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Will Galleon’s Move Impact Its India Investments?

22 October, 2009

A handful of Indian firms, which have investments from the Galleon Group, may come under the spotlight with the New York-based Group founder Raj Rajaratnam’s disclosure that he will liquidate his hedge funds. The billionaire founder of Galleon Group has been charged with insider trading last week. 

New York-based Galleon has, reportedly, been approached by unidentified parties interested in buying the company and an undetermined amount of its assets. This could have a bearing on the existing portfolio.

Galleon’s existing and former investments in India includes financial services firm Edelweiss Capital, Pipavav Shipyard, Shriram EPC, Reliance Infratel and Take Solutions among others.

For instance, in Edelweiss Capital (which also has investments from Sequoia and Greater Pacific Capital), Galleon holds 7% stake through two separate funds which is valued at around Rs 267 crore ($56 million). Edelweiss is said to be Galleon’s fourth-largest shareholding after ebay, Apple and Google.

Galleon owns 4.6% (valued at Rs 45 crore or $9.5 million) in Shriram EPC, which counts Bessemer Venture Partners and New Vernon Private Equity among its shareholders. 

Galleon also has indirect investments through its exposure in private equity funds such as New Silk Route (NSR). NSR and Galleon have also co-invested in some firms such as Reliance Infratel.

Besides putting a question mark on how and when the existing investment would be liquidated, the issue also concerns the people working in Galleon. It is not known how many Indians work at the hedge fund house as traders or analysts but the development means a new career course for people like Sanjay Santhanam, managing director and head of risk management at Galleon International.

Before joining Galleon, Santhanam was senior portfolio manager at The Rock Creek Group, an alternative investments group. Incidentally, he also sits on the board of Edelweiss Capital.

Although, Sri Lankan-born Rajaratnam, whose Galleon managed about $3.7 billion in funds, has said he is innocent of all the charges levelled against him as per this , the hedge fund is facing redemption requests. Some existing  investors are Rochdale Investment Management LLC and Colgate University, Notz, Stucki & Cie. Galleon, which managed $7 billion at its peak last year, operates five hedge funds.

Troubled hedge funds that have sold assets to rivals include Citadel Investment Group LLC taking over the energy positions of Amaranth Advisors LLC in 2006 and Chicago-based Citadel acquiring most of the assets of Boston-based Sowood Capital Management that shut shop after losses on corporate bonds and loans.

 


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Will Galleon’s Move Impact Its India Investments?

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