India-focused private equity player Lighthouse Fund, just closed its third fundraising round, taking total assets under management to under $500 million dollars, said co-founder Mukund Krishnaswami.
The third fund will close at around $200 million, of which $80 million closed in a preliminary round in October last year. For Lighthouse, investment has in general been dedicated to small consumer-driven plays, or what Krishnaswami calls "Roti, Kapda aur Makaan".
The fund, which has so far been supporting consumer goods companies like Kama Ayurveda, Bikaji, Cera, Wow! Momo, Indian Herbs and FabIndia, will use the money raised in the latest round to write cheques of $25 million and below for investee companies.
The driving force behind the investment logic is that across 29 states – each with 40-50 distinct socio-economic groups – there are at least 1,200 communities with a sizable population of 1 million to 2 million consumers each. Those are the sub-markets that Lighthouse is focused on. Of the first two funds, 100 per cent has been deployed, says Sachin Bhartiya, partner with the fund.
Krishnaswami says he sees trends like democratisation of smaller consumer brands available on limited platforms on the one hand, and the typical pursuit of larger aspirational brands on the other. He also points to all products related to the "look and feel better space" meaning diagnostics, health-related ancillary industries like sugar-free products and naturally derived goods as gaining momentum in the future
Lighthouse, which currently has 21 investments in its portfolio, has had eight exits so far, including from companies like Unibic, Suraksha Diagnostics, and Dhanuka Agritech. On Dhanuka Agritech, a listed company with a market capitalisation of Rs 3,300 crore, Lighthouse clocked returns of eight times on an investment of $7 million.