The Piramal Group, which last week announced major diversification plans after selling off its domestic formulation business, would invest Rs 500 crore in its newly-launched private equity (PE) fund, apart from raising funds from domestic and international markets.
“We would be putting in Rs 500 crore in the PE fund within the next couple of years. We would first be raising funds domestically and then globally,” Ajay Piramal, chairman, Piramal Group, told Hindustan Times.
The company has still not announced the focus of the PE fund, in terms of sectors. However, the company is likely to explore two sectors in which it already has a presence — real estate and pharmaceuticals. Indiareit, the group’s real estate arm, already has an exposure of R3,800 crore in the segment.
The fund would invest in domestic companies in the short run and international firms at a later stage, company executives said. “It would give investors a lot of confidence when a promoter like Piramal comes forward and say he would invest his own money in the fund. Especially in the present situation when not many PE funds are able to raise funds due to global turmoil,” said a senior analyst with a global consultant.
Piramal refused to divulge the total size of the fund, indicating though that it would be substantial. “In PE you do not require too much of your own fund (as investment) but we would invest a small portion of the fund.”
“The size of the fund would depend on many aspects and we are still on the drawing table regarding the same. We would be taking a decision on the size within the next quarter, a senior company executive said.
According to industry trackers, the fund would have an India focus for the first couple of years after fund-raising.
Last week, the group announced its foray into financial services with the launch of two non-banking financial companies (NBFCs) and a PE fund. While one NBFC would focus on infrastructure another would focus on real estate among other sectors. The group was exploring investment opportunities after selling its domestic formulation business to Abbott Inc for Rs 17,000 crore.
“We were only getting an interest of around 8% on our cash, now we would get much more returns. In case of NBFCs the returns would be immediate,” said a top company executive.