Temasek, Abu Dhabi fund, Ontario invest $250 mn in Kedaara Capital

Kedaara has an option of additional investments worth another $500 million, sources said
Mumbai: The environment might be tough for private-equity (PE) fund managers struggling to raise their debut funds, but Manish Kejriwal has managed to buck the trend. Kedaara Capital, founded by the former head of Temasek India, has successfully roped in some of the largest sovereign funds, such as Temasek Holdings and Abu Dhabi Investment Authority (ADIA).

According to sources, Kedaara Capital raised $500 million last month. About half the amount has come from major investors including Temasek, ADIA and Canada’s Ontario Teachers Pension Plan (OTPP), one of the largest pension funds in the world.

Kedaara Capital, set up by Kejriwal and Sunish Sharma (former managing director of General Atlantic India) in October 2011, had roped in UK-based PE firm Clayton, Dubilier and Rice (CD&R).

Although the fund size is $500 million, Kedaara has an option of additional investments worth another $500 million, sources said. The LPs (limited partners or investors) have agreed to make co-investments in Kedaara’s proposed investments in India.

When contacted, Kedaara founders refused to comment on its fund-raising plans. An email questionnaire to Temasek’s spokesperson also did not elicit any response.

Kejriwal is the second PE veteran to receive a large chunk from a Canadian pension fund. In 2010, former ICICI Ventures head, Renuka Ramnath, had received a commitment of $100 million from Canada Pension Plan for her PE fund, Multiple Alternate Asset Management.

OTPP is Canada’s third largest pension fund with $115 billion (C$117 billion) in assets. An independent organisation, OTPP invests the pension fund’s assets and administers the pensions of 300,000 active and retired teachers in Ontario.

The Singapore government’s Temasek owns portfolio worth $170 billion (S$215 billion) as on March 31, mainly in Singapore and Asia.

ADIA has an estimated value of $750 billion and ranks among the largest wealth funds in the world. Established in 1976, ADIA’s main funding comes from oil export revenue.

Kejriwal, married to Rahul Bajaj’s daughter, Sunaina, is known for his deal-making instincts. He had made a diversified portfolio for Temasek India. During his tenure, Temasek’s major investments include a 10 per cent stake in ICICI Bank (current value of $2.5 billion), a billion deal to acquire five per cent in Bharti Airtel and also a five per cent stake in Mahindra & Mahindra (sold in 2011 with 5x return). Under Sharma’s tenure, General Atlantic made a significant return of about 4.5x in its investment in Genpact.

According to a recent Bain & Co report, one of the main reasons for the declining investment in the Indian PE industry is LPs are showing more caution while allocating funds. In 2012, there were 55 funds with a mandate to invest in India, but the total fund value allocated was only around $3 billion, down from $7 billion in 2011.

“What’s more, LPs are becoming increasingly picky about the fund managers they work with,” said the report.