Jupiter Capital Partners to launch $75 mln SL Country fund
Jupiter Capital Partners (JCP), a South Asian focussed private equity firm is to set up a US$ 75 million country fund for Sri Lanka, officials said.
“We’re going to call it Jupiter Sri Lanka Investment Fund,” Indika Hettiarachchi, Managing Director JCP told the Business Times. This unit aims to fund Small and Medium sized firms (SMEs).
Currently many SMEs and high growth companies are faced with funding constraints. Although there are various loan schemes targeting SMEs, such loan schemes do not help long-term growth of such firms, or help increase equity value of such firms thus hindering the growth of entrepreneurship in the country, according to Mr. Hettiarachchi. He added that the private equity (PE) ownership model allows a professional team of fund managers to take large stakes in private companies, to ensure they are run in the best interests of the underlying investors.
“Our strategies are designed to benefit from high growth companies – in both private and public markets.”
When evaluating an investment, PE investors expect returns to be driven by many “internal factors”, he said, adding that growth in business volume, improvement in value-addition of products and/or services, improvement of margins (due to increased scale, operational efficiencies, new technology), improvement in value due to better risk management, governance and management and the entry price are some of them.
PE investors are required to deliver very high returns to investors in PE funds hence it is essential to earn high return on each investment – at least 25 per cent, according to Mr. Hettiarachchi.
At a recent seminar on PE, he said that firms can benefit from private equity through value-addition. “Strategic management support, improve governance, internal controls/systems, risk management, etc and new business development can be achieved.” PE is a catalyst to increase a company’s equity value and marketability, he said adding that PE investors are committed to ensure long term success of the business (even after they exit). “Oftenexits are planned in a way beneficial for all stakeholders (company, promoters, employees, business partners).”
Listing some points to note about PE, he suggested that one should seek PE funds only if there is a solid expansion/growth plan. “Usually PE investors do not invest in start-ups and green-field projects and PE funding takes time (difficult to meet urgent funding requirements),” he said, cautioning not to think PE as a “cheap” source of funding with “fixed cost/rate”. He also advised to be comfortable about dilution of ownership, corporatization, delegation of responsibilities to professional management. “Be comfortable about sharing information honestly and openly. Obtaining the service of an adviser (an advisory firm) could help, but it’s not essential.”
Success of PE investors are not only judged by how much financial return they made on investments, but also by how well their investments perform in the long term as good corporate citizens, even after PE investors exit.
JCP specialises in dedicated South Asia country funds, and its fund strategies are custom tailored to suit each country in which they operate. “Our strategies are designed to benefit from high growth companies-in both private and public markets. Investing in high growth SMEs is also an important part of our strategy,” the JCP Managing Director said .