IL&FS Investment Managers, one of India’s largest PE firms managing assets of $3.2 billion, is looking to raise a new fund dedicated to making PIPE (private investment in public enterprises) investments. IL&FS Investment might be looking to raise around $300 million (Rs 1,360 crore) for this fund, which it will invest in listed companies across the sector.

The PIPE fund will essentially look at investing in companies which are raising monies through fresh/primary issues. But it will also be open to investing in secondary market transactions, according to the recent analyst call held by the firm.

An e-mail query sent to IL&FS Investment CEO Dr Archana Hingorani for more details did not elicit a response. When contacted, a company spokesperson declined to comment.

This new fund comes even as the listed private equity fund manager has started raising its new growth fund Tara India IV, which is targeting $300 million. According to reports, Tara India III has recently closed its last deal, investing $8.9 million in agri-warehousing firm JICS Logistics. Tara India III has raised commitments of $225 million and invested in companies like mobile retailer The Mobile Store, laundry chain Jyothy Fabricare and Ramky Infrastructure Ltd.

The private equity firm has been making a few PIPE investments from its funds such as Leverage India Fund and the Tara series, and these funds have been focusing on deals in privately held companies. One of its latest public investments came when it put in Rs 75 crore in India’s largest rose exporter Karuturi Global Ltd through a fresh issue.

In addition, IL&FS Investment is also raising a rental yield fund in its joint venture with Milestone Capital and a $400 million infrastructure fund in the Middle East.

Raising funds dedicated to investing in the public markets is becoming increasingly popular among private equity firms. In fact, there are several PE firms who focus on investing in the public markets. Also, several private equity professionals have launched their own funds to invest in publicly held companies. Recently, the four managing directors of Sequoia Capital India – Sumir Chadha, KP Balaraj, Sandeep Singhal and SK Jain – left the firm to float a public markets fund under the banner of Westbridge Capital Partners, an entity they were originally part of. Westbridge is raising a fund of over $200 million.

The trend of dedicated PIPE fund in India was started by former Warburg Pincus managing director Pulak Prasad who launched Nalanda Capital in 2006, with a mandate of investing only in listed companies in India. The Singapore-based firm had raised $400 million Nalanda India Fund in 2007.

Avendus Private Equity Investment Advisors Pvt Ltd, the private equity arm of the leading investment bank Avendus Capital, has also raised two funds. It has recently closed its second fund at Rs 200 crore and is targeting a corpus of $100 million (Rs 450 crore) for its third fund.

Other players active in this market are Kotak India Focus Fund, which raised $86 million for its first quasi-private equity fund in 2007. It is currently raising its second fund. Samena Capital, which invests in MENA and South Asian countries like India, also happens to be a private-equity style PIPE fund, active in the country’s capital markets.

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