Md.-based Monsoon Capital held a soft close on its Monsoon India Inflection Fund, Monsoon India Inflection Fund II and Cayman Islands-domiciled Monsoon India Inflection Cayman Fund on Jan. 1. The funds, which raised a total of $600 million, will close to existing investors in March with some $700 million.



The Monsoon funds take a private equity slant to investment opportunities, investing in small- to mid-cap companies across a wide range of industries. About one-third of its transactions are structured negotiated deals, including private investments in public equity and minority stake private equity deals where the funds take a 10% to 20% stake in the acquired companies. Two-thirds of their transactions are secondary purchases acquired in the open market or through block trades.

Last year, the funds returned 57%, net of fees, on the strength of its core holdings, according to founder Gautam Prakash. “One modification we made to the investment strategy was the decision in late 2005 to further concentrate in our best holdings," said Prakash. “From Aug. 1 to year-end our largest six portfolios were up an average of 112%, whereas the Indian mid-cap index was up 30% to 35% during the same period."

Prakash declined to name the fund’s specific holdings but said it had exposure to the IT services, consumer electrical goods, medical device manufacturer, consumer finance and real estate development sectors. “We focus not by being top-down sector specific but by being bottom up company specific," he said. “We look at companies with low p/e ratio, high EPS growth rates and good management teams with very scalable business models and a lot of operating leverage.