Even as corporate groups and financial institutions in India are floating their own private equity funds, the downturn in the global economy has affected their fundraising plans indefinitely. However, by exploring new sources such as domestic institutions and high networth individuals (HNIs), a few PE firms have received commitments while a few others remain optimistic about completing fundraising soon.
Avendus, the Mumbai-based merchant banking firm, and one of the latest entrants into the PE market, is expected to complete raising Rs 1,000-crore private equity fund next year. The PE firm has started talks with domestic sources for the purpose. Early this week, Aditya Birla Private Equity, the PE arm of the Aditya Birla Group, reportedly raised about $100 million out of its targeted $250 million. Reliance Equity Advisors, PE arm of the ADAG Group, is expected to close its first fund of Rs 1,500 crore by the year-end. The firm, which is targeting domestic investors instead of raising overseas capital, is in discussions with State Bank of India, Punjab National Bank, Bank of Baroda, and Canara Bank for the commitment. The investment focus will be on growth capital buy-outs, minority investments and acquisition financing in sectors such as services, retail, logistics, media, infrastructure ancillaries and healthcare, according to reports.
Multiples Alternate Asset Management, the PE fund launched early this year by Renuka Ramnath, former CEO of ICICI Venture, is raising its first private equity fund targeting both domestic and international institutional investors and ultra high networth individuals. The target size is approximately $400 million. Multiples Alternate Asset Management will make sector-agnostic investments in India.
Akansa Capital, the fund launched by former Wipro vice-chairman Vivek Paul with a corpus of $300 million to $400 million early this year, is understood to have signed some seed capital and is hoping for its first closure by the year-end.
Similar to PE counterparts who are raising the funds for the first time, Avendus is also pinning hopes on domestic institutions and HNIs in India.
According to Avendus Private Equity CEO Manoj Thakur, ?We have the expertise to create proprietary transactions and are hopeful of convincing limited partners (LPs) on our strength in deal sourcing, deal execution and value addition. We are focusing on the domestic market for our fundraising initially, and are in talks with financial institutions, NBFCs and HNIs in India.? The firm was looking for controlled transactions in unlisted growth-oriented companies that could be in the lower-end of mid-market companies with Rs 100-200 crore revenues, he added.
Arun Natarajan, managing director & CEO, Venture Intelligence, a research firm focused on PE deals, said, ?With several corporate houses as well as independent general partners going after the same pools of domestic capital, it remains to be seen how many of these would be successful.?
According to a Venture Intelligence study, 11 India-focused funds worth $3,173 million were raised during January-October 2009, while 18 funds worth $3,977 million were raised during the same period last year.
Ajay Garg, MD, Equirus Capital, an investment bank operating in mid-market segment, remains optimistic about the Indian firms? fundraising plans. ?It is a long-term process and not to be concluded in six-months time, but takes a minimum of one-and-half to two years. Hence, it is difficult to predict when the closures take place.?