Mumbai: Hong Kong-headquartered Baring Private Equity Asia will allocate half of its latest fund of $1.52 billion (Rs6,430 crore) for India investments.
The private equity firm, which just closed its fourth fund for the region, plans to set up an India office by year-end to manage the capital. This is the largest growth equity fund raised for the Asia market. Previously, Chrys Capital had set up a $1.25 billion India-dedicated fund.
“India and China are our biggest markets today,” said Jean Eric Salata, chief executive and founder of Baring, explaining the decision to invest the fund equally between the two markets.
It has made six investments worth $300 million here in the last 18 months, three of them from the fourth fund. The company operates separately from Baring Private Equity Partners India, which is a dedicated India entity.
Baring, which had its first closing of the fund earlier, has already invested about $400 million of it. Of this, it has invested $160 million across Mumbai-based brokerage firm Sharekhan Ltd as well as Hyderabad-based Karvy Stockbroking Ltd and Rithwik Projects Ltd. Other investments include edible oils company KS Oils Ltd, steel product maker Bhushan Power and Steel Ltd and textile manufacturer Prathibha Syntex Ltd. The firm typically invests $50 million per deal in companies with average revenues of $50-100 million.
“We are sector-agnostic, but we will do a fair bit of investing in financial services, infrastructure services, education and manufacturing,” said Jimmy Mahtani, principal, Baring, who currently invests in India out of the Singapore office. The firm will set up an office in Mumbai and expand its Asia team of 30 investors to add on-ground partners here.
A majority of limited partners or LPs (institutions that back private equity funds) for the latest fund are from the US, Europe and West Asia, with Asian LPs representing just 25% of the mix.
“The US market (recession) has led to greater interest than before in Asian funds, and more LPs are looking at emerging markets,” Salata said. The firm’s success with its third fund, which saw an internal rate of return (an indication of the efficiency of an investment) of 126%, contributed to the oversubscription of its next fund, Mahtani added.