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Religare plans $500-million pan-Asia fund

After venturing into the private equity (PE) space earlier through a joint venture, financial services provider Religare is now planning to go solo.

The company is planning to launch a $500-million (around Rs 2,350 crore) pan-Asian fund targeted at emerging economies. The fund would mainly invest in Southeast Asian markets such as Indonesia, Malaysia, Thailand, the Philippines and Singapore, and partly in India, sources close to the development said.

Religare would shortly open representative offices in Singapore, Bangkok and Kuala Lumpur.

While it would be a sector-neutral fund, the major focus areas would be healthcare, diagnostic labs, hospital chains, financial services and consumer sectors. The financial services group is in talks with Indian and international limited partners for raising funds. Sources said that promoters might provide 20 per cent or around $100 million (around Rs 470 crore) as anchor investment in the fund.

In April, Religare had entered into a joint venture with Milestone to launch a Rs 600-crore India Build Out Fund I. Despite being announced seven months back, it is still in the process of raising funds. Religare had contributed Rs 60 crore as anchor investor in the fund, mainly targeting healthcare and education sectors. Fund managers were expecting an internal rate of return of around 30 per cent.

When contacted, a Religare spokesperson said, “We are looking at Southeast Asia as part of our expansion plans, but would not like to get into specifics at this point in time.”

A source close to the development said, “There are a lot of untapped market in Southeast Asia where there are tremendous opportunities. This will be one of their significant steps in establishing a global identity.” The Religare Milestone Fund recently invested Rs 250 million in IMS Learning Resources, an educational services player focused on test preparation, skill development and formal education.

The pan-Asian fund comes at a time when fund raising by global PE players has hit a five-year low by raising $38 billion during July-September 2009. Fund raising in the third quarter went down by 55 per cent compared with the second quarter when $84 billion was raised globally, according to data from Preqin, a fund tracking firm. The average time taken by funds to achieve closure was estimated at 18 months, which was nearly double the time taken in 2004.

There are 117 pan-Asia private equity funds currently planning to raise around $59.2 billion. There are 78 India-focussed funds looking to raise $24 billion. A recent KPMG survey said that India could lead global PE recovery as 33 per cent of investors ranked the country as the most attractive market after China.

ICICI Ventures was on road to raise a $500-million (around Rs 2,350 crore) fund, followed by Renuka Ramnath-promoted Multiples Asset, which was also planning to raise a $500-million fund. Axis Private Equity was also in the process of raising a $250-million (Rs around Rs 1,175 crore) fund for infrastructure. Some of the recent fund raising include a $750-million infrastructure fund for emerging markets by global private equity firm Actis.

Source: Business Standard

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