Private Equity Firms Entered 2024 with Massive $2.59 Trillion in Unspent Cash

The private equity industry has entered 2024 with massive amounts of unspent investor cash ( ~ dry powder) and an unparalleled stockpile of ageing deals that firms must sell in coming years.

Private equity firms were sitting on a record $2.59 trillion in cash reserves available for buyouts and other investments as of December 15, according to S&P Global Market Intelligence.

Nearly a quarter of that cash was held by 25 of the industry's largest groups, including Apollo Global, Blackstone, KKR, CVC Capital and Advent International. Notably, 19 out of these 25 firms were headquartered in the US.

It is to be noted that this analysis report is limited to the top 25 global private equity investors by dry powder with investments announced or completed between Jan. 1, 2023, and Nov. 30, 2023.

Industry executives and their advisers believe the new year presents a big test for private equity investors as they seek ways to sell down large large investment while searching for new opportunities.

The dry powder total as of Dec. 1 represented close to an 8% increase over the December 2022 total of $2.39 trillion, according to S&P Global Market Intelligence and Preqin data.

Apollo Global Management Inc. led the list of these PE firms, with $55.14 billion in unspent capital available to its private equity strategies, followed by KKR & Co. Inc. and CVC Capital Partners SICAV-FIS SA. 

According to consultancy Bain & Co., the number of private equity exit transactions in last quarter was near a decade low, which left buyout groups with a record $2.8 trillion in unsold investments and what Bain described as “a towering backlog” of companies to exit.

In India, the country's startup ecosystem is currently sitting on $20 billion (~ ₹ 1.6 trillion) in dry powder waiting to be allocated, according to Rajan Anandan, managing partner, Peak XV Partners (formerly Sequoia India).

According to Financial Times, the private equity groups selling businesses to each other had increasingly used complex structures. Those included performance-based earn-outs — which pay sellers additional cash if a business performs better than expected — or other tools such as deferred payments from buyers and large rollover investments from sellers in order to get deals done.

Quoting Chris Zochowski, a private equity partner at Shearman & Sterling, the Market Intelligence report states that the buyers want lower asset prices, and the resulting valuation gap creates hesitancy to execute deals.

Chris forecasts an upward trend in deal activity in the next 12 months, at a much greater rate than what was witnessed in 2023.

Deployment of the massive Capital, raised by PE firms, could begin in 2024 if inflation sinks down and interest rates begin to stabilize.

TVS Capital Funds Elevates Gaurav Sekhri to Partner

TVS Capital Funds, one of the largest rupee capital growth equity funds, has promoted Gaurav Sekhri to the role of Partner as part of its ongoing efforts to institutionalise its operations. In the six years that Sekhri has been with TVS Capital Funds, he has led the B2B services vertical and has spearheaded investments in LEAP India, Digit Insurance, and Increff. Sekhri brings with him a wealth of experience in private equity and public market investments, having worked with companies such as Piramal Group, SBI Global Markets, ICICI Bank, and Bank of America.

Commenting on Sekhri’s promotion, Gopal Srinivasan, the Chairman and Managing Director of TVS Capital Funds, said, “This is part of our continued efforts to institutionalise TCF and take the fund to the next level. I am confident that Gaurav’s expertise in B2B product software and logistics and his wealth of experience will continue to help TVS Capital in its focus on supporting next-generation entrepreneurs, to build successful businesses.”

Gaurav Sekhri, Partner, TVS Capital Funds, expressed enthusiasm for his new role, saying, “I am delighted with this announcement. Will continue to work hard and stand committed to our focus of empowering next-gen entrepreneurs and delivering value to all our business partners.”

TVS Capital Funds has raised around ₹3,500 Cr so far and continues to invest in tech-driven businesses in financial and B2B services. The company has been strengthening its leadership team with strategic additions such as Anuradha Ramachandran, as the Managing Partner – Investments, and Krishna Ramachandran, as the Managing Partner and COO. These moves are aimed at building robust institutional capability for the firm.

About TVS Capital Funds

TVS Capital Funds is one of the largest domestic capital PE Funds, with an AUM of ~₹2000 crores in its current Fund. Its third fund backs top-quality next-gen entrepreneurs piloting technology-driven businesses in financial services and B2B/enterprise services. It empowers them with capability capital and helps them build great businesses. Category focus, led by best ideas and combined with an established network of advisors, enables the fund its right to win. TVS Capital plans to raise its next venture growth fund in 2023.

