Lighthouse was started by Sachin Bhartiya, Mukund Krishnaswami and Sean Sovak in 2005 to invest in new India and help next-generation entrepreneurs. 12 years later and after the successful launch of two funds, the company’s trust in consumer-centric business hasn’t fumbled a bit.
Discussing the fund’s investment strategy, Bhartiya shared fund house prefers investing a business that has about 30-40 years of operating cycle as against project-based business, where today’s demand can die tomorrow.
“We try to avoid cyclical business. We look at a business that can compound 20 per cent growth in at least the next 10 years,” he said to Entrepreneur India.
The company’s portfolio includes companies like WOW! Momos, Bikaji, Capital Trust, Kama Ayurveda, Cera, V2Retail, and Stylam. Talking about the house’s portfolio, Bhartiya says they have been very consistent with the kind of companies that it supports.
“In the entire portfolio, each of the companies is secular, demand and consumer-centric business,” he shared with an example V2Retail and the man behind the company Ram Chandra Agarwal.
“He started ahead of time but failed because he was in too much of debt and probably the market was not right. However, he sold the business just in time. Considered as one of the pioneers of value retail, Agarwal, started again from scratch in 2011 and today the company has over 40 stores and is one of the fastest growing and most efficient apparel retailers in the country. These are the companies that we back,” he added.”
Shedding lights on the fund’s exit strategy, the partner said the process is initiated after 5-7 years as Lighthouse is a very long-term and patient investors. Most of their exits will happen mostly through IPOs or through a strategic sale or to a large PE fund.
“With kinds of company we hold, their business is such that we don’t have to worry about the exits,” he touted.
Lighthouse started its first fund, which was USD 100m, in 2007 while the second fund was about 135m. Presently, the company is in the middle of fundraising for its third round. The total size of the fund is anticipated to be USD 200m of which two-thirds have been raised so far.
The 200m fund has received a commitment of $20 million from International Finance Corporation (IFC). The firm is the final process of raising funds and hopefully, will close it in the next few months.
Elaborating on the third round of funding, he revealed that, Lighthouse focuses on business areas like consumer-centric, agrichemicals, building material, financial services and healthcare. The focus of fund the third fund will remain the same.
“We will be targeting transaction between 10-30m,” he tattled.
(As published in entrepreneur.com on Wed, January 10 2018. )