Amid mounting pressure on private equity firms to return cash to investors rather than rely on paper gains, True North has stepped up exits from its older funds, returning nearly $2 billion to its limited partners (LPs) over the past three years, a senior executive told Mint.
“For the longest time, LPs have invested significantly in India and taken meaningful positions. But they have always been concerned about the exit environment in India,” Satish Chander, partner at True North, told Mint. “So, DPI or distributed to paid-in capital has been a very strong area of focus for us across our firm.”
DPI measures the actual cash returned to investors, or LPs, relative to the capital they have contributed, making it a more meaningful gauge of realized returns than paper gains. The metric has come into sharper focus as domestic and global institutional investors become increasingly selective, trimming exposure to fund managers that have struggled to deliver exits while evaluating commitments to their next funds.
The firm’s latest exit came in May, when it sold its remaining 7% stake in Fedbank Financial Services (FedFina) to Nomura India Equity Fund for ₹385 crore. Over the past two years, True North has also monetized investments in Niva Bupa, Biocon Biologics, Infinity Fincorp Solutions, Zydus Wellness and Home First Finance through , and public market transactions.
“We have executed strategic transactions, sponsor-to-sponsor transactions and public-market exits. We have actively pursued all available exit routes,” said Chander.
More exits are in the pipeline. Last month, Mint reported that True North is looking to sell its over-decade-old stake in Bengaluru-based maternal and child healthcare chain Cloudnine Hospitals as the company prepares to raise $250-300 million in a fresh funding round.
The private equity firm is also awaiting final approval from the Competition Commission of India (CCI) for Warburg Pincus’s acquisition of its stake in pharmaceutical and formulations maker Integrace Health.
True North is also raising its second private credit fund, a vertical which began in 2021 with a sector-agnostic focus. Led by former head of credit at KKR Kapil Singhal, True North’s first private credit fund of ₹2,000 crore has been fully deployed. To be sure, the two verticals while housed under True North, operate separately from each other.
The focus on distributions mirrors a broader trend across India’s industry. In August last year, Mint reported that 360 ONE Asset has returned $2.1 billion to its limited partners through recent exits, citing its chief investment officer and head of VC & PE business Sameer Nath.
True North has raised seven separate investment funds with a combined corpus exceeding $3 billion, including co-investments. It began raising its seventh fund in 2021.
Founded in 1999, private equity firm True North, formerly known as India Value Fund Advisors, invests almost 90% of its corpus in mid-sized profitable businesses in identified focus areas of consumer, financial services, healthcare and , and technology products and services.
Healthcare focus
Chander, who leads investments in the healthcare and life sciences sector for True North, believes the sector will remain healthy, with quality assets continuing to attract both IPO and strategic interest, although investors have become far more selective on pricing. “It is really a two-speed IPO market. Some companies can price successfully, while others face significant resistance on valuation,” he said.
The private equity player is also actively looking to deploy capital from its seventh PE fund. Chander said single speciality healthcare, consumable medical devices, and pharma manufacturing, among other areas is where the firm is looking to deploy within this focus sector.
“Although the China+1 opportunity has taken longer than many expected to materialise, we continue to believe it is a strong long-term driver for Indian pharma manufacturers to gain market share from China. We have been investing behind this theme for almost a decade, well before covid,” said Chander.
“Multispecialty hospitals have become highly consolidated and assets have become expensive. There are very few remaining large assets and the smaller ones are too small to move the needle,” he added. “Medical devices is another area of interest—not equipment businesses but consumable devices that generate recurring demand.”