Mumbai: The private equity arm of ICICI Bank Ltd is considering a public issue though it will move ahead only after it launches a greater variety of funds to create an “alternative asset platform”, its new managing director and chief executive said in an interview.
Stability first: ICICI Venture’s Vishakha Mulye spent the first year in charge steadying operations after the sudden exit of her predecessor. Ashesh Shah / Mint
Such a listing would be unusual even by global standards. Private equity has come to the public markets only fitfully, with the most famous instance being the public issue of the Blackstone Group in June 2007 on Wall Street. In India, only IL&FS Investment Managers Ltd is listed on the local exchanges.
The future listing goal and more immediate plans to float new funds is part of a renewed expansion drive that comes in the wake of a difficult year when ICICI Venture Funds Management Co. Ltd had to manage investor worries and build a new team.
Vishakha Mulye, the 44-year-old head of the private equity firm, has spent her first year in charge trying to stabilize operations after the sudden exit of her predecessor Renuka Ramnath in April. “We chose to stabilize our team and resolve with our investors first,” she said.
The problems with investors that she alluded to concern what is called the “key man clause” that allows investors in a private equity fund to refuse to honour investment commitments in case important members of a fund’s management team leave. The exit of Ramnath led to a minor investor revolt when it was raising money for its $810 million (Rs3,839 crore today) second fund in 2009.
Mulye tackled investor worries about the exit of Ramnath by capping investor commitments in the second fund and inviting new investors into a third private equity fund that is now raising money. “We decided we would continue with existing commitments we had with companies. But all new commitments will henceforth be done from the new fund,” she said.
This $350 million new fund was raised from domestic investors, and was the third one managed by ICICI Venture Management and the first floated under Mulye’s watch. She now plans to raise another $150 million from international investors, who will take the total corpus of the third fund to $500 million. There is no key man clause in the domestic part of the fund while Mulye will be the “key man” for the international portion of the fund.
Other funds on the anvil are a $500 million infrastructure fund and a Rs500 crore real estate fund.
ICICI Venture Management currently manages around $2 billion of assets in three private equity funds, one real estate fund and a mezzanine fund that invests in senior debt and equity of growth companies.
The public offer is much further down the road.
“We will do that (a public offer) at an appropriate time...we are slightly away from that right now,” said Mulye. “We are not in a hurry to do that as it has to be driven by an objective. Once we bring the company to the right level, at the appropriate time and if there is investor interest, then we will go to our parent ICICI Bank Ltd,” she added.
“The Indian PE (private equity) industry is not so mature yet, as it’s just a 10-15-year-old industry and globally funds such as Carlyle, Blackstone and Morgan Stanley all have diversified plays,” says Pankaj Dhandharia, national director at consulting firm Ernst and Young India Pvt. Ltd. The launch of an alternative asset management platform, according to him, is a natural step of progression for one of the oldest funds such as ICICI Venture Management.