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Rewind 2014: Top 5 PE & VC funds raised

07 January, 2015

The improving sentiments about the economy after the new government took over made a perceptible change in the outlook of foreign limited partners (LPs) about backing India-focused funds. Although two of the five biggest funds were raised before the BJP-led coalition won the general elections, the results added to the positive view on India.

Indeed, several funds hit fundraising milestones especially in the realty space and general partners (GPs), who manage the funds, say LPs are now more open to looking at India.

This marks a change from the past 2-3 years where offshore investors were looking at Indonesia among other markets due to lack of good exits besides poor business outlook in the country due to lack of fresh reforms.

Besides these funds, there were some large platform transactions through a managed account structure which created much more money power available to be deployed across real estate and infrastructure sectors.

Here is a look at the top five funds raised in 2014:

IDFC Alternatives’ India Infrastructure Fund II: $900 million

The PE arm of IDFC Ltd raised $900 million as a final close of its second infrastructure fund. It had an initial target of rupee equivalent of $1 billion when launched but said the fund was fully subscribed and closed after hitting upper end of the target, accounting for the change in forex over time. The fund includes a commitment of about $90 million from parent IDFC, besides $810 million from investors from North America, Europe and the Middle East. It is a successor to IDFC Alternatives’ debut infrastructure fund – India Infrastructure Fund – which closed in June 2009 with a fund size of $927 million against its target size of $1.25 billion, from Indian and international institutional investors. Although the dollar size of the new fund is smaller in comparison with its predecessor, it packs a larger corpus in local currency and would therefore have more money to invest. UK-based 3i had also raised a much bigger $1.2 billion India infra fund way back in 2008. However, in rupee terms that fund too had a smaller corpus, making IIF II the single biggest infra investment corpus to date. Bulk of the amount was raised in 2013 itself when the fund made a first close at $644 million. Infrastructure has gained traction as the government came up with policies to boost the sector and cleared several infrastructure projects.

AION Capital’s special situations fund: $825 million

AION Capital Partners, a joint venture between Apollo Global Management and ICICI Venture, made a final close of its maiden special situations India-dedicated fund at $825 million in April this year. This is the largest India-dedicated private equity fund raised to date, excluding infra funds raised by 3i and IDFC. The fund had an initial target of $750 million but last minute commitments pushed its size further up. The firm did its debut deal last year when it invested in public listed Jyoti Structures and has struck two more transactions thereafter. AION was launched in 2012 and looks at investing in special situations, including financial restructuring, recapitalisations, leveraged buyouts and promoter financing. The biggest India-focused sector agnostic fund ever was raised by ChrysCapital. The PE firm had received commitment for a record $1.25 billion for its fifth fund in 2007, at the peak of the previous bull-run in the market and fast paced growth in the economy. But in 2010, ChrysCap slashed the size of that fund to $950 million. WestBridge Capital currently has $825 million in its evergreen fund having put more money into the fund last year.

Sequoia Capital India IV: $530 million

One of the most active venture capital firms in India, Sequoia Capital raised $530 million in May this year for its fourth India-dedicated fund. With this fund, the firm’s total commitments to India reached approximately $2 billion. The new fund’s mandate also includes investment opportunities in Southeast Asia and recently it participated in the funding round of Indonesian e-com marketplace Tokopedia along with SoftBank. The new fund will focus on investments in the technology, consumer and health-care sectors, with special focus on mobile, online payments, big data, SaaS (software-as-a-service), cloud computing, enterprise software and medical and lifestyle related healthcare startups. Sequoia has been active in India for the past decade investing in companies like Capillary, Druva, Just Dial, Micromax, Mu Sigma, Pine Labs, Prataap Snacks, Quickheal, Stovekraft, UnitedLex, Vasan, Vini Cosmetics, Via and Zomato among others.

Kotak’s offshore realty fund: $400 million

Kotak Investment Advisors, the alternative assets arm of Kotak Mahindra Bank, closed its second offshore fund at $400 million in April this year. The fund received huge interest from large sovereign wealth funds along with pension funds. It received commitment of $200 million from Abu Dhabi Investment Authority to mark the first close of this offshore fund in July last year. Its previous offshore fund raised around $265 million in November 2007. With this fund raise, the total corpus of Kotak’s realty funds touched around $1 billion and total assets under management are around $1.3 billion. The realty fund planned to focus on residential projects in metro cities.

Everstone Capital Partners III: $302 million

Private equity firm Everstone Capital has got commitment for $301.5 million in its first close of its new fund Everstone Capital Partners III. The fund has roped in around 17 investors for its third fund with IFC, investment arm of the World Bank, commiting up to $50 million to the fund. Everstone is looking to raise $650 million through the new fund with an upper limit of $700 million. The new fund will invest in equity and equity-linked instruments of companies that have significant operations in the Indian sub-continent and cater to or benefit from Indian domestic consumption and infrastructure development expenditures across various sectors. This is Everstone’s largest targeted fund raise. The first fund Indivision India Partners raised $425 million and Everstone Capital Partners II raised $580 million.


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Rewind 2014: Top 5 PE & VC funds raised

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