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Tata Opportunities Fund to Raise $700 Million

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August 27, 2015

 

Tata Opportunities Fund, the private equity fund of the Indian conglomerate Tata Group, has announced its plans to raise $700 million in the following year. Two other separate private equity funds by the firm are also looking for further investments. It is another strong indicator for the improved strength in the Indian private equity market.

 

The Announcement

 

The private equity firm announced that it plans to raise its second fund next year, with the hope of raising at least $600 million. Padmanabh Sinha, managing partner at Tata Opportunities Fund, said in a LiveMint interview, “We are seeing a good deal pipeline and we will be able to deploy our existing fund by the end of this financial year after which we will raise a successor fund of similar size.”

 

Furthermore, Tata Capital’s other private equity funds are hoping to get back to fundraising during the next few months. According to reports in Business Standard, the Tata Capital Growth Fund is set to raise around $300 to $400 million. This will be followed by an aim to raise $100 million with the Tata Capital Health Fund.

 

Altogether, the private equity arm could be fundraising nearly $1 billion in the next year.

 

Improving Expectations

 

The previous Growth Fund managed to raise $240 million, with the fund investing in companies working in sectors such as urbanisation, discrete manufacturing and other strategic services sector. It made an investment as recently as last month, when it co-invested to buy Agile Electric Sub Assembly from private equity firm Blackstone.

 

Akhil Awasthi, managing partner of the Tata Capital Growth Fund, told Business Standard, “Since we expect to return more than 50 per cent of the fund in the coming months, fund raising for TCGF II will commence shortly.”

 

In addition, the first Tata Capital Health Fund has soon invested the full corpus of $100 million to allow the firm to raise more money with the second fund. The fund has invested in six companies, including Novalead Pharma and Lokmanya Hospitals.

 

Finally, the biggest fund, the Tata Opportunities Fund, managed to raise $600 million in 2013. The fund just recently invested around $100 million in the US-based ride hailing service, Uber. Sinha told Business Standard the fund could be looking for similar investments. “The fund has approaches from domestic and global companies desirous of leveraging the fund’s relationships and network for expanding in India – much like Uber,” Sinha said.

 

Hope for the Tough Environment

 

Tata’s appetite for fundraising is bringing more hope for the tough fundraising environment in India. Other Indian funds have also announced their interest to start raising new funds. CX Partners and Aditya Birla Private Equity, among others, have announced they are looking for the options.

 

India is benefitting from the somewhat troubled investment environment elsewhere in the world. “There is little choice in terms of geography for the investment dollars to go to. Europe continues to be troubled. The China story, too, is very dented right now,” Kalpana Jain, senior direct at Deloitte Touche Tohmatsu India, told LiveMint.

 

It will be interesting to see how the Indian private equity industry develops in the coming months.

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