Venturi Partners claims to have received positive feedback in the early stages of its latest fundraising cycle, which Nicholas Cator, founder of the Singapore-based consumer sector investor, attributes to emerging maturity in India’s exit market.

He identified two key factors: increasingly acquisitive local conglomerates and multinationals in India, particularly as many groups reassess their exposure to China; and robust domestic capital markets. The latter is seen as the key driver of improving distributions to paid-in (DPI) from Indian funds in the past five years.

“In India, because of the depth of its mutual funds, you can IPO at a relatively small market cap, let’s say USD 500m. You can build your book with only local capital, and you can still create a lot of liquidity at a relatively small-scale IPO,” Cator said.

“If I go to Indonesia, however, I generally have to go to USD 1.5bn-USD 2bn market cap because I need foreign institutional investors to anchor my book. So, I need a bigger IPO to get any liquidity.”

Venturi, which has historically deployed about 70% of its capital in India versus 30% in Southeast Asia, claimed visibility on USD 130m worth of commitments for its second fund, which formally launched this week with a target of USD 225m. The mandate remains for growth-stage investments across the two regions.

Fund I closed on USD 180m in 2022, attracting a mix of Asian and European investors, including France’s Peugeot Invest and Ackermans & van Haaren of Belgium. It has invested in seven companies to date. An eighth and final deal is expected to close by June.

Fund II will continue the strategy of targeting retail, education, healthcare, and fast-moving consumer goods (FMCG). It will back 10 companies, tracking themes such as consolidation in various consumer segments as well as disruption through digitalisation and business model innovation. The current pipeline encompasses food, pet food, and elderly care.

Cator said that the challenge in engaging LPs to date has been less about selling the consumer thesis than selling developing Asia in the midst of a global slowdown. This is another area, where India has proven the easier market to promote, especially in terms of the consumer sector outlook.

Cator described India as insulated from US monetary and trade policy, going as far as to say the country might benefit from an aggressive tariff programme in the US. At the same time, he cited expectations for 185m Indians to enter the workforce in the next 25 years, while China and many developed markets experience workforce declines.

“That’s something that’s quite different in our part of the world,” he said. “In Europe or the US, growth is going to come from a mixture of productivity, innovation, and macro factors such as trade talks. Here in Asia, it’s really driven by demographics.”