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Read news of Faering Capital’s investments, fundraising, exits, and industry perspectives.

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22 Jan | 2020

New Deal

Faering Capital Invests in Go Digit General Insurance, India’s Fastest Growing New Age Insurance Company

04 Oct | 2019

Exit

Faering Capital Exits Enamor; Advent Buys India’s Leading Retailer of Woman’s Lingerie and Activewear

30 Apr | 2019

New Deal

Faering Capital Invests in CAMS, India’s Largest Share Registry and Transfer Agent

26 Mar | 2019

New Deal

Faering Capital Leads Series B Investment in MSME Lender Finova Capital

10 Dec | 2018

New Deal

Faering Capital Leads Series B Investment in Two-Wheeler Financing Pioneer WheelsEMI

23 SEP | 2017

Fundraising

Faering Capital Marks First Close of its Second Fund at Rs. 725 Cr

02 AUG | 2017

Exit

Faering Exits Leading Hospital Chain Manipal Hospitals

30 SEP | 2016

New Deal

Faering Capital Leads Investment in Uttar Pradesh-Headquartered Utkarsh Small Finance Bank

10 Aug | 2016

Exit

Faering Capital Sells Stake in Snowman Logistics

15 Jul | 2016

New Deal

Faering Capital Invests in Prataap Snacks, Top 5 Indian Packaged Snack Food Company

28 Jun | 2016

Exit

Faering Capital Eyes Bumper Exit in RBL IPO

23 MAR | 2016

New Deal

Faering Capital Invests in BookMyForex, India’s Largest Online Foreign Exchange Marketplace

30 Jun | 2015

Perspectives

Online Financial Services a Huge Opportunity: Faering Capital Co-founders Aditya Parekh and Sameer Shroff

18 JUN | 2015

New Deal

Faering Capital Invests in FundsIndia, the Country’s Largest Digital Mutual Fund Distributor

26 Aug | 2014

New Deal

Faering Capital Anchors Snowman Logistics IPO

05 Dec | 2013

New Deal

Faering Capital Invests in Biba Apparels, Top Indian Clothing Brand

11 Feb | 2011

New Deal

Faering Capital Makes First Investment: Ratnakar Bank

02 Feb | 2011

Fundraising

Faering Capital Raises Rs. 830 Cr for First PE Fund

Faering Capital Leads Series B Investment in Two-Wheeler Financing Pioneer WheelsEMI

As published in Livemint on December 10, 2018:

WheelsEMI gets ₹100 crore infusion led by Faering Cap

Faering Capital, a mid-market-focused private equity (PE) firm founded by Aditya Parekh and Sameer Shroff, has led a ₹ 100-crore Series B round of funding in pre-owned two-wheeler financing company WheelsEMI.

WheelsEMI, run by non-banking financial company WheelsEMI Pvt. Ltd, is a specialist lender focused on used two-wheeler financing. The company was founded by former senior Bajaj Auto executives Srinivas Kantheti, Karunakaran Vadakkepat, CH Phaneendra Kumar and Ratheesh Bharathan in 2017.

This is the fourth investment from the PE firm’s second fund. Its earlier investments include small finance bank Utkarsh, forex company BookMyForex and packaged foods company Prataap Snacks.

“We have led a Series B round of ₹ 100 crore in Wheels EMI. Faering has invested ₹ 64 crore, while the rest was invested by existing investor Elevar. WheelsEMI is a pioneer in the pre-owned two-wheeler space, which is a large market with 17-18 million used two-wheelers being sold in the country," said Faering Capital’s co-founder and managing director Aditya Parekh, who is the elder son of HDFC Group chairman Deepak Parekh.

While new two-wheelers are financed by banks, there is a lack of organized financing for pre-owned two-wheelers, a segment which WheelsEMI is targeting. “They will close the year with around ₹ 120 crore of assets under management. Today, they are present in nine cities including Mumbai, Bangalore and Pune."

WheelEMI will use the capital to pursue growth plans, which will see the company expand its network to other cities. “They will go deeper in the cities they are already in and will also expand to new cities. The goal is to be in 50-60 cities in the next few years. But the expansion will be in a very calibrated manner." Parekh also said Faering will help the lender access credit lines from financial institutions such as banks.

For Faering, the investment in WheelsEMI is an attempt to tap the growing demand for pre-owned vehicles. “In addition to it, being a financial services play, what we are excited about is the rapid consumption growth in India. There are two major drivers for two-wheeler growth. One, is increasing urbanization and people buying their first vehicle. Two, is the rise of the delivery culture in India—food delivery, e-commerce delivery," said Shroff, who is also a co-founder and managing director at Faering Capital.

He said several people are buying used two-wheelers to take up a delivery person’s job. “So this is one of the ways of participating in the boom of the delivery culture of India without actually investing in one of the delivery companies."

Faering recently closed its second fund with a total corpus of $200 million (approximately ₹ 1,400 crore). In 2009, Faering had raised ₹ 800 crore for its first fund. “Around 70% of the fund has been raised from domestic investors, while the remaining 30% came from overseas investors," said Shroff.

“We felt that for the growth of the platform it is good to bring in marquee international investors and that’s why we got a third of the fund from them," said Shroff. “We felt that for the growth of the platform it is good to bring in marquee international investors and that’s why we got a third of the fund from them," said Shroff.

The PE firm expects to return 3-times capital from the first fund as it makes more exits in the coming years, he added.

Aditya Parekh takes a leaf out of Dad’s books

As published in Livemint on January 22, 2020:

Faering, A91 lead funding round in insurance distributor Go Digit

Faering Capital, the Aditya Parekh-promoted private equity (PE) firm, today said it has raised Rs 830 crore from from its first fund.

"Faering Capital is pleased to announce the first closing of its maiden private equity fund - Faering Capital India Evolving Fund in December, 2010 with a corpus of Rs 830 crore," the company said in a statement.

Named after a boat used by the Vikings as they roamed the seas more than 1,000 years ago, Faering is promoted by HDFC Chairman Deepak Parekh's son and his friend and co-founder Sameer Shroff.

The fund will focus on consumption-related investment opportunities and will expect investment in mid-cap firms, with an average deal size of Rs 30-80 crore in each transaction.

Faering believes "there are significant structural positives in the Indian economy today -- largely driven by favorable demographics, increasing urbanisation, a growing middle class and a young professional workforce."

"These factors will result in sustained broad-based consumption growth in India, which will boost a number of industries such as financial services, consumer and retail, telecommunications, technology and internet, media and entertainment, education, healthcare and business services," it added.

The company's advisory board comprises of Deepak Parekh and Adi Godrej. The board members will interact with companies; give advice and help them implement their business plans.

However, according to global consultancy E&Y, PE players faced a challenge situation in raising funds. Funds raised for India is estimated at $2.5 billion during 2010, which is much less than $3.8 billion mopped up in 2009.

As published in The Economic Times on Aug 17, 2010

Faering Capital Leads Series B Investment in MSME Lender Finova Capital

As published in Livemint on March 26, 2019:

NBFC Finova Capital raises $15 million in round led by Faering, Sequoia

Non-banking financial company (NBFC) Finova Capital on Monday said it has raised $15 million in a series B round led by new investor Faering Capital and existing investor Sequoia Capital.

Finova lends to micro, small and medium enterprises (MSMEs), and service providers in Tier II and III towns and rural areas. It caters to loans of ₹5-6 lakh for a period of up to seven years. Founded in 2016 by Mohit and Sunita Sahney, it claims to have disbursed ₹250 crore to over 4,500 customers till date. It operates 52 branches across Rajasthan, and plans to expand to over 75 branches across Rajasthan, Delhi and Madhya Pradesh by the end of this year.

