Indian private equity (PE) firm Paragon Partners, which recently raised over $80 million for its second fund, is set to clock a few deals in the country’s lower mid-market segment that is currently underpenetrated in terms of investments.

Founded by Siddharth Parekh, the younger son of Deepak Parekh, former chairman of India’s largest mortgage lender HDFC; and serial entrepreneur Sumeet Nindrajog, Paragon is betting big on sectors such as consumer, financial services, manufacturing, and healthcare from the investment vehicle.

“While we don’t invest in technology businesses, we look for opportunities where technology can be used as an enabler and drive significant efficiencies,” said Parekh, highlighting the firm’s strategy of picking up significant minority stakes in MSMEs that have proven their product market fit.

“The Indian VC/PE market has been growing steadily over the last decade… driven by a surge in entrepreneurship in India,” he said. “Today, most founders we meet have experience in working at matured organisations before starting up, and that experience combined with their drive, passion, and track record gives investors the confidence before investing.”

Paragon is currently in talks with several companies in the healthcare and manufacturing sectors. “We are seeking to invest in slightly more matured businesses that can provide an opportunity for liquidity in the next 3-4 years,” said Parekh.

The firm has already made a few investments from the fund, such as in omnichannel meat and seafood brand TenderCuts, logistics startup GoBOLT, and personal care brand mCaffeine, among others.

Edited excerpts from the interview: