Paragon Partners has received Sebi approval to raise a ₹2,000 crore fund with a green shoe option, though the firm's ideal size is ₹1,200-1,500 crore. According to co-founder and senior partner Siddharth Parekh, this represents the sweet spot where the firm can maintain return discipline while pursuing mid-market opportunities. The Mumbai-based investment firm will begin fundraising in the next few months and expects to complete the process within 12-18 months. The firm has backed consumer brands including Chai Point and mCaffeine, focusing on sectors such as financial services, consumer, healthcare, and manufacturing.
Paragon Partners anticipates 2-3 liquidity events this year with more to follow over the next 12-15 months. As reported by co-founder and senior partner Sumeet Nindrajog, the return of capital from Fund I and early Fund II investments will be the most powerful narrative for Fund III conversations. The firm has historically exited investments through a mix of initial public offerings (IPOs), strategic sales, and secondary sales to larger investors. The first fund invested in Capacit'e Infraprojects, Maini Precision Products, InCred Finance, and Chai Point, while the second fund backed companies such as Saarathi Finance, Niva Bupa, and mCaffeine.
The third fund will target 10-12 investments with ideal portfolio construction of financial services and healthcare comprising 50-60%, manufacturing at 20%, and consumer and other sectors at the balance. According to Parekh, the firm avoids capital expenditure-intensive businesses and focuses on sectors with strong unit economics and cash generation. Paragon typically writes cheques of ₹60-120 crore but ticket sizes for the new fund may increase to ₹100-200 crore with flexibility for larger deals through co-investments. The firm has earmarked 10% of the overall fund for follow-on investments. The firm typically invests in companies with revenues in the range of ₹150-500 crore and places importance on good unit economics, cash flow generation, and strong competitive moats.
Paragon Partners closed its first fund with a ₹760 crore corpus in 2017 and its second fund with ₹650 crore in 2022. The fundraising comes amid a broader revival in private equity activity, with capital raised by VC/growth equity funds doubling year-on-year to about $5.4 billion. The firm typically focuses on sectors such as financial services, consumer, healthcare, and manufacturing, with nearly 65-70% of its deals being proprietary transactions. Nearly 65-70% of its deals are proprietary transactions, enabling disciplined entry valuations. The firm's thesis and evaluation strategy are built on very defensible sectors including financial inclusion, healthcare access, and domestic consumption.