Finova analyses borrower’s cash flows for credit assessment, instead of asking for formal documentation since the segment it caters to can rarely provide formal credit history. The company has created custom templates that assist in credit underwriting across various sectors.

“We are at an important juncture as we continue to find innovative ways to provide the unbanked population access to business loans—doing so as one of the few players in the running of a profitable operation from inception," said Finova's founder CEO Mohit Sahney.

Faering Capital is a a mid-market-focused private equity (PE) firm founded by Sameer Shroff and Aditya Parekh, the elder son of HDFC group chairman Deepak Parekh.

The deal also marked Faering’s second-investment in an NBFC from its second fund. Mint reported last December that WheelsEMI, a specialist lender focused on used two-wheeler financing, had raised ₹100 crore in a round led by Faering.

Bengaluru-based Unitus Capital acted as the financial advisor to Finova.

Digital lending platforms for small and medium enterprises have seen significant traction recently, as startups look to address the needs of a large and fragmented market. Ziploan, another digital lending platform, raised $12.5 million in a series B round led by SAIF Partners, where existing investors Matrix Partners India, Waterbridge Ventures and Whiteboard Capital also participated.

Faering Capital Makes First Investment: Ratnakar Bank

As published in The Times of India on February 11, 2011:

Ratnakar Bank raises Rs. 720 crore

Kolhapur-based Ratnakar Bank has raised Rs 720 crore by selling shares to institutional investors at Rs 67 per share. With this issue the bank's networth has crossed Rs 1,000 crore.

Speaking to TOI, Vishwavir Ahuja, MD & CEO, Ratnakar Bank, said that this was among the initial step towards putting the building blocks in place for expansion of the bank. Given that the asset base of the bank is a little over Rs 2,000 crore, the new capital infusion will provide the bank with capital to grow its business several fold.

The equity investors in the bank include Beacon India Private Equity Fund, Cartica Capital, Faering Capital, Gaja Capital Partners, HDFC, Norwest Venture Partners, and Samara Capital, among others. Besides raising the capital, the bank under its new leadership has brought in a whole new team. The senior executives, who have come on board, include Rajeev Ahuja, former head of fixed income capital market and sales at Citibank, Nitin Chopra, former CEO of Bharti Axa Life Insurance, Sunil Gulati, former group president, corporate & institutional banking, Yes Bank, Suhas Sahakari, former head of SME at Axis Bank, Shanta Vallury, former head, liabilities distribution, ICICI Bank, and Naresh Karia, former country controller, Citibank. "We will begin expanding our branches only after we have put in place the new core banking solution platform," said Ahuja.

He said the process was expected to take a year. The bank whose head office is at Kolhapur has opened a large main office in Mumbai. The Ratnakar Bank is the second example of an old bank repositioning itself as a new generation bank following the entry of new management and investors. With bank licenses being stringently rationed by the Reserve Bank of India, investors are willing to pay a premium for old banks if they see a promise of transformation into a growth story. Earlier, Thrissur-based Dhanlaxmi Bank transformed itself following a change in management with the help of equity investment from private investors.

The 67-year Ratnakar Bank has been widely held old generation private bank which restricted its activities largely in Maharashtra. The Centrum group had picked up a large chunk of shares in the widely held bank and had emerged the single largest shareholder. However, the bank continued to be under pressure to raise capital given Reserve Bank of India's directive that all private banks should have a minimum net worth of Rs 300 crore. Ahuja who joined the bank last year led a team of professional and investors into the bank.

Faering Capital Raises Rs. 830 Cr for First PE Fund

As published in The Economic Times on February 2, 2011:

PE firm Faering Capital raises Rs 830 cr

Fearing Capital, a PE firm promoted by Aditya Parekh, son of HDFC chairman Deepak Parekh, on Monday said that it has raised 830 crore marking the close of the first round of fund raising. Faering is promoted by Parekh and his friend and co-founder Sameer Shroff who launched the firm last year.

Faering's successful close comes even as there has been a considerable drop in the tempo of capital raised for India-focused funds in the past year-and-a-half, as investors played safe in a volatile market and funds focused on exiting bad investments.

According to global consultancy E&Y, PE players faced a tough environment for fund raising. India-focused funds raised an estimated $2.5 billion during 2010 compared to $3.8 billion mopped up in 2009.

Faering is looking to invest 35-80 crore in small to mid-cap firms with proven business models. The firm said that it will capitalise on investment opportunities generated through broad-based consumption-led growth in the Indian economy.

Shroff and Parekh, in a chat with ET, said that they are sector agnostic and that they are excited about opportunities in financial services, media, technology, education and healthcare.

Aditya Parekh said his father will play the role of an advisory board member. He will not be involved in day-to-day operations, he added.

"These factors shall result in sustained broad-based consumption growth which, in turn, shall have a favourable impact on a number of industries including financial services, consumer and retail, telecommunication, technology and internet, media and entertainment, education, healthcare and business services," the company said in an announcement.

Faering Capital Invests in CAMS, India’s Largest Share Registry and Transfer Agent

As published in VCCircle on April 30, 2019:

Warburg Pincus teams up with Faering Capital for another India deal

Marquee global growth equity firm Warburg Pincus and Indian mid-market private equity firm Faering Capital have joined hands to back a financial services company, a little over five years after co-investing in a fashion apparel maker

Warburg Pincus has increased its stake in Computer Age Management Services Pvt. Ltd (CAMS) while Faering Capital came as a new shareholder recently, two people familiar with the development told VCCircle.

Warburg had picked up a stake of around 12.6% in CAMS from mortgage lender HDFC and the National Stock Exchange (NSE) for Rs 420 crore ($60 million) last year. Separately, HDFC Bank was supposed to sell an undisclosed quantum of stake to Warburg as part of the deal.

It could not be immediately ascertained if HDFC Bank did indeed monetise its investment in CAMS, which acts as a registrar and transfer agent (RTA) for large asset managers in India. An email sent to HDFC Bank went unanswered.

In the latest transaction, Warburg and Faering have picked up an 8% to 10% stake in CAMS from its promoter group ACSYS Investments Pvt. Ltd, one of the people said, requesting anonymity. The deal value is pegged around Rs 330-400 crore ($47-57 million). Bulk of this came from Warburg, it is understood. Faering Capital typically strikes deals in the $5-10 million range, according to VCCEdge, the data research platform of Mosaic Digital.

Warburg’s exposure to CAMS is now believed to be around $100 million. It declined to comment on the development while Faering Capital confirmed its investment.

“CAMS is a market leader in the mutual fund registrar and transfer agent (RTA) industry and will continue to participate in the substantial growth of the mutual fund industry in the years ahead,” said Sameer Shroff, co-founder and managing director at Faering.

Email queries to CAMS and Acsys Investments did not elicit any response till the time of publishing this article.

In December 2017, HDFC had first disclosed that it was selling a stake in CAMS to Warburg Pincus and added that group firm HDFC Bank would also sell some stake. At the time, HDFC and HDFC Bank held 11% and 6% respectively while NSE held 45% and ACSYS owned around 31% stake in CAMS.

In March 2018, HDFC clarified that it had decided to sell a smaller stake. NSE Strategic Investment Corporation Ltd, a wholly owned subsidiary of NSE, also decided to sell 7.5% instead of the 10% as originally envisaged.

With the latest deal, Warburg’s holding is believed to have moved to around 20%. Acsys will hold a 21.83% stake in CAMS.

Warburg has invested in several Indian financial services companies such as AU Small Finance Bank, Capital First, HDFC and Kotak Mahindra Bank. In July 2017, it picked up a stake in ICICI Lombard General Insurance for $282.71 million; it sold a part of its shares in 2018.

