Oman-India PE fund makes first close of $250 million for second fund | Mint
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Business News/ Companies / News/  Oman-India PE fund makes first close of $250 million for second fund

Oman-India PE fund makes first close of $250 million for second fund

Backed by SBI and Oman's SGRF, OIJIF eventually plans to raise $350-400 million for its second fund

Through its first fund, OIJIF made investments in sectors such as financial services, consumers and industrials.Premium
Through its first fund, OIJIF made investments in sectors such as financial services, consumers and industrials.

Oman India Joint Investment Fund (OIJIF), a private equity (PE) fund backed by Oman’s sovereign wealth fund State General Reserve Fund (SGRF) and India’s largest lender State Bank of India (SBI), has hit a first close of $250 million for its second fund, said two people aware of the development.

To be sure, a fund has many closings and a first close implies that it will start investing the money raised.

The first fund—which raised and invested $100 million in 2011—did not seek third-party capital and was completely sponsored by SGRF and SBI.

“The fund was on the road for some months now, talking to various institutional investors to raise money. They have recently hit their first close target of $250 million," said the first person mentioned above, requesting anonymity as he is not authorized to speak to the media.

The fund has a commitment of $200 million from the two sponsors, while the rest of the money is being raised from domestic and foreign institutional investors, the first person said, adding that the first close corpus has been mostly raised from domestic institutional investors.

OIJIF eventually plans to raise around $350-400 million for its second fund and expects to hit that target by the end of the year, the first person added.

With a larger fund, the team at OIJIF will be looking at larger deals for the second fund, said the second person cited above, also requesting anonymity.

“In the previous fund, they were making investments in the range of $10-20 million. With a larger corpus, they are now looking to invest in ticket sizes of around $30-50 million per deal," he said, adding that the sector focus would broadly remain the same as the first fund.

The fund is also looking to increase its team and will be hiring a few people, he added.

Emails sent to OIJIF and SBI did not elicit any response.

Through its first fund, OIJIF made investments in sectors such as financial services, consumers and industrials.

Some of the investments made by OIJIF from its first fund include National Commodities and Exchange Derivatives Ltd, footwear manufacturer and retailer SSIPL Retail Ltd, mining explosives manufacturer Solar Industries Ltd and ING Vysya Bank, which was acquired by Kotak Mahindra Bank. OIJIF made a total of seven investments from the first fund.

OIJIF’s successful first close of its new fund comes at a time when private equity and venture capital investments in India hit an all-time high in 2015, with investors pumping in $22.9 billion into the country, according to Bain and Co.’s India Private Equity Report 2016.

The 2015 investment figure surpassed the previous high of $17.1 billion in 2007.

Exits too have been on the rise. PE investors made the highest number of exits in five years in 2015, the report said.

In 2015, general partners (GPs) returned $9.4 billion to their investors as compared with $6 billion during the previous year. Deal volumes rose 10% with 213 exits reported—the best in five years.

The improved sentiment around exits has allowed domestic PE firms to raise fresh funds. Last year, Everstone Capital said it had raised $730 million for its third fund. 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.

Some of the other PE funds that are in the process of raising capital from investors include Renuka Ramnath-promoted Multiples Alternate Asset Management Pvt. Ltd, IDFC Alternatives, PE veteran Ajay Relan’s CX Partners and growth capital fund Tano Capital.

“There has been a significant improvement in exits, whether through secondary exits or through IPOs. Exits had become a concern for funds investing in India, and their investors. The recent trend of exits has propelled the confidence for people to invest as they have now seen the evidence of exits from India," said Harish H.V., partner at Grant Thornton India Llp.

However, limited partners (LPs), who invest in private equity funds, will be cautious in choosing the fund managers they will back, he said.

“It will mostly be funds that have a proven track record that will be able raise funds and LPs will be very cautious of investing in managers raising their first fund," said Harish.

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Swaraj Singh Dhanjal
" Based in Mumbai, Swaraj Singh Dhanjal is responsible for Mint’s corporate news coverage. For the past eight years he has been writing on the biggest deals in private equity, venture capital, IPO market and corporate mergers and acquisitions. An engineer and an MBA, he started his journalism career in 2014 with Mint. "
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Published: 30 May 2016, 01:42 AM IST
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