Tata's PE arm eyes buyout deals worth about $300 mn

Early this month, Tata Opportunities Fund raised a $600-mn fund, the largest India-focused fund raised in the last five years

Today, Padmanabh Sinha, or Paddy Sinha as he is often called in the private equity (PE) industry, is a relaxed man. After taking charge of the PE arm of the $80-billion Tata Group, Paddy has added another feather in his cap — he has raised a maiden $600-million (about Rs 3,264 crore) fund, the largest India-focused fund raised in the last five years.

Early this month, Tata Opportunities Fund had closed its maiden fund by raising a corpus of $600 million, even as general partners struggled to raise their first funds. By leveraging the Tata Group brand, the fund successfully raised money from a mix of sovereigns, institutions and family offices across countries such as Korea, Japan, Singapore and the US, as well as some West Asian countries.

“Yes, we have raised the largest corpus in the last five years in the toughest fund-raising market. However, finding out the right opportunities is another hurdle before us,” Sinha said in his first media interaction since taking charge of the PE fund.

Sinha, former managing director (India), Temasek, joined the fund in February 2011. He brought with him a decade-long experience with institutions such as Temasek and ICICI Venture. In February this year, Tata Capital promoted Sinha to the post of managing partner of Tata Opportunities Fund. This followed the appointment of Mukund Rajan as brand custodian for Tata Sons, the holding company of the Tata Group.

“We are seeing the interest of limited partners to invest along with us in our portfolio companies in India. This would help us to carry out control-transactions worth about $300 million (about Rs 1,632 crore),” he said. The fund would eye investments in the $30-120 million range accounting for significant minority stakes in companies in India.

Though the majority of the fund would be deployed in Tata Group companies, the fund would also explore good opportunities in the unlisted space in India.

Sinha says the fund has to convince investors about its concept of cultivating Tata-related companies. “We have an independent fund management team, as well as a conflict management team to look into each investment in Tata group companies. Also, limited partners would play a key role in finding out the right deals from Tata group companies.”

The fund, operational since March 2011, has already recorded its first deal by acquiring a significant minority stake in Tata group entity Ginger Hotels in November 2011. Sinha says three more deals with Tata group companies are under various stages.

“Two are in advanced stages and are waiting for regulatory approvals,” he said, refusing to divulge the details.

Last year, PE fund-raising in India fell 43 per cent, compared to 2011. In 2012, 48 PE funds raised $3 billion, against $5.2 billion raised by 39 funds in 2011, according to data from VCCEdge. In 2008, PE funds worth $8.8 billion were raised in India, the most ever.

So far this year, PE funds in India have raised $766 million.