Arjav Capital, backed by several prominent family offices, is in the process of raising a ₹2,500 crore fund—its maiden vehicle—that will target buyout opportunities in the industrial and manufacturing segments, top executives at the investment firm said.
The capital has been raised from domestic family offices and overseas investors such as 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.
“We plan to announce our first close of ₹1,000 crore over the next few months, of which ₹700 crore has already been raised. The overall corpus ( ₹2,500 crore in size), has provisions for co-investments from LPs and also includes a ₹500 crore green shoe option,” Akshaya Prasad, founder and managing partner at the firm, told Mint in an interview.
In his previous role, Prasad headed the India practice of UK-based Greater Pacific Capital and had a stint at , where he oversaw infrastructure investing.
Family-office backing
Anubhav Gupta, the co-founder & managing director at Arjav, added that the firm’s strategy is heavily focused on control-oriented transactions and ownership transition. “It was important for us to have the operating muscle and an investor base that understands how to scale businesses in India. We believe that this thesis resonates most with family offices, as reflected in the profile of our investors in the fund,” he said in the joint interaction.
Prasad and Gupta—a three-time entrepreneur—set up Arjav Capital to establish a playbook for mid-market buyouts in industrials and manufacturing, a theme that is more common globally. The firm also onboarded Apoorv Somani, who previously had stints at Ola, JM Financial and EY, to its core investment team.
Arjav will back sub-segments such as auto and auto components, , building materials, which includes fittings and furnishing, elements of pharma contract manufacturing, and power transmission.
Control strategy
“In India, approximately 90% of the deals are minority, growth-oriented but there are thousands of mid-market family-owned enterprises that are well-run and cash flow positive,” Gupta explained. “Many of these have the potential to become larger enterprises, but they may face some flux in ownership as successive generations in the families often have different motivations and may not want to take over the business. That is the opportunity we want to play in,” he said.
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, Prasad added that co-investments are expected to enable the fund to execute more deals while also allowing the investment firm to expand cheque sizes in select situations.
The fund, which will be deployed over a three- to four-year period, will typically invest in companies built on larger tailwinds of premiumization and urbanization and export competitiveness, with a turnover ranging between ₹300-1,500 crore. These companies will be cash-flow positive, profitable and have sufficient headroom to grow, with strong governance standards.
Succession opportunity
Prasad noted that other instances of ownership transitions are emerging in the country. “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. The amount of the capital focused on such opportunities is limited but the supply of companies coming to the market is large.”
Through such partnerships, Arjav expects to create companies that eventually have a strong management team with solid operational metrics and governance systems. “We hope to build companies that eventually become an attractive proposition for the larger buyout firms, strategics as well as the public markets,” Gupta said, adding that the firm is already conducting due diligence on three transactions.
Arjav is also looking to expand its team across two layers: a core team that will oversee the investments and an operating team, which will comprise industry-specific partners who will assist in executing transactions in a particular sector.
“We will grow to an 8–10-member team. The operating layer is crucial for us as these partners, who are deeply entrenched in the industry will be responsible for providing judgement on the quality of companies and due diligence for deals,” Prasad added.