National Investment and Infrastructure Fund Ltd’s (NIIF) Fund of Funds will make an anchor commitment of ₹400 crore (about $49 million) in private equity firm Lighthouse Advisors Pvt. Ltd’s fourth alternative investment fund (AIF) to become its first domestic institutional investor.
“With a target size of up to ₹3,500 crore (around $425 million), Lighthouse India Fund IV AIF will invest in high-growth businesses in sectors such as healthcare, specialty manufacturing, digital transformation, and consumer products and services,” NIIF said in a statement on Monday.
In September last year, Lighthouse, the backer of Nykaa and Fabindia, had received a commitment of up to $50 million from International Finance Corporation (IFC), the private investment arm of the World Bank, for the fourth fund.
NIIF’s participation as an anchor investor in Lighthouse Fund IV makes it the first domestic institutional investor and is expected to help the fund catalyse further capital from high-quality domestic and global institutions, according to the statement.
Founded in 2006 by Sachin Bhartiya, Sean Sovak and Mukund Krishnaswami, Mumbai-based Lighthouse is a mid-market consumer-focused PE firm and has raised three funds of about $500 million assets under management (AUM) so far. It has invested in over 25 companies across food, lifestyle, home improvement, and healthcare sectors.
Lighthouse invests between $20-$50 million range per transaction. In May 2019, it had raised the third fund with a capital of ₹1,750 crore, including a pool of capital for co-investment opportunities. Besides Nykaa and Fabindia, some of its investments include startups such as Wow! Momo, Bikaji Foods and Medikabazaar.
“For the past 15 years, we have partnered with some of India’s finest entrepreneurs, and this commitment is a vindication of our ability to continue delivering strong outcomes for our investors,” said Bhartiya, co-founder of Lighthouse
“We are proud that our first domestic investor is someone of NIIF’s reputation and quality and are looking forward to a long and successful partnership,” he said.
NIIF Fund of Funds invests in fund managers with a strong track record and sets a high standard of institutionalization, including ESG (environment, sustainability and governance) practices. With this commitment, the FoF has made more than 90% commitments across seven funds, investing in nationally significant sectors such as climate, affordable housing, healthcare and pharmaceuticals, innovation, deep technology, and manufacturing.
Besides Lighthouse, the six funds are Green Growth Equity Fund (GGEF), HDFC Capital Affordable Real Estate Fund 2, Multiples Private Equity Fund III, Somerset Indus Healthcare India Fund II, Arpwood Partners Fund I and YourNest Innovative Products VC Fund III.
“This investment aligns with the Fund of Funds’ approach of backing best-in-class fund managers. Through its deep knowledge of the Indian investment landscape and its ability to forge strong partnerships with Indian entrepreneurs, Lighthouse has demonstrated a strong track record and will provide NIIF Fund of Funds and its investors’ access to high growth sectors in India,” said Prakash Rao, executive director and chief investment officer, indirect investments, NIIF.
NIIF manages more than $4.3 billion of equity capital commitments across its three funds--Master Fund, Fund of Funds, and Strategic Opportunities Fund--each with a distinct investment strategy committed to support India’s growth needs.