’s time, by the end of 2022.

“TVS Capital Fund is well-positioned now, in its journey to be the amongst the most preferred mid-market growth PE Funds, with capital and capabilities to empower nextgen entrepreneurs in their journey of growth to pursue their vision,” the statement said.