CDC Group plc, a development finance institution owned by the UK Government, will invest around $25 million in Lighthouse's third private equity fund - Lighthouse India Fund III, which is around $240 million in size.
The fund will invest in companies which are in the consumer sector and the sweet spot would be $15-25 million.
Lighthouse has invested over $300 million in India, till date. In 2008, Lighthouse began advising India 2020, Limited (Fund I), an India-focused investment vehicle with a corpus of approximately $100 million. In 2014, the fund began advising a second investment vehicle, India 2020 Fund II, Limited (Fund II), which has a corpus of approximately $135 million. Of the 24 investments, the company has exited from 10.
CDC brings decades of experience working in emerging markets and in India particularly. "We look forward to their partnership and guidance as we continue to back entrepreneurs building long-term, sustainable businesses,” said Lighthouse’s co-founder, Mukund Krishnaswami. Other investors in the fund include marquee institutions and global family offices.
This investment enables CDC to get our capital into family-backed, small-to-midcap businesses in job-creating sectors. As India transitions from developing to a developed economy, SMEs will play an increasingly important role but they will need more investment than ever. Historically, this segment of the Indian market has seen a widening gap between the supply and demand of capital, said Alagappan Murugappan, Managing Director and head of Asia Funds, CDC.
CDC, one of the largest institutional investors in Indian PE funds, has committed over $1.7 billion to Indian funds since 2004.
Lighthouse focuses on growth investments in India's consumer sector. It has backed marquee consumer-centric brands such as ethnic snack food player - Bikaji Foods, luxury premium ayurvedic personal care brand - Kama Ayurveda, ethnic lifestyle brand - FabIndia, and India’s leading sanitaryware brand - Cera. Other portfolio companies of Lighthouse include laminates maker Stylam Industries, QSR chain Wow! Momo and value retailer V2 Retail.
Lighthouse has closed four investments from its third fund. Earlier this month, it announced that it was investing over Rs 2.50 billion in Aqualite Industries, one of India's leading footwear companies. Last month, the fund invested Rs 1.60 billion in Duroflex, a leading mattress brand in south India. In September, it made an investment of Rs 1.13 billion in Nykaa, India’s premier beauty retailer, while in June, it invested Rs 830 million in Tynor Orthotics, a leading orthotic soft goods brand.