February 2009
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Investor defaults hit private equities

There are rumblings in the world of private equity (PE). The investors in the funds, known as limited partners (LPs) in trade parlance, have defaulted on their commitments to several PEs. At least four PE funds in India have been told by some of their major LPs that they would not chip in with the promised money. These PEs — which include big Indian VCs and offshore funds — are exploring legal recourse under terms laid down in the subscription agreement between them and LPs. It’s easier for an LP to back out if it has not yet invested in the fund pool. However, if it holds back investments after contributing a few tranches, the fund manager may freeze the money already invested. Indeed, a few funds ET spoke to did not rule out this possibility. One of the funds floated by an Indian financial services firm, which recently announced the completion of fund raising and even indicated a 25% return, has been told by two big US pension funds not to go ahead with the ‘draw down’. […]

UTI close to 26 pct stake sale – sources

UTI Asset Management is close to selling a 26 percent stake for $175-$200 million to one of at least four investors and private equity firms, valuing the firm at 7-8 percent of assets, banking sources said. UTI has held talks with U.S. money manager T Rowe Price , Japan's Shinsei Bank and private equity firms Actis and ChrysCapital for the deal, likely to close by late February, three banking sources and one company source with knowledge of the transaction said. The sources, including one who is directly involved in the negotiations, declined to be named as they were not authorised to speak to the media. One banking source said T Rowe Price was the front-runner. […]