Tata fund leverages parent’s brand

LPs include less than 10 global institutional investors from North America, Asia and the Middle East. The Japan Bank of International Cooperation is one of these, while sovereign investors, financial institutions, global corporates and high net-worth families make up the rest.

Tata Capital had initially expected to raise $1 billion, but Bobby Pauly, a partner at TOF, says the emphasis was on quality of investor. "We had a high threshold for individual investors. Had we wanted to chase quantum we could have easily reduced the threshold, gone with intermediaries or placement agents. It's not just the quantum but the quality and nature of investors that makes a difference for the long term."

The fund, which has a 10-year lifespan, has been more successful with LPs who are now seeking to build India PE exposure, added TOF Managing Partner PadmanabhSinha.
So far INR2.2 billion ($48.74 million) from the fund has been committed to Roots Corporation, a subsidiary of Tata Group's The Indian Hotels Company Limited (IHCL), which runs the budget Ginger Hotels chain.

The investment ties in with one of the themes the managers are interested in - consumer services. Engineering and manufacturing will also be focal points, especially where there is a combination of domestic and international market opportunity. So, too, will infrastructure.

Tata companies are likely to account for the first three transactions. The group has previously done very few deals with PE investors, but that is now changing as part of efforts to meet aggressive growth targets.

"The outgoing chairman last year spelt out certain objectives in terms of revenues of the group in the next five years and if you look at those growth objectives you'll need a fair amount of capital," Sinha says. "So that's the reason I feel that it would make sense for them to look at external sources of equity capital as well."

TOF will use its sponsor's strengths as it explores control deals as well as minority or significant minority stakes in portfolio companies.

PrakashTelang, Ex-CEO of Tata Motors and HomiKhusrokhan who used to be the CEO of Tata Chemicals and Tata Tea, will serve as operating advisers to the fund. "Having this talent pool that is available to us, of people within the Tata Group or of retired people, we think will be a big differentiator for us as we influence outcomes of our investments" says Pauly.

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• Topics
• Fundraising
• South Asia
• Tata Capital
• Fundraising
• India