Private investment firm Sage Capital Advisors Pvt. Ltd plans to form a joint venture (JV) with a financial services group to launch a private equity (PE) fund or its own fund, an official said on Wednesday.
“We are exploring a JV with a large financial services group as the platform will allow us to get quality investors,” said managing director Manish Kanchan, adding that Sage would hold a majority stake in the planned venture. “We can even raise up to $1 billion (Rs3,940 crore) through this JV.” Kanchan said the name of the partner and other details would be announced in a month’s time.
He also said the firm is talking with potential investors to launch a PE fund of around $200-250 million if the JV falls through. PE investment in India is expected to touch about $10 billion in 2007. Investment had more than tripled to $7.46 billion in 2006, from $2.26 billion in 2005.
The firm would not make any new investments as a proprietary investment firm.
Kanchan also said Sage would not make any fresh investments as a proprietary investment firm, because proprietary money tends to run out and attrition becomes an issue since employees tend to leave for better career prospects.
“Moreover, a PE firm allows us to participate in larger deals,” he said, adding that it would typically enter at forward earnings multiples of seven or eight and exit at 19-20 with an average time horizon of three years.
Sage plans to focus on small and medium enterprises (SMEs) in manufacturing, exports, base metals, logistics and infrastructure in tier I and tier II cities, but will steer clear of software services, media and retail sectors because they are more concentrated in the metros, Kanchan said.
Source: Livemint