TVS Capital Funds, part of the Rs 16,000-crore TVS group, has roped in Shriram Group to float domestic rupee-based Rs 500-crore growth fund called TVS Shriram Growth Fund. The fund is an India-focused growth equity fund floated with a vision to develop and nurture India’s mid-cap businesses, especially from the emerging cities (tier-II & III cities) into global companies, said Gopal Srinivasan, chairman and managing director of TVS Capital Funds Ltd.

It is registered with the Securities and Exchange Board of India (Sebi) under the venture capital funds regulations. The fund will be managed by TVS Capital Funds itself, an asset management company floated by himself, said Srinivasan. Both TVS Capital and the Shriram Group chipped in Rs 50 crore each into the fund while the remaining amount was raised from banks, FIs, high networth individuals (HNIs) and friends & associates, said Srinivasan.

Addressing a press conference here on Wednesday, he said: “We will act as a trusted partner by providing support in growth, expansion and operational aspects, offer both the group’s decades-old experience and expertise in enhancing the corporate governance, understanding of family business culture and growth prospects, etc. Explaining in detail the objectives of the fund, Suresh Raju, general partner, TVS Capital Funds said the fund will target the investee companies with revenue of Rs 30-250 crore, proven business models that require growth equity capital, investments in sectors with consumer consumption theme, focus on emerging tier-II and tier-III cities and metros, will hold significant minority stake (ranging between 20% and 35%) with a participation in board and will invest anywhere between Rs 30 crore and Rs 40 crore and above in case it requires more.

“Unlike other funds, we don’t look at horse trading nor seek majority stake in the investee company. Our objective is to grow the company with our support to global level,” Raju said adding “we will stay with the company up to a minimum period of four years.” The exit options vary from an IPO to selling the stake to bigger PE or to the original promoters of the company, he added. According to him, the fund will focus on consumer consumption driven sectors such as privatised higher education, health care delivery, mass housing, hospitality, specialty retail, packaged ready-to-eat foods, cold chains, media & entertainment and logistics. “With Shriram group we will bring a proven business culture, infrastructure and a wide network of relationships across several sectors and geographical regions to the next generation entrepreneurs of India,” he said adding “we don’t invest in start-ups.”

The fund will primarily target tier-II and tier-III cities in Tamil Nadu, Andhra Pradesh, Karnataka, Kerala, Maharashtra, Gujarat and NCR. “We expect to fund at least seven to eight companies in the first year,” Srinivasan said. The company will go for another round of fund raising for the same amount next year, he added.