The Tata Group is understood to be realigning its private equity business and is consolidating all its future limited partner commitments under a separate entity, even as it is closing its flagship Tata Opportunities Fund.
Existing investors or limited partners in the fund are expected to get their money back by the end of 2022, either by selling shares in the businesses or through initial public offerings, an executive close to the fund management said. “Some of the investments have done extremely well,” he said.
When contacted, the group’s financial and investment services unit, Tata Capital, said private equity would remain a focus area for it, but that it decided to continue with two other funds — Tata Capital Growth Fund and Tata Capital Healthcare Fund.
The opportunity fund’s current term will end in March 2022 and it can further be extended by another year, a Tata Sons spokesperson said separately, adding: “The fund management team is committed towards achieving optimal and timely exits from its investments before the end of fund life.”
Investors into Tata’s fund include Temasek Holdings, Mitsubishi Corp, Mizuho Corporate Bank; Korea Investment Corp, the Bahwan Group, BDT Capital and large University endowments from the US.
Tata Opportunities Fund was the brainchild of former Tata veterans Noshir Soonawala and Praveen Kadle, to crate a platform with the largest sovereign and pension money managers as well as huge institutional investors across the world to invest in businesses in collaboration with the Tata Group.
The decision to close the fund has led to the exit of executives from the firm. Recently Bobby Pauly, managing partner of Tata Opportunities Fund and an old Tata hand, quit.
After Tata Capital had decided not to continue sponsoring a second fund, the fund’s senior managing partner Padmanabh (Paddy) Sinha had quit and joined National Infrastructure Investment Fund as chief investment officer last year.
Pauly is a founding member and partner of Tata Opportunities Fund, having joined Tata Capital Private Equity as its first employee in 2007. He has helped conceptualise, nurture and build the firm’s private equity business. The fund had picked up stakes in companies such as Tata Sky, Tata Projects and Ginger Hotels while its non-Tata investments were in Uber Technologies and Fincare Business Services.
Before Sinha’s exit, the then team had proposed a management buyout of the fund, but that was unsuccessful.
Tata Capital, in its response to ET’s questions, said it decided to consolidate future fund offerings through the growth and healthcare funds. “Tata Opportunities Fund has done extremely well — however since our strategy was to consolidate all future sector agnostic funds into one fund, we have decided to use Tata Capital Growth Fund as a vehicle to raise future LP commitments for sector-agnostic funds. Besides, Tata Capital Growth Fund, we are also growing our Healthcare Fund,” it said.
Tata Sons, in its response, said Tata Capital has been managing PE businesses across multiple formats. “The company based on its view on potential investment opportunities has decided to launch a second fund for the healthcare and growth funds and not to raise a new fund in the Opportunities Fund format,” its spokesperson said.
“Tata Opportunities Fund was launched in March 2011 with a term of 10 years with a provision to extend it by another two years. In September 2020, its term was extended to March 2022 and can further be extended by another one year.”
https://m.economictimes.com/industry/banking/finance/tatas-to-realign-pe-business-close-key-fund/amp_articleshow/85254483.cms
