Kedaara bucks India fundraising trend
It hasn't been a stellar year for India PE fundraising. Driven by a combination of disillusionment over past underperformance and uncertainty about the prospects for the domestic economy, until last week LPs had committed just $1.9 billion to domestic managers. This compares to $2.4 billion for 2012 as a whole, the lowest annual total since 2004.
Kedaara Capital, however, has confounded the skeptics to reach a final close of $540 million on its debut fund, beating the $500 million target. Indeed, the US dollar portion of the fundraising was wrapped up - bar the paperwork - three months ago and several investments are already in the pipeline.
The firm plans to target buyouts as well as the minority growth deals that dominate Indian private equity.
"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," said Manish Kejriwal, Kedaara's co-founder and managing partner.
Kejriwal set up the firm at the end of in 2011 alongside Sunish Sharma, formerly managing direct 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 partnership with CD&R - a UK-based firm known for its operational approach to buyouts - has helped Kedaara define its approach to control transactions and develop systems for attracting and deploying operating partners. The operating team includes former CEOs from Genpact, Idea Cellular and Hindustan Unilever.
The private equity firm's 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 among the others reported to be participating.
Speaking to AVCJ earlier this year, Jane Rowe, senior vice president at OTPP, stressed the importance of Kedaara's strong mix of local networks and Western training and skills - and of Kejriwal's Temasek credentials. The pension plan also supported the spin-out of FountainVest Partners, which was set up by members of Temasek's China team.
In addition to the US dollar fund, Kedaara is currently raising a rupee-denominated fund for local investors. It will invest alongside the US dollar vehicle on a pro rata basis. The combined size of the two entities will not exceed $600 million.
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