Lighthouse closes capital raise for Fund III at Rs 1,750 crore

Lighthouse Funds, a private equity firm focused on growth investments in India’s consumer sector, announced the close of its final fund raise for Fund III at $250 million, or Rs 1,750 crore. Of the amount, $20 million came from co-invest capital from World Bank’s IFC and a family office from the Middle East, Lighthouse officials said. 

Lighthouse has made four investments from Fund III, which include footwear-maker Aqualite Industries; Duroflex, a mattress brand in south India; beauty retailer Nykaa; Tynor Orthotics, a manufacturer and exporter of orthopaedic and fracture aids. 

Founding Partner Mukund Krishnaswami said the vintage funds had been fully deployed and the current raise exceeded their target by $50 million. 

On the businesses the company aims to invest in, Krishnaswami said, “Lighthouse continues to believe in the consumption growth cycle, despite temporary dents in the economy that have occurred, thanks to the slowdown in NBFC lending.” 

The lighthouse mantra has traditionally been to invest in high volume consumer items across companies that make food, clothing, and household items, ranging from momos, kurtas, mattresses, and skincare products. Sachin Bhartiya, managing partner with Lighthouse, said challenges remained for investors. “Growth is there, but managing that growth is a challenge because a lot depends on how the team is hired and the organisation is scaled up.” 

He added that the firm saw greater numbers in the population, adding to their income bracket, the investment thesis around betting on branded businesses, which will have tailwinds of some 20 or 30 years is what the firm is going after. 

Bhartiya said economically emerging states such as Bihar, West Bengal, Assam, and Uttar Pradesh are seeing greater traction in consumer demand compared to the traditionally dominant and larger states such as Maharashtra and Punjab. The other he says is mobile penetration which is growing is spreading awareness and making consumer far savvier about the market than they used to be.

Set up by Krishnaswami and W Sean Sovak, Lighthouse typically invests between $5 million and $20 million per funding round in consumer-facing firms and has in the past put money in firms that include Bikaji Foods, Fabindia Overseas, Cera Sanitaryware, Capital Trust, Suraksha Diagnostic, Dhanuka Agritech, Indian Herbs, Kama Ayurveda,  V2 Retail, and XSEED Education.

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