Barings set for fin services splash

Barings Private Equity Partners India (BPEP), managers to a $175 million private equity fund, is set for a financial services splash in the coming months.

The fund manager, which made more than a handful of returns in hawking MphasiS to EDS, is keenly pursuing this sector, which is witnessing a exponential growth in the Indian markets.

Rahul Bhasin, managing partner, BPEP India, said they are keen to either incubate a financial services platform or buy into one.

"Given our lineage of being a financial services firm, we have got expertise in this sector. We also have the bandwidth to put a team in place to tap into this segment," he added.

The company recently hired a financial services veteran Manish Tayal as partner to focus on this vertical. Tayal has over two decades of experience having worked at Citigroup and Yes Bank in various positions including wealth management. BPEP has a nominal exposure to this sector through an investment in a micro-finance firm.

According to information available, the foray into financial services sector in India is backed by the fact that this sector attracted about $3.3 billion across 58 investments in the past 18 months ended June 2007.

According to Venture Intelligence, a research service focussed on private equity and venture capital activity, BFSI has replaced healthcare and lifesciences as the third most attractive industry for PE investment, followed by IT and ITES and manufacturing.

While banks, retail brokerages, NBFCs were among the favourite sectors within BFSI, stock exchanges (both the BSE and NSE) as well as housing finance institution HDFC raised large amounts of capital.

Some of the recent deals include Citi's investment in Anand Rathi and BNP Paribas in Geojit. Many global majors like Nomura and Macquaire are understood to be exploring active options in India.

In addition to the financial services focus, BPEP India is understood to be mulling over options to raise its third fund.

"We are yet to take a fix on what the fund size will be. Our Limited Partners are pushing us to raise our next fund. The challenging part of this private equity business is in how best we can deliver returns to our investors. For example, on a fund size of $175 million, we are expected to deliver a return of $500 million," a source in the company detailed.