Tata Cap plans $1-bn PE fund by Dec 2011

Company to apply for infra NBFC status so that it can float infrastructure bonds.

Tata Capital, the private equity (PE) and financial services arm of the Tata Group, plans to raise $1 billion (around Rs 4,670 crore) by December 2011 under its four private equity funds — special situation, innovation, growth capital and healthcare.

The firm, which started raising fund early this year, today announced its first closure. “We have got commitment for Rs 900 crore from the domestic market. Most of these investments have come from financial institutions. We started the process of fund raising in January 2010,” said Tata Capital Managing Director and Chief Executive Officer Praveen Kadle.

The firm will tap international markets for its growth and healthcare funds. “In the distressed assets portfolio, we will look at companies that are looking for capital but are not loss-making entities. We will also look at companies where the growth story is good but the management is looking for equity support,” said Kadle.

Tata Capital will start investing in the coming few months. It will take a minority stake of 15-30 per cent in a company. The fund would invest Rs 50-200 crore in one company. “We will soon make an investment. Based on the initial response, we are hopeful of closing the fund by December 2011,” Kadle added.

Tata Capital has presence in consumer and corporate finance, investment banking, infrastructure finance and equity and debt broking.

“We would like to grow our housing finance and auto finance businesses. We want to increase our market share in these areas,” he added. Kadle said the company would apply for an infrastructure non-banking financial company status.

The company aims to grow the asset size to Rs 15,000-16,000 crore by the end of 2010-11. “We will need Rs 2,000- 3,000 crore more capital for this financial year,” said Kadle. The total balance sheet includes treasury and other investments. “We have raised short-term and long-term capital. Our Tier-I capital as on March 31 is around 16 per cent and around six per cent for our Tier-II capital.”

As of June-end, Tata Capital has a total balance sheet size of around Rs 13,000-crore. Out of its total loan book, nearly Rs 7,500 crore is corporate loans and around Rs 2,500 crore retail advances.

The company is in the process of setting up an infrastructure financing arm soon. “We are in the process of setting up the company — Tata capital Infrastrucure. We have received the registration for the firm and expect to get the initiative operational in the next six months,” Kadle said.

Tata Capital has posted a net profit of Rs 51 crore for the last financial year. Its gross revenue stood at Rs 1,379 crore, fee-income contributed nearly 42 per cent to the revenue. Its capital adequacy ratio stood at 21.4 per cent.