Reliance PE plans third fund, with target corpus of $300 mn

Plans to tap only global investors; Reliance Alternative Investment Fund-I may look at exits ahead of fresh fund raising

Anil Ambani-led Reliance Private Equity is firming up plans for its third fund, with a target corpus of $300 million. Reliance PE will be looking exclusively at global investors for this fresh fund, according to sources.

Reliance Private Equity is currently investing from its second fund — Reliance Alternative Investments Fund-Private Equity Scheme-I, which has a corpus of Rs 930 crore and expected to be drawn down by November 2013. It had tapped domestic investors, besides a small number of high net worth individual (HNI) investors for this fund, among others. Technically, the Rs 930-crore fund was the first official one to be launched during 2008-09, after Reliance Private Equity was formed. The Anil Ambani-led group had earlier also raised a Rs 1,000-crore fund focused on the power sector, which has been completely deployed.

Investment bankers tracking this sector added that Reliance Alternative Investment Fund-I might look at couple of exits ahead of the fresh fund raise.

A spokesperson for Reliance Private Equity, however, denied any move to raise fresh fund.

Reliance Private Equity is starting plans for a fund raise when the going is tough and the sentiment skewed towards high negativity. According to a recent report from corporate advisory firm Grant Thornton, there is a marked decline in fundraising expectations of general partners (GP) around the world, with nearly three-quarters (72 per cent) describing the outlook as either ‘negative’ or ‘very negative’. In 2011, the figure was 46 per cent.

According to Emerging Markets Private Equity Association (EMPEA) data, capital raised by India-focused private equity funds fell from $2.7 billion in 2011 to $2.1 billion in 2012, a fall of 22 per cent.

According to PwC India, a number of PE firms are focused on raising their next round of funds and this will be an indicator of how the global investment community looks at India.

“From an Indian fiscal standpoint, there has never been a greater need for foreign investment in the country. The role of PE investors in supporting Indian businesses is well-acknowledged. The question is whether policymakers have done enough to encourage them to look at India differently from the last year. We will have to wait and watch,” said Sanjeev Krishan, leader (private equity), PwC India.

Other than Reliance Private Equity, a corporate-sponsored PE fund from Aditya Birla is also currently investing from two funds.
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• Capital raised by India-focused private equity funds fell from $2.7 billion in 2011 to $2.1 billion in 2012, down 22 per cent
• The Anil Ambani-led group had earlier raised a Rs 1,000-crore fund focused on the power sector, which has been completely deployed