Mumbai-based ICICI Venture has raised an additional $100 million for the first close of its third fund, India Advantage Fund (IAF) Series III, bringing total commitments so far to $350 million. The fund has a target of $500 million, with a hard cap of $800 million.
The firm held a first close on $250 million in October. It has raised all the capital so far entirely from domestic institutions and high net worth individuals, Jayanta Banerjee, a president at the private equity group of ICICI Venture, told sister news site PEI Asia.
Banerjee told PEI Asia in October that he anticipated another close by March 2010 at the latest. He said limited partners in the fund so far include the Life Insurance Corporation of India, Punjab National Bank, Andhra Bank, and ICICI Venture’s parent company, ICICI Bank, which will commit up to 10 percent of the fund’s capital.
IAF Series III is a multi-sector fund that will make both growth and buyout investments. The fund follows IAF Series II, an $810 million fund which closed in 2006. Seventy two percent of that fund’s capital has been committed, Banerjee said in October. The firm closed IAF Series I on $267 million in 2003.
ICICI Venture, one of India’s oldest private equity firms, is just one of the many firms affiliated to prominent Indian conglomerates in an industry dominated by captive funds.
Other well-known Indian private equity firms like IL&FS Investment Managers, IDFC Private Equity and Kotak Private Equity are also parts of larger financial services groups.
One reason given for the dominance of captive funds is that local LPs, who are in the main new to private equity, prefer to back a known brand name and reputable sponsor rather than a relatively young independent team.
This view would seem endorsed by the number of captive funds in India that are raising money from domestic investors this year. Besides ICICI Venture, firms such as Aditya Birla Capital Advisors (affiliated to the Aditya Birla Group) and Reliance Equity Advisors (a subsidiary of Reliance Capital, the financial services arm of the Anil Dhirubhai Ambani Group) are also tapping the domestic markets for the first tranche of their current fundraising efforts.