Former Temasek India head Manish Kejriwal’s Kedaara Capital Advisors LLP is looking to make the first close of its maiden fund at $200 million with commitments from anchor investors, including its partner CD&R, an international private equity investor.
The fund is targeting a total of $500 million and expects to make the final close in the current financial year. For the first close, Kedaara is in the process of sewing up commitments from 3-4 anchor investors in the next one month, two people with direct knowledge of the fundraising said.
“The fund has got a very good response in a market where other big funds are struggling to raise money. It has also seen marquee LPs investing,” one of the persons said on condition of anonymity.
A detailed e-mail query sent to Kejriwal did not elicit any response.
Kejriwal, along with General Atlantic India’s former managing director Sunish Sharma, set up Kedaara in October last year to invest in carve-outs or spin-offs of large businesses and conglomerates. The firm has partnered with Clayton, Dubilier and Rice (CD&R) to launch the fund in India. Investors in CD&R include endowments/foundations, corporate pension funds, public pension funds, insurance companies and financial institutions, among others. Globally, CD&R manages more than $16 billion and has currently invested in 19 companies.
The fundraising gains significance at a time when more than 50 India-based private equity firms are looking to raise money for their maiden funds or follow-up funds, adding up to $13 billion. According to data from VCCEdge, the data research platform of VCCircle, a total of 14 funds have raised $975.92 million this calendar year. In 2011, $3.322 billion was raised by 25 India-based funds and in 2010, 22 funds raised $2.527 billion.
The market remains challenging for both new and existing general partners (GPs) as limited partners (LPs) are becoming increasingly cautious about making new commitments in India. Consequently, it has become difficult to sell the India story easily. As a result, other funds are also scaling back fund targets.
“This time around, we really had to make efforts and hard-sell the India story to the LPs and other investors. Raising money is going to be really difficult, given the poor return on investments that India has provided so far,” the chief investment officer of a venture capital and private equity firm told VCCircle. However, he did not want to be identified as he is in the process of raising his third fund.
Some of the first-time fund managers on the prowl to raise money are Subbu Subramanian, the former partner at Baring Private Equity, who set up MCap Fund Advisors; PR Srinivasan, the ex-head of Citi Venture Capital International, who set up Exponentia Capital, and Jayanta Banerjee, formerly with ICICI Venture, who started the PE firm Pravi Capital.