<article>Almost a year after it made the first close of its maiden $200 million fund, growth capital private equity firm <a href="http://dealstreetasia.com/tag/amicus-capital" target="_blank" rel="noopener">Amicus Capital Partners</a>, recently made its first investment.</article>

Almost a year after it made the first close of its maiden $200 million fund, growth capital private equity firm <a href="http://dealstreetasia.com/tag/amicus-capital" target="_blank" rel="noopener">Amicus Capital Partners</a>, recently made its first investment.
Founded by former <a href="http://dealstreetasia.com/tag/carlyle" target="_blank" rel="noopener">Carlyle India</a> managing director Mahesh Parasuraman and Sunil Theckath Vasudevan, former partner of <a href="http://dealstreetasia.com/tag/india-value-fund" target="_blank" rel="noopener">India Value Fund Advisors</a>, Amicus Capital invested around $9 million in online insurance aggregator <a href="http://dealstreetasia.com/tag/renewbuy" target="_blank" rel="noopener">RenewBuy</a>.
Set up in 2015, Amicus had raised about $86 million as first close of its $200 million fund in December last year, and is aiming at a final close by March end. The Bengaluru-based investment firm is focused on investing in four sectors- financial services, consumer, healthcare and technology. It plans to make investment of around $8-20 million startups with proven business models.
In an interview with DEALSTREETASIA Mahesh Parasuraman, Partner, Amicus Capital talks about the deployment strategy for the fund. Edited excerpts:-
What is the status of your fund?
We did the first close of our fund some time in December last year and it has taken us some time to close our first deal. We are moving towards a final close. We have time till March of next year for us to do it. So we will do it in the first quarter of next year the final close.
Why did it take so much time for you to close your first deal?
The time that we did our first close a few major events, one of which was demonetisation. So, we just wanted to watch the situation. The event itself was unprecedented. We were in fairly advances stages on a couple of deals but we decided to go slow. Second, was GST among other factors.
We are focussed on four sectors- healthcare, consumer, technology and financial services. Two of these were going through some interesting times and we wanted watch what the impact would be on those two sectors. Discretionary spends were coming off as a result of this. We’re quite happy with the outcome as we see it.
We have a reasonable window to deploy the capital, so there is no point for us to rush and deploy capital and then realise that these businesses have been affected. I think we’re in a good space. We are a little boring in our outlook, maybe we’re a dying breed. We like to back entrepreneurs who we know and have tracked and are driven and passionate. It’s a combination of one or two things. Few of the deals fell off because we couldn’t agree on either valuation of business issues. But our pipeline is strong, so you will see announcements from our side as we go along.
Wasn&#8217;t there pressure from LPs to deploy the fund?
Once you do a first close there is always a pressure from LPs to deploy quickly. They are wondering what is happening with two experienced professionals going slow on deployment. But at the end of the day we have a fund to run and we have to do the right things from a long-term perspective. I think we are quite happy with the situation that we’re in. The fact that we have taken so much time to make our first investment should tell you that irrespective of pressure from LPs to deploy capital after the first close. As we’re building a franchise it is important that we do the right thing.
What is the deployment strategy that you have for this fund?
We have a four year period to deploy our capital. I don’t think we will be under any pressure both from a vintage and timing perspective. It&#8217;s important that we pace these over the investment period so that we don’t get caught in one business or valuation cycle. I think we will spread it across this four year period. But at the same time you find very interesting opportunities that you don’t want to miss. It’s very opportunistic in that sense. I think we can safely say that we will do 2-3 deals a year at least each year.
So what is the outlook for the number of deals in the near future?
I think you will see at least one if not two deals by March. We are looking at some interesting deals in the consumer space, in the healthcare space, and we are looking at one more in the financial services space. Things are coming together, the pipeline is very strong.
What is the average size of investments that you are planning on?
Rs 50-125 crore ($8-20 million), and we can go up to $30-35 million along with our investors. Co-investment opportunities with our investors will really add to this.
What are the kind of LPs that you’ve got for your fund?
We cannot name the investors, but it’s a mix of institutional investors and family offices, but the LP base is largely international. There is a very small pool of capital from India, which included enterpreneurs we  have supported in the past have given us some money and some domestic family offices. We are not actively looking to raise money in India. Our domestic capital pool is very tactical as far as the fund is concerned.
Since you are on the road to raise funds, what is the sentiment of the LPs like? Have moves like demonetisation impacted their decision making?
The investor sentiment is positive, but finally India has to deliver as a country. There is no escape from that. As long as we continue to do well we’ll be okay. Over the last couple of years, given that a lot of IPOs have happened and money have gone back to investors, we need to now start doing this on a continuous basis. We have been fortunate that we have a good bunch of investors backing us and we have a good bunch of investors who are doing due diligence on us. And it’s up to us to put our heads down and deliver with strong returns.
You still have the target of raising $200 million for this fund?
The fund target is $150 million with a hard cap of $200 million. What we’ll end up with, we don’t know, but hopefully we should be on track to close it by the end of this financial year (March end).
How do you view the current environment for the private equity space, now that there are more exits coming through?
It’s positive that people are making money and it’s good for the ecosystem. It helps all of us. I’m hoping that this trend continues in the future. As long as the investors are disciplined in the underwriting process, I think we will be able to see good returns. So that discipline is quite important. The cycles of exuberance and then lull will take place. It is important for investors like us to hold our ground in what we do. At the same time, investors have to be ahead of the curve, because business cycles are getting shorter and shorter. So, it is important that investors are able to see trends that are emerging well in advance. This is why I feel it is important for people to specialise in deals and go deep, which is why domain experience helps.
What is your investment strategy for this fund?
We are a classic growth equity fund, what we provide is capital to companies to scale up once the business model is proven, and companies require capital to scale in the four sectors that I talked about. Typical deal sizes are Rs 50-125 crore. Portfolio construct is going to be between 10-12 companies in the fund. The focus is going to be significant minority investments, and ideally we want to be the first institutional investor, though it’s not a must, where we can work with good entrepreneurs and help them build the companies as they scale. That’s really what we look for. The diligence for us is not only on the investor but also on the founders. We want to be like a partner and not only a provider of capital. So, it is important who we partner with.
Within sectors that you have identified like consumer or healthcare, are you primarily focussed on tech-based firms?
No, we’re not doing health-tech or fin-tech etc. Technology now is starting to play an important role in every business. We will make sure that all our portfolio companies invest adequately in technology. We are opportunistic in the way we look at it. We don’t want to narrow down our choices in each of these sectors. In India the sectors are still not deep enough so you really don’t want to have the risk of adverse selection and boxing yourself with a narrow strategy.
Would you also look at PIPE deals?
We have a mandate in our fund but given the way the markets are today I don&#8217;t think we will have any PIPE deals in this fund.
Also Read:
<a class="tinymce-colortext" style="color: #ff0000;" href="https://www.dealstreetasia.com/stories/india-34-84285/" target="_blank" rel="noopener">India: Online insurance platform RenewBuy raises $9m from Amicus Capital</a>
<a class="tinymce-colortext" style="color: #ff0000;" href="https://www.dealstreetasia.com/stories/amicus-capital-raises-rs600-crore-eyes-portfolio-mix-of-10-12-firms-59813/" target="_blank" rel="noopener">India: Amicus Capital raises $90m in first close, eyes portfolio of dozen firms</a>

Amicus had raised about $86 million as first close of its $200 million fund in December last year, and is aiming at a final close by March end.

PE firm Amicus Capital eyes final close of $200m fund by March

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PE firm Amicus Capital eyes final close of $200m fund by March

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