Fulcrum Ventures plans to raise up to `800 crore for new fund3 min read . Updated: 01 Aug 2016, 12:48 AM IST
Fulcrum to raise funds from both domestic and overseas LPs, with more than half the money coming from overseas
Mumbai: Pharmaceuticals and healthcare-focused private equity (PE) firm Fulcrum Venture India is planning a third fund which could attract as much as ₹ 700-800 crore, according to two people aware of the development.
“They are planning to raise around ₹ 700-800 crore ($100-120 million). The fundraising plans are at an early stage and right now; they are in the process of tying up soft commitments from limited partners (LPs)," said one of the two people mentioned above, requesting anonymity as the talks are private. Investors in private equity funds are called limited partners (LP).
The firm is currently working on registering the new fund with the Securities and Exchange Board of India (Sebi), and the process is expected to be completed by end of the current quarter, said the second person cited above, also requesting anonymity. The latest fund will see the Fulcrum raise funds from both domestic and overseas LPs, the second person said, adding that more than half of the money will be raised overseas.
In 2012, Fulcrum raised its first fund of ₹ 100 crore, focusing solely on pharma and healthcare. The fund was founded by Krishna Ramanathan, whose father sold his pharma company American Remedies to Dr. Reddy’s Laboratories in December 1999. From 2000 to 2012, the family made seven angel investments.
From its first PE fund, Fulcrum Venture invested in companies such as Shield Healthcare, a Chennai-based branded formulations pharmaceutical company; Richfeel Health and Beauty, a trichology chain; Congruent Solutions, a specialized IT solutions and BPO provider focusing on the pension industry; Nutri Synapzz Therepeutix, a nutraceutical products company and others.
“We are not raising funds at the moment. As and when we launch, we’ll keep you posted," said Krishna Ramanathan, founder partner at Fulcrum Venture India.
Several established and new funds are currently in the market to raise funds, with the environment for Indian fund managers seeing a marked improvement in the last two years.
Last year, Everstone Capital raised $730 million for its third fund, while India Value Fund Advisors raised $700 million for its fifth fund. This year, PE funds ICICI Venture and Gaja Capital announced that they have raised $190 million and $240 million, respectively, for their latest funds. Several other established PE firms are currently on the fundraising road. Collectively, these firms are looking to raise nearly $4 billion.
PE firms that are in the process of raising capital from investors include Renuka Ramnath-promoted Multiples Alternate Asset Management Pvt. Ltd ($600 million), IDFC Alternatives ($500 million), ChrysCapital ($650 million), PE veteran Ajay Relan’s CX Partners ($400 million), Tata Opportunities Fund ($600 million), Aditya Birla Private Equity ($500 million), and growth capital funds Tata Growth Equity ($350 million), Tano Capital ($200 million) and Motilal Oswal Private Equity ($300 million).
It’s not just the established PE funds which are tapping the improved fundraising environment.
On 29 July, Mint reported that about two dozen private equity industry executives are on the road to raise up to $2 billion for their new funds.
These first-time fund managers include the likes of former Carlyle Group managing director Mahesh Parsuraman and former India Value Fund Advisor partner Sunil Vasudevan’s Amicus Capital ($200 million); former KKR India director Heramb Hajarnavis’s Sea Link Capital Partners ($250 million); and Siddharth Parekh’s Paragon Partners ($200 million).
“India macro-economically is very attractive right now when compared to the other emerging markets, and thus there is a strong appetite from global investors to look to deploy money in India," said Lovekesh Kapoor, head (investment banking) at Client Associates, a multi-family office firm.
“Additionally, the strong momentum that we have seen in terms of exits in the last two-three years has given a positive push to fundraising, as LPs are more comfortable now that they are seeing money coming back from India," said Kapoor.
In 2015, private equity funds returned $9.4 billion to their investors as compared to $6 billion the previous year, according to Bain and Co.’s India Private Equity 2016 report. Deal volumes rose 10% with 213 exits reported—the best in five years.