This appears to be a clear sign of the rise of the domestic LP (or limited partners who power VC/PE firms with their investments) class.
ICICI Venture Funds Management Co, the private equity arm of India’s largest private sector lender ICICI Bank, has completed the first close of $250 million (Rs 1,175 crore) for its latest fund, India Advantage Fund Series 3 (IAF 3), led by capital-raising from domestic banks and high networth individuals.
Of the total $250 million, around 60% has come from institutions like banks and insurance companies, and the rest from high networth individuals (HNIs). With the first close formally done, ICICI Venture will now hit the overseas LP circuit to complete the fund-raising, said Jayanta Banerjee, president, private equity at ICICI Venture.
As overseas markets for PE fundraising have frozen, there are more than dozen PE funds looking to raise capital from domestic investors. These include Reliance Private Equity, Renuka Ramnath-floated Multiples, Aditya Birla Private Equity, Milestone Religare Investment Advisors Pvt Ltd, Indiareit, Tata Capital PE, among others. A strong track record and institutional backing from ICICI Bank would have helped ICICI Venture sew up its first close.
IAF 3, launched under ICICI Venture’s new chief Vishakha Mulye, has managed get commitments from domestic investors in a span of four months. The fund has a soft target of $500 million (Rs 2,350 crore) and it could raise another $300 million (Rs 1,408 crore).
The firm plans a second close of around $450-500 million (Rs 2,100-2,350 crore) by end of this fiscal year. ICICI Bank, which is the anchor investor in ICICI Ventures’ funds, will invest 10% of the total corpus.
This will be the first new fund close for the firm after Renuka Ramnath, who headed the fund for nearly a decade, quit earlier this year. The initial success of IAF 3 should instil confidence in the new management, a market observer said.
“There are challenges in international markets, however, the money is available in pockets," ICICI Venture MD & CEO Vishakha Mulye had told VCCircle in an interview last month.
The fund will look at a mix of deals in growth equity and buyout transactions. IAF 3 will look at investment themes like infrastructure derivatives and domestic consumption, said Banerjee.
The new fund follows the $810-million India Advantage Fund Series 2, which was capped at $583 million. The first of the series raised $245 million. ICICI Venture also has a real estate and a mezzanine fund.