AVCJ Awards: Fundraising of the Year - Mid Cap: Kedaara Capital

When Kedaara Capital invested in automotive components manufacturer Bill Forge in 2015 it was planning for a longer holding period than 16 months. But last September, the India-focused firm had secured the first exit from its debut fund, with an approximately 50% IRR – thereby offering LPs a degree of reassurance that its strategy could work.

Kedaara closed Fund I in September 2013 with commitments of $540 million, having spent around 18 months in the market. Fund II was raised in about one third of the time, reaching a first and final close in September 2017 at the institutional hard cap of $750 million. Including the GP contribution, it has $795 million to deploy.

The firm was established five years ago with three particular areas of focus: avoiding high entry valuations; doing control transactions and adding value to portfolio companies by leveraging the talents of operating partners; and concentrating from the outset on delivering successful exits.

“I remember discussions with many investors – some of whom are in the room – and we said, ‘The poor legacy of Indian private equity has historically given a negligible DPI [distributions to paid-in] to the LPs and we are determined to make sure we do it differently,” recalled Manish Kejriwal, a founding partner at Kedaara, speaking on the sidelines of the awards presentation dinner. “We have been fortunate indeed.”

The Bill Forge exit came when Spain-headquartered CIE Automotive agreed to buy the company for INR13.1 billion ($200 million). Kedaara received around INR3.15 billion in cash – more than the approximately INR3 billion it paid for a 46.88% interest in the business – plus shares in Mahindra CIE, the acquirer’s India-listed subsidiary. The private equity firm has since added two more partial exits to its ledger, following IPOs by Au Small Finance Bank and Mahindra Logistics in 2017.

Six of the nine investments in Fund I are control deals. Clayton, Dubilier & Rice, a UK-based GP known for its operational approach to buyouts, contributed to the latter, helping Kedaara define its approach operating partners. “This was very important in establishing how operating partners work with portfolio companies,” said Kejriwal. “You don’t necessarily want operating partners to be with the companies every day, making decisions for them. The role is more to help companies make their own decisions.”

Kejriwal was formerly a partner with McKinsey & Company, based in New York and India, and helped set up the firm’s private equity practice. He then spent seven years as India head at Temasek Holdings before launching Kedaara with General Atlantic alumni Sunish Sharma and Nishant Sharma.

Ontario Teachers’ Pension Plan (OTPP) was the anchor investor in Fund I and it is performing the same role in Fund II. All the firm’s other existing backers re-upped. New investors include Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) and insurance company Allianz. 

Pictured: Manish Kejriwal (left) and Sunish Sharma of Kedaara Capital

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• Topics
• South Asia
• Fundraising
• Buyout
• GPs
• India
• Kedaara Capital
• AVCJ Awards