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Ex-Goldman Executives May Raise $350 Million for Logistics Fund

Everstone Capital Management, the private-equity and real-estate fund adviser started by two former Goldman Sachs Group Inc. executives, may raise as much as $350 million for a new fund to invest in warehouses in India.

Everstone has invested 25 percent of the $240 million Indospace Logistics Parks fund, said Sameer Sain, co-founder at Everstone Investment Advisors Pvt. The private-equity firm with offices in Mumbai and Singapore may start raising money for the second fund at the end of 2011 after it has allocated 75 percent of the money in Indospace Logistics, said Sain.

“India is in the stone ages in terms of quality warehousing,” Mumbai-based Sain said in an interview in Mumbai Aug. 27.

Everstone, which manages $1.5 billion across various funds, wants to invest in developing industrial real estate and warehousing facilities as India’s government changes the current regional tax structure, which has led to delays in the movement of products, in favor of a goods and services tax regime.

“With the country moving from regional and state levies to a central goods and services tax, the need for regional warehouses in every state will be greatly reduced and companies will move to large central warehouses and distribution centers,” said Sain.

Private-equity firms invested about $2.4 billion in 67 deals in India during the quarter ended June 2010, according to a study by Venture Intelligence, a researcher based in the Southern Indian city of Chennai. Investments have jumped threefold to $4.57 billion in the six months to June compared to $1.5 billion in the same period a year ago, the study showed.

Fund Raising

The Indospace fund, which develops industrial real estate and warehouses across India, is a joint venture between Everstone and U.S.-based industrial real estate firm Realterm Global. The fund has developed 1.6 million square feet (149,000 square meters) of warehouses and manufacturing facilities at Chakan, in the western state of Maharashtra, and an 800,000 square foot facility in Chennai.

The $425 million Everstone Capital Partners I has made 17 investments, including Faces Cosmetics Plc, a maker of beauty products, and financial services firm Centrum Capital Ltd. The fund has made two exits, in apparel maker Lilliput Kidswear Ltd. and Capital Foods Exports Pvt., a producer of packaged meals.

Everstone Capital Partners II, launched in December, has achieved its first close raising $250 million last month primarily from investors in Europe and the U.S., Sain said.

“The environment for fundraising remains challenging,” said Sain. “Investors have become highly selective about where they put their money and the level of scrutiny and diligence is extremely high.”

Bearish on Commercial

Private-equity firms raised $41 billion in the second quarter, the lowest amount since 2003, as endowments, pensions and wealthy individuals hesitated to back new funds, according to London-based research firm Preqin.

Sain left Goldman Sachs in 2006 to start Future Capital Holdings Ltd. with Kishore Biyani, owner of India’s biggest publicly traded retailer. Future Capital raised 4.9 billion rupees ($105 million) in a share sale in 2008 to expand its consumer finance businesses in India.

Everstone was spun off this year when Future Capital reorganized its businesses. Everstone is run by Sain and Singapore-based Atul Kapur, a former Goldman Sachs managing director in the Principal Strategies Group.

The firm, which also manages the $350 million Horizon Realty LLC, may raise another real-estate fund next year depending on market conditions, Sain said.

“We are short-term bearish on commercial real estate over the next two to three years as we see an oversupply,” he said. Everstone’s real estate funds have not made a single investment in that sector in the past three years, he added.

Everstone, with offices in Mauritius, Singapore, Mumbai, Delhi and Bangalore, may list its real-estate assets in the 3 billion rupee Kshitij fund on Indian exchanges, he said. It may also explore listing the Horizon fund on the Singapore exchange, Sain added.

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