Tata Capital to raise Rs4670 crore for PE funds

Tata Capital, the private equity (PE) and financial services company of the Tata Group, will raise about $1 billion (Rs4,670 crore) by December 2011 under its four private equity funds - special situation, innovation, growth capital and healthcare.

The firm, which started raising funds early this year, yesterday announced its first closure. ''We have got commitment for Rs900 crore from the domestic market. Most of these investments have come from financial institutions. We started the process of fund-raising in January 2010,'' said Tata Capital managing director and chief executive officer Praveen Kadle.

The firm will tap international markets for its growth and healthcare funds. ''In the distressed assets portfolio, we will look at companies that are looking for capital but are not loss-making entities. We will also look at companies where the growth story is good but the management is looking for equity support,'' said Kadle.

Although the company didn't mention the size of the healthcare fund - a major area of growth for Tata Capital private equity - reports say the company is planning to invest Rs500-600 crore in profitable mid-sized pharmaceutical companies.

The other two funds - 'special situations' and 'innovative' - would primarily raise money from local investors, mainly financial institutions, said Kadle. ''So far, we've got good response from overseas investors in our non-deal roadshows. While most investors are cautious and liquidity is tight, there is money available for a good investment theme,'' he added.

Globally, large private equity firms are finding it difficult to raise money as limited partners - investors in a private equity firm including pension funds and endowments - are reluctant to lend money after burning their fingers in the financial crisis. The tight liquidity has forced funds, initially buyout funds, to shut shop or merge with other divisions.