Tata Capital readies $600m Fund II

The Mumbai-based firm will look to take control stakes in companies as well as its typical growth equity plays for its second flagship vehicle it plans to launch later this year.

Indian private equity firm Tata Capital, which is preparing to launch its second flagship vehicle within the year, is likely to do control transactions for its latest offering, building on its minority growth capital-focused debut fund, TOF managing partner Paddy Sinha told Private Equity International.

“One change for Tata Opportunities Fund II is that it could look at a mix of deals. We’ve built our operating advisor network and bench over the last year and I believe we’ve got more resources in place for control deals,” Sinha said.

TOF currently has a team of 11 investment professionals and four operating advisors.

The firm is in the process of readying Fund II, which will have a target of around $600 million – the same size as Fund I – and will launch within the year, Sinha said.

Fund I closed on $595 million in 2013, garnering commitments from global investors including the Korea Investment Corporation and other Japanese institutional investors, according to PEI data.

Sinha also noted that the firm expects Fund II to attract interest from a broader institutional base.

“Broadly speaking, there is greater interest in India from North American LPs because the country has much more weight in the global economy and is also the fastest growing large economy in the world,” he said. A lot of Asian LPs, who had investments in the 2006-08 vintages in India and whose portfolios didn’t do well, are also re-engaging or at least re-evaluating opportunities in the country.”

Similar to its predecessor, Fund II will invest between $50 million to $200 million in sectors such as consumer, industrial, B2B and B2C.

The firm completed eight transactions from Fund I, all sourced through proprietary channels. Companies in its current portfolio include engineering and construction services company Tata Projects, satellite television operator Tata Sky, auto parts manufacturer Varroc Engineering, and taxi hailing company Uber.

Sinha declined to provide details about the performance of Fund I but said the portfolio’s average EBITDA growth rate is around 25 percent since the firm invested.