Ample avenues for growth in Chennai’s Private Equity market

The group has raised $300 million to boost its manufacturing business in multiple locations. Chennai has even overtaken Bengaluru, considered a hub for PE deals in the south, by inking 238 deals compared to the 45 deals struck by businesses in the Garden City.

Venture Intelligence, which provides data and analysis on private company financials, transactions (PE, venture capital and M&A) and their valuations in India conducted this study. Arun Natarajan, Founder-CEO of the firm speaks about the PE scene in the city. 

The city doesn’t have as many local investors (angel and VC) as peers in Mumbai and Bengaluru. Neither are there too many successful role models in the B2C segment – companies that have scaled as rapidly as Flipkart, Paytm, etc. B2B is a wholly different story. 

Thanks to the pioneering efforts of Zoho and companies created by former Zoho employees (Freshdesk, Chargebee, etc.), Chennai is considered the de facto SaaS (software as a service) capital of India. The success of these companies is creating a virtuous cycle, which is helping newer entrepreneurs to take the plunge with more confidence and aim higher. 

The Shriram Group - especially its financial services businesses - has been a darling of PE funds. The diversified player has given them several successful exits. Several other leading business groups be it TVS Logistics or Sanmar Chemicals, among others have also tapped PE capital. 

Businesses that are keen on being funded: 

Across sectors - from chemicals to e-commerce - entrepreneurs who are growth-oriented and do not mind diluting equity to scale faster are tapping this form of capital.