The Hindu Business Line : Indian private equity funds catch NRIs’ fancy

Mumbai, May 21 Non-resident Indians are increasingly looking at private equity (PE) funds as an alternative investment avenue. While the PE space has traditionally been the domain of institutional investors, now there is an increasing trend of high networth NRIs investing in such funds, said Mr Sonjoy Chaterjee, Executive Director, ICICI Bank.

Mr Chaterjee, who is in charge of the bank’s International Banking, said that for NRI investors, this gives an opportunity of indirectly participating in growing sectors such as real estate and infrastructure. Mr Chaterjee told Business Line that the bank has successfully raised money from NRI investors in West Asia and the UK for two of ICICI Venture’s funds, India Real Estate Fund and the India Advantage Fund.

Some other funds that attracted interest from NRI investors were the ones launched by JM Financial and the healthcare fund launched by Ajay Piramal’s group.

Due diligence

Mr Chaterjee said, “The bank has become a very good conduit for raising retail money for PE funds. For NRIs, sitting far away, the choices are between investing directly in commercial property or in such funds.

As the bank is marketing the fund, investors know that the due diligence has been done. So they don’t mind investing even if it means paying a fee.”

As these are retail investors, the average ticket size is $1,00,000. “Our strength comes from the fact that we have access to NRI investors and that we have a strong distribution network,” said Mr Chaterjee.

Apart from PE and real estate funds, infrastructure funds are also gaining popularity with NRI investors, he added.

Valuation opportunities

The bulk of inward remittance by NRIs is for personal use, followed by investment in property for self use. NRIs are also active investors in real estate, said Mr Chaterjee.

“NRIs have been quite consistent with their aspirations on the property side because they are excited about the valuation opportunities in India, which is not there in many of the developed countries,” he said.

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