Mumbai: Mumbai-based Centrum Capital Ltd joins the growing ranks of financial services firms that plan to raise private equity (PE) funds.
Centrum hopes to start a fund with a corpus of $100-125 million (Rs454-567.5 crore) through domestic sources such as institutional and retail investors, said a senior official who did not want to be named. The fund won’t be sector-specific.
“These are not immediate plans as there are a lot of people before us who are in line to raise funds,” said the official.
Centrum offers financial services, including investment banking, wealth management, portfolio management, stock broking, foreign exchange, travel services, and infrastructure and real estate advisory services.
The firm has hired Shivani Bhasin, who was a principal at IDFC Private Equity, a subsidiary of Infrastructure Development Finance Co. Ltd, to head the fund. Bhasin has earlier worked with US-based PE firm Lightyear Capital Inc. and the PE arm of General Electric Co.
In 2008, Centrum raised Rs120 crore from Indivision India Partners, which was sponsored by Future Group.
PE fund-raising in India has declined significantly—from 29 funds raising $8.92 billion in 2007 to 23 funds raising $5.15 billion in 2008 and 16 funds raising just $3.77 billion in 2009, according to Venture Intelligence, a Chennai-based research service focused on PEs and mergers and acquisitions.
“The fund-raising environment is difficult,” said the Centrum official.
Other financial services firms such as Edelweiss Capital Ltd and Avendus Capital Pvt. Ltd also have plans to raise PE funds.
Motilal Oswal Private Equity Advisors, the PE arm of Motilal Oswal Financial Services Ltd, is raising Rs1,500 crore for its third fund.
Avendus plans to raise a Rs1,000 crore PE fund in 2010 and has hired Manoj Thakur to head it. It declined to comment on how far it has progressed.
While India needs growth capital, it is important that these funds have a unique selling point that makes them stand out, said Avinash Gupta, head financial advisory, Deloitte Touché Tohmatsu India Pvt. Ltd.
“Also, there could be a conflict of interest between the investment banking arm and the PE arm as the PE arm could be competing for the same deals,” he added.
Vikram Utamsingh, executive director and director (private equity) at audit and consulting firm KPMG India Pvt. Ltd also urged caution.
“These funds need to exercise caution when they go to raise money from international LPs (limited partners),” he said. “Foreign LPs prefer independent GPs (general partners), so they will have to demonstrate their independence and how they can handle conflicts.”