Indian private equity firm Lighthouse in talks to raise $400-mn fund

India's Lighthouse Funds is in talks to raise $400 million for a new fund, a senior executive told Reuters, in what will be the biggest fundraising by the private equity firm that is targeting fast-growing consumer brands in the country.

Lighthouse has raised more than $450 million over the years and has invested in Indian companies that include popular online beauty retailer Nykaa and ethnic apparel and home accessories brand Fabindia.

Lighthouse is in talks with potential investors to raise its fourth fund, a partner at the private equity fund, Mukund Krishnaswami, told Reuters in an email.

The latest fund will be Lighthouse's largest so far, after its first $100 million fundraising in 2009, followed by $135 million and $230 million in two funds in 2015 and 2019, respectively.

"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 said, declining to name the investors the fund was in talks with.

A person directly involved in the discussions said the new Lighthouse fund is expected to close later this year.

Some existing investors will increase their exposure in the upcoming fund, while Lighthouse will also tap new investors, added the source, who declined to be named due to the private nature of discussions.

Lighthouse's existing investors include the World Bank's International Finance Corp and the UK government's development finance arm CDC.

The private equity firm operates in the mid-market segment in India where it typically invests between $15 million and $30 million in upcoming consumer brands. Its investments cover sectors such as affordable footwear, snacks, clothes and skincare.

Funds such as Lighthouse are betting big on the consumer space as they target India's fast-growing class of affluent customers, even as the sector faces growing inflationary pressures.