Creador tops its $300-mn Fund-II by $31.5 million

At a time when many private equity (PE) funds are finding it tough to raise money from investors, Creador has raised an additional $31.5 million to top its second fund (Fund-II) of $300 million. The PE firm said its strategy of focusing on multiple geographies, including India, has helped it attract investors. The fund is also targeting a net internal rate of return (IRR) of 20-25 per cent from Fund-II.

Confirming the development, Anand Narayan, senior managing director of Creador Advisors India Private Limited, said the second fund will be the firm's largest fund to date since its inception in September 2011.

The size of Creador's Fund-I was $135 million, of which $34.5 million was invested in India.

While sources said the company would look at deploying $60 million in India, it could be even higher, depending on the opportunities. However, Narayan did not give any target stating that "there is no allocation across geographies and Creador looks at each opportunity on its own merit". Narayan added that in the Fund II, around 75 per cent are institutional investors (fund of funds, endowments, pension funds, etc) and of which about 50 per cent are from the US and Europe.

"There were several first-time investors in the fund, most of whom wanted to see a credible exit track record. The two fund exits - Old Town (based in Malaysia) and Repco (India) - have to be seen in this context," Narayan added. Creador exited from Old Town and Repco Home at 70 per cent IRR.

Talking about the challenges pertaining to the India market, Narayan said capital return has been poor. He noted that investors were confused about government policies and the currency devaluation also affected the returns of investors.

"People (investors) have been cautious, but not negative about India. Still they are concerned about India and continue to raise the question whether Creador wants to invest in India. We need to build confidence among the investors."

Creator's strategy has been to back proven entrepreneurs who run strong business franchises and who are committed to providing exit / liquidity at the appropriate time. Given the revival of the economy and the expected 'on-ground' improvements in the next few years, the investment climate seems to be picking up.