India: HDFC chairman’s son Siddharth Parekh forays into private equity with $200m fund

Siddharth Parekh has already invested in start-ups as an angel investor in his personal capacity. Photo: Mint

Siddharth Parekh, the younger son of Deepak Parekh, chairman of India’s largest mortgage lender Housing Development Finance Corp. Ltd (HDFC), has made an entry into the country’s private equity sector with a $200 million fund.

Parekh has launched Paragon Partners with his friend Sumeet Nindrajog. The firm, registered with the capital markets regulator, is expecting its first close of $60 million by December and hopes to raise the entire targetted amount in nine to 12 months. Once a fund achieves first close, it can start making investments.

Siddharth Parekh was an investment principal for over seven years at the Mumbai office of Actis, a UK-based emerging markets PE fund. Before Actis, he worked with the International Finance Corp. based in Washington DC as an investment analyst, focusing on investing in the global manufacturing and services sectors, and as a consultant at the Boston Consulting Group in New York prior to that.

Nindrajog, who has worked at Ares Management at its PE Group in Los Angeles and UBS in the investment banking group, is co-founder and executive director at Mumbai-based Hover Automotive India.

“Our fund, a mix of onshore and offshore, will see commitments from HNIs (high networth individuals) and domestic institutions. After first close, we will start raising funds from foreign investors,” Nindrajog said.

Paragon has veterans such as Deepak Parekh, Harsh Mariwala, chairman of Marico Ltd, and Sunil Mehta, former country head of American International Group Inc. in India on its advisory board.

Paragon will invest in areas of consumer, automobile, infrastructure services and financial services with a ticket size of $10-20 million, said Siddharth Parekh. The fund intends to buy 15-30% stake in each company, Nindrajog said.

Siddharth Parekh has already invested in start-ups as an angel investor in his personal capacity. He has funded start-ups such as Mumbai-based credit advice and planning start-up CreditVidya; another financial technology start-up called IndiaLends; MobieFit Technologies, a developer of health and fitness mobile application; HandyTrain, a smartphone-based training platform, and Seynse Technologies, which focuses on digital financial products.

Deepak Parekh’s elder son Aditya Parekh ventured into private equity in 2009 with Faering Capital, which raised its maiden fund of Rs.800 crore in 2009 and is currently raising a second fund worth Rs.1800 crore.

Sons of businessmen venturing into private equity isn’t new.

Sasha Mirchandani, son of Gulu Mirchandani, chairman and managing director of Mirc Electronics Ltd, the owner of Onida brand, has been in private equity space since 2011 with his firm KAE Capital. Sasha is also a co-founder of Mumbai Angels, a grouping of angel investors.

Amit and Arihant Patni, sons of Gajendra Patni, co-founder of Patni Computer Systems Ltd, had launched Nirvana Venture Advisors in 2011. They are currently raising their second venture capital fund worth $100 million.

The environment for fund-raising has improved in India.

“Two-three years ago, when fund-raisings by GPs (general partners or fund managers) were launched, the climate was not good enough, causing the fundraising to get stuck. However, the economy looks better today which will help the new GPs to gain a lot of attention, making fund-raising easier,” said Sunit Mehra, managing partner, Hunt Partners, a global executive search firm.

India-focused funds grew by more than 110% in 2014 and several PE firms were planning or had announced their next round of fund-raising, according to a May report by Bain and Co., a consultancy firm.

As many as 212 funds worth $8.3 billion have been raised in India since 2012, while 2014 was the most active year with $2.9 billion raised through 63 funds, according to VCCEdge, an investments tracker.

In 2015, several funds were launched by PE veterans after quitting their highly-paid jobs. In March, Carlyle Group managing director Mahesh Parasuraman quit and joined hands with Sunil Vasudevan, formerly a partner of India Value Fund Advisors, to launch a growth capital investment firm.

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This article was first published on Livemint.com