Private equity (PE) firm Subhkam Ventures will raise its first formal fund of $100-125 million (Rs403-503.75 crore) in March.
The firm, founded by first generation entrepreneur Rakesh Kathotia, has been quietly running on reinvested proprietary capital of $200 million across its PE and broking businesses Subhkam Securities Pvt. Ltd and Subhkam Stocks and Shares Ltd. Of that, more than $100 million has been placed into PE investments, mostly in the power and ancillary infrastructure sectors.
Subhkam typically invests $3-10 million, but will raise that range to $5-15 million for the new fund. Of the firm’s 22 deals, a quarter have been Pipe (private investment in public equity) transactions.
Its latest private investment was in Aqua Infra Projects Ltd, which is establishing a greenfield project in Uttarakhand for water distribution. Other investments include a 2004 Pipe deal with Nagarjuna Construction Co. Ltd, in which Blackstone Group later invested $150 million, and Hyderabad-based Bharat Biotech International Ltd, which saw investments from ICICI Venture Funds Management Co. Ltd and International Finance Corp. of the World Bank. Subhkam has exited from five companies, including its 2005 exit from Nagarjuna.
Manu Punnoose, chief executive of Subhkam’s PE business, said this is the right time to raise a fund because the sectors they have expertise in have become more attractive.
The new fund will be raised domestically and Subhkam will be the anchor investor putting in 25%, or $25-31.25 million. The funds will be deployed in six months to a year, after which it will look to raise a second, larger fund.
He said the business has grown more than 100% in five years, but is expecting 25-30% growth for the new fund. He said the market dip makes this a ripe time to raise a domestic fund as the limited number of investors may be even more ready to invest in PE. “The savvy investor now sees PE as an asset class,” he said.