BTS Investment Advisors, a private equity firm focusing on small and medium enterprises (SME), is planning to raise a new fund focused on the clean energy sector in India. The Mumbai-based PE firm, which currently manages two SME-focused funds, is looking to raise $100-120 million for this fund, said K Srinivas, managing partner at BTS in an
interview to VCCircle. Also as the primary markets have revived in India since last year, BTS is also planning a few exits.
BTS plans to launch its clean energy fund in the next one or two quarters. "Given the demand-supply gap for clean energy in India, we feel the focus should be on renewable energy," said Srinivas. The fund would look at proven business models in areas like wind energy, biomass, hydro power and energy efficiency, among others. BTS also plans to look at solar power once the policy and the technology stabilises and skill sets develop in EPC, said Srinivas.
"We want to replicate our skill-sets in the SME space to sunrise industries like clean energy," he added. BTS has started working with some limited partners (LP) and is in final stages of setting up the strategy for this fund.
"We think that the next driver for private equity will be the clean energy space," said Srinivas. Clean energy sector in India has started seeing a lot of interest from PE funds. Some of the largest investments in this sector last year were IDFC Private Equity's acquisition of wind energy assets of BP Energy India Pvt Ltd at an enterprise valuation of $95 million (Rs 463 crore). Another big deal was Global Environment Fund's $46.3 million in Greenko. Several other PE firms are also planning India-focused clean energy funds.
BTS currently manages two SME funds - $22 million Swiss Technology Venture Fund and $75 million BTS India Private Equity Fund. The firm has made 19 investments from the Swiss Technology Fund, out of which it has exited 11 investments at an internal rate of return (IRR) of 22%, said Srinivas. BTS India Private Equity Fund, from which the firm
is currently investing, has made seven investments of which 60% corpus has been exhausted. It also plans to launch another SME focused fund, which will be a successor to BTS India PE Fund, in the next 12 months.
Some of the LPs in the first two funds of BTS include Swiss Government, UK's CDC, Asian Development Bank, among others.
Some of the current investments of BTS are Arch Pharmalabs Ltd, Ocean Sparkle Ltd, Microqual Techno Pvt Ltd, among others. Many private equity funds operating in India are also now eyeing exits given the buoyancy in the capital markets. PE funds were not able make exits in 2008 and 2009 due to fall in valuations. BTS is also lining up its portfolio for public offerings and is negotiating exits. "We are currently negotiating at least 3-4 exits from both Swiss Tec and BTS India," said Srinivas. BTS is eyeing currently looking for deals in areas like pharma and life sciences, infrastructure service providers, logistics and media & entertainment.