Reliance Equity Advisors is targeting commitments of INR15 billion ($316 million; €219 million) for its first private equity fund.
The Indian private equity group is a wholly-owned subsidiary of Reliance Capital, the financial services arm of energy and telecoms conglomerate Anil Dhirubhai Ambani Group.
Fundraising has begun for the vehicle and is proceeding better than expected, Ramesh Venkat, chief executive officer of the firm, said in an interview. He said the amount will be raised almost entirely from domestic investors including high net worth individuals, banks and insurance companies. The firm is also looking to garner commitments from non-resident Indians or expatriates.
We wanted to target the domestic investor base with a sharper focus.
That gives it an LP base diverse from peers, Venkat said, considering that most Indian private equity funds have raised the bulk of their capital from overseas investors. “Given the changed [fundraising] circumstances and the fact that a lot of the overseas investors are still not fully prepared to invest in the Indian market, we wanted to target the domestic investor base with a sharper focus,” he said.
“We don’t know exactly what we are going to end up with,” he said, adding that the amount raised by the firm so far gives it confidence to meet its initial INR15 billion target. The firm’s parent group has committed to make an anchor investment equivalent to 20 percent of the fund’s final size.
Venkat declined to name the limited partners in the fund, saying merely that the firm is in discussions with “practically all large banks and insurance companies in the country”. Reliance has already garnered commitments from a few of them and with many, it is still a work in progress, he added.
According to Indian daily Business Standard, some limited partners in the fund include the State Bank of India, General Insurance Company, Life Insurance Company, IDBI Bank and Bank of Baroda.
Reliance Alternative Investments Fund has a mandate to invest across all sectors, but will primarily be focused on the “sunrise sectors” comprising of newer industries such as logistics, media, pharmaceuticals, retailing, education and infrastructure services.
On average, the fund will invest about INR1.5 billion per deal. Venkat said that though realistically there are going to be more opportunities in the growth capital segment in the country, the fund has the bandwidth to do buyouts as well. He added that the firm will also consider PIPE investments, but only from a private equity perspective – it will not seek to make quick flips from a trading or a hedge fund perspective.
The firm is likely to close its first investment from the fund in about six weeks, Venkat added, declining to provide further details.
Based in Mumbai, Reliance Equity Advisors has a team of 11, including six investment professionals.