Accel Partners set for $400 mn fund for India

This may well be the best fund news for Indian entrepreneurs looking at growth capital.

Accel Partners, the marquee global venture capital and growth equity provider with $6 billion assets under management, is enroute to setting up a $400 million India-dedicated private equity fund. The Palo Alto, California-headquartered fund, best known for investments in Facebook and Groupon, with both of them commanding blockbuster valuations, is understood to have hit the road to set up the India fund.

Investment banking players indicate that Accel is aggressively looking at this space even as it is looking to expand its venture capital business. The fund, during late 2009, hired Neeraj Bhardwaj from Apax Partners as MD of the growth capital business in India and presently has a three-member team manning this. Accel Partners did not respond to mails requesting for a statement on this.

Founded in 1983, Accel Partners has a long history of excellence and innovation in the global venture capital and growth equity business. Accel today invests globally using dedicated teams and market-specific strategies for local geographies, with offices in Palo Alto, London and Bangalore, as well as in China via the IDG-Accel Partnership.

With over $6 billion under management, Accel has helped entrepreneurs build over 300 successful category-defining companies including: Alfresco, Arrowpoint, Baidu, ComScore, Foundry Networks, Infinera, Interwoven, JBoss, Kayak, Macromedia, Polycom /PictureTel, Real Networks, Riverbed, Veritas, Walmart.com besides various others. According to various recent reports, Accel’s holdings in Facebook and Groupon itself is valued upwards of $4-5 billion.

While plans are being firmed up for the growth fund, Accel Partners has a strong networking venture capital and early stage funding and is understood to have a corpus of $60 million. In the recent past, the company took over Bangalore-based Eras-mic Partners as it aimed to expand this business pretty aggressively.

Accel Partners is coming in with an India dedicated fund even as the private equity industry is swinging back to the pre-recession levels. According to data from Venture Intelligence, a research service focused on private equity and venture capital, PE firms invested $7.9 billion over 325 deals in India during the 12 months ending December 2010, compared to a little over $4 billion across 290 deals during the previous year.

“After a volatile 3-year period, PE investment activity in 2010 reverts to the levels of 2006 (which had witnessed 358 investments worth $7,485 million),” pointed out Arun Natarajan, CEO of Venture Intelligence. “The really exciting feature of 2010 was on the exits side where activity vaulted to all time high levels with 121 transactions, including 24 via IPOs,” he added.