LaunchBay Capital, a private equity (PE) firm co-founded by Padmanabh (Paddy) Sinha, a former senior executive at the Indian government-backed National Investment and Infrastructure Fund (NIIF), is setting its sights on India’s lower mid-market segment, which is often overlooked and undercapitalised.
In an interview with DealStreetAsia, Sinha said, “On one hand, established players have scaled up their fund sizes and moved up the curve to larger deal sizes; on the other, there’s a crowded field at the lower end, comprising both venture capital (VC) firms and a long, fragmented PE tail.”
“This has created a gap in between… this is the underserved mid-market we are targeting,” he added.
LaunchBay is currently raising $300-400 million for its debut fund, targeting a mix of foreign and domestic limited partners (LPs). However, Sinha noted that a larger share is expected to come from international sources.
“Domestic institutional capital has historically been relatively shallow in India and has typically anchored only venture funds or smaller PE vehicles targeting the lower end of deal sizes. This is fortunately beginning to change… However, for us, foreign LPs are likely to be the dominant source of institutional capital,” he noted.
LaunchBay plans to invest in growth-stage companies across sectors such as consumer, healthcare, industrials, financials, and technology, with investment cheques in the $25-50 million range – what Sinha calls the “sweet spot”.
In addition to primary funding, the firm is also looking to provide growth and expansion capital to businesses that offer attractive secondary opportunities, as earlier investors seek liquidity.
“Some of the earlier investors in these companies are seeking exits. These secondary deals are often priced at a discount to primary valuations, which themselves have become more sustainable over the last couple of years,” Sinha observed.
Sinha, who has seen several successful cycles of investments and exits in a career spanning over 25 years, has had stints with PE behemoths like Temasek and Tata Capital before joining NIIF in May 2021. He stepped down as the Executive Director and Chief Investment Officer – Private Equity – at the government-backed firm in March this year, to focus on LaunchBay Capital – a firm he co-founded in 2020 but had deferred launching due to the post-COVID environment.
DealStreetAsia had first reported on his plans to set up LaunchBay Capital in 2021.
Edited excerpts:
