With over 60% of its second fund exhausted, Mumbai-based BTS Investment Advisors is gearing up to launch a third fund, titled BTS Fund II, by mid-2009.
K Srinivas, managing partner, BTS Investment Advisors, said while the first and second funds were in the region of $22 million and $80 million respectively, the third fund is expected to be around $200 million.
“As deal sizes increase from $1.2-3 million in 1997 to $7-8 million in 2005 and $12-15 million now, we are struggling to meet the funding requirements and have to bring in co-investors to serve the purpose,” he said.
The third fund will also focus on SME group. “We would like to stay with it and maintain our dominance in that segment,” said Srinivas.
While development financial institutions will continue to invest with BTS, the investor portfolio for the third fund might see a slight change. “As the fund size increases, we will have to migrate more institutional and private investors and fund of funds etc, primarily from Europe where we have a stronghold,” Srinivas said.
So far, BTS has not had any participation from the US markets. But, with the new fund in the planning stage, there are possibilities of some percentage if funds may come from the US markets.
BTS expects to close four new deals in the next 60 days. One of these is expected to be announced within a week, with a south-India based firm that has been about seven years in the market and is promoted by first-generation entrepreneurs. The firm focuses mainly on infrastructure projects related to water/water treatment and irrigation projects in rural areas and is registering a growth of around 60% annually.
Srinivas said, “We have already invested and a co-investor is joining us in this deal.” The deal size is $8 million and the co-investor (also based out of south India) will be bringing in another $4 million.
There are another 3-4 investments in the final-stage of due diligence and will be announced in a few months.
The new investments are in the areas of pharma, multi-model logistics, offshore oil drilling services. The deal sizes are in the range of $7-8 million, along with a co-investor (in some cases), who brings in another at least 50% of the investment size.
Source: DNA India