Everstone Fund II Oversubscribed; To Close At $550M

25 February, 2011

Everstone Capital Partners, an India-focussed investment manager with dedicated private equity and real estate funds, is on track to close its second fund Everstone Capital Partners II at $550 million, sources close to the development told VCCircle. The fund close, which is due on March 7, is currently witnessing huge oversubscriptions from instiutional investors. Despite being oversubscribed, the investment management firm has decided not to alter the hard cap of the fund or raise the fund size.

Everstone Capital Partners II is currently working on accomodating all the investors into the fund by trying to slash their commitments a little to create room for all. This fund close by Everstone will mark one of the largest second-time fund-raising in recent times. The private equity firm, which began its fund raising only in January last year, has taken a very short span of 13 months to close its fund and that too with oversubscriptions.

Everstone Capital Partners raised its first fund at $425 million which was also one of the largest first-time funds raised in that time frame.  Everstone’s close is significant as the fund raising environment is yet to come back to the golden days of pre-2008. Only those funds with excellent exit track records or managers with significant PE experience have been able to raise capital. Some of the recently concluded fund raises include Multiples of Renuka Ramnath (announced a first close of $250 million) and CX Partners of Ajay Relan (final close of $515 million).

Others are Avigo Capital Partners, which closed its third fund at $240 million, Ascent India Capital Advisors, which raised $350 million and Aditya Birla Capital Advisors, which raised over Rs 800 crore.

Though there is some improvemement in the fund raising environment, on-the-ground situation still remains difficult leading to fund size truncation. Against such a backdrop, the successful fundraising of Everstone only shows that the funds who have a good management team, track record, exits and sizeable personal commitment, are able to attract capital.

“Everstone has a great management team with a focussed strategy of private market investing and just had two good exits in their portfolio. Such funds will continue to attract capital from investors,” said an LP, who has committed in the current fund, on conditions of anonymity.

In the current round of fund raise, GPs have made a personal commitment as much as up to $20 million against a personal commitment of $10 million in the last fund, sources add.

Everstone Capital is founded by Sameer Sain and Atul Kapur who were both professionals at Goldman Sachs in their previous stints. Formerly, Sain spent eleven years at Goldman Sachs where he was Managing Director within the Investment Management division and Kapur spent twelve years at Goldman Sachs where he was a Managing Director within the Principal Strategies Group (Goldman Sachs proprietary capital) for three years in Europe.

It has invested in close to a dozen companies from its first fund till now. Some of its portfolio companies include Tikona Digital Networks Pvt Ltd (Alternative Carriers), $30 million into Pan India Food Solutions (Restaurants), $15 million into Percept Ltd,  $27.2 million in Centrum Capital Ltd. (investment banking), $25 million into Interarch Building (Building Products), $25 million into Regen Powertech Pvt Ltd ( heavy electrical equipment) and $12.5 million into Nashik Vintners Pvt. Ltd ( Distillers & Vintners) among others.

In terms of its exits, the fund recently sold its stake in Lilliput KIdswear in a secondary transaction to Bain Capital Advisors India Pvt. Ltd. and TPG Capital Inc.. Its other portfolio company Capital Foods Ltd also got acquired.

The fund, which has about $1.6 billion of assets under managment with 110 employees and five offices, is essentially building its private equity franchise more like an institution in India. It has till now stuck to the role of a classic private equity investing.

In 2008, global funds with Asia as one of their economies raised capital of $44.3 billion, according to data from VCCEdge. Last year, $46.3 billion changed hands in which funds only focusing on India mopped up close to $4.2 billion in 2008 and about $2.9 billion in 2009. The latter months of 2008 and the first quarter of 2009 were rather testy. Early trends indicate that while the fund-raising sentiment may have improved, the environment is still beset with challenges. But, there is a significant improvement from last year when LPs or investors shied away from new investments and were only doing follow-on funding.

There are a host of funds which are currently out on road which include ICICI offshore tranche and infrastructure fund, BTS cleantech fund, BCP Advisors, Blue River Capital, and Subbu Subramaniam’s MCap Advisors among others. Track record, differentiated strategy and LP friendly terms are seen as the crucial factors to succeed in fundraising.


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Everstone Fund II Oversubscribed; To Close At $550M

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