TVS Capital gets Rs 1,100 crore commitment for third round of funding

TVS Capital on Wednesday announced the second close of its third venture capital fund — TVS Shriram Growth Fund 3 — with a commitment of Rs 1,100 crore. The target corpus for the fund was around Rs 1,000 crore and has a structure that allows for a Rs 500 crore green-shoe option of which Rs 100 crore has already been subscribed to and Rs 150 crore remains in the pipeline. 

Gopal Srinivasan, managing director and chairman of TVS Capital, said that the fund will be open till next March and the size would go up to around Rs 1,500 crore by the time. With the fund-raise, TVS Capital now manages cumulative assets of Rs 1,664 crore and is among the larger managers of Rupee-denominated mid-market growth private equity capital in the country.

The third fund will be a venture growth fund that would support experience ent­repreneurs and is probably the first to have a co-investment structure where eligible client partners can participate by subscribing to co-investment units in the fund, therefore making it extremely simple for the client partners as well as for the portfolio business partners, he said. 

Besides financial instutions, interest on family offices, which have doubled there committment compared to last funds, development funds like SIDBI, NABARD have also participated. The first two rounds had Rs 600 crore each as fund corpus. 

The fund plans to deploy around 20-25 per cent in the current fiscal. The fund will back companies in sectors including financial services, business services and niche consumer. The fund has already invested around 13 per cent of its target corpus, within the first six months of the first close, in Suryoday Small finance Bank and LEAP India Pvt Ltd. The plans are to invest around 20-25 per cent each year from the fund. It has invested arond Rs 100 crore into LEAP India.

The average ticket size would be around Rs 50-150 crore, said Srinivasan. The third fund will invest an average of Rs 75-150 crore per company in consumption-driven growth opportunities in the food, financial services, lifestyle and business service sectors.

"We are an entreprenurial fund, going forward in the next 10 years we want to be a platform with more partners in the venture growth funding," he added.

Founded by Gopal Srinivasan, a third-generation entrepreneur of the TVS Family, in 2007, TVS Capital Funds is a homegrown mid-market PE.