Bharat Banka will head the private equity (PE) foray of the AV Birla Group. Banka -- a member of the group's top management and head of corporate finance, and part of the old guard -- has been instrumental in the group's major acquisitions of Ultratech Cement and Idea Cellular, besides playing a key role in the restructuring of some group companies.
This would be the first venture of AV Birla Group in the financial sector where it has not joined hands with any foreign partner. “We are in the process of setting up the system and the infrastructure and have already appointed Bharat Banka as the CEO of the fund," said Ajay Srinivasan, chief executive officer of financial services of AV Birla Group. Without disclose the size of the fund, he said that the system would be in place by end of March 2008 and be operational in the second quarter.
The group is launching the fund with an eye on the growth opportunities that Indian market offers, said a senior official on the condition of anonymity. “Our aim is to be among the top three players in the private equity space within next 3-4 years, said an official.
The PE fund would primarily be a growth fund and invest in companies that offer growth opportunities in the long term, said Srinivasan, adding that a rapdly growing economy was bound to many investment opportunities. The fund would primarily focus on the domestic market and invest across sectors.
Sources said that the promoters would provide between Rs 800 and Rs 1,200 crore ($100 million an $150 million) as seed capital to start the operation. They would subsequently raise $1-1.5 billion from the global markets. Private equity firms usually raise between 5-10 times of the initial capital raised from internal accruals.
The group has a vision to become one of the country's leading homegrown private equity players such as ICICI Ventures and ChrysCapital, which are leading players with assets under their managment of around $1.6 billion under and expected to grow to around $4 billionin the next 3-4 years.
For insurance and mutual funds, the group has partnered with Sun Life of Canada, in which the foreign partners hald 26 per cent and 50 per cent stake respectively.