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Private equity (PE) firm Lighthouse Funds is reportedly in talks to raise $400 Mn for a new fund that will target fast-growing consumer brands in the country.

Lighthouse is in talks with potential investors to raise its fourth fund, its founding partner  Mukund Krishnaswami told news agency Reuters. 

“We are seeing good interest, and are hopeful that the strength of the portfolio and performance of Funds II and III are good tailwinds for these discussions,” Krishnaswami was quoted as saying.

However, he refused to name the investors the PE firm is in talks with.

A source familiar with the development told the news agency that the fund is expected to close later this year. The source further added that certain existing investors will increase their exposure in the upcoming fund, while new investors will also join the new fund.

The report also claimed that the prospective fund would be Lighthouse’s largest fundraise in the country.

US-based Lighthouse Funds was incorporated in 2001 and started actively investing in the Indian startup ecosystem in 2008. It raised a $100 Mn fund for investing in India in 2009, and followed it up with another $135 Mn fund in 2015. It closed its last $230 Mn fund in 2019, led largely by World Bank’s International Finance Corp (IFC), UK’s CDC Group and German investment group DEG, among others.

Lighthouse has a slew of big-ticket investments in its portfolio including listed online beauty ecommerce platform Nykaa, ethnic apparel brand FabIndia, footwear brand Aqualite, among others.

The PE firm generally invests in the range of $15 Mn to $30 Mn in upcoming consumer brands across sectors such as clothes, skincare, among others.

The fund will likely look to invest in the consumer space which has been witnessing a boom, of late. Led by an affluent middle-class, increasing internet penetration and a penchant for variety, the industry has grown manifold in the last few years. 

The fundraise comes at a time when major venture capital (VC) firms have been raising funds for investing in the Indian startup ecosystem. 

Bengaluru-based ARTPARK has launched a $100 Mn venture fund to invest in 10-15 early and growth-stage AI and robotics startups. LetsVenture’s cofounder Shanti Mohan also launched a micro VC fund Propell earlier this month that will seek to invest INR 50 Cr in 30 early-stage tech-enabled startups working.

Major VC and PE houses have also closed mega fundraises this year. In July, US-headquartered Lightspeed closed a $500 Mn fund dedicated solely to India and the South-East Asia region. 

In June, Sequoia Capital India raised its largest ever $2.85 Bn fund to invest in startups across India and Southeast Asia. Elevation Capital also raised $670 Mn for its Fund VII in April to focus on early and growth-stage startups in India. 

In total, Indian VC firms have so far raised more than $12.3 Bn in the first half of 2022.