ICICI has formed a joint venture with Trust Com-pany of the West, US to raise investment funds from overseas markets.
A 50:50 joint venture the company has already in place the TCW\ICICI India Private Equity Fund LLC (Fund) registered in Mauritius.
TCW, set up in 1971, is among the leading fund management companies in the US and currently manages assets aggregating $53 billion.
It specialises in the management of tax exempt pension and retirement funds endowments and foundations in the US and abroad. In Asia, it has about four funds and one each in Brazil and Argentina.
The fund plans to raise $125 million of which $51 million has already been raised as the first tranche.
The fund will be a closed end seven year fund that will invest in unlisted private equity of medium-sized Indian companies.
Technology Development and Investment Company of India (TDICI), the venture capital arm of ICICI has been appointed investment advisor to the fund.
According to N Vaghul, chairman, TDICI the company has already identified two companies and has another 18 in the pipeline for investment.
The sectors that are being targeted include software, auto components, pharmaceuticals, chemical and engineering industries. In all the companies identified for investment, the fund will take a significant minority stake that will vary anywhere between 30 and 49 per cent.
Apart from the Fund, ICICI will also take a minimum 5 per cent stake in these companies. Minimum investment of the Fund will be $1 million.
Overseas investors in the Fund are looking for returns that are will be at least 25 per cent on dollar terms.
But, with the rupee depreciating, the actual returns are likely to be even higher, says A J V Jayachander, president, TDICI.
Typically, TDICI will look for a holding period of about three or four year investment period after which the company will exit from the venture either through an IPO or subsequent sale on the stock exchange.
Sale to strategic investors and buyback by the management will be the other exit options.
Depending on the success of this fund, ICICI will work on a second offshore fund, Vaghul said.
