Aditya Birla Capital Advisors, private equity arm of the $35 billion diversified conglomerate Aditya Birla Group, is set to make the first close on its second fund, which will target emerging sectors in the Indian economy, such as life skills and applied technologies.
The Aditya Birla Private Equity – Sunrise Fund is expected to make its first close of over Rs 200 crore in the next 8-10 days, said market sources familiar with the development. The new fund is also nearing its first investment, which is likely to be in the water management space, said one source.
The second fund comes after the private equity firm mopped up Rs 880 crore for its debut fund, Aditya Birla Private Equity – Fund I, from domestic investors in March, 2010.
Bharat Banka, founding managing director & CEO at Aditya Birla Capital, was not reachable for comments.
The new Sunrise Fund is looking to raise Rs 350 crore from domestic investors, which include institutional investors and high networth individuals (HNIs). Aditya Birla Financial Services Pvt Ltd, the fund’s sponsor, is also investing up to 10 per cent of the final corpus. It can be looking at a final close, six to eight weeks after the first close.
The new fund will be investing in companies in early cycles of growth and operating across sunrise industries, which are witnessing over 20 per cent compound annual growth rate (CAGR). The Sunrise Fund is expected to focus mainly on four baskets – lifestyle (wellness, processed foods), life care (specialty care & devices, R&D), life skills (education delivery, learning solutions) and applied technologies (cleantech, mobile VAS).
While it will back companies in early stages, those entities must have a track record of three-four years and should be “beyond the risky stages in execution and planning,” said this source. This will mean revenue-generating companies, which are profitable or nearing break-even.
The Sunrise Fund will look at deal sizes, typically between Rs 25 crore and Rs 50 crore, for minority stakes. Aditya Birla Capital’s first fund, which is more into later-stage private equity transactions, usually invests more than Rs 60 crore.
Aditya Birla Capital has currently invested around 30 per cent of the corpus of its first fund in four companies. Its most recent investment was Rs 62.5 crore in GEI Industrial Systems Ltd, a manufacturer of air-cooled heat exchangers and condensers.
Other investments include CARE, India’s second largest credit analysis and research institution; Anupam Industries, a manufacturer of material handling equipment and the Bombay Stock Exchange.
Aditya Birla Capital had also beefed up its team earlier this year, appointing Milestone Religare’s Amitvikram Sharma as an investment director and former founding MD of NCDEX, P.H. Ravikumar, as an independent director to its board.