Xpressbees, FreshToHome Backer Investcorp Mulls Wrapping Up Second India Fund By 2024 End

Bahrain-based alternative investment manager Investcorp is reportedly looking to close its second India-focused investment fund by the end of the current calendar year. 

The Mubadala-backed firm, which manages assets of over $50 Bn, has already secured more than half of the targeted corpus for the India private equity fund, a Mint report said.

“We are over halfway through the $400 Mn target fund… we would look to wrap it up by the end of 2024. We’ve already done three deals out of it,” Rishi Kapoor, CEO of Investcorp, told Mint, adding that a fourth deal is currently in progress.

Investcorp entered the Indian market in 2019 by acquiring IDFC Alternatives’ private equity and real estate business.

Having completed 16 transactions, including investments in companies like Xpressbees and FreshToHome, Investcorp aims to support 10-15 companies over three years with deal sizes ranging from $30 Mn to $50 Mn. 

India stands as Investcorp’s “most active” market, and it intends to deploy the new fund within three years, Kapoor added. 

He expressed confidence that the fund will be fully deployed within the timeframe, emphasising India’s exceptional performance compared to other markets in terms of deal volume and success rate. 

Investcorp launched a $150 Mn India fund in 2019 and has exited five investments so far, including luggage manufacturer Safari Industries and ASG Eye Hospitals. 

The recent IPO of portfolio company Medi Assist Healthcare marked a significant success for the investors. 

Despite currently representing 2% of Investcorp’s total assets under management (AUM), approximately $1 Bn, India holds promise for growth, Kapoor mentioned. 

Kapoor also outlined ambitions to reach $5 Bn in total assets over the medium term, with around $2 Bn allocated to real estate assets. To achieve this, Investcorp aims to deploy $300-400 Mn annually in real estate investments, maintaining a targeted pace for reaching the $2 Bn mark. 

Last year, Investcorp completed its investment journey with Safari Industries, achieving an impressive Internal Rate of Return (IRR) of 102%.

It is pertinent to note that since 2022, the Indian startup ecosystem has experienced a significant correction from its 2021 peak. In 2023, total funding reached $10 Bn+, representing a 60% drop from 2022 and a sharp 76% fall from the peak in 2021. Notably, this is a seven-year decline in funding for the Indian startup ecosystem.

Over 38% of investors failed to deploy even 50% of the allocated startup investment targets for FY24. However, the future outlook remains optimistic with a considerable 95% of investors predicting favourable IPO conditions for startups in 2024.