FMO, the Netherlands’ development finance company, plans to invest $15 million (about Rs 107 crore) in the third fund of mid-market private equity firm BanyanTree.
FMO said in a disclosure it plans to make the investment in BanyanTree India Growth Capital Fund.
BanyanTree is likely to close the third fund at $100-125 million, FMO said.
The fund, managed by BanyanTree Finance Pvt Ltd, plans to invest in 10-15 small and medium-sized companies in Tier 2 and Tier 3 cities in India.
The fund has a sector-agnostic strategy and will invest in sectors such as food-processing, financial services, pharma, healthcare, education, and manufacturing, among others.
The Dutch investor makes equity and debt investments in sectors such as agri-business, food and water, energy and financial institutions in under-served regions.
Earlier this month, FMO announced a plan to provide $42 million to Aavishkaar Venture Management Services Pvt. Ltd.
BanyanTree
The PE firm had hit the road to raise money for its third India-focussed fund in April last year, VCCircle reported at the time.
BanyanTree typically makes structured investments in small and medium enterprises in India, according to its website. It had raised $100 million for its first fund and $175 million for the second vehicle.
BanyanTree, which has been investing out of its second fund also looks for co-investment opportunities and focuses on neglected sectors, according to its website.
Its most recent deal was the acquisition of the food business of an ice-cream chain in the National Capital Region .
In mid-2018, the firm struck a co-investment deal alongside Morgan Stanley Private Equity where both firms put $75 million in education services firm NSPIRA Management Services Pvt. Ltd.
