6 days ago
InCred plans second PE fund of up to ₹1,500 crore, eyes bigger cheques
Mumbai: After closing its maiden private equity fund at ₹575 crore earlier this year, InCred Alternative Investments is preparing to raise a significantly larger second fund of ₹1,000-1,500 crore, a top executive told Mint. The firm plans to increase its average deal size and tap a more institutional pool of investors for this fundraise.
'We will try to inject larger amounts from the second fund onwards and are targeting an average ticket size of ₹140-150 crore across 7-8 companies, up from ₹75-85 crore in the first fund," said Vivek Singla, managing partner at InCred Alternative Investments, told Mint in an interview. The fundraising process will start in the next quarter, though final timelines and fund size will depend on market conditions, he added.
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InCred's second fund will seek capital from both domestic and international investors, with domestic investors expected to contribute about 75% of the corpus. This marks a slight shift in its limited partner (LP) mix. In the first fund, while domestic investors formed the majority, most international investors were non-resident Indians (NRIs). Roughly 80-85% of the maiden fund came from domestic investors, with the rest from non-resident Indians.
So far, InCred has invested in six companies from its first fund: Niva Bupa, Purplle, Manjushree Technopack, Shadowfax, Biryani by Kilo and Celebal Technologies. About 55% of the fund's capital has been deployed, with more deals in the pipeline.
The firm's investment strategy focuses on companies with meaningful scale, strong product-market fit, operational profitability and a clear IPO path within 3-4 years. Target sectors include consumer, technology, enterprise and financial services. InCred also looks for valuation discounts relative to listed peers, Singla said.
'Given that the fund has a six-year duration, there is only a certain segment of companies that we can invest in. We prefer high-growth companies that are likely to have a liquidity event in the near term," he said.
Singla noted that this approach is partly driven by the differing return expectations of domestic and international LPs. Domestic investors generally seek quicker returns, prompting the firm to balance its portfolio between growth and late-stage companies to better manage liquidity expectations. Its sector allocation also reflects a mix of new economy and traditional economy businesses to provide stability, he added.
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The fundraising environment has changed since the pandemic years, with founders placing greater emphasis on building sustainable, profitable businesses. 'In 2021, founders were largely focused on maximizing valuations. After having gone through a deep learning curve, their focus is not just on valuation but creating value," Singla said.
Fundraising momentum has picked up over the past six to eight months, with several private equity and venture capital firms launching new funds, including Kedaara, ChrysCapital, Stellaris Ventures, India Quotient, Sixth Sense, Prime Ventures, Accel, A91 Partners, Cornerstone VC and Bessemer Venture Partners. Others such as Nexus Venture Partners, Lok Capital, Chiratae Ventures, Peak XV Partners, WEH Ventures, Avataar Venture Partners, Blume Ventures and Fireside Ventures are also preparing to raise fresh capital.
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Last year, PE/VC fundraising in India declined to $10.4 billion across 95 funds, down from $15.9 billion across 102 funds in 2023, according to a report by EY India published in January. After peaking at around $17.4 billion across 99 funds in 2022, fundraising has trended lower, though EY maintains that the outlook remains positive into 2025, citing favourable macroeconomic conditions, stable government policies, and an expected correction in public markets that could improve deal volume.
