Amid a challenging private equity (PE) market, more veterans are joining the fundraising bandwagon. The latest entrant to the party is Varun Bajpai, former SBI Macquarie Infrastructure Fund chief executive. Bajpai’s Violet Arch Capital Advisors, a start-up investment bank, is set to raise a $500-million sector agnostic PE fund.
“We believe India continues to offer several value plays across sectors, which are driven by the fundamental growth and consumption story. A differentiated sector agnostic PE fund is an appropriate vehicle for foreign and domestic capital to tap into such opportunities,” said Bajpai, also the chief executive. Violet Arch Strategic Themes (VAST) fund, a mix of offshore and domestic, will invest in the range of $50-75 million.
Violet Arch started its operations by acquiring Alchemy Shares & Stock Brokers from its promoters, including Rakesh Jhunjhunwala. Recently, it roped in Berenson & Co, a New York-based leading merchant bank, as a strategic investor by selling around seven per cent. It has also tied up with London-based ISM Capital, set up by former Jefferies International chief executive Cliff Siegel. Kolkata-based SREI Group has a significant minority stake in Violet Arch.
Sanju Verma, former executive director of HDFC Securities, has joined Violet Arch as the managing director and chief executive of its securities business. Violet Arch runs investment banking across M&A and PE advisory, besides securities and PE business.
According to a recent report by Bain & Co, 120 PE funds seeking to raise $34 billion in 2011 are on the road. A couple of weeks back, Rajesh Khanna, former India head of Warburg Pincus, shut his shop, Arka Capital, after failing to raise funds. Earlier, Harsha Raghavan, former India head of Candover India, had closed his shop, Steer Capital, opened with former WNS chief Neeraj Bhargava.
On synergies between other businesses and the fund management platform, Bajpai said, “The fact is that the proposed VAST fund benefits from the presence of large in-house investment banking and research teams, and is better placed to see a wider deal sourcing capability as well as market and sector views at any point.”
Since 2010, many PE veterans have been busy with fundraising. However, except a few like Renuka Ramnath and Ajay Relan, many others have not been able to prove their mettle.
Wen Tan, managing director, Squadron Capital, a Hong Kong-based fund, said, “Even though the inflow of capital commitments is limited, there is a disproportionately high number of fundraisers competing for the same pool of capital.” A couple of months back, Tano Capital LLC, founded by Charles E Johnson, former co-president of Franklin Templeton Investments, raised $97 million for the second close of Tano India Private Equity Fund II, which is targeting $150 million.
“There will still be a small subset of Indian fundraisers who will have a relatively easy fundraising. If you have a well-differentiated strategy, a strong historical track record that is relevant to the strategy, and a well-structured and stable team, you have a decent chance of a successful fundraising,” Wen said.
Others in the fundraising fray include Subbu Subramaniam (former partner, Baring Private Equity), who set up MCap Fund Advisors, PR Srinivasan (former head of Citi Venture Capital International), who set up Exponentia Capital, and Jayanta Banerjee (ex-ICICI Venture director), who floated PE firm, Pravi Capital, which got merged with the ASK Group.
