The PE fund raising activity in India for 2010 was down 30% from the levels of 2009 at $2.4 Bn, while the global PE fundraising was down marginally at $225 Bn for 2010 as compared to $234 Bn for 2009.
Fund Raising Trend
The fund raising trend in India is inline with the Global fund raising activity as the global fund raising also witnessed a dip in the past couple of years, however the Asian fund raising activity witnessed a 20% rise in 2010 after a dip in 2009, it was mainly due to RMB denominated funds in China.
India has been getting close to 1% of the global share of funds for PE, it’s share in India was on the rise till 2009 but it came to 12% in 2010 as India focused PE funds were unable to attract LPs while China, the driver of the Asian fund raising activity was able to raise RMB denominated funds.
Global PE Fund Raising Activity
* Figures in $Bn
Here is the fund raising activity for 2010 and the last two quarters of 2009
|Axiom Asia Private Capital Fund II||950|
|Ascent India Fund III||350|
|Tata Capital Special Situations Fund||160|
|Aditya Birla Capital Advisors||147|
|Elevar Equity Advisors||70|
|Banyan Tree Growth Capital||100|
|CX Partners Fund I||515|
|Multiples Alternate Asset Management||250|
|Avigo SME III||250|
Despite the dip in the PE fund raising activity, funds with a track record of Indian investments have been able to close funds.
There are a number of funds on the road looking to raise funds for investments in India. Many of these funds are being set up by Ex-heads of PE funds or I-banks. Such first timers have found it difficult to raise funds.
Here is a list of PE funds on road for fund raising
|Fund||Size (In $ Mn)||Headed By|
|KV Asia Capital||500||Karam Butalia (former head of StanC PE)|
|Arka Capital||400||Rajesh Khanna(Former MD of Warburg Pincus)|
|Tara India Fund IV||400|
|Canbank Venture Capital Fund||225|
|Ambit Capital||150||Primarily An I-Bank|
|Access india Advantages Fund||150||Nilesh Mehta(Former MP of Aureos Capital)|
|Franchise India Holdings||100||Franchisee and Retail Solutions Provider|
|Headland Capital Partners||85||Formed after a MBO of HSBCs PE biz|
|Redwoods Capital||50||Anuj Nautiyal(BNP Paribas Real Estate Head)|
|SIDBI venture Capital Limited||22|
|Gujarat Infrastructure Fund||1080|
|Asia Healthcare Fund||200||Anand Burman(Former Dabur Group Chairman)|
|Aavishkaar Goodwell India Microfinance Development||100|
Challenges ahead for the PE fund raising
PE Dry Powder in India
There is about $10-$12 Bn of PE funds waiting to be deployed in India. According to data from Preqin in July’10, ICICI Venture, NSR, Macquarie, India Value Fund, Sequoia, IDFC Project Equity, 3i capital,IL&FS, Chrys Capital and Baring PE were sitting on more than $4 Bn of dry powder to be deployed in India.
- 3i Capital is raising a $1.5 Bn fund for investment in Indian companies. It already has a $1.2 Bn 3i India Infrastructure Fund which was closed in 2007. As on 30th Sept 2010, the fund was 42% invested having completed three investments.
- India Value Fund has raised $725 Mn fund in 2009, it is still to be deployed.
- Baring PE India launched a $550 Mn Baring India PE Fund III Ltd in 2008. The fund has so far invested about $75 Mn in 3 companies.
- IDFC Project Equity raised a $927 Bn fund in 2008 for investments in Infrastructure assets. It has so far invested about $ 450 Mn across 12 investments.
PE Investment Trend in India
Average Deal Size for PE Investment in India
|Average Deal Size||31.5||19.64||25.00|
If we consider a PE dry powder of $10 Bn for investment in India and the current average PE deal sizes, the funds are enough for about 250-300 deals.