DSG hits first close on fourth India, SE Asia consumer fund
DSG Consumer Partners has reached a first close of approximately USD 63m on its fourth fund, which will make early-stage consumer sector investments in India and Southeast Asia.
The overall target is USD 120m, according to two sources close to the situation. DSG declined to comment on fundraising.
The first close comprises mainly existing LPs, with the anchor investor doubling its Fund II commitment, one of the sources said. DSG has previously won support from Verlinvest – an investment firm established by the founding families of the Anheuser-Busch InBev brewing empire – family offices, and institutional investors from Europe, Asia, and the US.
LPs that have disclosed their involvement in Fund IV include Wipro Consumer Care Ventures, the VC arm of India-based personal care products provider Wipro Consumer Care & Lighting. This is part of a concerted effort by DSG to attract more strategic investors with a view to gaining access to their insights and resources as well as creating a potential exit channel for portfolio companies.
DSG, which was established by Deepak Shahdadpuri (pictured), raised USD 24m for its first fund in 2012. That vehicle made 21 investments and currently has distributions to paid-in (DPI) of 3.3x and total value to paid-in (TVPI) of more than 10x, the same source said. Fund II closed on USD 50m in 2017 – a year after The Everstone Group acquired a stake in DSG – and Fund III closed on USD 65m in 2019.
The firm makes early-stage investments, typically when companies have zero revenue and no product in-market. It claims that brands take 7-10 years to build. As such, Fund II has yet to deliver significant realisations. A first exit came last year when Good Glamm, a beauty e-commerce business turned brand aggregation platform, acquired mother and baby care products retailer The Moms Co.
In addition, DSG has raised three annexe funds (USD 20m in 2014, USD 20m in 2016, and USD 37m in 2019), with existing LPs accounting for nearly all the capital. These vehicles are restricted to follow-on investments in existing portfolio companies and they cannot lead rounds.
Fund II also made 21 investments and there have been 18 from Fund III. However, the latter vehicle also includes a scout program, which makes commitments of USD 250,000 to USD 500,000 to start-ups sourced through micro-VCs. DSG allocated USD 2.5m to the program and completed nine investments. The expectation is that some companies will graduate to the main funds.
DSG now has 11 investment professionals. It is also building out a portfolio operations team to provide support in areas such as consumer insights, branding and product design, and online discovery and distribution.
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