A91 Partners on track to raise its largest fund at $700-750 million

Homegrown investment fund A91 Partners – which has backed companies like Digit Insurance, HealthKart, Blue Tokai Coffee, and Paper Boat, among others – is in the process of raising its largest-yet fund at $700-750 million, three people in the know said. This will be among the fastest scaleups in terms of fund size for a domestic investment fund amid a broader appetite for the India market among limited partners.

“A91 has expressed to its LPs (limited partners, or sponsors in funds) that they are aiming to raise their third fund at $700-750 million… They will launch and market the fund after a few months,” one of people in the know said.

A91 Partners began life in 2018 and had racked up $350 million for its maiden fund. Three years later, it picked up $550 million for its second fund to deploy across late-stage venture and early-growth funding rounds. So far it has invested half of the capital from Fund-II across nine companies and is expected to close another deals in the coming months.

Founded by former Sequoia Capital India (now Peak XV Partners) partners Abhay Pandey, VT Bharadwaj and Gautam Mago, A91 focuses on investing companies across technology, consumer and financial services.

The firm’s talks to raise capital come in the backdrop of other domestic biggies also lining up fresh dry powder. ChrysCapital and Kedaara Capital, for example, are likely to close anywhere between $1-2 billion India-dedicated vehicles this year.

Despite tech-led venture funds lagging behind in cash distributions to LPs, diversified investments firms have been able to shore up a high level of interest from global sponsors. Seen as more conservative and private equity-like, these funds have been providing consistent and stable returns to LPs.

VC firms, on the other hand, typically aim for outsized returns and invest early in startups.

Exits, Returns

A91’s partial exits include the ones from energy-efficient small appliances brand Atomberg in a round led by Temasek and Steadview Capital and spice maker Pushp where Nikhil Vora’s Sixth Sense Venture bought a secondary stake from the fund.

Other significant bets include Sugar Cosmetics, software firm Exotel, pharmaceutical company La Renon, and silver jewellery-focused startup Giva. Among its portfolio, Digit Insurance is likely to go public this year.

With a big jump in fund size, A91 may look to increase its average cheques from $20-30 million to $35-40 when from Fund-III, people in the know said.

“Their strategy is to keep backing capital efficient, growth businesses across sectors,” said a person familiar with the fund’s thinking. “The cheque sizes may go up once the new fund is raised and starts to get deployed later this year,” the person added.

At the time of announcing its Fund-II, A91’s Pandey had told ET they had upped the corpus significantly keeping in mind the market opportunity in India. “When we launched the first fund in 2018-19, we had a certain set of opportunities in India that we needed to address as per our team’s bandwidth and $350 million was good then… But the market opportunity has expanded, which is why we can now invest $25-$30 million across 15-17 companies with a larger sized fund, that’s the math we did,” he told ET in November 2021.