India's Paragon raises $86m for Fund II

Fund II was launched in 2019 with a target of INR 10bn. Pandemic-related travel restrictions limited international participation, but domestic support proved significant, including government institutions, insurance companies, corporations, and family offices.

“Though we had received indications of investor interests closer to the target, we decided not to wait further and declare final close as we had started investing and have made three investments already. The investing environment looks very promising, and we are working on a robust pipeline of opportunities available at attractive valuations,” said Siddharth Parekh, co-founder of Paragon said.

“We decided to close the fundraise so that we can focus on other priorities such as delivering exits, value creation in portfolio companies, and executing new investments.”

Parekh (pictured), formerly an investment principal at Actis, founded Paragon in 2015 alongside Sumeet Nindrajog, an entrepreneur with private equity experience at Ares Management in the US.

They launched their debut that year with a target of USD 200m. It attracted investment from the likes of India Infoline, Edelweiss, Fairfax, and Kotak Mahindra-affiliated Infina Finance Private, as well as a sovereign wealth fund, a development finance institution, fund-of-funds, insurance companies, and family offices.

The aim is to back companies with revenue ranging from USD 20m to USD 100m – a segment Parekh observes is relatively less competitive – with cheques of USD 10m to USD 20m. Target sectors span financial services, healthcare technology systems, manufacturing, infrastructure, industrials, and B2C services.

Paragon also maintains a public markets business managed by CIO Rahul Mehta, previously of Argonaut Private Equity, Blue River Capital, Greenhill, and ChrysCapital. It describes the strategy as taking a private equity mindset to listed equities.

Fund II activity to date includes an INR 1.1bn investment in omnichannel meat and seafood supplier TenderCuts alongside Nabventures in 2021 and leading a USD 20m Series B round for new-age logistics provider GoBolt later that year. The fund also led a INR 2.4bn Series C last year for mCaffeine, a direct-to-consumer personal care brand that specialises in caffeine-infused products.

Standout investments historically include small retail business lenders SMECorner, which has raised around USD 50m across four rounds, and InCred Financial Services, which has raised more than USD 160m across three rounds.

Paragon’s first investment was a two-round, USD 15m commitment to Capacite Infraprojects, a construction company that won backing from NewQeust Capital Partners and Infina before listing in 2017.

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• Topics
• South Asia
• Fundraising
• Growth
• India
• Paragon Partners