Tata Sons, an investment company of $100-billion Tata Group, has signed an approval of Rs 10,161-crore investment plan which focuses on the insurance, realty and retail units, defence and conglomerate’s finance. It has decided to invest up to Rs 1,800 crore in Tata Advance Systems, Rs 1,750 crore in Tata Realty & Infrastructure NSE 0.84 %, Rs 260 crore in Tata AIG General Insurance, Rs 250 crore in Infiniti Retail, Rs 2,500 crore in Tata Capital, and Rs 2,001crore in the subsidiary holding company namely Panatone Finvest.
The investment budget contains Rs. 1600 crore of IDBI Federal Life Insurance for a possible acquisition. After taking his charge, Chandrasekaran in the first year of his service, has sought to fix the group’s high leverage, strengthen the capital ratios and also deal with the acquisitions and businesses gone awry. He also made two major deals including forming a joint venture with the ThyssenKrupp for the Tata Steel’s European business and selling the mobile telephony business to rival Bharti Airtel.
Tata is in a unique position to successfully invest in and build companies. Originally founded in 1868, the firm has a long history of creating and nurturing businesses, and now consists of approximately 100 companies operating in over 40 industry sectors across over 80 countries. It is one of India’s most trusted and highly respected companies, and India’s most recognized brand.
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Tata Capital Ltd, a financial services business of the Tata group which manages the various private equity funds, has earmarked $115 million to be invested as its general partner commitment, as the firm looks to rise up to $1 billion across three private equity funds, said two people aware of the development.
Recently, Tata has raised three new funds namely, Tata Opportunities Fund II, Tata Capital Growth Fund II and Tata Capital Healthcare Fund II. Tata Capital have raised $600 million, $240 million and $75 million, respectively, in their maiden versions.
On behalf of the Limited Partner Investors, each Tata Capital fund is run by separate professional, which are experienced and dedicated in their work. These teams also have a privileged access to the considerable resources of the company to source opportunities, diligence the markets and companies, build an ethical and professional businesses for exit, add value to the companies and also get references on the sellers.
“Tata Capital is on the road to raise three new funds, which could see them raise a total of nearly to $1 billion, if the fund-raisings are successful,” said one of the persons cited above. “For these three funds— Tata Opportunities Fund II, Tata Capital Growth Fund II and Tata Capital Healthcare Fund II—they are looking to raise $500-600 million, $300-350 million and around $120 million, respectively,” he added.
While fundraising for the Opportunities and Growth funds are in the initial stages, that for the Healthcare fund could be closed as early as the end of this calendar year, he added. To support the fundraising activities of the three funds, Tata Capital has earmarked significant sums of capital to be invested as the general partner or co-investment commitments in each of them.
A general partner or fund manager is typically required to commit a certain percentage of the fund’s capital from its own pocket in order to have ‘skin in the game’. This gives comfort to third-party investors in the fund, so-called limited partners, that the manager will invest capital responsibly as its own money is also at stake.
The Tata Opportunities Fund, through its maiden $600 million fund, invested the bulk of its capital in Tata group companies such as Ginger Hotels, Tata Sky, and Tata Projects Ltd. The second fund is expected to follow a largely similar strategy.
In August 2015, the Opportunities fund invested an undisclosed amount in taxi-hailing app Uber Technologies Inc. According to Reuters, the deal was worth $75-100 million. Other non-Tata group investments include auto-component maker Varroc Engineering Pvt. Ltd and TVS Logistics. The fund is headed by Padmanabh Sinha.
Tata Capital Growth Fund, which is headed by Akhil Awasthi, has invested in companies such as small finance bank licensee Janalakshmi Financial Services Ltd, insurance company Star Health and Allied Insurance Co. Ltd and affordable lender Home First Finance Co.
Tata Capital’s fundraising comes at a time when a large number of fund managers are out in the market to raise capital, on the back of India’s increased attraction due to relatively stronger economic growth among emerging market peers and economic reforms such as the goods and services tax. Nearly twelve private equity industry executives are come up in order to raise up to $2 billion for their new funds, across private equity and venture capital.
The list includes former India Value Fund Advisor partner Sunil Vasudevan’s Amicus Capital, former Carlyle Group managing director Mahesh Parasuraman, Siddharth Parekh’s Paragon Partners and former KKR India director Heramb Hajarnavis’s Sea Link Capital Partners.
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