Reliance Equity Advisors Ltd, the PE arm of Anil Dhirubhai Ambani Group (ADAG), is raising Rs 1,000 crore in January next year. The fund, which will start investments thereafter, is expected to take its corpus to Rs 1,500 crore in March 2010.
The fund has raised Rs 600 crore from the large domestic financial institutions and another Rs 200 crore in cash from the anchor investor, which is ADAG. Reliance Equity Advisors is in the midst of raising Rs 200 crore from the mid-cap public sector banks before starting investment operations in early 2010.
Reliance Alternatives Investment Fund, which is a six year fund, is also in the midst of mopping up atleast Rs 300-350 crore from retail investors. It has a soft target of Rs 2,000 crore with an option to raise another Rs 1,000 crore. The fund is likely to hit the overseas markets for the mop up once sentiments improve globally.
The fund's initial investments could come in education, logistics and FMCG. Reliance PE hopes to clinch average deal size of Rs 120-150 crore with a clear cut exit roadmap. Being a six year fund, it would start looking at exits from the fourth year onwards.
Several Indian General Partners (PE fund managers) are now looking to raise the initial amount from domestic investors and subsequently hit overseas markets as sentiment is expected to be much better in 2010.
Ramesh Venkat, CEO of Reliance Equity Advisors, told VCCircle in an earlier interview that they may look at tapping the overseas limited partners (LP) after making the first close. "One cannot ignore foreign markets because real size can be achieved only when you get there. Once we see some recovery, we will look at fund raising from there as well," he said.
ICICI Venture, which also raised $350 million from domestic investors recently for its latest fund, also plans to follow a similar strategy.
Private equity is not new to the group which had earlier floated a power fund with Singapore state investor Temasek. Reliance Capital has also been making proprietary investments. The new fund has positioned itself as an independent third party player by laying out clear-cut guidelines (two or more external co-investors with similar terms and a 10% cap on aggregate commitments) on investments into ADAG companies.
Reliance Equity will join the increasing ranks of Indian PE funds tapping the domestic market for funds. Many Indian institutions like ICICI Bank's PE arm ICICI Venture, AV Birla Group, TVS Capital, have managed to raise funds recently taking advantage of their brand name, improving sentiment and increasing awareness among the Indian investors.