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Kedaara Capital's Groundbreaking $1.7B Fund Revolutionizes Indian Equity

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Benjamin Hughes

May 17, 2024 - 18:22 pm

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Kedaara Capital Defies the Norm with Historic $1.7 Billion Fund in India's Private Equity Landscape

In an unprecedented move that propels it to the ranks of global investment giants, Kedaara Capital has amassed a staggering $1.7 billion in funds. This marks a new milestone for Indian private equity firms, which have traditionally been overshadowed by well-heeled international entities. With this fresh financial firepower, Kedaara stands poised to leverage its intrinsic insight into the Indian market and assert its influence across highly prospective sectors such as healthcare, consumer goods, and financial services.

A Strategic Collaboration for Deal-making

Equipped with its substantial capital infusion, Kedaara is set to strategically partner with leading investment firms like Blackstone Inc. and Carlyle Group Inc. As these corporate titans quest for lucrative deals within India—a nation celebrated as the fastest-growing major economy—Kedaara's regional acumen will prove invaluable.

“We foresee an escalation in exit opportunities to global sponsors who are flush with cash but face limitations in their deal flow, particularly for larger transactions,” articulated Kedaara Co-Founder Sunish Sharma during a conversation in Mumbai.

The Pursuit of Exceptional Investment Opportunities

Securing billion-dollar funds is a common triumph for global heavyweights such as KKR & Co., however, it is a rare feat in India, and Kedaara has achieved this distinction not just once, but twice over. Following their previous $1.1 billion fund three years prior, the firm is poised to diligently allocate its new capital. As it employs this wealth, Kedaara's investment portfolio stands as a beacon for global investors, including Blackstone, which seeks an additional $25 billion in Indian assets, and others like KKR and Goldman Sachs Group Inc., who are eyeing promising deals.

For further insights: KKR Bets on Domestic Consumption, Private Credit in India Push

A Decade of Achievement and Growth

The latest fundraising effort signifies a notable moment for Kedaara—a firm supported by Clayton Dubilier & Rice LLC and co-founded over ten years ago by Sunish Sharma, alongside Nishant Sharma and Manish Kejriwal, the former head of Temasek Holdings Pte in India.

Together, the trio, whose roots trace back to their collective experience at McKinsey & Co., have cultivated an impressive team of 40 executives. This includes 24 dedicated investment professionals. Sunish Sharma, paired with Nishant Sharma—who are not related—spearhead the deal-making processes, while Kejriwal, in tandem with Sunish Sharma, skillfully manages investor relations and fundraising activities. Proudly, Kedaara governs approximately $5.6 billion in assets.

Exceptional Performance and Investor Trust

Kedaara Capital Investment Managers Ltd., esteemed for its 40% gross internal rate of return as of March 24 for its first $540 million fund raised in 2013 as reported by Nishant Sharma, thrives with a distinguished consortium of backers. Among these are numerous Canadian pension funds, insurance behemoth Allianz SE, and HarbourVest Partners LLC. Its most recent fund closed last month, drawing in fresh stakeholders like Singapore’s GIC Pte and the University of Minnesota endowment, relay sources close to the matter.

Expanding Horizons with Strategic Investment

Aiming to secure approximately four high-potential investments annually from the latest fund, Kedaara plans to commit equity sums ranging between $75 million and $200 million. They are also prepared to recruit further capital for larger-scale deals. Focusing on the horizon, Kedaara anticipates taking three companies public in the ensuing year as well as in 2025.

Central to Kedaara's exit strategy has been the facilitation of initial public offerings (IPOs). “When fortune grants a window for an IPO, seize it without seeking to overly finesse the moment,” Nishant Sharma advised. He pointed to IPOs as Kedaara's primary exit avenue, spotlighting notable successes such as Vedant Fashions Ltd. and Spandana Sphoorty Financial Ltd.

Harnessing India's Domestic Consumer Market

Within its three pools of funds, Kedaara has consummated 29 investments, concentrating on consumer-driven undertakings, which span financial services and connected sectors such as packaging materials. Among its triumphs is the investment in AU Small Finance Bank Ltd., which saw its stock value escalate impressively post-IPO in 2017. Further strengthening its portfolio, the firm has supported Vishal Mega Mart Pvt., which aspires to raise close to $1 billion through its own public offering.

Investing in Health and Consumer Crossroads

Anticipating a burgeoning sector, Kedaara aspires to carve its niche at the confluence of healthcare and consumer markets, predicting the emergence of companies akin to the Estee Lauder Cos-endorsed Forest Essentials skincare brand over the next half-decade. The firm is also venturing into consumer-led preventative healthcare enterprises and aims to channel its expertise from Vishal Mega Mart to delve further into the burgeoning market of packaged foods.

“A significant portion of India still cherishes its traditional snacks, from biscuits to chips,” noted Sunish Sharma, alluding to the enduring appeal of these comforts.

A New Beacon of Growth in Mumbai

Evidencing its progression, Kedaara has lately transitioned to the prestigious Altimus building in Mumbai, offering a workspace more than 60% greater than its previous location. This move places Kedaara amid a cluster of powerhouse firms, including TPG Inc., Morgan Stanley, and the Ontario Teachers’ Pension Plan, signaling its rising prominence in the global investment community.

The Global Expansion of Executive Talent

Though Kedaara’s primary investment locus remains India's thriving domestic market, the firm is also casting its recruitment net across the oceans. Plans are underway to bring on board seasoned executives in the USA to seek synergies between the two countries. Kedaara is particularly intent on enlisting a senior operating partner with a foundation in tech services married with an in-depth comprehension of the US market.

This new hire is earmarked for mentoring roles, guiding the management teams of Kedaara's burgeoning list of portfolio companies, and tapping into the US, which constitutes a significant market share for many Indian tech service enterprises. A notable group of Indian entrepreneurs is making substantial strides in the US market, articulating a transnational vision that Kedaara aspires to foster further.

“The aim is to entrench our presence across both nations, thus creating conduits for investments in India and championing Indian enterprises on the global stage,” declared Sunish Sharma with an eye on the future.

Conclusion

Kedaara's transformative $1.7 billion fund doesn't just symbolize a financial breakthrough; it represents a tectonic shift in India's private equity landscape. As it competently invests in a diverse array of high-growth sectors and nurtures companies for the global market, Kedaara Capital stands as a formidable force. In essence, it bridges the gap between Indian innovation and international capital, paving the way for enduring economic expansion. With a discerning and strategic approach to investment, Kedaara confidently navigates the future, laying foundations today for tomorrow's leading enterprises.

This milestone in Kedaara Capital's journey underscores its unwavering commitment to driving value and innovation. As it writes the next chapter of its success story, Kedaara is not only shaping its own destiny but also galvanizing the Indian economic mosaic. The world watches as Kedaara Capital advances, ushering in an era where local expertise meets global aspirations, creating a legacy that will inspire future generations of investors in India and beyond.

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