The PE firm invests in the country out of its global fund Warburg Pincus Private Equity XII LP. Its latest flagship fund is Warburg Pincus Global Growth LP, which mobilised $13.75 billion when it hit its first close late last year.

Warburg Pincus has more than $44 billion in private equity assets under management. Founded in 1966, the New York-based firm has raised 17 private equity funds which have invested more than $60 billion in over 800 companies in more than 40 countries.

It had previously teamed up with Faering to invest in apparel company Biba.

Faering Capital, CAMS

The PE firm is led by Aditya Parekh, the elder son of HDFC chairman Deepak Parekh, and Sameer Shroff.

This is Faering Capital’s fourth transaction in the financial services sector from its latest fund.

In March 2019, it invested in SME-focussed non-bank finance firm Finnova Capital. In December 2018, it invested in auto financier WheelsEMI Pvt. Ltd. It had earlier invested in Utkarsh Micro Finance.

CAMS is a transfer agent and provides registry services to mutual funds. It has also tied up with insurance companies, private equity funds and financial services firms to offer them technology-enabled services.

For the financial year that ended on March 2018, CAMS reported revenue of Rs 650.6 crore and a net profit of Rs 159.9 crore. In comparison, its revenue for March 2017 was Rs 472.8 crore with a net profit of about Rs 107.5 crore.

Faering Exits Leading Hospital Chain Manipal Hospitals

As published in VCCircle on August 2, 2017:

Temasek set to buy out two PE firms in Manipal Hospitals

Singapore state investor Temasek Holdings is buying the minority stake held by two private equity investors in Bengaluru-based Manipal Health Enterprises Pvt. Ltd, three persons briefed on the development told VCCircle.

Temasek is purchasing the stake of Faering Capital and True North, two of the persons said. The deal values Manipal Health, which manages the Manipal Hospitals chain in India and Malaysia, a little above Rs 6,000 crore ($940 million), one of them added.

This will place the deal size around Rs 1,100 crore ($172 million).

True North (previously known as India Value Fund Advisors) had invested Rs 438 crore, mostly for buying a stake from the company’s promoters in 2012. Faering Capital—which is led by Aditya Parekh, son of HDFC chairman Deepak Parekh—had invested Rs 50 crore through a preferential allotment at the same time.

True North is likely to take out close to Rs 1,000 crore while Faering will pull out Rs 100-110 crore, back-of-the-envelope calculations show. This would translate into an internal rate of return (IRR) of around 20%, according to VCCircle estimates.

PE firms chase 20-30% IRR in local currency in India, which would mean benchmark returns for True North and Faering Capital. As first reported by VCCircle, both True North and Faering Capital are raising fresh capital. PE firms tend to showcase profitable exits while raising a new fund.

True North owns around 16.3% while Faering Capital holds about 1.8% of the diluted share capital. TPG is the third PE investor in Manipal Hospitals.

One of the persons cited earlier told VCCircle that other shareholders of Manipal Hospitals, including TPG, continue to hold talks to sell a majority stake to Temasek, but that is part of a larger deal which is expected to be sealed over a period of time.

A spokesperson for Temasek confirmed that the sovereign fund is set to purchase an 18.1% stake in Manipal Hospitals through its subsidiary Sheares Healthcare Management but declined to provide other details. It also declined to comment on a majority stake buy in future, referring to it as a speculation.

True North executives declined to comment. Faering Capital and Manipal Hospitals CEO Ajay Bakshi did not respond to a request for comment. An email query to TPG did not elicit any response till the time of publishing this article.

TPG had invested in the company around three years ago and, unlike True North and Faering Capital, it may not be in a hurry to exit.

The Economic Times had earlier reported that Temasek was looking to buy True North’s 18% stake in the hospital chain at a valuation of $1.2 billion (Rs 7,800 crore).

Manipal Hospitals

Founded in 1991, the company operates 15 multi-specialty hospitals in Maharashtra, Karnataka, Andhra Pradesh, Tamil Nadu and Goa, according to its website. It also manages five teaching hospitals in Karnataka and Sikkim, as well as several fertility clinics across the country.

The chain, which competes with Apollo Hospitals and Fortis Healthcare, also owns and operates a hospital in Malaysia and manages a clinic in Nigeria.

Manipal Hospitals’ consolidated revenue grew at a compound annual pace of 23% between 2013-14 and 2015-16. Its earnings before interest, tax, depreciation and amortisation recorded annualised growth of 30% during this period. The firm clocked revenue of Rs 1,262 crore and EBITDA of Rs 172.2 crore for the year ended 31 March 2016. Its financials for 2016-17 are not yet in public domain.

The deal is likely to value the firm around 30 times its EBITDA for 2016-17, higher than the 25 times valuation for key publicly listed peers.

The company is part of Manipal Education and Medical Group (Manipal Group), a privately held conglomerate focussed on education, healthcare and research. Earlier this year, the parent group partnered with UK-based development financial institution CDC Group Plc to float a Rs 500 crore (around $75 million) healthcare fund.

Manipal Hospitals is one of a few large corporate hospital chains in India. The healthcare segment in the country is dominated by standalone hospitals and regional chains, besides state-run public healthcare facilities.

Lack of adequate hospitals has resulted in a business opportunity that has attracted both private equity firms and lately a few foreign players to Indian hospital chains. Malaysian sovereign fund backed IHH is one such firm that has struck two inbound deals in India.

Temasek’s healthcare bets

For Temasek, this will be its third reported deal in the Indian healthcare space. In 2015, it had picked up nearly 18% stake in Global Health Pvt. Ltd, which owns and runs Gurgaon-based multi-specialty hospital Medanta.

Prior to that, it had backed entities such as Bangalore-based HealthCare Global Enterprises Ltd (HCG), which runs an oncology services chain. Many years ago, it had also invested in Apollo Hospital Enterprises, though it now counts it as an old portfolio firm.

While HCG also operates hospitals in some cities where Manipal is present, they are not essentially seen as competitors as the former specialises in cancer care. Medanta is a single-location entity in North India where Manipal has no presence.

Apart from these hospitals, Temasek has also bet on pharmaceutical firms such as Glenmark and Sun Pharmaceutical Industries Ltd.

Faering Capital Leads Investment in Uttar Pradesh-Headquartered Utkarsh Small Finance Bank

As published in VCCircle on September 30, 2016:

Utkarsh Micro Finance raises $60 mn from RBL Bank, Faering Capital and others

Varanasi-based Utkarsh Micro Finance Pvt. Ltd has raised fresh capital of Rs 395 crore ($60 million) from several domestic institutional investors in a transaction that will help it to bring down the foreign holding below the 49% mark it must achieve to transition to a small finance bank.

The microlender raised funding from HDFC Standard Life Insurance, HDFC Ergo General Insurance, ICICI Prudential Life Insurance, Shriram Life Insurance, RBL Bank, Small Industries Development Bank of India and private equity funds Faering Capital and Arpwood Capital.

ICICI Securities and Avendus Capital advised Utkarsh Micro Finance on the capital raise.

The transaction is likely to complete next week, said Gautam Benjamin, executive vice president and head of financial sponsors group at ICICI Securities. Utkarsh founder Govind Singh confirmed the development.

The deal will reduce the company's foreign shareholding from 85% to 49%, which is essential to complying with the regulatory requirements. In August, VCCircle reported that the company was raising capital from eight to nine domestic investors at a valuation of Rs 1,000 crore.

Earlier in the day, the Mint newspaper reported that the company had raised capital from the investors named above.

In an earlier interaction, Utkarsh CFO Abhisheka Kumar had said that the lender would convert into a holding company after the funding. This holding firm would house the subsidiary Utkarsh Small Finance Bank, which would run the banking operation.

