TPG Group changes India investment approach
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Mumbai: American private equity (PE) firm TPG has merged the India investment teams of its two arms, TPG Capital and TPG Growth, as it looks to adopt a more focused approach to investing in India, according to two people aware of the development.
The internal announcement of the move happened late last month, said one of the two people, on condition of anonymity.
“The TPG Growth team looked at deals that were below $70-75 million and deals bigger than those would go to the TPG Capital team. From a sector point of view, the two teams looked at the same sectors other than e-commerce, where Growth is invested,” he said.
Puneet Bhatia, who currently heads TPG Capital India, will head the combined teams, he added.
TPG declined to comment.
TPG does not have dedicated India funds. According to a Reuters report in February, TPG has secured $9.8 billion from investors for its latest buyout fund, TPG Partners VII.
In April 2015, TPG Growth closed its third fund, raising total commitments of over $3 billion. Globally, TPG has over $70 billion under management.
The new unified team structure will ensure better collaboration, said the second person, who also asked not to be identified. He added that sometimes the TPG Growth team would be working on a deal when it realized that there could be a bigger play for TPG and get the TPG Capital team to take over.
“However, that meant that a lot of work had to start all over again, because an entirely new team was now looking at the deal,” this person said.
Under the new unified structure, the same team will now look at all deals and depending on the final size of the investment, money will be drawn down either from the Capital or Growth fund, he added.
TPG is expected to undertake a similar exercise in other markets such as China and South-East Asia, he added.
According to data from VCCEdge, the financial research platform of VCCircle, TPG has deployed more than $1.5 billion in India over the past decade, which includes investments by both TPG Capital and TPG Growth.
The move to restructure the Indian investment team comes at a time when TPG is increasing its focus on India.
Last month, Bloomberg reported that TPG flew in 65 of its limited partners (investors in a PE fund) to meet policymakers and companies, with an eye on opportunities in distressed assets.
“Distressed (assets) opportunities in India are more suited for private equity, as you have to own the entire capital structure and need to make management changes,” Bloomberg quoted Bhatia as saying.
India received a record $22.4 billion in PE investments last year, 32% more than the previous record of $17 billion in 2007, according to a report by Bain & Co. India Pvt. Ltd.
“They (large PE funds) have all raised funds with an allocation towards India and with the prolonged slowdown in the Indian market, valuations are very attractive for these funds who have the ability to do large-sized transactions,” said Girish Nadkarni, managing director at Motilal Oswal Investment Advisors Pvt. Ltd.
New funding structures are emerging in the Indian market, allowing these funds to make larger bets in India—not only pure equity deals but structured finance and other formats, he added.
In India, TPG is also looking to invest in consumer Internet start-ups in partnership with venture capital firms.
“We are looking to partner with some of the best venture capital funds, who we know well and respect... for successive funding and growth capital for their portfolio companies,” said Anjali Bansal, partner and managing director at TPG Growth, in an interview last month.
TPG has exposure to the Indian consumer Internet market through TPG Growth’s investment in Lenskart.com.