Tata Cap, Mizuho Securities to raise $500-mn fund

Tata Capital, the non-banking finance arm of the Tata group, today announced it was going to partner with Tokyo-based Mizuho Securities to raise about $ 500 million (Rs 2,350 crore) from domestic and international private equity (PE) investors, for a growth fund focused on Indian mid-cap companies. The fund will account for a big chunk of the $1 billion (Rs 4,617 crore) that Tata Capital plans to raise for its private equity funds.

The “growth fund” will be based in Singapore and will target investors in Japan and other international markets such as – South-East Asia, West Asia and Asia Pacific, apart from India. The fund has separate segments for domestic and overseas investors and has already concluded the first closing of the domestic fund.

Around 20 per cent of the fund size will be raised from domestic investors, while overseas investors will put in the rest.

“Current regulations do not allow Indian investors to put money in overseas-based funds that invest in Indian companies. Hence, we decided to have two segments for domestic and overseas investors,” Tata Capital Managing Director & Chief Executive Praveen Kadle said.

“We signed the ‘General Partners’ agreement in Singapore last month and hope to raise a bulk of the amount in the first closing of the international fund,” he added. Both the domestic and international funds will invest proportionately in the companies identified by the fund managers. Close to 15-20 per cent of the total fund size will be invested by the General Partners — Tata Capital, Singapore and Mizuho Securities.

Akhil Awasthi, who is the head of Tata Capital’s PE unit, is the managing partner of the growth fund. Pramod Ahuja is a partner and the two will be assisted by a five-member team.

“The average size of the investments of our growth fund is likely to be $25-35 million,” Kadle said.

“This is a sector agnostic fund and we are open to all segments, except real estate and pure infrastructure. We will focus on early-growth stories and prefer non-listed companies,” Kadle said.