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ICICI Venture whittles target, to launch Rs1,000 cr realty fund

ICICI Venture whittles target, to launch Rs1,000 cr realty fund
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First Published: Wed, Jul 15 2009. 12 11 AM IST

The change at the top level of ICICI Venture, a subsidiary of India’s largest private sector lender ICICI Bank Ltd, has reportedly raised concerns among many investors. Ahmed Raza Khan / Mint
The change at the top level of ICICI Venture, a subsidiary of India’s largest private sector lender ICICI Bank Ltd, has reportedly raised concerns among many investors. Ahmed Raza Khan / Mint
Updated: Wed, Jul 15 2009. 10 16 AM IST
New Delhi: With at least four top executives leaving the company, ICICI Venture Funds Management Co. Ltd is launching a smaller, Rs1,000 crore realty fund, according to two people close to the development.
The plan for the scaled-down property fund comes at a time when the private equity (PE) firm is facing hurdles in raising commitments from investors for some of the initiatives it had announced earlier, which included a $1-1.5 billion (Rs4,880-7,320 crore) real estate fund.
The firm, which manages at least $2 billion, saw its long-time chief executive and managing director Renuka Ramnath quitting in April. Ramnath was replaced by Vishakha Mulye, who was till then an executive director of ICICI Lombard General Insurance Co. Ltd.
The change at the top level of ICICI Venture, a subsidiary of India’s largest private sector lender ICICI Bank Ltd, has reportedly raised concerns among many investors. Ahmed Raza Khan / Mint
After Ramnath’s departure, the firm lost three more senior executives. Sudhir Variyar, a senior director, quit to partner with Ramnath for a new fund, which is aiming to raise $500 million.
Shweta Jalan, a director with the PE investments team, also left the firm last month. Jalan, who had been with the firm since 2000, was involved in leveraged buyout transactions such as VA Tech India Pvt. Ltd, Infomedia India Ltd (now Infomedia18 Ltd) and ACE Refractories Ltd, and played a key role in raising funds.
Pradeep Varshney, another senior director in the real estate team, has also quit. The PE fund had put in place a project monitoring team from the industry, which was headed by Varshney.
The realty practice at ICICI Venture is headed by Rajeev Bakshi, a joint managing director, who was earlier heading PepsiCo India. The team now has one senior director, Anandjit Sunderaj, who looks after investments.
The change at the top level of ICICI Venture, a subsidiary of India’s largest private sector lender ICICI Bank Ltd, has reportedly raised concerns among many investors—mainly foreign—and that is considered to be one of the reasons for the firm’s plan to launch a smaller fund.
The fund plans to mobilize 90% of the target corpus from domestic investors—institutional and high net-worth individuals—the two people said on condition of anonymity.
Most PE firms have been raising capital abroad, while ICICI Venture is turning to local investors so that it can use ICICI Bank’s distribution muscle to reach out to them. The people quoted earlier said that a successful launch of the property fund will help instil confidence in foreign investors after which it can introduce a larger general PE fund, probably with a target corpus of $1 billion.
ICICI Venture announced several billion-dollar PE funds in 2007 and 2008. Besides the real estate fund, it intended to launch an infrastructure fund of $1 billion and a PE fund of $1.5-2 billion. These did not take off as expected due to the global financial crisis.
What also did not help is the change of guard at the firm. On 10 July, The Financial Express (FE) reported that some of the investors who had committed funds to ICICI Venture were pulling back investments after Ramnath’s departure. Some people, who declined to be named, confirmed the development.
An email sent to ICICI Venture’s Mulye for comments was unanswered till the time of filing this story.
The commitments are being pulled out due to a so-called key-man clause, under which limited partnerships are allowed to pull back investments if the key management of the general partner or PE fund manager leaves, the FE report said.
It had also said one-third of the commitments to $841 million India Advantage Fund Series II were under dispute.
VCCCircle.com
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First Published: Wed, Jul 15 2009. 12 11 AM IST