Investment banking and asset management firm Lazard is setting up a $100 million (Rs 500 crore) India focused fund targeting mid sized firms in the country. The onshore fund will be registered with SEBI as a venture capital trust and Lazard will pick units of the trust through a Mauritius arm.
Lazard has a merchant banking license in India till now, it applied to the FIPB for launching a venture capital fund in the country. "The FIPB filings are just enabling steps. We are still in the process and some way from a closing," a Lazard spokesperson told VCCircle.
Lazard India Growth Fund Trust will acquire large stakes which would stop short of a controlling shareholding in mid-sized Indian firms, as per Lazard's application to the foreign investment promotion board (FIPB), the nodal body which clears foreign investment into India.
The onshore fund has a targeted corpus of Rs 500 crore which is to be sourced from both overseas and domestic investors which would include Indian public sector banks. As the sponsor's contribution, Lazard is bringing in Rs 125 crore to the fund and will form Lazard India Advisors Pvt Ltd as the investment manager of the fund. It will also appoint IL&FS as the trustee to the fund.
The fund will seek investment targets in sectors such as consumer services & organised retail, hospitality & travel, education, food processing, engineering & capital goods, power, logistics, telecom, IT-BPO, healthcare, life sciences & pharma besides other manufacturing firms, though it would steer clear of the real estate sector.
For Lazard, the fund will mark further expansion of activities in India. Its existing subsidiary Lazard India is engaged in non fund based advisory activities for corporate mergers & acquisitions, initial public offers, rights issues etc. Lazard is already operating its merchant banking business in India through Lazard India Pvt Ltd, in which it holds 74.64% stake. Lazard India managing director K Balakrishnan holds 25.07% and the remaining equity is with some other minority investors.
This is the first significant expansion move by a US investment bank in India after the bankruptcy of Lehman Brothers last September. NYSE-listed Lazard reported revenues of $1.68 billion in 2008 with assets under management of $91.1 billion as of December 2008. It closed 2008 with employee strength of 2,434 spread across 39 cities in 24 countries.