New Silk Route plans to invest $300 million this year

New Silk Route plans to invest $300 million this year

Mumbai: Asia-focused private equity (PE) firm New Silk Route (NSR), a growth capital investor that bets on mid-size businesses, is looking to invest as much as $300 million (Rs 1,551 crore) this year, primarily in medical devices firms and restaurant chains.

“We have half a billion left to invest from the current fund," said Parag Saxena, founder and chief executive, NSR. The PE firm has close to $1.4 billion under management.

“We have been approached by several investors but at least three are really serious. The investment should happen in June-July," said Saxena.

Short-term demand for telecom towers is low as operators are trying to focus on reducing losses, said Romal Shetty, national head, telecom, KPMG India Pvt. Ltd. “Today, there are only five-six active operators in every circle even though close to 10-11 operators exist," he said.

NSR made two investments last year. The firm declined to disclose details, but said these were minority investments. Last year was a good year for PE firms, with close to $11 billion deployed across 427 deals.

After a challenging 2011 because of the controversy surrounding one of its founders, Rajat Gupta, NSR is now looking to make some exits and return money to investors. The US Securities and Exchange Commission charged Gupta over his alleged involvement in an insider trading case along with Raj Rajaratnam, founder of hedge fund Galleon Group.

“Limited partners (investors in the fund) interestingly have not brought up the topic of Rajat since he took a leave of absence," said Saxena. Gupta took a leave of absence from NSR in March 2011. “At that time, they of course asked what does this mean and what effect will it have on the fund, and we explained that he had no role in the running of NSR and that he was not on the board of any of the portfolio companies," he added.

Earlier this month, NSR appointed a strategic advisory board comprised of Nina Shapiro, who was earlier associated with the International Finance Corporation and the World Bank; Herbert A. Henzler, a special adviser to the chairman of the Credit Suisse Group; and Supratim Bose, who had a 28-year career at Johnson and Johnson. The board will be responsible for identifying global opportunities for NSR’s portfolio companies.

“We have some companies in our portfolio that have potential outside India or companies that you can list in entirely different markets," said Saxena.

Funds hire operational people, especially those who have experience running companies, to add more value to companies, which in turn enhances returns, said Avinash Gupta, head of financial advisory, Deloitte Touche Tohmatsu India Pvt. Ltd. “The bigger funds such as Bain Capital, KKR and Blackstone have done it in the past because they could afford getting bigger people on board, but today even smaller growth funds are doing it," he said.