India’s Multiples PE closes third fund at $680m, says founder Renuka Ramnath

Multiples PE founder Renuka Ramnath.

Renuka Ramnath-led homegrown private equity firm Multiples Alternate Asset Management (Multiples PE) has closed its third fund at $680 million to invest in mid-market companies in India.

Multiples Private Equity Fund III, which started raising capital from limited partners (LPs) or investors in 2018, targeted to raise “$700 – $750 million, a 30% increase from our Fund 2,” Ramnath told DealStreetAsia in an exclusive interview.

The PE giant has so far made two investments from the said fund. The most recent one was the $192 million funding that it co-led with Singapore-based investment firm Temasek in Indian fresh meat and seafood e-tailer Licious, which saw the participation of other investors as well.

Prior to that, Multiples, along with others, backed Zydus Cadila’s animal healthcare business that, according to media reports, was valued at a whopping $333-400 million. Going forward, the firm is set to clock its third investment in a B2B Saas company. However, the name of the company could not be ascertained.

Multiples Private Equity Fund III was earlier slated to close last year. However, “during the pandemic, onsite diligence for new investors was not possible. Some of our existing investors had their strategy changes or challenges which did not allow them to re-up in our third fund,” said Ramnath, who was earlier the MD & CEO of ICICI Ventures.

“We have added some marquee new domestic and global investors which is a big win for Multiples. Our focus is to find good opportunities to deploy this capital and come back for Fund 4 in the next 18 months,” she added.

India’s first sovereign fund, The National Investment and Infrastructure Fund (NIIF), is understood to be one of the major investors in Multiples Private Equity Fund III, while its other LPs are said to be Canada Pension Plan Investment Board (CPPIB) and IFC, a member of the World Bank group. The names, however, could not be independently verified with Ramnath.

Multiples PE was launched in 2009, following the global financial crisis. The firm closed its first fund at $405 million in 2011. Subsequently, it raised its second fund in 2017 with a corpus of $550 million.

Multiples Private Equity Fund III plans to invest in a gamut of sectors such as consumer, technology, pharma and financial services, besides the new-economy areas.

“Even prior to the pandemic, digital opportunities that have the ability to scale to create lasting value was our chosen thesis. The pandemic has accelerated this theme further and we will look for digital opportunities across both B2C and B2B SaaS opportunities,” said Ramnath.

Other PE firms that raised capital in India this year are Tata Capital and TVS Capital, which goes on to signal how investors are betting big on the long-term growth story of the country.

Expand Table

Top PE-VC Fundraisings in India H1 2021

InvestorDateAmount Raised ($M)Stage
Sequoia Capital IndiaMarch195VC - Seed
Alteria CapitalApril180VC - Debt
Tata CapitalJanuary170PE
Trifecta CapitalMarch141VC - Debt
TVS CapitalJanuary121PE
Source: Venture Intelligence

Edited excerpts from an interview with Ramnath:

Multiples recently co-led the $192 million round of seafood e-tailer Licious. Prior to that, a consortium led by the PE firm acquired the animal health business of Zydus Cadila. If sources are to be believed, you are also looking to close your third investment – all from your third fund. Could you take us through the sectors that you are planning to target and the distinct themes that have emerged during the pandemic?

Even prior to the pandemic, digital opportunities that have the ability to scale to create a lasting value were our chosen thesis. The pandemic has accelerated this theme further and we will look for digital opportunities across both B2C and B2B SaaS opportunities.

Our investment in Licious recently is in line with our chosen thesis of Direct-to-Consumer digital opportunities. Our third investment is yet to be announced is a B2B Saas company. Other than this our sector choices include consumer, technology, pharma, and the entire spectrum of financial services.  

Talking about your third fund, it is understood to have made the final close at $680 million, which is a little short of its original target that was over $700 million. Also, the fund was slated to close last year. What took you this long to make the final closing? How difficult was it to raise capital at this time amidst the COVID-19 crisis?

Fund 3 was targeted at $700-750 million, a 30% increase from our Fund 2, which was a $550 million fund. Our current fund size is enabling us to invest in all the strategies that we wish to pursue.

Our funds typically have a portfolio of about 10-12 companies. Given that we have sufficient capital and we have been able to participate in large deals vide consortiums that we have been able to lead, we felt it was wiser and most appropriate to focus on the investment activities.

During the pandemic, onsite diligence for new investors was not possible. Some of our existing investors had their strategy changes or challenges which did not allow them to re-up in our third fund.

As such we have added some marquee new domestic and global investors which is a big win for Multiples. Our focus is to find good opportunities to deploy this capital and come back for Fund 4 in the next 18 months.

Could you take us through your first two funds – the investments and the exits that you have clocked? Have you exhausted them completely?

Our Fund I was fully invested in 11 assets out of which 10 assets have been fully exited. Meanwhile, Fund II is fully invested in 11 assets. We have seen some high-quality exits from this fund as well.

Exits from our investments in companies like Delhivery, and PVR from Fund 1, Encube, part exit of Dream11, India Energy Exchange have been exemplary.  We are investing only from Fund III now.

You mentioned the sectors that you traditionally invest in and the new economy areas that have got a boost from the pandemic. Do you think the ongoing crisis has opened more opportunities for fund managers to clock buyout and distressed deals at attractive valuations? Are you scouting for such transactions?

Multiples believes in sector and product expertise. We spoke about the sectors of our choice. On the product side, we build companies for lasting value with an entrepreneurial mindset. Simultaneously, we are capable of partnering with entrepreneurs to unlock their full potential. Depending on the market condition, Multiples can identify unique opportunities and create a high alpha.

I would highlight our backing a promising management to build Vastu, an affordable housing finance company from the scratch, and backing an outstanding entrepreneur, Mehul Shah to transform Encube (a manufacturer of dermatological products) are examples of the extreme stretch of our product suite.

What is your take on the overall PE/VC industry? Is it out of the woods? Despite all the challenges in the current scenario, in June this year, startups mopped up $3.8 billion from PE-VC investors, more than double the amount raised in May and an 820% leap from the $416 million raised in the same month last year. Your comments, please.

The pandemic has made strong companies emerge stronger. And PE/VC firms always invest in companies with great potential. I believe that across the board, the portfolio for PE/VC will be stronger. So, I am not at all surprised that capital is chasing these companies. This PE/VC industry is most relevant for a broad spectrum of financial solutions for Indian companies. The increase in the amount of money raised and exited will be a secular trend for this industry in the country. This industry is at the centre of the economic growth in India, and we currently attract about $30 billion as PE/VC FDI each year. This comprises nearly 60% of all FDI into the country. Over the next 5 years, we should reach about $50 billion annually.

Talking about challenges, a common complaint about the Indian PE scene has been the lack of exits. With the IPO market riding on a huge high this year, is that perspective likely to change? Are we going to see more exits through the IPO route over the next few months vis-à-vis strategic sales in the country?

Complaint about exits is no longer is true for India. This used to be the case 10 years back. We have many doors to exit including IPO, VC to PE to buy out funds and strategic exits. With all this, exits are no longer an issue for our industry or for good assets.

New-age businesses or unicorns that have a valuation of $1 billion have finally started hitting the bourses. What impact will it have on the overall startup ecosystem? Will it prompt more investors to pump in capital in the burgeoning sector? Will this have an impact on valuations too?

It is very good that the IPO markets have opened up for new-age companies. It will give Indian Investors the ability to acquire such assets. It also paves the way for newer startups to list their company on the Indian bourses. Overall, it is a very positive development.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.