In a difficult fund raising environment, leading Indian private equity fund India Value Fund Advisors (IVF) has closed at $725 million for its fourth fund. When contacted, a spokesperson for India Value Fund Advisors confirmed the development to VCCircle.com. He refused to
comment further.
In this period of tight liquidity and limited partners (the investors in private equity funds) backing out of commitments, achieving the close of a fund of this magnitude for Indian market is significant.
PEI Asia, a private equity tracker based in Singapore, first reported that IVFA has achieved the close of its fourth fund.
The fund close comes at a time when the markets, although recovering, still remain cautious. The competition for fundraising is also tough. There are 78 India-focused funds on road looking to raise $24 billion, according to data by Prequin, a UK based fund tracker.
There are about 117 pan-Asia private equity funds – which have India as one of its geographies - on road currently targeting to raise an aggregate capital of $59.2 billion.
Some of the major India-focused funds that have managed to close this year are NYLIM Jacob Ballas Capital, Actis and Avigo Capital Partners. IL&FS Investment Managers, who was able to announce final close of both its real estate and growth equity funds, had a mixed response to
its funds.
While its real estate fund raised $895 million, exceeding target of $750 million, its growth equity fund had to close at $225 million, way short of its $400 million target.
Actis, which focuses on emerging markets, raised $2.9 billion, of which around $1 billion is expected to come to India. NYLIM Jacob Ballas raised a $440 million growth fund, while Avigo Capital and CX Partners were able to announce the first close of their funds.
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Buying Controlling Stakes
IVFA, which manages $610 million across its three previous funds, usually buys controlling stakes in the companies it invests in. The firm also has a strategy of appointing business managers on the boards of its portfolio companies in order to have a better control over the
running of these firms.
Some of the earlier companies it invested, turned around and exited are Shringar Cinemas (now called Fame India Ltd), Trinethra Superretail Ltd, and TTK Healthcare TPA Pvt Ltd. Its current portfolio includes 11 companies such as Music Broadcast Pvt Ltd (runs Radio
City), V-Link Travel Solutions Ltd (Meru Cab), and DM Healthcare (Kerala-based hospital chain).
In May this year, the fund picked up more than 51% stake in private container trains operator Innovative B2B Logistic Solutions (Inlogistics) for around Rs 200 crore. It had also recently picked up a controlling stake in the Bangalore-based Atria Convergence Technologies (ACT TV), which launched IPTV services in the city in Februrary this year, for Rs 450 crore.
IVFA has a sector agnostic approach, however, the key sectors that it plans to invest from its fourth fund include pharmaceuticals and healthcare, retailing and supply chain management, outsourced services and media and entertainment.
IVF had closed its third fund at $400 million in January 2007. A 30% of the third fund is yet to be deployed. Prior to this, IVF had closed its second fund in 2005 at $175 million. The firm’s first fund was a $35 million fund which it closed in 2000, when it was established.
The fund was set up as a joint venture between Housing Development Finance Corporation (HDFC), Ambit Corporate Finance and former G E Capital chairman and CEO, Gary Wendt. Delhi-based real estate investor Gaurav Dalmia is also one of the sponsors of IVFA.
(With inputs from Ruchika Sharma)