Fundmen seek bigger private equity deals pie

Indian fund managers expect to displace foreign funds and capture a greater share of the markets for private equity in India, which is expected to double in the next two years.

The majority of the private equity investments is managed by foreign funds with Indian funds managing about 15 per cent of the private equity pool of money, market sources said.

But this is set to change soon, according to Raja Kumar, managing director & CEO of UTI Venture Funds. "While the private equity pool of money was dominated by foreign funds till now, this will see a considerable change going forward as Indian fund managers play a far more active role, typically catering to Indian institutions and high networth investors."

Buoyed by the success of its first fund, ITVUS, UTI Venture Funds has now launched Ascent India Fund "" a Rs 700 crore fund, focussed on private equity deals.

The other big Indian players in the private equity domain include ICICI Venture Fund, IDFC India Development Fund, IL&FS Investment Manager, GW Capital and Kotak SEAF, market sources said but added that the list is not comprehensive.

Added a senior fund manager from another Indian private equity fund, "The increasing private equity fund participation in Indian companies and they looking to play a proactive role in strengthening corporate governance practices, business strategies and financial reporting besides other avenues will help the companies they are investing in, going forward."

The new UTI Venture fund aims at investing in promising young Indian companies by providing them growth capital.

The fund has a distinct mid-market focus, and the key investment theme of Ascent India Fund would be India's outsourcing strength, both in services and manufacturing. The focus industries include IT & convergence technologies, BPO, auto ancillaries, pharma and textiles, Raja said.

UTI Venture Funds has designed a unified vehicle for the Ascent India Fund by combining domestic and international investors.

Many Indian banks, insurance companies and investment institutions have already provided significant commitments to Ascent India Fund.

The fund has also attracted strong demand from International investors, which include hedge funds and fund of funds, a fund manager said.

Carlyle India Advisors Pvt Ltd, part of the Carlyle Group, a global private equity firm with more than $18.4 billion under management, has made investments of more than $55 million till date.

Wayne Tsou, managing director, Carlyle Asia Investment Advisors, said, "As one of the fastest growing economies in the world, India continues to grow in importance to Carlyle and we plan to expand our presence and investment scope there significantly."

M Shankar Narayanan, managing director of Carlyle India Advisors, added: "The Indian market presents a diverse set of investment opportunities for private equity players in emerging businesses such as retail, insurance, media, telecom, etc; knowledge industries such as IT, BPO, pharmaceuticals, biotech, etc; commodity businesses such as petrochemicals, metals, sugar, tea, etc; and strong domestic consumption plays such as automobile, banks, cement etc."

He added that that they have an investment horizon of at least five years.