Aditya Birla Private Equity in-talks to raise $500Mn fund

With an expected surge in Indian economy, domestic private equity firms intends to raise fresh funds from domestic and foreign investors. Aditya Birla private equity is expected to raise fresh corpus of $500-million in which Aditya Birla Group’s honcho Kumar Mangalam Birla will invest as an Anchor investor to the tune of 15-20%. According to sources, new fund is expected to be the firm’s largest fund and will be focused on buy-out opportunities in sectors like consumer goods, financial services and infrastructure. 

Aditya Birla Private Equity (PE), part of the $40-billion Aditya Birla Group, intends to raise a $500-million fund from domestic and global investors, said two people aware of the fund’s plans. Discussions with some US investors have already started, they said.
Domestic private equity firms continue to try and capture the turn in sentiment around Indian investments by raising fresh funds, in some cases, their largest till date.
After a lull of two years, fundraising activity from domestic funds picked up last year as investors sought to capture an expected upside in the Indian economy.
According to a May report by Bain & Co., India-focused funds grew by more than 110% in 2014. The report added that several PE firms were planning or had announced their next round of fund-raising.
The new fund will be Aditya Birla PE’s third and largest.
Aditya Birla Capital Advisors Private Limited (ABCAP), part of Aditya Birla Financial Services Group (ABFSG), manages Aditya Birla PE.
The firm currently manages more than Rs.1,180 crore through two funds—the Rs.880-crore Aditya Birla Private Equity-Fund I and the Rs.300-crore Aditya Birla Private Equity-Sunrise Fund.
Kumar Mangalam Birla, chairman of the group, will invest about 15-20% as an anchor investor to the fund, said one of the two people. Both asked not to be identified.
An Aditya Birla PE executive confirmed that the firm is considering raising funds.
“The fundraising is being contemplated. However, it is premature to give specific details,” said D. Muthukumaran, chief executive officer of Aditya Birla PE.
While Aditya Birla’s two existing funds provide growth capital, the new one will look at buyout opportunities, the first person added.
The fund will look at large-ticket size investments in the range of about $50-75 million, while also considering larger buyout transactions with backing from limited partners, added the second person.
The fund will focus on segments such consumer goods, financial services and infrastructure related services, the second person said, although he added that it would, in general, be sector-agnostic in its approach.
Aditya Birla Private Equity- Fund-I has invested in Bombay Stock Exchange (BSE), Credit Analysis & Research Ltd (Care), Coffee Day Resorts Pvt. Ltd, City Union Bank Ltd, Indian Energy Exchange Ltd (IEX) and RBL Bank, among others.
The firm has also participated in a few pre-IPO (initial public offering) funding deals.
It picked up a 2.5% stake in Monte Carlo Fashions Ltd and 1% in Wonderla Holidays Ltd before these companies went public.
Aditya Birla PE is among a handful of domestic firms that are back on the road to raise funds.
On 18 February, Mint reported that IDFC Alternatives Ltd, the private equity (PE) arm of infrastructure financier IDFC Ltd, would launch its fourth PE fund to raise around $400-500 million.
In April, Economic Times reported that India Value Fund Advisors was fast approaching the closure of its $700 million fifth fund, the Indium-V Fund.
After deploying its first fund which was raised in 2010, Renuka Ramnath’s Multiples Alternate Asset Management Pvt. Ltd is also raising a new fund with a corpus of about $600 million, Mint reported last year.
“It is a mix of timing and India sentiment, which is better than in the past. A large number of funds of2008-10 vintage are exhausted and fund managers are looking to raise follow-on funds. There is appetite for India-focused funds provided the returns of the (older) funds are good,” said Mayank Rastogi, Partner (Private Equity) at Ernst & Young, adding that investors would also consider the track record of fund managers before committing fresh funds.
According to data from VCCedge, 212 funds worth $8.3 billion have been raised for investments in India since 2012; 2014 was the most active year with $2.9 billion raised through 63 funds.
India is not the only geography seeing increased interest. According to the Bain & Co. report, funds allocated to the Asia-Pacific region rose 11% in 2014 to $43 billion, even though global fundraising fell 7% to $375 billion (excluding real estate and infrastructure).
(Source: LiveMint)

Aditya Birla Group