Lighthouse Funds targets $200m for third fund

Mumbai-based lower mid-market firm Lighthouse Funds is aiming to raise its third and largest fund by the end of the year.

The firm is looking at a $200 million target for India 2020 Fund III, larger than the $135 million it raised for Fund II in 2014, as first reported by Deal Street Asia.

Fund III will have the same strategy as the firm’s previous funds, focusing on the consumer space. “We like the consumer space. There are more than a billion consumers in India and each consumer makes a bit more every day and spends more on better products and services,” Mukund Krishnaswami, founding partner of Lighthouse Funds, told Private Equity International. “We understand our sector, we’ve built our capabilities and organisation around it, and we don’t expect any strategy change in the next five years.”

For its latest offering, Krishnaswami added the firm is looking to raise capital from more Asian LPs. Limited partners in the firm’s debut fund, 2008-vintage $100 million India 2010 Fund I, are primarily European and North American family offices, while Fund II investors include the International Finance Corporation, Overseas Private Investment Corporation, funds of funds in Europe and Hong Kong, as well as family offices in Europe and the Middle East.

Lighthouse Funds has made investments in quick service restaurant chain Wow! Momo, laminated sheets maker Stylam Industries and non-banking financial company CapitalTrust. Last year, the firm also exited four investments including diagnostics chain Suraksha Diagnostics and biscuit maker Unibic India.

The firm expects to close one more transaction this year for Fund II, while Fund I has returned about 1.7x invested capital on a local currency basis to its LPs and holds four remaining assets, Krishnaswami said.