New Silk Route planning a new fund next year

NSR is on verge of exhausting its first fund of $1.4 bn

Private equity major New Silk Route (NSR) is likely to raise a new fund next year as it is on verge of exhausting its first fund of $1.4 billion, a senior official has said.

"We definitely will look into doing a second fund. Probably some time next year, we will raise a fund," NSR partner Darius Pandole told PTI here.

NSR, which has exhausted about 65% of its first fund of $1.4 billion raised in 2007, will exit from 17 investments first before pitching for a new fund, he said.

He, however, declined to divulge any target size of the money to be raised or the investment themes for the new fund, saying those factors are yet to be decided.

On difficulties NSR may have to incur in realising its future plans in the backdrop of economic gloom, besides the conviction of its founder Rajat Gupta in an insider trading case in the US, Pandole conceded it is "tough".

"In an environment like right now we are in...Fund raising is very hard. It is a very tough environment, you cannot fool yourself into thinking otherwise," he said while refusing to comment on events surrounding Gupta.

Gupta had resigned from the fund after allegations of passing on insider information to the head of the hedge fund Galleon Raj Rajratnam, who was also a co-founder of NSR, had surfaced.

Pandole said NSR has "less than two years" to complete committing the remaining amount from the first fund of USD 1.4 billion.

NSR is yet to make a single exit from its first fund, which has investments across sectors like hospitality, financial services, telecom infrastructure and logistics, he said.

Without giving any timeline or the investments on the block, Pandole said an exit was imminent as it would help NSR establish the returns before they pitch to potential limited partners.

The fund is at present bullish on infra services, consumer-oriented technology, media, telecom, financial services and manufacturing sectors.

However, it will stay away from real estate which requires a separate expertise, and sectors like airlines and textiles which are witnessing stress at present, he said.

On crucial valuation, Pandole said, the ones being asked by promoters of domestic companies have become "lower and more sensible", from the highs of 2007-08 when the PE scenario was flush with money.