Motilal Oswal Private Equity, the private equity arm of Mumbai-based Motilal Oswal Group, said Tuesday it has launched its fourth fund to raise Rs 4,000 crore ($550 million).
The PE firm aims to achieve first close for the India Business Excellence Fund IV before December and conclude fundraising within nine to 12 months, it said in a statement.
The development comes two months after Motilal Oswal Real Estate, the group’s property investment arm, marked the first close of its fifth fund at Rs 650 crore (about $90 million). The fund’s target is Rs 800 crore ($110 million).
The PE firm said the new fund will follow a similar investment strategy as its predecessor vehicles and focus on providing growth capital to mid-market companies. As before, the new fund would prefer to invest in first-generation entrepreneurs.
It plans to build a portfolio of 10-12 companies across consumer, financial services, life sciences and niche manufacturing sectors. The fund may also selectively invest in new-age businesses with digital distribution channels.
Vishal Tulsyan, managing director and CEO of the PE firm, said the Motilal Oswal Group and the firm’s investment team are likely to commit 18-20% of the new fund’s corpus. He added that the firm will tap Indian investors as before and that domestic backers accounted for about half of the amount raised for the previous three funds.
The PE firm launched its first fund in 2007, raising $115 million. This vehicle invested in 13 companies and recently fully exited after selling its stake in GR Infraprojects through an initial public offering. The fund made six-fold returns and clocked an internal rate of return of about 27% at the gross level in rupee terms.
The second fund raised $155 million in 2013 fund and made 11 investments. The PE firm has clocked one exit from this fund. The third fund raised $320 million in 2018 and is 90% committed across nine investments. These include Molbio Diagnostics and fintech firm KreditBee.
Overall, the PE firm has made 33 investments and have generated six-fold returns on its 14 exits till date.
Cumulatively, Motilal Oswal PE currently manages over $1 billion across three growth capital funds and five real estate funds.