He had also said that the microfinance company was awaiting approval from the Reserve Bank of India since the round entailed a dilution of more than 26% in the holding company. Both Faering Capital and RBL Bank will own about 9.9% stake each and the other investors will hold less than 5% of Utkarsh.

RBL Bank will also become a preferred partner and will help meeting the future lending requirements of Utkarsh as a small finance bank.

According to an earlier VCCircle report, Aavishkaar Goodwell (15.29% stake), Sarva Capital LLC (12.82%) and Norwegian Microfinance Initiative (17.28%) had been looking to sell their stake in the company. International Finance Corporation and Aavishkaar Goodwell India Microfinance Development Co. Ltd. were among the first investors to back the microlender in 2009.

Other small finance banks

Utkarsh joins several other companies with approval to start a small finance bank in reducing its foreign holding. Janalakshmi Financial Services Pvt. Ltd, Disha Microfin Pvt. Ltd, Equitas Holdings Ltd and Ujjivan Financial Services Ltd are among the others which have raised funds either to launch small finance banks or meet the RBI’s norms on shareholding.

Janalakshmi raised about Rs 1,000 crore in April from investors led by global private equity firm TPG, though it didn’t say whether this round helped in reducing its foreign holding.

Equitas and Ujjivan went public earlier this year while Disha Microfin was looking to raise about Rs 300 crore to comply with the central bank’s foreign shareholding norms.

Faering Capital Eyes Bumper Exit in RBL IPO

As published in The Economic Times on June 28, 2016:

Private equity fund Faering Capital eyes bumper exit in RBL IPO

Domestic private equity fund Faering Capital is eyeing a bumper exit from its 5-year old investment in Ratnakar Bank Ltd. (RBL) by cashing out at the proposed initial public offering slated to be launched later this month, said two sources privy to the plans.

Founded by HDFC chairman Deepak Parekh's son Aditya Parekh and his investment banker friend Sameer Shroff in 2009-10, Faering Capital had invested about Rs 100 crore for about 4% stake in 2011 — the first institutional fund raised by the bank — following the induction of the new management team led by veteran banker Vishwavir Ahuja, the MD and CEO.

Faering is among the top five shareholders in the bank and the largest Indian private equity fund along with leading global institutions including IFC, CDC, Norwest, Capvent and Asian Development Bank. At an estimated IPO valuation of Rs 7,000–7,500 crore, Faering’s stake would fetch around Rs 250 crore representing a near 3-fold return on investment.

Analysts estimate, just one exit will help the fund return 40% of its capital back to its investors. This will also help the founding duo of Faering to gain traction for their second fund, estimated at Rs 1800 crore. “Faering will either partly exit its holdings or sell the full stake. A decision is expected to be made in a few days,” said a person with direct knowledge of the fund’s plan. The other investors too may follow suit.” When contacted, a Faering spokesperson declined to comment on the story.

The Kolhapur-headquartered bank, which turned to Bank of America's former India chief Vishwavir Ahuja to breathe new life into its operations in 2010, finally got a nod from the regulator Sebi last month for an IPO after months of delay. Once launched, it will be the first bank IPO in India after a decade.

The IPO’s draft documents filed with Sebi said RBL Bank planned to raise a total of Rs 1,100 crore from investors through its listing. However, last year, it raised about Rs 488 crore from global private equity funds such as ADB and the UK government’s development finance arm CDC Group Plc and a clutch of long-only funds such as DVI Fund (Mauritius) Ltd and Rimco (Mauritius) Ltd.

Following that, the IPO size was reduced to Rs 600 crore. “The management team has put in enormous effort into modernising the bank, its technology and brand, which has led to a 10X growth in its balance sheet in just 6 years,” said an official in the know. “RBL has been Faering’s first investment and arguably the most successful so far.”

The fund is now looking to raise a total of Rs 1,800 crore in its second fund with rupee as well as dollar investments. A first close of around $100 million is expected by August, another source with knowledge of the plan said.

In 2010, Faering raised Rs 800 crore from domestic investors including business groups and private institutions. Till date it has made 15 investments for minority stakes in a diverse set of companies across financial services, consumer and healthcare. They include ladies apparel maker Biba, private banks like City Union, National Stock Exchange, NBFCs like M&M Financial and hospital chains like Manipal, besides RBL. Typically they deploy $10-$30 million in each of their investments.

Faering Capital Sells Stake in Snowman Logistics

As published in The Economic Times on August 10, 2016:

Faering Capital withdraws investment in Snowman Logistics

Faering Capital, a private equity fund started by Deepak Parekh’s son Aditya Parekh and childhood friend Sameer Shroff, have exited its investment in Snowman Logistics, the largest integrated cold-chain service provider in India offering warehousing, transport and other value-added services.

It invested Rs 20 crore in Snowman Logistics through its initial public offering in September 2014, according to the fund. On Tuesday, the fund sold its investments in the company for a total value of Rs 37.1crore, gaining a multiple of 1.9x on the investment.

“We had identified Snowman Logistics as a dominant player way back in 2013 and had developed an investment thesis based on its growth prospects with the added support of various stakeholders in the company,” said Shroff, co-founder, Faering Capital.

“The return on investment we are now realising through our exit bodes well with our objective to identify and invest in market leaders in consumption-led growth sectors and enhances our position as a partner of choice for entrepreneurs and management teams,” Shroff added.

Faering Capital Invests in BookMyForex, India’s Largest Online Foreign Exchange Marketplace

As published in Financial Express on March 23, 2016:

Faering Capital picks 26% stake in bookmyforex.com

Faering Capital currently manages a Rs 850-crore private equity fund (Faering Capital India Evolving Fund), which invests in financial services, consumer and retail, healthcare, education, media, technology, internet and business services

Domestic PE player Faering Capital has bought close to 26% stake in online foreign exchange services provider bookmyforex.com for around $2 million.

The investment is an early stage one. Founded by former head of HDFC Bank’s foreign exchange services, Sudarshan Motwani in 2011 the company provides full suite of forex products like currency notes, prepaid travel cards, traveler’s cheques, demand drafts and wire transfers. According to sources, bookmyforex registered an annual turnover of Rs 300 crore in the last fiscal.

Faering Capital is a boutique asset management firm founded by HDFC chairman Deepak Parekh’s son Aditya Parekh and his associate Sameer Shroff.

Faering Capital currently manages a Rs 850 crore private equity fund (Faering Capital India Evolving Fund) which invests in financial services, consumer & retail, healthcare, education, media, technology, internet, and business services.

Since 2009, Faering Capital has made 12 investments from its maiden fund, which include Ratnakar Bank, Gokaldas Intimate-wear (Enamor Lingerie), Manipal Healthcare, Avantha Power, Biba Apparels, Mahindra Financial Services, City Union Bank, NSE, KOOH Sports, Linkstreet, Transerv, and Snowman Logistics. Faering Capital, it is believed is the midst of raising its second fund from a clutch of domestic and foreign investors.

Earlier this month Paragon partners another private equity fund founded by Deepak Parekh’s younger son Siddharth Parekh, and entrepreneur Sumeet Nindrajog announced the first closure of $50 million in commitments, of their $200 million private equity fund called Paragon Partners Growth Fund I (“PPGF-I”). According to fund executives, PPGF-I plans to invest in 10-15 mid-market companies in India, with an average deal size of $10-20 million. It will focus on five core sectors, including consumer discretionary, financial services, infrastructure and health care services.