For more information, visit www.tvscapital.in/

General Atlantic to Invest $1-1.5 Bn in India's Consumer Tech Firms in Next 1-2 Yrs

New York-based private equity firm General Atlantic (GA) is looking to invest in consumer technology space in a big way, announced Sandeep Naik, India Managing Director, General Atlantic, in an interaction with CNBC TV18.

Speaking about funds deployment in India, Naik said that GA will be deploying at least $1-1.5 billion in the next year or two, which will GA's largest deployment in India over the next two years "specifically backing innovative digital disruptors that will build the Bharat of tomorrow".

For GA, Consumer technology spans across telecom platforms, grocery delivery, food delivery, digital fitness, tele-health as well as education technology.

Naik said that globally GA has about $10 billion of dry powder right now that company is willing to invest in the next 2 years. Dry powder is a slang term referred to cash reserves kept on hand by a company, venture capital firm or individual to cover future obligations, purchase assets or make acquisitions.

General Atlantic, which provides capital and strategic support for growth companies, has been investing in India since 2002 and has invested up to almost $3 billion to date. The 40-year-old PE firm has invested in more than 25 companies.

GA's portfolio companies include Capital Foods, BYJU, Euangguru, and Unacademy. Last month, GA led the Rs 230 crore funding round of NoBroker.

Established in 1980, General Atlantic is said to have pioneered the concept of growth equity a.k.a Growth capital (also called expansion capital and growth equity)-- a type of private equity investment, usually a minority investment, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition without a change of control of the business

Rajiv Rattan and US-based PE Loan Star Funds together Launch MSMEs Loans

RattanIndia Finance, a joint venture between Rajiv Rattan and US-based Private Equity (PE), Loan Star Funds has launched MSME loans to facilitate easier credit access to Micro, Small & Medium Enterprises (MSMEs). The company plans to cater the MSME segment with its retail lending offering which is powered by a newly developed technology platform and backed by strong data analytics to provide customers with an easy and seamless experience. MSMEs can avail a range of financial solutions vis-à-vis access to business loans, working capital, invoicing and supply chain financing which will help them accelerate their growth.

RattanIndia Finance aims to build USD 1 bn loan book in three years and has already built Rs. 1200 crore loan book across Corporate, Retail & SME segment. The company had launched its unsecured and secured loan offering for SME customers late last calendar year.

Speaking about the opportunity in financing the MSME sector, Mr. Rajiv Rattan, Chairman & CEO, RattanIndia Finance said, “MSMEs play a crucial role in the economic and social development of the country. Our key objective at RattanIndia Finance is to empower MSMEs to realize their full potential by helping them with their credit needs. We are greatly looking forward to filling a vast gap in credit availability and simplify borrowing experience in this sector.”

“2019-2020 will be our key period of growth, when we plan to scale-up our business and establish our position amongst the top 10 NBFCs in the products that we operate. Launch of MSME Loans is in line with our business expansion plan and supplements the product suite of SME secured and unsecured loans,” added Mr. Amit Mande, Head – Retail & SME, RattanIndia Finance.

RattanIndia Finance retail lending business currently offers Personal Loans, SME Secured and Unsecured Loans and Loan Against Property to salaried and self-employed customers. It plans to add more products in the consumer and SME space during the year.

RattanIndia Finance Ltd., a Consumer Finance company provides retail and corporate loans. The company was started in partnership with Lone Star Funds, one of the largest US-based private equity group. The company, a Systemically Important Non-Deposit Taking NBFC (NBFC-NDSI), is among the top NBFCs in India with committed equity capital of Rs. 2600 Crores.

RattanIndia Finance provides Loan Against Property, Business Loans to SMEs and Personal Loans to retail customers. The company also provides big-ticket corporate loans and has marquee clients as its customers.

[Published unedited, except the headline, via Business Wire India feed]

India's Oldest PE Firm ChrysCapital Raises $850 Mn in Record 4 Months

India’s oldest Private Equity (PE) firm ChrysCapital has closed its latest eighth fund of $850 million corpus in record four months making it fastest fund-raising by any India-bred private equity firm.

