Samena looks to third-party LPs for $350 million in funding
Samena Capital, a collective investment business of businesspeople and entrepreneurs from the emerging-markets world, wants to boost the scale of its private-equity investments.
It is about to make first close on its second PE fund, with its shareholders having contributed over $350 million, but it is now marketing the Samena Special Situations Fund II to limited partners, with a view to raising a total of $700 million for the fund.
In addition, as it seeks bigger deals, it should offer co-investment opportunities for those LPs, which will include regional family offices, endowments and institutional investors, says Shirish Saraf, vice-chairman and CEO.
The launch builds on rapid growth for Samena Capitals’ first special-sits fund, which launched in 2008 with $400 million.
So far that vehicle has made 16 investments, of which seven have closed, two are in the process of closing, and more than half the capital has been drawn down. The fund has already returned 20% of shareholders’ capital with an internal rate of return on its realised exits of 122%.
The life of the first fund extends to 2014, but with it cashing in on so many of its investments, the shareholders wanted to begin a new fund. They are also keen to diversify the investor base on the strength of the first fund’s track record.
The second fund will have a longer investment period (four years) and will emulate the first one’s preference for extracting value through operational improvements, not financial engineering.
The first fund invested in automobiles, oil & gas and industrials, where shareholders (who are all entrepreneurs) have expertise. The second fund will look to those sectors as well but with a bent towards infrastructure opportunities in India and the Middle East, from water treatment to social infrastructure plays such as education.
Saraf also notes opportunities in areas such as defence and aerospace in these countries. Investments into China and East Asia, on the other hand, would be in other areas, because infrastructure is already mature.
Samena Capital is advised by two 100%-owned affiliates in London and Hong Kong. The fund is domiciled in the Cayman Islands, with Norton Rose providing international counsel and Maples and Calder the Cayman lawyers. Citi is prime broker and custodian, Deutsche Bank is fund administrator and KMPG is the auditor.
The fund’s target IRR is 25% based in US dollars, with a 2% annual management fee, a 20% performance fee (subject to clawback), a 4% hurdle rate and organisational/placement fees for limited partners of 1-3%, depending on when they enter. Late arrivals may also be subject to a co-investment premium.