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January 09, 2006

A well timed play on India

The Evolvence India Fund (EIF), the first independent private equity "Fund of Funds" set up exclusively for investments in India, has been very active in the six months since its launch in June 2005. EIF has already invested into five India-focused funds: GW Capital’s India Value Fund II, Barings (India) Private Equity Fund II, IL&FS India Leverage Fund, IDFC Private Equity (Mauritius) Fund II and UTI Venture Capital's Ascent India Fund.

EIF is sponsored by the Dubai-based Evolvence Capital which started out as a vehicle to manage the personal wealth of nine high net-worth families in the Middle East. EIF received commitments of $73 million at its first closing in September and expects to have its final closing by Q4, 2006, Jay V. Jegannathan, Managing Director of EIF told Venture Intelligence India. The final fund size is expected to be $300 million.

EIF will focus on investments in private equity across all sectors, including real estate and infrastructure development. About 48% of EIF's corpus will go towards PE investments, 30% into real estate and the balance 22% into infrastructure projects. Evolvence also expects to launch a separate real estate focused fund on India during the current year.

While 60% of its investments will go towards India-focused funds, EIF also has the option to co-invest along with these funds. EIF’s Limited Partners (LPs) will also have an opportunity to selectively participate in such co-investments. EIF’s ability to co-invest gives its portfolio funds the confidence to go after investment opportunities that they might not otherwise take up due to the limitation imposed by their fund size.

EIF is headed by Jegannathan (a qualified Chartered Accountant with wide experience in the Middle East) along with co-Managing Director Paresh Thakker (who also has an accounting background and had worked earlier with Infinity Ventures).

Because of its good timing, EIF has been able to invest into the new funds from PE firms with a good track record - like GW Capital and Barings - before they closed. "At about the same time we started out, there were two or three other announcements of fund of funds for India. But EIF is the only one to have moved ahead and capitalize on the opportunity in a timely manner," says Jegannathan.

There's one more angle to EIF's timing advantage: now that it is already invested into some of these top-performing Indian funds which have already closed, foreign investors - who were not able to invest into them directly - now have an opportunity to get exposure to these funds in an indirect manner via EIF.

Given its expertise in accessing money from the Middle East and its opportune timing, EIF has swiftly emerged as a major player in the Indian private equity landscape and one that will be closely watched as a barometer of the industry’s performance.

Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.