Pragati Equity Advisors, a sector-agnostic private equity firm that is targeting to invest in economically underdeveloped and low-income states of India, has reached the first close of $70 million for its maiden fund with a target of $100 million.
The fund has received commitments of $20 million from International Finance Corporation (IFC) and $50 million from Commonwealth Development Corporation.
Narayanan Shadagopan, managing director of Pragati Equity Advisors, said, “We have raised a large amount of what we were looking to raise for the fund. We have already started looking at deals and we will start deploying the fund soon.”
Pragati India Fund was aiming to raise between $75 million and $100 million to invest in low-income states such as Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh, Chhattisgarh and Orissa. These states are home to some 421 million people who are defined as ‘multi-dimensionally poor,’ according to the Oxford Poverty and Human Development Index.
Incorporated in 2011, Pragati India Fund is led by Shadagopan, who has been an investment banker in New York and London. A sector-agnostic fund, Pragati will primarily invest in areas like healthcare, ancillary infrastructure services, ancillary oil and gas services, manufacturing and education.
The target companies will be at a stage where they require professional management and processes in order to grow. The PE firm, with offices in Delhi and Mauritius, will make investments in the range of $5 million-$15 million.
Thomas S Davenport, Director, IFC-South Asia, said, “This fund will invest in companies with a networth of $10-30 million and we are looking at a lock in period of 5-6 years. We will look at strategic sales for exits later. We will take substantial minority stake like 25-35 per cent in every company that the fund will invest in.”
IFC, one of the most prolific private investors in the region, has bet big money on SME space in India as well as coming in to support SME focused PE funds in the country. The private investment arm of the World Bank is looking to close the current fiscal ending June 2012 with $1 billion investment in India.
Davenport added, “We have already invested $850 million in the region we will invest more by the fiscal year end which is June.”
According to senior executives, IFC expects to close the fund raising process for its $1 billion global fund in the next 3-6 months. Rashad Kaldnay, vice president for global industries, IFC, said, “In next few weeks the anchor investor will be announced and from that fund there is a possibility of deployment of 15-20 per cent in India.”
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