Online Financial Services a Huge Opportunity: Faering Capital Co-founders Aditya Parekh and Sameer Shroff

As published in The Economic Times on June 30, 2015:

Online financial services is a huge opportunity: Aditya Parekh

Almost a decade ago, HDFC chairman Deepak Parekh's son Aditya Parekh and his friend Sameer Shroff, both in their 30s, left their investment banking jobs at Wall Street to start a business in India. In 2009, they raised Rs 800 crore from local rich businessmen and started Faering Capital, a private equity fund to invest in growth companies with a five year horizon to exit. After investing 90% of the funds in 14 companies in the past five years, Faering Cap is once again in a fund raising mode to raise Rs 1,800 crore. ‘Our goal is by the end of this year or by March, we would have returned 50% of our capital raised in the first fund, which is unprecedented," they said in an exclusive interview to ET.

How did Faering Capital start its journey?

Aditya Parekh: We both met in the US. We were both starting out our careers, he was in Morgan Stanley and I was in Meryl Lynch. We met by accident at a friend’s house but hit it off, two people in financial services, with same goal, living in New York, we both wanted to come back to India and build a business one day and we remained close ever sense. Our journeys have been fairly parallel, we both went to business schools abroad, he went to Kellog, I went to Wharton and started making our way back. I came back in 06-07, he came back a year later and that’s the genesis of Fairing Capital.

In 2009 we formed Faering Capital and what we have been able to create a differentiated platform and it been a partnership of values and trust that we have been able to create. Our goals when we started, in Taj, with a piece of paper and a pad, we asked what do we want to do? And we wanted to create a differentiated asset management platform in India.

Tell us about your investments and portfolio?

Sameer Shroff: Our strategy was we will not do an investment, unless someone in our ecosystem, vouches for the entrepreneur, because the shareholder’s document can only protect you so much. We had seen in 2006 and 2007 large global funds coming to India and doing deals based on consulting reports where they did not know the promoters. We thought the best way to protect ourselves is to only invest in companies where some in our ecosystem knows them very well. Second, we said we need to be deep sector experts and that was driven by our view that India in the next 10 years is going through some very large structural changes.

What were the themes of your investments?

Samer Shroff: One is urbanization and increase in professional workforce. These are causing a ripple impact in 3 or 4 sectors which we identified and said we will have the deepest expertise and networks in those sectors. So financial services has been our number one most important sector, where we have the deepest network and the second one is consumer.

We are obsessed by brands. In a long time cycle, it is the brand that protects you. Whenever given a choice of investing in input to a brand or brand itself, we always invest in the brand. So between products and services, brands are what hold you.

As a PE what is your view for a decade?

Sameer Shroff: We believe that in the next 5-10 years, be it in services sectors, banks, product sector-apparel, healthcare sector-hospitals, people who have been able to build long term brands always create value. So other than financial sector and consumer, healthcare is another sector where we have spent a lot of time. Healthcare is counter-cylical, if you provide a consistent service. Other than that we remain opportunistic about the sectors but they are all enablers of consumption if not consumption directly.

Which sectors did you stay away from?

Aditya Parekh: What we have chosen not to do is that we will not invest in any company that is just an exporter to the world. Or a back office to the world, we do not want to be just a commoditized input to a company, because it is well in a good cycle but gets crushed in a down cycle.

Does your portfolio reflect this strategy?

Aditya Parekh: Our portfolio reflects this hypoythesis. Today, out of 14 investments that we have done so far, 8 investments are between financial services and consumers. Once you start showing interest in that portfolio, it starts to get you more and more deal flow in that sector.

But, you have a smaller fund?

Sameer Shroff: It does not matter how much money you have raised, it matters what you have done in your portfolio. Today it is much harder to convince your entrepreneur why he should take your money if you do not have a portfolio to back it. Lot of people have larger funds but when they sit with the entrepreneur they cannot say how they will add value to the company.

For instance in financial services, we have invested across the spectrum- from banks, NBFCs, payments companies, which are very exciting, in an online financial services player so we have covered the entire spectrum. Ours first and largest was Ratnakar Bank, which is now going to do an IPO. We are one of the top 5 largest shareholders in the bank. Ratnakar Bank was going through a transition, and we were first shareholders to back it and invested in the first rights issue. Then we invested in subsequent round so that we amassed over a 4% stake.

In the financial services space, we invested in another bank, Citi Union bank and we have a payments company TranServe. This currently has both a pre-paid program card manager and a digital wallet business. So we have a lot of inbound interest in this company.

What about your consumer?

Sameer Shroff: In Consumer, we have two of the best brands in India. One is Enamour-leading lingerie brand in India which has done well. It has done fantastically well, when we invested in it was around when we invested in it was around 60 crores and now we are on track in FY16 we should hit over 160 crores in revenues.

Exits is a problem for many PE funds. What is your view?

Aditya Parekh: We have seen may PEs say there is an exit problem. We don’t believe that, we think it is just a problem of bad portfolio. If you have a good portfolio, you should always be able to sell. We have seen funds raised in 06 -07 and they have still not exited. We do not have an exit problem, you have to choose your portfolio in a particular manner so our first investment Ratnakar Bank, we knew it will list. Other PE funds invested everything upfront in 2 years, we said let’s not time the market, lets invest patiently, so we have taken full 4 years to deploy this capital. There will always be ups and downs but do not try to time the market. If you have invested in a good brand it holds you during bad times.

Have you invested everything from the first fund?

Sameer Shroff: We have mostly invested, kept some for follow-ons. There is one small thing we are working on that we may do but otherwise, our most recent deal was announced last week-Funds India.com, which is an online financial services company. We believe that is a huge opportunity where we can reach customers directly, especially in smaller towns in India.

Aditya Parekh: When you give same weightage to each transaction, whether it is Rs5 crore or Rs100 crores, and you are thinking about it the portfolio as a team, from a portfolio level and you do not want any stepchildren. Each investment is doing well. And that is where we can say there is no exit problem.

What is the exit time frame?

Sameer Shroff: Typically each investment we want to hold it for 4-5 years. So December, 2011 what we invested in we will exit in 2014. So we have lot of inbound interest in some of our investments which we will look to exit, at least partially monetize it. Our goal is by the end of this year or by March, we would have returned 50% of our capital raised, which is unprecedented. We would have returned Rs 400 crores of capital and we on target for it.

When you chose your portfolio, what were you looking for? Safety? Or let me take a risk?

Sameer Shroff: We are not venture capitalists, we do not have the philosophy that out of 11 investments if 2 do 100 x and rest fail we will feel as bad if 2 children become Olympians and the rest die. You won’t feel happy. Our policy is capital protection is very important to us. We raise capital from people we know, put our lives savings in it as well. What we looked for was 1) Is this a promoter we can trust? 2) Has the corporate governance been verified by people close to us? 3)Is he building a market leading company in this industry? 4) Is it a strong brand?

Sectors like healthcare, consumer and financial services can’t go wrong in India?

Aditya Parekh: Even within these sectors, there are 100 ways of losing money. Unless you have ability to say, I am investing in a place I can trust, and can work with them. And so it’s not how quickly I can get deal done, it’s about history of the deal.

IS it a conscious decision to stay away from ecommerce firms, real estate and infrastructure companies?

Aditya Parekh: Online financial services, is a huge opportunity. It leverages our DNA and expertise. We are looking at consumer brands that were built using digital channels. The economics must make sense. We won’t do real estate, infrastructure and not input companies to large exporters or large industries. But other than that we have large canvas if it meets our filter of high corporate governance, investor relations and opportunity to exit in next 4-5 years. Just because a sector is hot, we will not invest in it. It has to make sense and there has to be a path towards making money.

Faering Capital Invests in FundsIndia, the Country’s Largest Digital Mutual Fund Distributor

As published in Livemint on June 18, 2015:

FundsIndia raises Rs70 crore in fresh funds from Faering Capital, others

Wealth India Financial Services Pvt. Ltd, the Chennai-based online financial services company that operate the portal FundsIndia.com, said on Thursday that it had raised ₹ 70 crore in its third round of funding. It had previously raised ₹ 3 crore and ₹ 20 crore in 2010 and 2012, respectively.

