Reliance Equity Advisors Ltd, the private equity arm of Anil Ambani's Reliance Capital, will soon kick off the overseas leg of fund raising as it plans to mop up between $250 million and $300 million through this route, said sources familiar with the development. Coupled with the domestic tranche, Reliance Equity Advisors could be looking at a final close of around $500 million. The PE firm's offshore tranche comes after it managed to mop up around Rs 1,100 crore (~ $235 million) from domestic investors earlier this year.
Ramesh Venkat, CEO of Reliance Equity Advisors, confirmed the development when contacted by VCCircle. "Around $250-300 million is what we are looking at (from overseas investors) as we already have about $250 million from domestic markets," he said. The final size of the fund could be $500 million including the overseas tranche. Anil Dhirubhai Ambani Group (ADAG) planned to invest Rs 300 crore in the fund.
The fund made its debut investment by taking a stake for Rs 100 crore in Pathways World School in May this year. This will be its first independent fund with external investors. The group had launched Reliance Energy India Power Fund in a joint venture with Singapore state investor Temasek Holdings in 2004.
"The initial feedback from select overseas investors we have spoken to has been encouraging," said Venkat, who added that the fund plans to close a couple of more deals soon. The fund will be a generic, sector agnostic fund and will look at deals in FMCG, healthcare, retail, logistics, media, education and infrastructure ancillaries. But one source added the fund will stay away from sectors where ADAG has a presence like power and telecom.
Several Indian funds have followed the structure of raising money initially from domestic investors to be followed by an overseas fund-raise. ICICI Venture's India Advantage Fund Series 3 raised $350 million from domestic investors in December 2009 before approaching foreign LPs. The PE firm plans to follow a similar strategy for its infrastructure fund.
Renuka Ramnath, who led ICICI Ventures for nearly a decade, also managed to make a first close at $250 million for Multiples from a mix of domestic and overseas investors like Canada Pension Plan Investment Board and CDC Group.
While the fundraising environment remains tough, several Indian fund managers have been able to see traction from overseas LPs. "GPs (fund managers) have managed to strike a conversation with LPs even throughout this slowdown, but it’s just that LPs were not able to make this commitment. As equity markets have stabilized, we are beginning to see the LPs make commitments, as now they have greater visibility in the value of those (exisiting) portfolios," said Jennifer Choi, Director Research, Emerging Markets Private Equity Association, in a recent interview.
Several fund managers who have managed to raise their funds solely from overseas LPs include: Avigo Capital Partners which closed its third fund at $240 million, Ascent India Capital Advisors raised $350 million, Everstone Capital made a first close for Indivision II at $250 million recently. Former Citigroup Venture Capital India head Ajay Relan's CX Partners made a final close of its debut fund in excess of $500 million earlier this year.
Several Indian conglomerates who have forayed into the financial services business have launched PE funds. These include players like Aditya Birla Financial Services, which has closed its first fund at Rs 675 crore from domestic investors. Tata Capital, which has raised Rs 900 crore from domestic investors for its healthcare and growth capital funds, recently tied up with Japan’s Mizuho Securities to tap overseas markets.
