Mumbai: Motilal Oswal Private Equity (MOPE), the private equity arm of Motilal Oswal Group, is launching its next growth equity fund, the company said today.

This will be the fourth fund for the homegrown private equity firm which has been investing in this market since 2007.

The investment strategy for the new Fund, India Business Excellence Fund IV (or IBEF IV), will be in line with the previous funds as MOPE continues its focus on providing crucial growth capital to mid-market Indian companies demonstrating strong long-term sustainable growth potential.

As in the past, the preference would be to invest in first-generation entrepreneurs building businesses with significant product and/or geographic leadership, the company said.

“The PE/VC ecosystem in India has really come of age over the last decade and growth equity capital will continue to play a pivotal role as India moves from a $3 trillion economy to over $10 trillion in the next decade," said Vishal Tulsyan, managing director and CEO of MOPE, adding that despite the Covid-19 situation and restrictions across the country, MOPE has actively made new investments as well as delivered exits to its investors.

In terms of focus sectors, IBEF IV plans to build a diversified portfolio of 10–12 investments across MOPE’s preferred sectors of consumer, financial services, life sciences, and niche manufacturing. The fund may also evaluate and selectively invest in emerging new-age business models with digital/online distribution channels, within its preferred sectors.

The Fund has been set up as an alternate investment fund (AIF Category II) registered with stock market regulator Sebi. MOPE expects to achieve its first close before December 2021 and conclude fundraising within 9-12 months.

MOPE’s first fund, a 2007 vintage, Rs550 crore fund made 13 investments and recently fully exited the fund with an IPO of GR Infraprojects (a leading road EPC company) which was subscribed 100 times, the highest oversubscription in the sector for over a decade. Other exits from Fund 1 include AU Financiers (now, AU Small Finance Bank) and Dixon Technologies, both of which delivered more than 10 times returns. "Overall, Fund 1 made 6x returns and clocked an IRR of ~27% at the gross level in INR terms."

The PE firm’s second fund, raised in 2013, was a Rs1,000 crore fund and made 11 investments, of which one exit is already completed while multiple others are underway.

MOPE raised its third and latest Rs2,300 crore fund in 2018. This fund is already 90% committed across nine investments. Molbio Diagnostics, which the fund invested in at the beginning of 2020, is the country’s largest molecular diagnostics platform and has been at the forefront of Covid testing in India, since the onset of the pandemic. MOPE also invested in Bengaluru-based KreditBee, one of the largest players in the personal loan segment, marking its debut investment in the fintech space.

Overall since its inception in 2006, the private equity firm has made 33 investments and has generated 6 times returns on its 14 exits till date.