PE funds feel slowdown, rupee pinch

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Tata Capital Growth Fund has changed tracks and reduced its planned fund size to slightly over $350 mn compared to the $400 mn target set at the time of the launch. Tata Capital Growth Fund has changed tracks and reduced its planned fund size to slightly over $350 mn compared to the $400 mn target set at the time of the launch.
SummaryBetween Jan 2010 and Sept 2013, 125 India-dedicated PE funds went on road to raise $19 bn cumulatively.

The lack of exits with good returns, depreciation of the rupee and a decline in growth rates have left a number of private equity (PE) funds in the lurch, with many firms unable to close funds since 2010.

Between January 2010 and September 2013, 125 India-dedicated PE funds went on road to raise approximately $19 billion cumulatively, as per data provided by VCCEdge, the financial research platform of VCCircle.com. However, at last count, only 60 India-dedicated PE funds had managed to raise a total of $6.2 billion over the period.

Moreover, the top five funds launched in 2010 are either still on the road to complete fund raising or have cut down on the originally planned fund size.

Among these, ICICI Venture's Indian Infrastructure Advantage Fund has been on the road since 2010 with an initial target of $750 million. As per sources, the fund has so far managed to raise $270 million and is still expecting more commitments from its limited partners (LPs).

Top Indian PE funds

In the meantime, Enam Holdings' PE investment arm, which had attempted an external fund raise in 2010 with a target of $750 million, shelved its plans within a year, citing fund raising issues and decided to continue as a proprietary fund instead.

Tata Capital Growth Fund also changed tracks and reduced its planned fund size to slightly over $350 million compared to the $400 million target set at the time of the launch. The fund has deployed 35% of the money raised in 2010. “The economic downturn, forex depreciation and limited exit opportunities have made it difficult to raise money. Existing funds are facing difficulty in showing exits,” says Pramod Ahuja, partner at Tata Capital Growth Fund.

Even veteran fund managers are finding it difficult to reach their first close due to the uncertain economic and market environment. Exponentia Capital, run by seasoned fund manager PR Srinivasan, has only managed to raise $60 million for its $400-million targeted fund. Former Axis Private Equity head Alok Gupta, who launched a private equity firm, AlphaInsight Ventures LLP, had to shut shop within a year due to lack of funds. He later joined US-based Gerken Capital Associates as managing director and India head.

Another PE firm, Arka Capital's plans to raise $400 million had to be shelved after a year as it failed to attract investors. The firm was launched by Rajesh Khanna, a former

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