This speedy fund-raise suggests that global risk capital providers are positive despite of macro-economic uncertainties worldwide.

The four partners of the asset manager pumped in about $75 million from their side, taking the overall corpus of the fund closer to $925 million.

Founded in 1999, ChrysCapital's partners are -- former Goldman Sachs executive Kunal Shroff, ex-Ranbaxy honcho Sanjiv Kaul, former KPMG executive Ashley Menezes and manufacturing expert Sanjay Kukreja as partners.

[caption id="attachment_128054" align="aligncenter" width="621"] (From left) ChrysCapital partners Ashley Menezes, Sanjiv Kaul, Sanjay Kukreja and Kunal Shroff. Photo: Manoj Verma/LiveMint.com[/caption]

ChrysCapital, which has $4 billion worth of total assets under its management, is known for its 2016 investment in India’s largest stock exchange NSE and cutting other lucrative deals in non-bank financial services company Hero FinCorp and skin care specialist Curatio.

“Given our strong pace of deployment of over $200 million per year and an active pipeline, we decided to embark on raising eighth fund in August 2018,” said Kunal Shroff, managing partner at ChrysCapital.

ChrysCapital has made 80 investments in India and exited 60 of these since its inception. The firm's notable investments in the past include Axis Bank, HCL Technologies, and KPIT Technologies.

Last month, ChrysCapital has acquired a controlling stake of 80% in US-based healthcare service provider GeBBS Healthcare Solutions, in a deal worth Rs 1,000 crore ($140 million).

In April last year, the PE firm has hired former SBI chairperson Arundhati Bhattacharya as an advisor.

Source - Times of India

IvyCap Ventures Brings on Board Senior Professional from India Focused Private Equity Fund

Ivycap Ventures has confirmed the appointment of Lipika Rajpal, making an addition to their senior level investment team. Lipika has joined as a Senior Investment Professional and will be providing strategic muscle to potential start-ups.

Lipika has nine years of experience in Private Equity investing, investment banking and has worked with CX Partners, an India focussed Private Equity fund, the Royal Bank of Scotland and SBI Capital Markets. In her last role, she was a part of the Investment Team of the CX Intermediate Capital Fund. Her investing experience spans sectors such as pharma, healthcare, infrastructure, education, auto etc.

Prior to CX Partners, Lipika worked with SBI Capital Markets where she focused on arranging project finance of over $6 billion for large corporations in the oil and gas and chemicals sector. She has also worked as a portfolio manager with the Royal Bank of Scotland (erstwhile ABN Amro Bank), where she underwrote local and foreign currency financing of over $10 billion for companies across sectors such as FMCG, metals and mining.

Lipika earned her MBA from SP Jain Institute of Management & Research, Mumbai, and has a Bachelors of Commerce from Christ College, Bangalore.

Commenting on the appointment, Vikram Gupta, CEO & Managing Partner of IvyCap Ventures said, “It is a pleasure to have Lipika on board with us, and she brings along a wealth of practical experience that will be beneficial not only to our portfolio companies, but also to the potential new startups. We are looking forward to working with her. “

The latest hire by IvyCap Ventures comes at a time when the sector-agnostic, early-to-mid-stage investment firm is in the process of raising its second fund – IvyCap Trust Fund-II – while also actively investing out of the same.

About IvyCap Ventures Advisors Private Limited:

IvyCap Ventures Advisors Private Limited, founded by Vikram Gupta is a Venture Capital Fund Management Company with an approach to focus on high-quality professional entrepreneurs from the premier education institutions of the country. It focuses on investing in early and growth stage companies across sectors such as Healthcare, Education, Food based businesses, Technology. E/m-Commerce and other innovation oriented businesses. They believe that in the case of early/growth stage companies, a strong collaborative approach is critical for success and that is what their Board of Mentors bring to the projects they get involved with. They have the required skills, industry experience and passion to support creation of distinct value in their portfolio companies.

Their portfolio includes Reuters Market Light – Into Agriculture and Farming Industry, Aujus – Information & Technology Services, Fieldez – Computer Software, Vinculum – Information & Technology Services, Leixir Lab Group – Medical, eShakti – Consumer/Online Retail, Purplle – Beauty & Grooming, Sokrati – Digital Advertising Technology, Clovia – Online Lingerie/Nightwear, Bluestone.com – Online Jewellery.

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