The funding was led by private equity firm Faering Capital. Existing investors Inventus Capital and Foundation Capital too took part.

The company, founded in 2009 by CR Chandrasekar and Srikanth Meenakshi, aims to use the funds to expand its marketing initiatives, improve technology and build partnerships for online and offline growth.

Start-ups in the online financial services sector are receiving investor attention. Policybazar.com raised $40 million in April and Bankbazaar.com raised $13 million in 2014.

The online financial services market in India was estimated to be ₹ 4,508 crore in December 2014 and has grown at a compounded annual growth rate of 20% since 2010, according to industry body Internet & Mobile Association of India.

Users can log into FundsIndia’s website, enter basic details for registration after which an advisor from the company calls them. Users are give suggestions to invest on the basis of criteria including their age and risk appetite.

“In India the mutual fund penetration is 3-4% as compared to a 70-75% in the US. Most users of our services are first-time investors. The average age would be between 28-35 and these users typically invest 5-10% of their salary," said Meenakshi. He said that most users begin with systematic investment plans.

FundsIndia manages assets worth ₹ 1,200 crore and offers mutual funds from all asset management companies, stocks and Exchange Traded funds (ETFs) from the Bombay Stock Exchange. The company has tied up with 39 banks for online transaction facilities.

Faering Capital Invests in Biba Apparels, Top Indian Clothing Brand

As published in The Hindu Business Line on December 5, 2013:

Warburg Pincus, Faering Capital invest Rs.300 crore in Biba Apparels

Private equity firms Warburg Pincus and Faering Capital have invested Rs 300 crore in Biba Apparels, a women and girls ethnic apparel brand.

Biba will be using the investment to ramp up its stores pan-India. The investment will also provide an exit to existing investors Future Lifestyle Fashion.

Siddharath Bindra, Managing Director, Biba, told Business Line that the company will be adding 200 stores in the next three to four years. “We will be investing Rs 150 crore to scale up presence across India,” he said. Set up in 1986 by Meena Bindra, the company has 132 stores, a majority of which are company-owned-company operated.

Kishore Biyani-promoted Future Ventures India Ltd owned an 18 per cent stake in Biba that it acquired in 2006 for an undisclosed amount. Biyani had recently exited the venture.

Bindra said the company is also mulling to launch value brands to enhance its presence at lower price points and also scale up presence in international market.

It also plans to expand its distribution network and strengthen presence in the higher-end fashion category through new product launches and JVs with acclaimed designers.

Kishore Biyani, Group CEO, Future Group, said: “We have had an exciting journey being part of the growth of Biba…We are happy that the brand will now have the support and expertise of Warburg Pincus and Faering Capital to take it to the next level. India is just witnessing the emergence of large fashion brands and we are quite sure Biba will play a major role in this journey in the years to come.”

Faering Capital is a boutique Indian asset management firm founded by Aditya Parekh and Sameer Shroff.

Vishal Mahadevia, MD and co-head India, Warburg Pincus, said: “Over the last two decades, Biba has built a women’s ethnic wear brand in an industry that continues to demonstrate positive growth trends.”

Equirus Capital acted as the financial advisor to Biba and Future Lifestyle Fashion for the transaction.

Bindra said Biba had clocked a turnover of Rs 310 crore in March.

Faering Capital Marks First Close of its Second Fund at Rs. 725 Cr

As published in Mint Story on Sep 23, 2017:

Faering gets Rs. 725 cr from Domestic LPs

Mid-market growth capital private equity firm Faering Capital, started by Aditya Parekh and Sameer Shroff, has achieved the first close of its second fund—India Evolving Fund II—raising Rs725 crore (approximately $110 million) from domestic investors.

Once a fund achieves first close, it can start making investments.

The second fund, in which Parekh and Shroff are targeting a final corpus of about Rs1,800 crore, will see the duo reach out to foreign limited partners for the first time. Investors in a private equity fund are called limited partners (LP).

“This time we are raising funds from both domestic and overseas investors,” said Shroff. In its first fund, Faering strategically avoided raising offshore money, he added.

“We wanted to stay close to home, develop a track record, show exits. Now that we have achieved these, we are going for raising an offshore fund.” Faering’s first fund, raised in 2009 with a corpus of Rs800 crore, relied entirely on the domestic LPs.

Shroff said the first close of the second fund was achieved in just a few months. Faering plans to launch the offshore fundraising by October end. Faering’s success in raising funds has come on the back of the track record of its first fund, he said.

“The first fund is currently tracking a gross IRR (internal rate of return) of 26%. Investors are also attracted by our track record of investing in notable market-leading companies such as RBL Bank, Biba Apparels, Enamor, Manipal Healthcare, Snowman Logistics and NSE,” he said.

The fundraising efforts of the private equity firm are also being aided by strong tail winds on the exit side. The fund has recently exited two of its portfolio firms—RBL Bank Ltd and Snowman Logistics Ltd—and has, in the process, returned a significant amount of capital to its LPs.

“We have sold 48% of our stake in RBL Bank after the IPO and we also sold our stake in Snowman, where we made a 40% IRR. Just on these two exits, we have returned a third of the capital to our investors,” said Shroff.

In all, Faering has seen two partial exits and one complete exit from its first fund, which had a portfolio of 15 firms. The fund has lined up more exits, while it also has liquidity in several of its investments.

“By June (2017), our plan is to return 100% of the capital drawn down from the investors,” said Shroff.

NSE, its portfolio firm, is moving towards an IPO, which will create liquidity for Faering’s investment.The first fund is also invested in a couple of listed firms—City Union Bank Ltd and M&M Finance Ltd— where, according to Shroff, Faering is already sitting on 2x of its invested capital. The firm will exit these investments at an opportune time. “There is a lot of liquidity in the portfolio and there is a lot of inbound interest in some of the other portfolio companies,” he said.

While the second fund is more than twice the size of the first, the firm plans to continue with its strategy of mid-market growth capital investment in the range of up to $30 million in ticket size.

Faering Capital anchors Snowman Logistics IPO

As published in VCCircle on August 26, 2014:

IFC sitting on multi-bagger as Snowman opens IPO; Faering among anchor investors

Snowman Logistics Ltd, a cold chain unit of Gateway Distriparks Ltd, has opened its public issue, the first public float since the new government took over in May, on Tuesday. Around four-fifths of the issue was subscribed at the end of day one, according to data collated by the bourses.

The firm also roped in a clutch of mutual funds besides private equity firm Faering Capital as anchor investors.

It said anchor investors subscribed to 94,50,000 equity shares at Rs 47 per share, or the upper end of the price band of Rs 44-47 a share, bringing in Rs 44.4 crore in the process.

India Evolving Fund, a PE fund managed by Faering Capital, has picked 3,492,000 shares bringing in Rs 16.4 crore as part of anchor investment commitment.

The other anchor investors include ICICI Prudential Growth Fund Series 2 which subscribed to 2,127,900 shares, ICICI Prudential Value Fund Series 4 picking 851,100 shares, IDFC Sterling Equity Fund subscribing to 2,659,800 shares and IDFC infrastructure Fund taking in 319,200 shares.

The company is looking to garner as much as Rs 197.4 crore in toto from the public issue which closes on August 28.

Bangalore-headquartered Snowman provides temperature-controlled storage services to a number of industries, catering to the likes of Hindustan Unilever, Baskin Robbins, Pizza Hut, Mother Dairy and ITC.

It has 23 temperature controlled warehouses spread over 14 locations. It operates 238 reefer vehicles consisting 175 leased and 63 owned ones. It has warehouses in all major cities, including Mumbai, Chennai and Pune, and plans to expand to other cities like Chandigarh and Surat.

