IDFC raises $100m for latest PE fund

The India-focused manager plans to invest the capital in about 12 Indian companies that specialise in agriculture, healthcare and telecom.

Mumbai-based asset manager IDFC Alternatives has so far raised a third of its target for its fourth private equity fund focused on agriculture, healthcare, telecommunications and media.

IDFC, which began raising capital for IDFC Private Equity IV in 2015, held a first close on $100 million in November last year.

The firm had initial target of $400 million but changed it to $300 million because of the depreciation of the rupee.

According to Girish Nadkarni, a partner with IDFC, the fund’s strategy is to focus on the Indian demographic story. “We are working on sectors which will benefit from multi-year trends such as food and agriculture, healthcare, telecom and media, and financial services.”

“We have a very nuanced strategy within this. With food and agriculture, our focus is agricultural productivity which includes certain areas of the value chain such as seeds, crop care products, and micro-irrigation.”

Meanwhile for healthcare IDFC wants to focus on lifestyle issues such as infertility and obesity.

“Infertility is a lifestyle issue for India; we have a population of 1.3 billion so nobody talks about it but there are 2 million couples within the early 20s to mid-30s age group with fertility issues,” Nadkarni pointed out. “Obesity is another area IDFC wants to focus on because India has become the third most obese country in the world, in spite of the fact that 30 percent of the population is below the poverty line.”

For telecom and media, the firm intends to focus on post-digitisation services such as home broadband services and wi-fi connectivity.

The firm is looking to invest in 10 to 12 companies – a third of the investments will be in platform companies where IDFC will get to build out the businesses from scratch, and the remaining two-thirds will be in minority growth companies. 

IDFC has already made its first investment in InCred Finance, a non-banking financial company based in Mumbai. 

Investors in the first close are mainly Indian LPs and most have re-upped their commitments, Nadkarni said. But the firm is also in advanced conversations with new investors such as private banks and insurance companies from North America, Europe, Japan, Hong Kong and Singapore.

Investors in IDFC’s previous funds include the Asian Development Bank, the CDC Group, Bangalore-based Canara Bank and the Life Insurance Corporation of India.

The firm expects to hold a final close in the third quarter of 2017.