Kubera Fund to seal five deals by year-end

PRIVATE EQUITY WATCH

Kubera Cross-Border Fund, a close-ended private equity fund listed on the London Stock Exchange's Alternative Investment Market (AIM), will seal four to five deals in India by the year-end.

The average size of the investment will be $20-40 million, one of its founder said. Founded by Kumar Mahadev and Ramanan Raghavendran (ex-McKinsey executives) last year, the fund raised close to $225 million for investment in cross-border companies.

Cross-border companies are those West-based companies that seek to leverage Indian resources for lower cost and talent availability and Indian companies that seek to expand in other global markets through acquisition etc.

"We are looking to invest in Indian companies with a cross-border angle (export-oriented) in sectors such as auto components, pharmaceuticals services, biotech, BPOs and financial services," said Ramanan Raghavendran, managing partner, Kubera Partners.

The fund has invested $20 million in two companies "" Adayana Inc and Kejriwal Stationery. US-based Adayana Inc, an e-learning services company with offshore development operations in Hyderabad, caters to vertical markets including automotive services, defence, food, agriculture and life sciences.

On the other hand, Kejriwal Stationery manufactures and distributes stationery products to customers in the US, European and Indian markets.

The PE fund is likely to raise another $225 million next year by issuing more shares.

"If we look at the contribution of private equity funds to the US GDP, we are just 1 per cent of the total GDP (Private equities have invested so far $10 billion in India), we are nowhere near to the mature economy. Indian companies have been capital starved for a long time and now they are growing and tapping the PE funds," said Abhishek Maheshwari, who will be heading the India operations.

Several private equities opine that the valuations across sectors have gone through the roof. However, Raghvendran defers with this view. "Considering the companies' growth rates valuations are not overblown. It certainly deserves a high multiple," he said.

Recently, Promethean India investment fund, part of the Promethean Private Equity Group, UK, raised $150 million from AIM for investments in Indian listed and unlisted companies.

Mohit Burman of the Dabur group, who manages the India fund, also made its first deal when it acquired 8 per cent stake in Nitco Tiles, a company listed on domestic bourses.