They say a good real estate investment is based on the three attributes: location, location and location. Taking the cue, in the world of private equity and venture capital, the three attributes of a successful fund are management, management and management.

So what happens when key people in the management of a PE/VC fund decide to part ways?

Take the case of Baring Private Equity Partners India, which recently lost a partner, N ?Subbu? Subramaniam. He quit after 12 years in the firm allegedly over ?professional differences? with managing partner Rahul Bhasin. Soon after, sources say, there was talk of the firm?s limited partners (LPs) looking to roll back the fund. That hasn?t happened?at least not yet?but the danger is real and more so as this seems to be the worst investment environment since 2001.

The exit of the key people has hit funds such as ICICI Venture (I-Ven) and Tata Capital as well. I-Ven had announced a $1-1.5 billion real estate fund last year. Facing a turmoil following the exodus of senior executives such as Renuka Ramnath and Sudhir Variyar, I-Ven has reportedly reduced the size of the new realty fund to

Rs 1,000 crore.

The company also faced the heat from LPs who decided to pull back the amount committed for I-Ven funds invoking the key-man clause after Renuka Ramnath quit.

Ramnath was replaced by Vishakha Mulye, who was an executive director of ICICI Lombard General Insurance Co, but the flight of top management continued to dog the firm. I-Ven saw the exit of Sudhir Variyar, a senior director, Shweta Jalan, director, and Pradeep Varshney, senior director in the real estate team. Following the wrath from LPs, I-Ven is turning its back on foreign LPs and is learnt to be keen on domestic investors for its future fund-raising.

Rahul Chandra, director, Helion Advisors, says, ?It is true that LPs base their investment decisions largely on individual general partners (GPs). In the event of a GP leaving, it is up to the LPs to decide whether to trigger the key man clause or not.?

The PE arm of Tata Capital is another firm which which received a jolt following the exit of head Shailendra Bhandari, who quit last month. Bhandari left less than a year after joining the firm to take over the reins of ING Vysya Bank as CEO. Tata PE had also appointed Lauris Capital?s Harshawardhan Sabale to co-head its private equity division last year. Sabale, too, left the firm.

According to a senior executive in a PE firm, the Indian market is so large that raising money for new funds by those who quit recently from I-Ven or Baring PE will not be an issue. ?The cases of Bhandari, Subbu and Ramnath are different. Bhandari, who felt comfortable in his previous job as a banker, decided to go back to it, while decision of Subbu and Renuka to quit and set up new funds may be forced by their eagerness to step out from the organisation they have served for many years and work independently.? He adds, ?This is a temporary hitch and may not affect the fund-raising prospects of I-Ven and Tata Capital in a major way.?

The company has taken it on the chin and said it remains fully committed to its strategy and the launch of the company?s funds is well on track.

According to reports, the firm is planning to launch its first fund of $350-500 million focusing on mid-cap firms in the coming months and a $100 million fund for the technology sector to be followed by a healthcare fund.

?It is normal practice among PE companies to identify replacements early enough,? says Chandra of Helion. ?Given that, I doubt if the committed amount will be disturbed much when a GP exits. Sometimes, an element of freshness also comes in when a partner leaves and someone new comes in. May be some new sectors would be actively looked at, and some new ideas will be pursued,? he adds.

Should we say, the acid test of any fund is as much about its management as about strategic thinking.