PE fund multiples to raise $1 billion for resurgent India

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0
India-focused funds together raised about $3.1 billion in 2017, according to Preqin data.

Multiples Alternate Asset Management, the private equity fund founded by former ICICI Venture CEO Renuka Ramnath, is set to raise as much as $1billion in what could be one of the largest capital-raising plans by a domestic asset manager.

The programme, which is expected to start in February, will target pension funds, sovereign wealth funds and university endowments in North America, Europe, the Middle East and South East Asia, two people with knowledge of the matter said.

The proposed fund will be equivalent to almost one-third of the capital raised by 29 India-focused private equity and venture capital funds in 2017.

The fund is being launched with appetite for long-term capital after a relative lull of almost a decade. Big-ticket asset owners such as pension and sovereign funds have started putting in money since last year, especially after Moody’s Investors Service upgraded India’s sovereign rating outlook, which lifted sentiment towards one of the fastest-growing economies.

Multiples raised its first fund of $400 million in 2011 and its second fund of $750 million in 2016. It has delivered an average internal rate of return (IRR) of 30% to investors, sources said.

The average net IRR of India-focused funds was 14% over the past 10 years, according to London-based data tracker Preqin, compared with the median net IRR of 11.9% across all Asia-based private equity funds of all vintages.

“Yes, we have already started discussions with our existing limited partners and are looking to start marketing roadshows from Febru-ary. We expect the first close by mid of this year and a final close by December,” said one of the two people.

Founded in 2009 by Ramnath, former managing director and CEO of ICICI Venture, the private equity arm of the country’s biggest private lender, ICICI Bank, Multiples manages close to $1billion assets, its website showed. It counts Canada Pension Plan Investment Board and other North American pension money managers and university endowments as its largest limited partners or investors.

These investors have already committed to the fresh fundraising. Some of the investments by Multiples include Arvind, Cholamandalam Investment & Finance, Indian Energy Exchange and RBL. Last January, the firm sold its 14% stake in India’s largest movie hall chain PVR to rival private equity fund Warburg Pincus for Rs 820 crore, making a return on more than three times on its four-year-old investment, in constant currency terms.

India-focused funds together raised about $3.1 billion in 2017, according to Preqin data. This is more than double the money raised by 18 asset managers in 2016. Last year, former Temasek India head Manish Kejriwal’s Kedaara Capital raised about $750 million for its second fund, while IDFC Alternatives raised $350 million.

PE fundraising slowed soon after the Lehman crisis with asset managers struggling to get out of their investments as valuations were rearranged, said the head of a large US fund in India. “The Moody’s upgrade and related strength seen in the economy and continued strong sentiment are expected to keep the India story intact,” he added.

Source:Economic Times

 

PE exits set to see new record through IPOs this year

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Cross Border Transactions, M&As, Joint Ventures, Economy, Business Updates, Corporate Affairs | 0

With RBL Bank and Aster DM Healthcare planning to raise Rs 1,500 crore and Rs 1,600 crore, respectively, through initial public offerings (IPOs) this year, private equity investors are set to make a record exit using the primary market route.

According to Prime Database, a Delhi-based financial services firm providing research on IPOs, the first six months of the year saw PE investors exit stakes worth Rs 2,993 crore across six IPOs. These include small finance bank Equitas raising Rs 2,176 crore through IPO in April. Twelve PE investors including International Finance Corporation and Sequoia Capital sold stake worth Rs 1,454 crore in the issue, making part or full exit.

The first six months of the year has already seen more PE exits through IPOs than the annual record of Rs 2,346 crore across 12 IPOs in 2015.

“The value of exits is related to the size of the company looking to list and in recent times, we have seen larger companies coming to the market,” said Subhrajit Roy, executive director and head (equity capital markets origination) at Kotak Investment Banking. “Investors are increasingly focusing on post-listing liquidity, which is enhanced by a higher free float. The average deal size has been increasing to adhere to this requirement,” said Roy.

While Ratnakar Bank’s IPO will see PE funds Gaja Capital and Capvent India making part exits, that of DM Healthcare will see India Value Fund and Olympus Capital paring their stake. Another PE-backed company, Varun Beverages, has also planned to raise Rs 1,000 crore through an IPO this year by providing liquidity platform for its PE investors AION Global and Standard Chartered Private Equity. “The PE activity over the past few months was characterised by an increase in buy-outs, the restart of investments in infrastructure projects especially roads, PE-backed IPOs and continued robustness in fund raisinPE exits set to see new record through IPOs this yearg,” said Mayank Rastogi, partner and leader for PE at consulting firm EY.

“Owing to the strong listing performance of PE-invested firms in the past 12 months, a long list of IPOs is being lined up amongst PE-invested companies,” said Rastogi.

PE exits set to see new record through IPOs this year. Increasing PE exits through IPOs is also credited to the performance of secondary markets. Sensex, the benchmark index of the BSE, has risen four per cent to 27,167 this year. Also the average price-to-earnings ratio for 30 Sensex companies is 20.13 now, against five-year average of 17.93. This has given PE-backed companies an opportunity to provide their investors’ exit through the IPO route.

“As the broad secondary markets remain buoyant, we will see more and more PE-backed IPOs where the investor would make only partial exits,” says Pranav Haldea, managing director at Prime Database Group. “PEs want to keep their skin in the game as they expect secondary markets to do better from hereon.”

Source: http://www.business-standard.com/article/specials/pe-exits-set-to-see-new-record-through-ipos-this-year-116070600752_1.html