India begins to spark PE interest

As the level of dry powder in India rebalances, some LPs are going against conventional wisdom and recommitting capital to the country.

India is ripe for investment as fewer investors are rushing into the market and the amount of existing capital available in the country dries up, according to David Seex, head of Asia Pacific private equity at fund of funds Adveq.

“The issue is there has been too much capital,” he told Private Equity International. “India is now becoming an interesting place to invest again in terms of capital supply and demand.”

Adveq launched its third Asia-focused fund of funds in 2011. The firm will commit a large proportion of the vehicle's capital to China and India, Seex said, although he declined to comment further on fundraising. The fund has a target of $300 million, according to PEI’s Research & Analytics division. 

India is now becoming an interesting place to invest again in terms of capital supply and demand

David Seex
Head of Asia Pacific private equity
Adveq

Other LPs are committing to India as well. In May, Tata Capital made a final close on its Tata Opportunities Fund at $600 million – the largest debut fund ever raised in India – having launched the vehicle in 2011. The firm joined ChrysCapital and Everstone Capital Partners as one of the few country GPs that has managed to raise a recent India fund. 

ChrysCapital hit its $510 million hard cap for its sixth India-focused fund in May last year, while Everstone closed its second fund on $550 million in March 2011. 

Tata raised capital from LPs across the globe, according to the firm. They include North American investors, Asian and Middle Eastern sovereign wealth funds, family offices and financial institutions, demonstrating a broadly renewed interest in the market.

In contrast to India, Seex believes firms rushing into Indonesia could face a crowded market with few high-quality managers to absorb all the capital. He said, “Indonesia is an example of a market that is of great interest to a lot of people but there are relatively few institutional grade managers there.”

While Northstar Pacific Partners, Saratoga Capital and CVC Asia Pacific have had success there, many GPs entering the Indonesian market are yet to make investments in the rapidly-growing economy. 

Seex added that the historically successful GPs in Indonesia had been focused on resource investing. The larger opportunities are now in the consumer-related industries where few GPs have had extensive experience. For example, while CVC sold 40 percent of Indonesia-based Matahari Department Stores in a deal worth $1.3 billion, having acquired 98 percent of the business for $892 million in 2010, few local firms have comparably experienced teams in the consumer sector.

Adveq Management is a Switzerland-based fund of funds with about $4.5 billion in assets under management, according to PEI's Research & Analytics division. The firm has 100 percent allocation to private equity and focuses on venture and small- to mid-cap growth investing.

In August 2012, Adveq opened its fourth Asia hub in Hong Kong strengthening its presence in the Asia Pacific region. The firm also has offices in Beijing and Shanghai, as well as a representative office in Sydney.