Mumbai: Private equity (PE) investor Baring Private Equity Partners India Ltd (BPEP India) is raising its third India-dedicated fund with an expected corpus at $400-500 million (Rs1,616-2,020 crore).
The proposed fund will be launched early next year and will be more than twice the size of the PE firm’s current fund, the $177 million Baring India Private Equity Fund II.
The expanded corpus for India follows BPEP’s spectacular $255 million exit from MphasisBFL Ltd, which was acquired by US-based EDS for $380 million last year—the PE firm had invested $16.6 million in 1998 and held a 35% stake in the company at the time of exit.
“There is a lot of investor demand, so (raising money) is not a constraint,” said Rahul Bhasin, managing partner, BPEP India. The new fund will continue to focus on technology, health care, consumer goods, engineering services (including alternative energy companies) and financial services.
BPEP India’s target sectors of investment have remained unchanged since the early 1990s when it started investing in the country. About two-thirds of Fund II have already been committed for investments and the fund will exhaust its corpus by the end of the year.
It has just concluded a Rs100 crore deal with Mumbai-based banking and financial IT solutions company Infrasoft Technologies Ltd, in which it has bought a controlling stake. Infrasoft specializes in cooperative banking and anti-money laundering services.
So far, BPEP India has invested in 13 Indian companies out of the current fund (including Infrasoft). Its other investments include alternative energy company Auro Mira Energy Co. Pvt. Ltd, pharma marketing analysis company PharmARC Analytic Solutions Ltd and IT infrastructure company Maples ESM Technologies Pvt. Ltd.
BPEP, which is an Asia-focused investor, does not follow an Pan-Asia investment strategy in terms of sector focus. “Each country has a different competitive advantage, which we evaluate,” said Bhasin.
In China, for instance, the firm has a greater focus on manufacturing companies, while in Russia (where it is the largest PE fund), it invests in media and telecom companies. The India investment strategy has worked well in so far.
While refusing to divulge exact numbers, Bhasin said the firm’s IRR (internal rate of return) last year was its best in India over the last 10 years.