India Venture set to launch R500-cr healthcare fund

Written by Shruti Ambavat | Mumbai | Updated: May 30 2011, 04:26am hrs
India Venture Advisors, founded by industrialist Ajay Piramal and former State Bank of India (SBI) chairman AK Purwar to focus on healthcare and life sciences segment, is set to launch yet another healthcare-focused fund by September. It plans to raise R500 crore via new fund.

Launched in 2007 the firm has a corpus of R900 crore ($200 million). The new fund will also focus on social infrastructure sectors, like education, sources said.

Confirming to FE, the launch of a healthcare-focused fund, Purwar said, The investors in the fund will be domestic, including institutional and high net worth individuals (HNIs). India Venture Advisors has invested $11 million in C&C Construction last year and $18.4 million in Sri Kavery Medical Care (Trichy) in 2009.

Meanwhile, former ICICI Venture honcho Renuka Ramnaths independent private equity firm Multiple Alternate Assets Management, which she launched along with Sudhir Variyar, has raised $625 million up to 2011.

Ajay Relan, who quit Citi Venture in 2008 to launch CX Partners has closed $735 million till 2010. Subbu Subramaniam, who left Baring Private Equity in 2009 to launch MCap Fund Advisors, recently made his first investment by taking 1% stake in FMCG company Jyothy Laboratories for around $5 million (R22.5 crore) through the Emblem FII Fund.

These are but a few of the growing tribe of independent private equity players entering the Indian investment space, driven by the urge for entrepreneurship. From around 10 established players currently, it is estimated there would be twice as many in the next two years. Credibility and track record, the increasing appetite for alternative funding in view of the choppy markets, and an unmet need for small-ticket funding are driving this trend.

Says Dhanraj Bhagat, partner corporate finance services at Grant Thornton, The fact that independent players are able to raise money from limited partners (LPs) shows that LPs are willing to risk their money with credible players with a good past track-record.

Although India attracted PE funds to the tune of R 35,000 crore in CY2010 , according to Assocham data, there still remains a dearth of funds in the small and medium sized investment arena.

Sectors that saw the bulk of investments include energy, banking, financial services and insurance (BFSI) and IT/ITeS. Five years back, large PE firms looked at investments in the range of $10-25 million but now, the size of investment has grown to $50 million. India has less scope for larger, big ticket size deals and more for the small or medium sized ones, Vikram Utamsingh, executive director & head, private equity group, KPMG, said. The list of such players also include Rajesh Khanna, who launched Arka Capital Advisors in 2010 after quitting the top job at Warburg Pincus India. He is now aiming to close a $400-million fund. PR Srinivasan from Citigroup Venture Capital International India launched Exponentia Capital last year and and is targeting a similar closure. Hari Achuthan, formerly at Credit Suisse, launched Achuthan & Co last year with a dream of closing $1,000 million.

The growing trend is a good sign for the industry as it increases competition and quality. More established players feel that setting up fund gives them more freedom to invest, says Utamsingh.

Globally, it has been observed that independent private equity players have done better than institutional managers owned by brands, says Sunil Rohokale, executive director, ASK Investment Holdings. The owner of a fund will persist with it right from when it is raised, to execution, and then its exit.