Rho Fund Investors to debut in India

After a string of global private equity players and venture capital firms marking their presence in India, it is the turn of Fund of Funds (FoF) to actively look for deals here. Fund of Funds are those which invest in venture capital and private equity funds.

Rho Fund Investors, the US-based FoF with $2 billion under management, is understood to be scouting the Indian venture capital market for investments. Rho Fund Investors is a division of Rho Capital Partners, that invests in private equity funds on a global basis, with an emphasis on venture capital and other specialised private equity funds.

This three-decade-old firm has committed around $2.1 billion to over 140 venture capital and specialised growth buyout funds. Rho Capital could not be reached for comments.

This area of FoF is witnessing a lot of action of late in the Indian market. The entry of these funds to India picked up steam after US-based Thomas Weisel Partners set up its direct presence in India in 2006, which was followed by a few other funds. India's own ICICI Bank is also understood to be finalising a plan for a $2 billion FoF.

All these movements are not without reason though. During the last couple of years, there has been a spurt in India-focused venture capital and private equity funds raising anywhere from $100 million to $450 million to invest in Indian companies.

Funds such as Helion Ventures, Matrix Partners, Sequoia are only some of them actively investing in Indian growth-stage companies at a fast clip.

Usually, these venture funds tap into US-based pension funds, University Foundations and Family offices besides global financial institutions to be their investors, termed Limited Partners.

"With Fund of Funds available to be tapped here, it is indeed an encouraging sign for venture funds like us," said an industry player. Roh Fund Investors is presently committing a $600 million fund investment programme.

According to independent research, close to $1 billion was invested through the venture capital route into Indian companies during 2007, almost tripling over 2006.

"There is a tremendous appetite in India for funds as the returns are healthy, at least 20 per cent from these investments," noted an industry analyst.