UTI Ventures, the private equity (PE) investment arm of UTI Asset Management Co. Pvt. Ltd, has sold its remaining stake in PE firm Ascent Capital to its current management led by chief executive Raja Kumar for an undisclosed sum, two people aware of the development said.
“The management team of Ascent Capital now owns 100% of the firm,” one of the two people cited above said, requesting anonymity.
“The discussions were going on for a long time and UTI’s exit is as per the understanding reached in 2009, when Raja, along with the senior management of the firm, incorporated Ascent Capital as a spin-out from UTI Ventures,” the second person said on condition of anonymity.
Responding to a query, a spokesperson for UTI Asset Management confirmed UTI Ventures has sold its ownership but declined to provide details of the transaction. UTI Ventures will continue to evaluate future investment opportunities with Ascent Capital, the spokesperson added.
An email sent to Ascent Capital remained unanswered till press time.
In 2009, PE firm UTI Ventures’ management team, led by chief executive Raja Kumar, formed a separate investment entity called Ascent Capital Advisors. Founded in 2001 as UTI Ventures and renamed in 2009, Ascent Capital has in the past 15 years invested in 58 businesses covering a range of sectors such as technology, e-commerce, healthcare, financial services, consumer brands, and infrastructure, among others.
Ascent Capital has $600 million of assets across three funds and counts long-term institutional investors such as pension funds, foundations, endowments as its limited partners (LPs). The typical investments of Ascent Capital range between $10 million and $30 million. Its current investments include India’s largest online grocery retail platform BigBasket, recently listed RBL Bank Ltd, Delhi-based Newgen Software Technology Ltd, multi-specialty hospital chain KIMS and medical devices manufacturer Skanray.
Ascent Capital has had more than 35 exits so far.
“For an LP, the primary concern is often about the fund’s management team and whether it will remain with the fund till the end of the investment cycle because the departure of key people has an impact on the current and future investments of a fund,” said the second person cited above. “But in case of Ascent Capital, the same management team has continued for over 15 years, since the inception of the fund.”
The management of the PE firm buying out the stake of its parent institution now makes it a fully independent PE outfit—a positioning preferred by institutional LPs. A fully independent management team ensures independent decision-making and also makes for better alignment of interests as the management is now entitled to a bigger share of the profit.
“Ascent Capital emerging as an independent PE firm was supported and backed by its LPs,” the person added.
Management buyouts of PE firms are not unheard of in India. In 2014, Reliance Capital sold its PE arm Reliance Private Equity to the fund’s existing management under chief executive officer (CEO) Ramesh Venkat. Reliance PE was subsequently rebranded Fairwinds Asset Management Ltd. Prior to that, Vishal Nevatia, then CEO of GW Capital India, bought out the fund’s founder Gary Wendt and HDFC to start India Value Fund Advisors.