Snowman was initially promoted by the Amalgam group in 1997. Subsequently, three Japanese companies (Mitsubishi Corporation, Mitsubishi Logistics Corporation and Nichirei Logistics Group) acquired a significant stake in the firm.

Currently, Gateway Distriparks holds around 54.04 per cent stake while Mitsubishi Corporation and Mitsubishi Logistics Corporation together hold over 14 per cent, IFC owns 12.46 per cent stake and Norwest Venture Partners 13.86 per cent.

Following the IPO, Gateway Distriparks’ stake holding in Snowman Logistics will come down to 40.41 per cent.

The PE investors are sitting on neat profit on Snowman. Norwest, which came as pre IPO investor, is sitting on unrealised gains of around 33 per cent on its one-year-old investment (at the upper end of the price band).

IFC, which had originally invested Rs 25 crore four years ago, part exited early this year by selling a quarter of its holding to the promoter for Rs 18 crore. Its remaining holding is worth Rs 72.5 crore.

Snowman has been on a fast-clip growth path with its revenues rising almost five times and profit shooting up six times in the last four years.

During the year ended March 31, 2014, Snowman Logistics reported a net profit of Rs 23.2 crore against a net profit of Rs 19.8 crore for the previous fiscal. Net revenue rose from Rs 113.7 crore to Rs 153.4 crore in the same period.

Faering Capital Invests in Prataap Snacks, Top 5 Indian Packaged Snack Food Company

As published in VCCircle on July 15, 2016.

Yellow Diamond chips maker raises PE funding

Prataap Snacks Pvt. Ltd, the maker of Yellow Diamond Chips, has raised another round of external funding before going ahead with a rumoured initial public offer (IPO), a person privy to the transaction said.

The Indore-based company, which was formerly known as Prakash Snacks, has raised Rs 47.5 crore ($7 million) from mid-market private equity firm Faering Capital.

The transaction was routed through Faering Capital's second fund—Faering Capital India Evolving Fund II. Earlier, separate media reports had said that Faering Capital is raising Rs 1,800 crore in its second fund. The PE firm is yet to make a formal statement on whether it has hit a fundraising milestone.

E-mail queries sent to Faering Capital and Prataap Snacks did not elicit any response. Aditya Parekh, co-founder of Faering Capital, did not respond to phone calls and text messages either.

The person mentioned earlier said that Faering Capital has picked 3% stake in this deal, valuing the firm at $233 million (Rs 1,600 crore).

This would mean a big mark-up for Sequoia Capital that owns around 65% of Prataap Snacks, having invested around $40 million in three rounds, according to VCCEdge, the data research platform of VCCircle.

Prataap Snacks, which was launched in 2003 by brothers Amit andApurva Kumat and Arvind Mehta, makes and sells potato-based snacks, extruded snacks and namkeen. It also ventured into the noodles market last year.

The company has churned out over 25% growth in net sales with the top-line rising to Rs 559 crore in the year ended March 31, 2015. The company is yet to file its financials for FY2015-16 with the Registrar of Companies.

It had first raised $30 million from Sequoia Capital in 2011 and later raised two more rounds from the growth equity and venture capital investor in 2013-14.

Last year, Mint had reported citing unnamed persons that the company is looking at a fresh funding of $50-70 million and has hired a banker for the process. Amit Kumat had told the newspaper that it is in discussions to raise funding but did not acknowledge the amount. Early this year, the newspaper said that Prataap Snacks is looking to raise up to Rs 500 crore through a public issue in which Sequoia Capital may sell some stake.

It could not be immediately ascertained if Prataap Snacks has struck a pre-IPO funding round.

If it goes ahead with the planned IPO, Prataap Snacks will join another snacks-maker, Balaji Wafers, which is also planning to go public.

Balaji Wafers was earlier in advanced discussions with PE firms such as Capital International, Blackstone and Actis to raise capital where it was rumoured to be selling as much as 15% stake. But the terms of the proposed deal turned off the promoters.

The snacks space has attracted several PE investors in the last couple of years. In 2014, mid-market-focused private equity firm Lighthouse invested $15 million in Rajasthan-based snacks maker Bikaji Foods International Ltd to buy 12.5% equity stake in the company.

In another deal that year, WestBridge Capital Partners picked nearly 25% stake in DFM Foods, the maker of salted snacks under the 'Crax' brand from its promoters for Rs 64.5 crore or a little over $10 million then.

DFM Foods that was half the size of Prataap in FY2014-15 but enjoys higher margins, currently has a market cap of Rs 2,191 crore ($320 million). DFM's revenues grew 34% to Rs 389.5 crore and the firm saw its net profit more than double to Rs 25 crore for the year ended March 31, 2016.

According to consultancy firm Technopak, the branded salty snacks market was estimated to be worth Rs 10,000 crore ($1.68 billion) in 2013, and was projected to grow at a CAGR of 15-18% over the medium term.

This market can be broadly divided into two segments. First represents western snacks potato chips, extruded snacks like kurkure, etc. And the other is traditional snacks namkeen, bhujia, bhakarwadi, khakhra, banana chips, etc.

PepsiCo leads the western snacks market, and, together with other prominent players in this segment (ITC, Balaji, Parle Products and Haldiram’s), holds a share in excess of 70% of the market.

In the traditional snacks space, Haldiram’s and Balaji Wafers are two prominent brands. The rest of the market is highly fragmented, and understandably so, given that the market is driven by strong regional tastes and preferences.

Faering Capital

Meanwhile, for Faering Capital this translates into the second investment and first addition to its portfolio this year. Early this year it had reinvested in fin-tech startup TranServ with other firms.

Prataap Snacks would be the 10th portfolio firm for Faering Capital, a PE firm floated by elder son of HDFC chairman Deepak Parekh. It has also invested in firms such as online financial services transaction platform FundsIndia.com, apparel firm Biba and sports education startup KOOH Sports.

These apart, it has backed RBL Bank (formerly Ratnakar Bank), Avantha Power & Infrastructure, Gokaldas Intimatewear, Manipal Health Enterprises and Linkstreet Learning.

Exits are not a big challenge if one has a strong portfolio

As published in Livemint on January 22, 2020:

Faering, A91 lead funding round in insurance distributor Go Digit

Strong alignment with the management team and strong focus on exits are key to succeeding in the minority growth investing space, said senior private equity (PE) professionals at the Mint India Investment Summit.

“Our fundamental philosophy is that we partner with high quality teams and we are there to take the business from where it is today to the next level. What drives that is alignment with those teams and that really is our focus area to ensure that there is complete alignment upfront in terms of strategy, execution, exit path," said Ankur Thadani, principal at TPG Growth. According to Pavninder Singh, managing director (PE) of Bain Capital, it is important to have a high level of engagement in a minority situation. “When we look at minority, we want to be one of the more significant shareholders. We always make sure that it is a high engagement model. So, we are looking for partners in minority situations that will work closely with us," he said.

PE investors said that it was important to focus on the exit options right from the beginning and having a strong focus on execution. “You have to be really focused on execution and this we do with a mindset that is as rigorous as any buyout fund. Even on the exit side, even before we enter the company, we talk with promoters, management team on the exit options. If one is not working, then at what time we are going to move on to the next one. We are very clear about it," said Gagandeep S. Chhina, director (PE), ICICI Venture.

Aditya Parekh, co-founder and MD at Faering Capital, said exits are not a big challenge if one has a strong portfolio of companies. “Faering is a believer in minority growth investments. Our view is that it is a little unfair to say there is an exit challenge. It is about portfolios. If you have a strong portfolio of companies, whether they are majority or minority, you should be able to exit them. If you have good portfolio companies that have performed well with high level of corporate governance then the exit issue is a little bit overblown."

