Tata Capital to raise equity from international and domestic Investors

Tata Capital, Tata Group’s financial services arm Wednesday reported that it plans to raise private equity from domestic and international investors. The move will see the company raise about $1 billion in private equity fund by 2011, in its bid to expand its business and invest across four themes.


Tata Capital managing director, Praveen Kadle, said the company already has raised about Rs 900 crore, around $200 million, from domestic investors and is currently keen on raising more equity from international investors, with emphasis on investors from Europe. According to him, the fund accrued from the international investors will go into expanding its Healthcare and Growth funds. However, Kadle would not disclose the details of the amount foreign investors are expected to put towards the $1 billion fund.


Even though the Healthcare Fund amount from international investors was not mentioned, sources revealed that Tata Capital intends to invest around Rs 500 to Rs 600 crore in acquisition investments of mid-size pharmaceuticals companies. Healthcare Fund is understandably Tata Capital’s main area of growth, with its two other funds, Special Situations and Innovative expected to raise funds majorly from domestic, Indian investors, particularly financial institutions.


Kadle further said the company had received positive signals from international investors in its domestic roadshows, reiterating that, whereas many investors remain cautious and liquidity is rigid, the company believes funds are available for a profitable investment theme. Major global equity firms have recently found it tough trying to raise funds as limited partners are unwilling to lend funds as a result of their experiences in the global financial meltdown.


Limited partners are investors in a private equity firm, inclusive of pension funds and endowments. Tata Capital was begun in 2007 as a non-banking firm and its current balance sheet is estimated at Rs 13,000 crore, with a loan book pegged at almost Rs 7,500 crore. The company currently has plans to raise around Rs 2,000 to Rs 3,000 crore in debt for its business.


The company began another firm Tata Capital Infrastructure that targets investments in the infrastructure sector in the country, but in compliance with the country’s Reserve Bank regulations. In May, the Reserve Bank of India loosened up its offshore borrowing regulations for infrastructure fund companies, arguing that such companies do not have to necessarily seek RBI approval for raising offshore capital equivalent to or less than half of their own funds.

15 July 2010.