US-Based private equity firm Ripplewood Holdings, currently pitted against Tata Motors in the race to buy Land Rover and Jaguar, is planning to enter India through a large-ticket fund. Ripplewood, which hasn’t ventured anywhere in Asia outside Japan, could be considering a $1-billion fund to invest in Indian securities, sources said.
The New York-headquartered private equity is famous for its acquisition, quick turnaround and sale of Japan Telecom and also for the high-profile $2.4-billion buyout of Reader’s Digest in 2006. It was also involved in the turnaround of Shinsei Bank, a bank that has expressed interest in bidding for IFCI. Ripplewood’s move signals the continued interest of large private equity players in India, even as those currently active in the country have started taking equity stakes in large companies, opposed to the earlier norm of investing in mid-cap firms. US-based Blackstone is reported to be in talks to buy a minority stake in Bombay Dyeing.
Ripplewood’s proposed $1-billion fund comes close on the heels of last week’s reported move by Actis to market a $1.25-billion global fund.Formed by its current CEO Tim Collins, Ripplewood is now talking to a number of capital market professionals with adequate India experience to head the proposed fund, it is learnt. A number of senior people in various Indian brokerages and financial services companies, have been sounded out for the chief post and for other appointments in the Indian team.
This is not the first time that Ripplewood had an Indian link; in 2006, it had teamed up with Videocon to acquire Daewoo Electronics for $700 million. “It is also known to have much faith in the Indian expertise in software,” said sources, citing the restructuring of the ailing Long Term Credit Bank of Japan in the mid-90s, as an example. The bank — later rechristened as Shinsei — was on the verge of bankruptcy when it was nationalised and sold to an investors‘ consortium led by Ripplewood.
Among the various cost-cutting measures adopted by Ripplewood, was awarding contracts to top Indian software companies — including TCS — to explore options of developing high-tech programmes and migrate from the bank’s ancient mainframe to open systems. The move paid off and saved Shinsei tens of millions of dollars.
Ripplewood also invests in the automotive, manufacturing, entertainment, and technology sectors. It is known to hire industry experts before it ventures into those sectors. Early this year, the private equity had roped in former Ford Motor president Sir Nicholas Scheele to help it in its bid to buy Jaguar and Land Rover. Ripplewood had earlier appointed former Chrysler president Thomas Stallkamp as part of its automotive team.
“The entry of large private equity firms indicates larger fund size,” said an analyst with an European brokerage. “Investing in large cap companies means that private equity firms can deploy faster, from their corpus,” he added.
Source: Economic Times