The two-fold return would be encouraging, considering the performance of the portfolio companies, despite challenges such as drought and new policies like GST during the previous years. A better exit would enable the firm to gain more investor confidence and help it raise the funds as per the target.
The company will be forming an Alternative Investment Fund (AIF) structure for the third fund, and raise money from Indian investors, as against the previous initiatives that depended upon the US pension funds and endowments. Mandala has a bluechip investor base in US, which is tough to get into, and the company has been benchmarked against global and domestic peers.
Mandala has been investing in a range of $25-100 million in agri and food companies. While the previous two funds were India-focused, the new fund will expand its presence in South East Asia.
"The big changes we are seeing that switch from unorganised to organised players because of Goods and Services Act and greater compliance within the whole system in India, in terms of food safety regulations. Consumer behaviour is also changing and becoming more discerning, which is leading to enough volume. Scale is becoming more and more important, which is the biggest point and innovation in the product is becoming very important," he said.
Mandala Capital will continue to explore the sector deeper and deeper rather than looking at other industries for growth. The strategy is to identify companies in the agribusiness, food, and food-related consumer sectors which are scalable and have a sustainable competitive advantage, he said.