ICICI Venture Funds Management Co. Ltd, the private equity (PE) arm of ICICI Bank Ltd, India’s second biggest lender, will raise $7.5 billion, or more than Rs30,375 crore, over three years to power a massive push into so-called alternative avenues including real estate, hedge and mezzanine funds, apart from its core PE business.
By the end of 2010, the firm expects to have over $10 billion capital under management, a fourfold growth over the existing $2.5 billion, Renuka Ramnath, managing director and CEO of ICICI Venture said. ICICI Venture and Chryscapital Llc. are India’s largest PE funds. A break-up of how the $7.5 billion will be allocated across asset classes has not been firmed up yet, but in the immediate term, a $1.5 billion generalist PE fund and an equal-sized real estate fund are in the offing. The PE fund is likely to be dubbed India Advantage Fund Series III and follows the $245 million Series I and $810 million Series II generalist funds.
Ramnath (in the chair) with director Sudhir Variyar. Behind them are (from left) chief risk officer K. Ravindra and directors Aluri Srinivasa Rao, Bala Deshpande and Sumit Chandwani
ICICI Venture, or I-Venture as it is better known in PE circles, is also raising a mezzanine fund, India Advantage Fund VII (Mezzanine Fund I), which expects to raise $110 million in its first round of fund-raising. The corpus may be scaled up to $1 billion in the second round of fund-raising. Mezzanine funds, typically a debt-dominated vehicle topped up by an equity component, aims to protect investor capital with a moderate upside potential. Ramnath sees the push into non-PE alternative investing as a natural growth path for the firm, but at the same time, wants to take the company’s PE activity to the next level. After pioneering local buyouts, such as the 2003 Infomedia India Ltd deal, the firm is now looking at transactions overseas, specifically in Europe, and shareholder activist buyouts. Ramnath spelt out ICICI Venture’s plans in an interview with Mint.
Edited excerpts:How are you thinking through the diversification into non-PE alternative investing?
The way I think about my business is that I have the ICICI brand and as we have seen in the last 50 years, it is an extremely stretchable brand. We have put the brand into insurance, investment banking, mutual funds, information technology, business process outsourcing, and it has worked everywhere. So, with respect to ICICI Venture, I will not blind myself into saying that the brand will only work with private equity. The business that we manage here is really managing the wealth of people who allocate long-term capital to instruments that are outside the domain of standard capital market returns.
Tags - Find More Articles On: