Arjav Capital is raising ₹2,500 crore for its maiden fund to pursue control-oriented buyouts in mid-market industrial and manufacturing firms, betting on ownership transitions at family-run businesses. According to reports from Mint, the capital has been raised from domestic family offices and overseas investors including Sanjay Nayar (ex-KKR), Johannes Huth (ex-KKR), Akhil Gupta (ex-Bharti Enterprises), Yogesh Mahansaria (Mahansaria Tyres), Nilesh Ved (Apparel Group), Angad Banga (Caravel Group), Paras Chandaria (UST Global) and DIG Investment, a Sweden-based multi-family investment office. As reported by Mint, Akshaya Prasad, founder and managing partner, stated that the firm plans to announce its first close of ₹1,000 crore over the next few months, of which ₹700 crore has already been raised. The overall corpus includes provisions for co-investments from LPs and also includes a ₹500 crore green shoe option.
The fund will target sub-segments including auto and auto components, packaging, building materials (including fittings and furnishing), pharma contract manufacturing, and power transmission companies. According to Mint, Prasad noted that in India, approximately 90% of deals are minority, growth-oriented but there are thousands of mid-market family-owned enterprises that are well-run and cash flow positive. The investment firm expects to raise the next tranche of capital from other family offices and institutional investors, with an average ticket size ranging between ₹400-500 crore. Co-investments are expected to enable the fund to execute more deals while allowing the investment firm to expand cheque sizes in select situations. The fund will be deployed over a three to four-year period and will typically invest in companies with turnover ranging between ₹300-1,500 crore that are cash-flow positive, profitable and have sufficient headroom to grow, with strong governance standards.
The fund will be deployed over a three to four-year period and will typically invest in companies with turnover ranging between ₹300-1,500 crore that are cash-flow positive, profitable and have sufficient headroom to grow, with strong governance standards. As reported by Mint, Prasad noted that there are corporations looking to divest divisions that are in their non-core area of expertise or strategic global firms looking to monetize their position in India. Anubhav Gupta, co-founder and managing director, explained that the firm's strategy is heavily focused on control-oriented transactions and ownership transition, noting that many mid-market family-owned enterprises face ownership flux as successive generations may have different motivations and may not want to take over the business.
Arjav Capital has onboarded Apoorv Somani, who previously had stints at Ola, JM Financial and EY, to its core investment team. According to Mint, the firm plans to grow to an 8-10 member team with two layers: a core team that will oversee investments and an operating team comprising industry-specific partners who will assist in executing transactions. Prasad added that the operating layer is crucial as these partners, who are deeply entrenched in the industry, will be responsible for providing judgement on company quality and due diligence for deals. The firm is already conducting due diligence on three transactions. Gupta emphasized that the operating muscle and investor base understanding how to scale businesses in India is crucial for their thesis, which resonates most with family offices as reflected in their investor profile.
