ICICI plans to raise $8 bn by next year

MUMBAI: 6-12-2007.

ICICI group may well turn out to be the single-biggest channel for foreign investment in India. The group’s fund mobilisation target for ’08 for private equity investments in India stands at around $8 billion, which is half the total investment by all foreign institutional investors (FIIs) into the country this year. Of this, ICICI Venture alone is looking at raising around $5 billion with the remaining to be raised by ICICI Bank. ICICI Venture is aiming for a size of $10 billion by 2010. It is already the largest Indian private equity player with over $2.5 billion of assets under management. Next year, it plans to raise $5 billion. Among others it is launching a $2 billion real estate fund and $2 billion private equity fund. The average size of investments by the fund will also rise in the future. Currently, the size of investments is $60-100 million, which will go up to $200 million, said insiders. They added the fund is also likely to strengthen its management team going ahead. ICICI Bank also has ambitious plans to mobilise funds for private equity investments in India. The bank is looking at a fund of funds with an initial size of around $500 million, which will expand to around $2.5 billion. It is also in the process of raising another $2 billion for an infrastructure fund. Both the funds are likely to be launched next year. If the fund-raising plans go through, the group will rub shoulders with the biggest multinational players who now have a presence in the country. Bigger players like Temasek, Warburg Pincus, CVC, New Bridge, Blackstone and Carlyle do not have an India-specific fund. Other players are also looking at major fund-raising plans for investments into India. Private equity players say that over $12 billion of funds will be mobilised by PE players for investment into India. This figure factors in ICICI group’s fund raising plans. Other than Indian private equity groups, this includes funds from Japan to Middle East who are also looking at raising India-dedicated funds. A host of other private equity companies will also hit the fund-raising trail next year. IDFC will hit the trail early next year. Says Shahzad Dalal, vice-chairman and MD, IL&FS Investment Managers, We will hit the market early next year to raise $750 million for a real estate fund. Japanese major, Mizuho is also looking at launching a private equity fund based out of Japan for the Indian markets. The size of the fund will be in the region of $500 million, $1 billion. It is likely to be a growth fund, said an official from Mizuho Securities. New Frontier Capital Management, a Japanese institution, is also looking at setting up a pan-Asia fund, but with a primary focus on India. The fund, according to the firm’s CEO, Mikihide Katsumata, is likely to be in the range of $300-$500 million. He was speaking on the sidelines of Asian Private Equity & Venture Forum-India 2007. Others like Evolvence is also looking at raising a fund of funds for investments into India related funds. If sources are to be believed there will be a couple of more multi-billion fund of funds that are going to be raised. Others who are likely to hit the market next year include IDFC, UTI Ventures, and Blue River Fund among others. As compared to European markets where fund sizes grow by 50%, fund sizes are on an average doubling themselves in India, says Guy Eugene, managing partner, Legacy Finance (a placement agency), India is becoming a more mature market. Investors into Indian funds are looking at returns of 25% against around 15% in European funds. One of the main reasons is that investors don’t know enough about the market.

By Shamsheer (ET)