The new platform, called Clarus, has hit a first close of around Rs500 crore for its maiden fund in a month from its launch, said senior executives of the PE firm. It is a category-3, open-ended fund.
“In the last five years, less than 10% of the dollars we have deployed has been on the public side. And as the Indian private equity market has evolved and matured to be growth and buyout focused, we asked ourselves if we want to abandon our capability on the listed side or do we build on it,” said Chryscapital managing partner Kunal Shroff. “If you look at the more mature economies, there are different asset classes; there will be a separate asset class for your AIF equivalent, a separate asset class for venture and for private equity. And hence we thought of creating a separate product that can attract the right kind of investors who like this product and also allow us a different strategy.”
Unlike ChrysCapital’s private equity strategy, this fund will not be focusing on doubling Ebitda, or operating, margin or accelerating revenue growth; it will focus on backing the right sectors and entrepreneurs and supporting the right risk-reward to try and compound wealth, said Shroff.
The new public market fund marks the first time that ChrysCapital, which has raised billions across nine private equity funds, has tapped domestic investors – high-net-worth individuals and family offices – to raise capital.
“Historically, we’ve not raised money domestically. It’s clear to most people that wealth is growing in Asia and in India. This wealth is also getting more sophisticated. In the long term, India is a good market to raise capital from. We also have our foreign capital relationship and we will leverage both sides. But we think it’s important for us to also have some amount of domestic capital, especially as that wealth growth can be meaningful,” said Shroff.
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Apart from the first close of roughly Rs 500 crore, ChrysCapital will allocate Rs 300 crore to the AIF, he said.“Because this is an open-ended fund, there’s no specific target per se. Obviously, the product can scale up, because Indian markets will offer you tremendous opportunities. And we do want to scale up over the long run. Ultimately, it can be many multiples of the current Rs 500 crore,” said Shroff.
ChrysCapital’s public market-focused fund will be sector agnostic and market capitalisation agnostic, said Soumendra Lahiri, ChrysCapital partner and fund manager of Clarus.
This is not the first time Chrys Capital is betting on public markets. In the past it took large positions in several technology heavyweights including Infosys and HCL Technologies, investing from its private markets capital pool.
“Given where we are starting today, our bias will be more towards mid and small caps, because in the last 24 months, we’ve seen underperformance from that part of the market. We will construct a portfolio of maximum 25 stocks. We won’t go below Rs1,200-1,500 crore market cap. We want to invest in companies which have been through cycles and have been in existence for long periods of time,” said Lahiri.
While the fund is sector agnostic, it will have a preference for sectors such as financial services, consumer, healthcare and IT services, which account for 60% of the market and are also sectors of focus for ChrysCapital’s private equity business.
“Another theme that we are looking to back is change in ownership, where a private equity investor or a strategic investor is taking over a company. We have seen several cases of this, where a change in ownership has resulted in strong value creation,” said Lahiri.
Started in 1999 by Ashish Dhawan, ChrysCapital been the most successful homegrown PE fund that has in the past backed Genpact, Axis Bank, Idea Cellular to NSE, Bajaj Auto Finance, Hathway, Wow Skin Care, Mankind Pharma, Intaas Pharma and new economy companies Dream 11, FirstCry, Awfis, XpressBees and ResultsCX.
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