Motilal Oswal PE arm raises Rs 4500 crore for latest fund

Motilal Oswal Alternates (MO Alts), a subsidiary of Motilal Oswal Financial Services Limited (MOFSL), has raised Rs 4500 crore for its latest private equity fund India Business Excellence Fund IV (IBEF IV), tapping the increased appetite for India-focused investments. The fund has been primarily raised from domestic high net worth individuals (HNIs) and family offices.

With this fund, the cumulative AUM raised under the MO Alts platform between growth capital and real estate would stand at around Rs14,000 crore. MO Alts is currently managing over $ 1.1 billion across four growth capital funds. The funds are focused on providing growth capital to Indian mid-market companies, across sectors such as consumer, financial services, life sciences and niche manufacturing.

Approximately 75% of the capital in aggregate across all the funds has been raised from domestic investors across 55 cities in the country, said a company statement.

“For India to achieve its dream of a $10 trillion economy by 2030-2032, private capital will play the most pivotal role," said Vishal Tulsyan, MD & CEO of MO Alts. Over the past decade, more than 50% of private capital invested in China was raised locally. For India, that number is abysmally low, but over the next 10 years, if the industry and the government put in effort towards this, there is no reason why we will not be able to achieve similar numbers, he added.

IBEF IV will be a sector-agnostic fund and hopes to evaluate businesses in tech enabled space and expects to deploy 10–15% of its capital there, added the statement.

The fund has already made 2 investments - in Pathkind, India’s leading diagnostic chain promoted by the Mankind pharma group, and Simpolo, one of the largest players in India’s premium tile segment. MO Alts expects to commit around 50% of the fund by March 2023.

The private equity firm has made 37 investments and have completed 15 exits since inception.

MO Alts’s first fund, which is a 2007 vintage, Rs550 crore ($115 million) fund made 13 investments. Some of the notable investments in Fund 1 include AU Financiers, Dixon Technologies, Minda Industries and GR Infraprojects. Other major investments made by MO Alts have been in companies like Molbio Diagnostics, Kreditbee and Happilo.

"The home grown funds have delivered well on performance over a period of time, by and large built a strong reputation of collaborating well with founders and management teams and demonstrated stability and continuity in their own leadership teams. Existing LP's have invariably supported them with more commitments," said Venkat Subramanyam, Founder, Veda Corporate Advisors, leading mid market investment bank.

First half of 2022 recorded $9.9 billion in fundraises, 28% higher compared to fundraise of $7.7 billion recorded in 2021. This is the highest half-yearly value of funds raised in over six years both in terms of value and number of fundraises, said a recent IVCA-EY report. The largest fundraise in 1H22 saw Sequoia raise its largest ever India dedicated fund of $2.0 billion.

Other homegrown funds like Multiples Alternate Asset Management are also in a fundraising mode. Renuka Ramnath-led fund plans to raise as much as $1 billion for a fresh fund.

Naresh Patwari-led fund Jashvik Capital also plans to raise about $350 million in his debut healthcare & consumer focused fund. India-dedicated fund Kedaara Capital had raised about $1 billion for its third fund last year.