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January 29, 2013

Vikram Pandit, ex-Morgan Stanley boss John Mack begin to co-invest with Indian PE fund GTI Capital

MUMBAI: Two former bosses of multinational banks, Vikram Pandit of Citi and John Mack of Morgan Stanley, are among a few high net-worth individuals co-investing with Indian private equity fund GTI Capital, to purchase stake in Indian companies.


"This gives the members of the 'smart investment club' confidence to invest in their own circle of expertise and sweet spot," says Gaurav Dalmia, an Indian industrialist who owns GTI Capital along with American venture capital investor Jonathan Schulhof and Madhav Dhar, former head of global emerging markets at Morgan Stanley.

The PE fund, which started with $75 million capital in 2011, now will have $375 million committed from 15 overseas investors, including Mitsui Corporation of Japan. These investors will put in money when GTL identifies target.

"Ours is a long-term capital in the truest sense. We invest in companies for even 15-20 years, depending on the requirement and growth agenda,'' says Dalmia, who is also the managing director of OCL, a refractory maker.

"Ours can be termed as a permanent source of capital." GTI Capital offers a gamut of financial products, including acquisition financing, secondary investments, buyouts, takeout financing and both venture and growth capital.

"Today, most of the traditional private equity players are siloed into their rigid investment mandates, which makes it difficult for them to invest in all the sectors.

We would not only want our investment criteria to be deep but broad too, that's the way to go about in Indian market," Dalmia, who is an investor in another PE, India Value fund.

"Although this seems to be a patient pool of capital that brings personal rapport and speed while doing deals, the quantum of money they can invest in comparison with other institutional investors remains small,'' says Avinash Gupta, head of financial services practice at audit and consulting firm Deloitte.

GTI had invested roughly $100 million in Delhi-based Samhi Hotels, $20 million to buy out investors CDC and Actis in auto component maker Sandhar, $25 million in an aircraft maintenance company Airworks and $5 million in Brattle Foods, along with steel baron Laxmi Mittal.

"Attracting good talent to source and manage deals also remains a challenge as compared to the benefits of large institutional and PE investors," says Gupta of Deloitte. The fund is looking at investing around $100 million in 2013.

As Indian fund managers find it tough to raise capital from overseas investors as returns in the past did not match expectation, Dalmia says that raising money and investing is easier than generating returns through exits, only exits will define the success of this firm.

"With deal sizes shrinking in India, there is not much difference investments by such investment vehicles and other institutional investors,'' says Gupta.

indiatimes.com

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