Blue Lotus Capital hits final close of $35 million for PIPE fund

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S. Harikrishnan, founder, Blue Lotus Capital.

S. Harikrishnan, founder, Blue Lotus Capital.

Mumbai: Blue Lotus Capital, an asset management company focusing on private investments in public enterprises (PIPE) strategy, has raised $35 million (₹240 crore) for its Blue Lotus Capital Multibagger Fund, a senior company executive said.

The fund had made its first close of ₹110 crore ($15 million) in September 2017. The PIPE fund focuses on investing in listed small and medium enterprises (SME) with a market capitalization of up to ₹5,000 crore. Blue Lotus Capital was founded by S. Harikrishnan, the former managing director of SME-focused private equity fund Avigo Capital.

Blue Lotus Capital has raised the fund entirely from offshore investors, said Harikrishnan, a private equity investment veteran.

“We have raised capital from several institutional investors, fund of funds and a couple of large family offices from the Middle East. Some of the investors in the fund are Trans Atlantic Partners, Safra Sarasin, Vernalis Capital, Tamara Investment Holdings.”

The fund has so far invested in four companies, including water control gates maker Jash Engineering Ltd, skincare chain Kaya Ltd, alloy wheels maker Enkei Wheels (India) Ltd and commercial vehicles maker SML Isuzu Ltd.

Blue Lotus Capital focuses on small- and mid-cap companies with business models designed to capitalize on the aspiring Indian middle class, said Harikrishnan.

“Our investment thesis is that people today in India have access to certain kinds of products. The next step is that they will move from ‘needs’ to ‘wants’, basically, premium products. You are betting on the Indian consumer whose per-capita income is going to grow from $1,600-1,800 levels to $2,600-2,800 in the next four to five years. We are looking for companies that are catering to the aspirational wants of consumers,” he said.

For example, the fund’s investment in Enkei Wheels is a bet on Indian car owners gradually moving to alloy wheels from regular steel wheels. “Today in India you have 20% alloy wheels and 80% steel wheels in passenger cars. Globally, it is the other way round,” said Harikrishnan.

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