Exclusive: Jupiter ups Sri Lanka fund target

Indika Hettiarachchi's firm is now planning to raise $75m to invest in the frontier market's SME sector.

Jupiter Capital Partners, likely the first ever Sri Lanka-focused private equity fund, has increased its fund target ahead of the launch due to investor interest, Indika Hettiarachchi, founder of the firm revealed to Private Equity International.  

Originally targeting just $50 million, Hettiarachchi said the firm will now launch a $75 million vehicle dedicated to Sri Lanka, after a year of educating the market about opportunities there prompted widespread investor interest.

Hettiarachchi, a former executive at Aureos Capital – now owned by The Abraaj Group – formed Jupiter early last year and has since closed two small deals using local LP money, although the capital used is not part of the anticipated vehicle, he said.

Jupiter will do two more small, proprietary deals over the next two months before officially launching its debut fund.

“We have been doing a lot of things to develop the market and put Sri Lanka on the map,” Hettiarachchi told PEI. 

“We went to the market with a $50 million fund, but what happened was surprisingly we got a lot interest from [investors], but they told us a $50 million fund wasn’t big enough for them to look at and we had to increase the fund size. We thought $75 million was a good size because Sri Lanka is not a very big market.”

Hettiarachchi, who had led Aureos’ Sri Lanka and Bangladesh efforts, explains that while foreign investors have focused on real estate and hotel projects in Sri Lanka’s post-civil war period, SMEs in the country are being ignored. Jupiter plans to invest in Sri Lanka's small- and medium-sized enterprises that have the potential to expand offshore. 

While investors remain cautious, the country has attracted some private equity investment. In October 2012, emerging markets investor Actis acquired Asiri Group, a Sri Lankan private hospital group, in a deal worth $32 million. Actis director, Asanka Rodridgo, said that Sri Lanka’s government and private sector healthcare already compares with its emerging market peers, PEI reported earlier.