According to Nishant Parikh, partner at law firm Trilegal, minority investors have started focusing on exits early on in recent times. “Although exits have been good in the last couple of years, still a fairly large number of deals have been stuck. But, we definitely see nowadays in minority investment, people are putting a lot of focus on exits and talking about that from day one," said Parikh.

Industry experts feel that minority investors dwell deeper into diligence than those acquiring control, which is contrary to popular belief.

“The general view is that buyout deals will have far more rigour and diligence. However, it is far more rigorous in minority because at the end of day they will not have control on the company and they will be dependent on the mindset, the direction of the promoter," said Nitish Poddar, partner and national leader (PE) at KPMG India.

Alignment is also critical to ensure that the parties invest in the right tools such as tech to accelerate value creation.

“Both in the case of buyout and minority what drives the need for technology to be looked at as an enabler for value acceleration is the alignment between the management team and the PE firm. We have seen cases where there is a buyout but that alignment is not there and we don’t get to step in," said Aditya Narayan Das, senior director (private equity engagement program) at SAP India.

As published in Livemint on Aug 07, 2019

Faering Capital Exits Enamor; Advent Buys India’s Leading Retailer of Woman’s Lingerie and Activewear

As published in Livemint on October 4, 2019:

Advent International buys out lingerie brand Enamor

Global private equity (PE) firm Advent International, on Friday, said it has bought out women’s innerwear brand Enamor from India Alternatives, Faering Capital and its promoters for about ₹320 crore.

“Women’s lingerie in India is a high-growth market, with only a few strong brands in operation. As lingerie sales increase alongside disposable income, Enamor, one of the market’s leading players, is strongly positioned to benefit from these trends. We look forward to working with a global investor such as Advent, who will bring significant expertise and resources to help grow our business faster," said Shekhar Tewari, chief executive officer of Enamor.

Started in collaboration with French lingerie brand Barbara in 2001, Enamor has grown to 20 exclusive brand outlets and over 4,500 points of sale across India, mainly in larger cities. The brand that makes lingerie, sportswear and athleisure wear, also sells its products online.

“Enamor is a market leader in a dynamic segment with significant growth potential and a strong management team who will continue to lead the business," said Vinod Padikkal, director at Advent India PE Advisors Pvt Ltd. “We are excited to work with the team to help take the brand to the next level," he added.

The deal marks Advent’s eighth investment in India and fourth in the consumer goods sector since 2015.

In 2017, the firm acquired Dixcy Textiles Pvt. Ltd, which is an exclusive manufacturer and marketer of several leading men’s innerwear brands, including Dixcy Scott, Dixcy Scott UNO, Dixcy Josh and Dixcy & Slimz.

Within the consumer goods space, the firm also agreed to acquire a majority stake in packaged snacks maker, DFM Foods Ltd., in September. In 2015, it invested in consumer electrical goods maker, Crompton Greaves Consumer Electricals.

Its other investments in India are, Aditya Birla Capital, the holding company for the financial services businesses of Aditya Birla Group; Manjushree Technopack, rigid plastic packaging solutions provider; ASK Group, a leading wealth and investment management business and QuEST, a global engineering solutions provider.

The PE firm, active in India since 2007, has invested nearly $1 billion in the country across 10 companies from sectors such as consumer products, financial services, healthcare, industrial and technology.

In June, Advent raised its ninth global private equity fund, GPE IX, with commitments of $17.5 billion, surpassing the earlier target of $16 billion.

The funds would be deployed primarily in Europe and North America and selectively in Asia and Latin America for buyouts, corporate carve-outs, public-to-private and growth equity transactions. The PE firm focuses its investments in five core sectors, including business and financial services, healthcare, industrial, retail, consumer and leisure, and technology, media and telecom.

Faering Capital Invests in Go Digit General Insurance, India’s Fastest Growing New Age Insurance Company

As published in Livemint on January 22, 2020:

Faering, A91 lead funding round in insurance distributor Go Digit

The firm founded by insurance veteran Kamesh Goyal provides motor, health, and travel insurance, among other products, according to its website. Its partners include Cleartrip, Sterling Holidays and insurance aggregator Policybazaar.

Digit is also backed by Canadian billionaire Prem Watsa’s Fairfax Holdings, which has invested $140 million across rounds.

Before starting Digit, Goyal worked with Germany-based insurer Allianz, heading their strategy, planning and performance management.

Digit, which is expected to earn premium of about $280 million for FY20, is one of the fastest-growing general insurers in the country, the Times of India reported on 10 December 2019.

“From insurance to insurtech, the industry is going through a basic transformation, and Go Digit Insurance is at the cutting edge of this change with their customer-centric approach, prudent underwriting, and use of technology for operational excellence," said Gopal Srinivasan, chairman, TVS Capital Funds.

New age insurers such as Digit and Acko Insurance have seen heavy investor interest as they look to employ different methods of underwriting risk and offer more differentiated products than traditional insurers.

Before starting Digit, Goyal worked with Germany-based insurer Allianz, heading their strategy, planning and performance management.

Digit, which is expected to earn premium of about $280 million for FY20, is one of the fastest-growing general insurers in the country, the Times of India reported on 10 December 2019.

“From insurance to insurtech, the industry is going through a basic transformation, and Go Digit Insurance is at the cutting edge of this change with their customer-centric approach, prudent underwriting, and use of technology for operational excellence," said Gopal Srinivasan, chairman, TVS Capital Funds.

New age insurers such as Digit and Acko Insurance have seen heavy investor interest as they look to employ different methods of underwriting risk and offer more differentiated products than traditional insurers.

However, Digit still acquires its customers mainly offline, while Acko acquires them online.

Acko has raised more than $100 million in equity so far from investors such as former Flipkart co-founder Binny Bansal, SAIF Partners, Accel Partners and Infosys founder Narayana Murthy’s Catamaran Ventures.

Other insurance startups include Turtlemint, which provides a technology platform for insurance agents to sell products, and is backed by investors such as Sequoia Capital and Nexus Venture Partners.

The insurance industry has also benefited from the government’s decision to permit 49% foreign direct investment, which has made the Indian insurance sector lucrative to foreign investors and enabled insurers to secure capital to work on aggressive plans related to expansion and innovation, according to a June 2019 report from consultancy firm PwC. Insurers who have been in business for at least 10 years are allowed to raise capital through initial public offerings (IPOs).

Digitization can reduce around 20–30% of the cost of non-life insurance products and 15–20% of the cost of life insurance, said the PwC report.

Total life insurance premiums in the country have nearly doubled in the past decade, from ₹2.65 trillion in FY10 to ₹5.08 trillion in FY19, according to data from the Insurance Regulation and Development Authority of India, while health insurance premiums rose nearly 5 times in the past decade from ₹8,305 crore FY10 to ₹44,873 crore in FY19.

However, insurance penetration in India still lags behind other countries. Insurance penetration, which is measured as the ratio of insurance premium paid and the gross domestic product of the country, increased from 2.71% in 2001 to 3.69% in 2017 in India, but still lags behind the penetration levels in the rest of the world (6.13%) and emerging Asian economies (5.62%).

According to the PwC report, “for insurers, digitization of sales processes has always been the top priority. Although there has been significant investment and innovation in this area, re-evaluation of post-sales processes is vital for alignment with the needs of digitally advanced customers."

“Online self-service, easy communication channels, acceptance of digital documents, online processes for claims and other requests and flexibility in accessing account are the basic services expected. Further, elimination of paperwork through strategic digitisation of business processes will provide huge relief to customers," it added. Further, personalisation is expected to be the future of insurance. A connected technological architecture can assist in providing a holistic view of customers to executives for better interaction and consolidation of customer information has the potential to drive deep insights into customer behaviour.