Lighthouse powers disruptive start-ups, plans third India fund

Lighthouse Funds has disclosed it has put Rs 50 crore in Exeed and Rs 60 crore in SME lending non-banking finance company Capital Trust.

Deviating from investing in mostly brand-driven businesses, India-focused private equity firm Lighthouse Funds is now steering towards disruptive start-ups such as a primary education provider Xseed and Uttar Pradesh-based lender Capital Trust.

The firm, which had kept most of its investments from India 2020 Fund II under wraps, has disclosed it has put Rs 50 crore in Exeed and Rs 60 crore in SME lending non-banking finance company Capital Trust.

With these investments, among others, and two more in coming days, Lighthouse Funds hopes to complete investing its India 2020 Fund II which had closed at $135 million. "Xseed Education is an amazing start-up that has been transforming primary education, providing world-class teaching to a million kids for Rs 1,000 a year. The initiative is profound and phenomenal, scalable and can be replicated anywhere in the world," Sean said on the sidelines of CII-sponsored conference on healthcare funding.

"We have just invested in Capital Trust that funds SMEs, giving loans between Rs 1-5 lakh in Uttar Pradesh," he said.

The investment, made through Lighthouse Emerging India Investors Ltd, has given Lighthouse a 24.41% stake in Capital Trust, which also attracted relatively minor investments from Seven Hill Capital and Emkay FinCap, with each picking up 1.08% each. But it's the education start-up that Sean is more excited about.

"It's not about text book or the school but making sure the students have the best teachers. It's all about scaling teachers' training providing support and materials," he said expressing hope that this disruptive innovator deserves a Nobel Peace Prize.

These two investments are sort of deviation for Lighthouse which has so far been investing mostly in brand-driven businesses, be it Cera Sanitaryware, Bikaji or Suraksha diagnostics or Kama Ayurveda. "We mostly invest in brands, which consumers can be aware of, even if it's a diagnostic service like Suraksha," he said.

As the process of investing its second fund draws to a close, plans are on for the next installment. Lighthouse Advisors co-founder and managing director Sean Sovak told dna that plans are in an advance stage to launch the third fund.

"We had raised $135 million under our India 2020 Fund II. We have a couple of investments to make, maybe, two more and we would soon be starting to raise a new fund also."

(As published in DNA India on Mon, 20 Jun 2016)