Kedaara closes debut India fund at $540m, rupee vehicle to follow

Kejriwal set up the firm at the end of in 2011 alongside Sunish Sharma, formerly managing director at General Atlantic, and Nishant Sharma, formerly of General Atlantic and McKinsey & Company. They sealed a partnership with Clayton, Dubilier & Rice (CD&R) in March 2012 and launched the fund about two months later. A first close came in October 2012.

The successful fundraise - Kedaara's target for the US dollar portion was $500 million and it reached $540 million in commitments two months ago - has come despite a challenging capital-raising environment in Asia and with many LPs particularly downbeat on India.

In addition to pursuing minority growth deals, the PE firm is targeting control transactions. The latter are still relatively few in India but Kejriwal claims interest is growing. "On the control side, we are seeing a lot of interest not only from family conglomerates, but also from first-generation entrepreneurs facing succession issues as well as multinationals looking to divest their India portfolios," he said.

The partnership with CD&R is important in this context. The UK-based firm, known for its operational approach to buyouts, has helped Kedaara define its philosophy and develop systems for attracting and incentivizing the right kind of operating partners and establishing how these people will work alongside portfolio companies.

The Kedaara operating team includes Pramod Bhasin, Sanjeev Aga and Vindi Banga, ex-CEOs of Genpact, Idea Cellular and Hindustan Unilever, respectively.

The private equity firm's minimum ticket size is expected to be $25-30 million and there is no upper limit on transactions due to the appetite for co-investment among LPs. According to sources familiar with the situation, Kedaara is currently looking at a deal with an enterprise value of up to $220 million and an equity check of about $150 million. The PE firm would put in $50-75 million, with LPs providing the rest.

Ontario Teachers' Pension Plan (OTPP) is anchor LP for the fund, with Temasek Holdings and Abu Dhabi Investment Authority (ADIA) among the others reported to be participating. Kedaara is the most recent addition to OTPP's Asia portfolio and one of only two new commitments made globally last year by Teachers' Private Capital, the pension plan's private equity and direct investment arm.

"In India we looked at number of different groups and hadn't found one for which the chemistry felt right. When we think about the guys at Kedaara, we liked the background they brought to the table - a strong mix of local networks and Western training and skills," Jane Rowe, senior vice president at OTPP, told AVCJ earlier this year.

Kedaara is one of only five independent GPs to reach a final close in excess of $400 million for an India-focused private equity fund since the start of 2011. The others are ChrysCapital Partners ($510 million for Fund VI), Multiples Alternative Asset Management ($450 million for Fund I), WestBridge Capital ($500 million for its Crossover Fund after the principals regrouped following a period at Sequoia Capital), and Everstone Capital ($580 million for Fund II).

Tata Opportunities Fund, raised by Tata Capital with a brief to invest within the Tata group of companies and also in Indian businesses outside it, remains the largest fundraise of the year so far. It reached a final close of $600 million in May, short of its $1 billion target. IDFC Alternatives, meanwhile, announced a first close of $644 million on its second infrastructure fund in September. It is targeting $1 billion.

According to AVCJ Research, excluding Kedaara, India-focused funds have received commitments of $1.9 billion for the year to October. This compares to $2.4 billion for 2012 as a whole, the lowest annual total since 2004.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Fundraising
• South Asia
• Buyouts
• Expansion
• Fundraising
• India
• Kedaara Capital
• OTPP
• buyout
• Growth capital