Financial Daily from THE HINDU group of publications
Tuesday, Jul 13, 2004
Industry & Economy
UK's Actis raising $500 m; to invest mostly in Indian assets
Mumbai , July 11
ACTIS, a private investments manager created out of CDC of the UK, is raising nearly $500 million new money to invest mostly in Indian assets.
The private equity firm will raise the money in three different funds and CDC, whose investments Actis manages, will contribute most of it. The first fund, called the Actis India Fund II, will raise about $300 million and Actis South Asia Fund will collect $150 million, half of which will go to buying assets in Pakistan, Bangladesh and Sri Lanka. The fund expects its first close by November, Mr Donald Peck, Managing Partner, Actis, said.
A few other investors from the UK, the US and Asia will put money in the funds, but CDC will be the dominant investor owning at least 50 per cent of the pool, Mr Peck said. Even though he said the fund is also talking to some Indian investors, he declined to name them. State Bank of India, IDBI and LIC have invested in one of Actis' previous funds.
Actis manages CDC's historic investment portfolio of about $200 million comprising Indian assets as well as the fully invested $160-million South Asia Fund.
"Our investment strategy has changed over the past couple of years. We are now focussing more on management buy-outs and leveraged buy-outs. We have completely stopped making small investments," Mr Peck said. He said the firm is looking for investment opportunities in the pharmaceuticals, chemicals and automobile sectors.
He said a third fund that would buy stressed assets in India is also in the pipeline. "We would put that (stressed assets fund) together soon. The name and size of the fund is yet to be decided," Mr Peck said.
Actis has an agreement with ING Vysya Bank and Corporation Bank to set up an asset reconstruction company. Under a separate agreement with ING Vysya, the company will also buy stressed assets worth about Rs 400 crore from that bank.
The private fund has also been regularly encashing its investments in India. While it invested $465 million in 2003, it sold about $350 million of its assets that year, which included sale of its stake in UTI Bank. It had sold about 15 per cent equity stake in UTI Bank to HSBC. However, an agreement between the two to transfer a further 5 per cent holding ran aground when the Reserve Bank of India recently refused HSBC permission to buy the stake.
After regularly divesting itself of its stake in Daksh, Actis sold its residual holding to IBM when the US giant acquired the company. Sale of Actis' holding in Netkraft, a Bangalore-based technology company, to US-based Adea is awaiting the approval of the Foreign Investment Promotion Board.
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