India Equity Partners (IEP) is raising its second private equity fund with a target of $500 million and has already received commitments for around $130 million. In the process, it joins a list of India-focused PE firms, either raising their maiden funds or follow-on funds with a bigger corpus.
At present, IEP is investing out of its first fund worth $350 million. It has also been chasing investments in companies engaged in sectors like consumer products, food services, healthcare, education and consumer finance, as well as logistics and utility services sectors.
While the PE firm had raised an initial tranche of $90.05 million last month from a group of 53 investors, it received further commitments for the second fund over the past few weeks, according to an industry source. When contacted by VCCircle, the IEP spokesman declined to comment on the development.
Team, Portfolio Moves & Strategy
Given its recent initiatives, IEP may well focus on its existing strategy and target sectors which may see it striking more control deals in small and midsize consumer and logistics businesses.
The PE firm was founded in 2006 and is led by five managing directors based in Mumbai and New York. They are supported by additional investment professionals, sector-focused platform company CEOs and industry advisors.
The team of top five senior executives include Steven Wisch (former Partner at Goldman Sachs), Sid Khanna (ex-Accenture), Anurag Bhargava (co-founder of IREO who previously ran private equity group of MSD Capital, the private investment firm of Michael Dell & family), Gaurav Mathur (former Principal at JP Morgan Partners) and KK Iyer (former Partner, Accenture).
In addition, the PE firm has four platform company CEOs – Ajit Issac (human resource services), Arvind Nair (food services), Kannan Sitaram (consumer goods) and Abhik Mitra (logistics). Mitra is the latest to join the team. Previously, he was the managing director of the $100 million revenue Indian arm of TNT.
Last month, IEP struck a deal to acquire the domestic road operations of Dutch freight & logistics giant TNT Express in India for an undisclosed sum, in what is believed to be one of the biggest private equity transactions in the Indian logistics business. In December 2010, IEP also acquired a significant minority stake in Gwalior-based Swastik Roadlines Pvt Ltd, a food cargo supply chain service provider. Earlier in 2010, IEP had acquired majority stake in the restaurant chain Sagar Ratna that serves South Indian cuisine, primarily across Delhi-NCR. It had also acquired majority stake in Innovative Foods Ltd, a packaged food company and a strong player in the frozen food segment, operating under its brand Sumeru.
With the TNT Express transaction, all three deals struck by IEP in 2011 happen to be control deals. This shows that mid-stage control deals happen to be a key focus area for the PE firm.
IEP has been following the strategy of taking control stakes or significant minority interests (typically over 20 per cent) in its portfolio companies with the target investment size being $20 million-$50 million, although bolt-on investments for its platform companies can be smaller. It also expects to offer co-investment opportunities to its LPs and other investors for larger deals. With the new fund, this might allow IEP to write bigger cheques.
The latest fund of IEP comes in bang on the sweet spot of similar India-focused funds, recently raised by high profile fund managers. Close to half-a-dozen such funds were raised in the past year or two with a corpus of $450-500 million.
Nalanda Capital, a Singapore-based private equity firm founded by former Warburg Pincus India MD Pulak Prasad, raised its second fund with commitments of $475 million. This came four years after it raised its maiden fund of $400 million in May 2007, to invest in listed companies in India.
Former ICICI Ventures chief Renuka Ramnath also raised around $450 million for her new PE firm Multiples Alternate Asset Management. WestBridge Capital Partners, the investment firm revived in 2011 by four managing directors of Sequoia Capital India, also mopped up $500 million for a new fund focusing on investments in public markets and late-stage private companies. The new fund, called WestBridge Crossover Fund, came less than six months after those four MDs – Sumir Chadha, KP Balaraj, Sandeep Singhal and SK Jain – left Sequoia.
Among others, Kedaara Capital, the new PE firm floated by Manish Kejriwal (former India chief of Singapore’s sovereign wealth fund Temasek) and Sunish Sharma (former managing director of General Atlantic India), is also reportedly raising its maiden fund with a target corpus of around $500 million.