India-Based Private Equity Fund Managers on the Road – March 2012

by Yong Xiang Pua

  • 02 Mar 2012
  • PE

As the fundraising environment gets more competitive, some fund managers have been forced to abandon plans to establish private equity funds. In India, one such fund manager is Arka Capital Advisors, which was led by former Warburg Pincus managing director Rajesh Khanna. Targeting a total of $400mn, the firm launched its maiden vehicle, Arka Capital I, in April 2011; however it abandoned fundraising efforts in December that year.

Nonetheless, there are still Indian fund managers that are actively seeking investor commitments. Preqin is currently tracking 43 India-based fund managers that are raising private equity funds, excluding real estate and infrastructure vehicles. These firms are seeking $7.6bn in aggregate capital through 47 vehicles, of which $3.4bn has already been secured via interim closes. Sixteen vehicles have held an initial close and collectively secured $1.8bn, while another five vehicles raised an aggregate $1.6bn in their second closings.

Tata Capital Private Equity is one of the few firms with more than one vehicle in market, targeting $1.5bn in aggregate capital from investors via four funds. The firm’s Tata Opportunities Fund and Tata Capital Growth Fund are seeking $1bn and $300mn respectively, while Tata Opportunities Fund seeks both buyout and growth opportunities in both domestic and foreign markets and Tata Capital Growth Fund provides growth capital to Indian SMEs. The other two vehicles raised by Tata Capital Private Equity have a more focused mandate. Tata Capital HBM Healthcare Fund I targets domestic healthcare companies, while Tata Capital Special Situations Fund focuses on special situation opportunities.

Another established Indian fund manager, IL & FS Investment Managers, is raising its fourth vehicle in the Tara India Fund series. Tara India Fund IV is an India-focused mid-cap fund that allocates 60% to 80% of capital to growth opportunities and buyout transactions, with plans to invest the remaining capital in expansion/late stage venture deals. IL & FS Investment Managers is looking to garner $300mn in total commitments from investors and has targeted a $100mn initial closing in June 2012.

First-time fund managers are also looking to break into the domestic private equity scene. Led by former managing director of Citigroup Venture Capital International Perumal Srinivasan, Exponentia Capital launched its maiden fund Exponentia Opportunities Fund 1, with a $300mn target in September 2011. The fund invests in first generation entrepreneur-led Indian SMEs that are able to cater to the domestic demand. The vehicle also seeks to own the second largest stake in investee companies. Exponentia Capital is also anticipating a June initial closing for the fund.

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