IIFL Private Equity targets $524m for latest India pre-IPO fund

The latest iteration of the firm’s Special Opportunities Fund (SOF) – classified as Series 9 and 10 – has already raised INR 26bn and a final close of INR 35bn to INR 40bn is pencilled in for the end of June, Anshuman Goenka, head of private equity at IIFL Asset Management, told Mergermarket, AVCJ’s sister title. SOF Series 1-7 had combined commitments of INR 85bn and are now fully deployed.

The new pre-IPO funds have invested approximately INR 12bn across seven deals. Portfolio companies include dialysis centre operator NephroPlus and Aether Industries and OmniActive Health Technologies, which supply ingredients to drug makers and nutritional brands, respectively.

IIFL has also backed Care Health Insurance, Vastu Housing Finance, SK Finance, and an unnamed private general insurer. Equity commitments are in the INR 1bn to INR 3bn range.

"Core healthcare services, single-speciality healthcare, and diagnostics are very interesting. There are very good companies now in fertility, mothering, eye care, and dental care, which are interesting. And, we will continue to evaluate them,” Goenka said. "Manufacturing could also be potentially explored as an interesting vertical for SOF.”

IIFL Private Equity, which has around INR 225bn in assets under management (AUM), also manages funds focused on technology, early-stage investments, and financial intermediaries. Goenka did not specify when each strategy would be in the market or how much they would look to raise.

The firm sources most of its capital from Indian family offices and high net worth individuals. However, there are plans to expand the LP base to include global institutions and family offices. “It could be for Series 9 and 10, our technology fund, or a special strategy created for some of them,” Goenka explained.

IIFL Private Equity has delivered an average IRR above 20% across all strategies. SOF Series 1-5 has generated 17-20% and Series 7 is on 24-25%. All positions in listed companies in Series 1-5 have been exited. The firm has yet to exit 15 listed companies in Series 7 and six unlisted companies in Series 1-7. Up to three IPOs are expected this year and the same again in 2023.

Three companies – Bikaji Foods International, Northern Arc, and Protean eGov Technologies (formerly known as NSDL e-Governance Infrastructure) – have already filed draft prospectuses.

At present, IIFL Private Equity manages one technology-focused fund with an INR 50bn corpus, of which 60% has been deployed across 16 investments. These include D2C meat brand Licious, education technology players Byju’s and upGrad, food delivery business Swiggy, merchant platform Pine Labs, insurance broker PolicyBazaar, and social commerce platform Dealshare.

The fund makes commitments of INR 1.5bn to INR 3bn, targeting relatively late-stage rounds. Some companies attract follow-on investments under the SOF strategy.

“We flow over investments very selectively, and only with external price discovery. If there's further runway left and it fits with the investment charter of the next fund, SOF could also participate in future capital raises,” Goenka noted.

There is also one financial intermediaries-focused fund with a corpus of INR 15bn and three early-stage funds with combined commitments of INR 20bn. The latter vehicles are about 75% deployed and should reach 100% in the next three months.

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