Brokerage firms plunge into equity, realty funds

A clutch of top brokerage and financial services firms, led by Motilal Oswal Financial, AnandRathi Securities, Edelweiss Capital, JM Financial, Religare and IDBI Capital Markets, is venturing into the booming private equity and real estate sectors by launching funds.

The move is to tap the growing number of rich and the super-rich investors.

While Motilal Oswal is expected to close $100 million private equity fund, India Business Excellence Fund, in next few days, AnandRathi is raising Rs 500 crore (Rs 5 billion) for a real estate fund.

Broking and financial services firm JM Financial has already raised Rs 415 crore (Rs 4.15 billion) through its JM Financial India Fund. IDBI Capital Markets, the broking subsidiary of IDBI, has entered the PE space by mobilising Rs 50 crore (Rs 500 million) from its parent for PE investments and Religare, the financial services arm of Ranbaxy's promoter-family, has launched $150 million private equity fund with US-based Evercore Partners.

Edelweiss Capital, which has 30 per cent stake in private equity fund Blue River Capital, also has a real estate fund with Rs 150 crore (Rs 1.5 billion) corpus.

Industry sources said brokerage houses are entering these booming segments as their research teams can identify potential candidates for private equity investments while leveraging their branch network to lure high-networth investorsNIs).

"We want to give our clients a complete bouquet of wealth management products. The entry into private equity business is part of this strategy,"  said

Motilal Oswal, chairman of MOFL, which will manage its private equity fund through its wholly owned subsidiary Motilal Oswal Venture Capital Advisory. Oswal also said the PE fund was also getting investors from domestic markets as well.

"We are targeting HNIs and super HNIs who want to de-risk their investments from the secondary market. These are investors who are willing to wait for  4-5 years for getting returns on their investments," he said.

"Currently, India is the hot topic among global investors and hence it is relatively easy to mobilise funds, be it be private equity or real estate," said CJ George, managing director of Geojit Financial Services.

George, however, ruled out any such plans for Geojit Financial Services in the near term. A top official of Edelweiss Capital said, "There are umpteen number of unlisted companies which are doing exceedingly well. Yet, these companies are looking for funds to meet their expansion plans. PE funds offer a win-win situation for company and investors.

"Edelweiss has recently pumped in $10.2 million PE investment into Aurangabad Electricals.

Nimesh C Shah, managing director of Fortune Financial Services (India), said the company was seriously looking launching a PE fund in the future.

"A PE fund will be a logical extension of our wealth management services. We may start a PE fund in the future," Shah said.

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