Tata Group and Mizuho Financial Group, Japan’s third-largest bank by market value, will be anchor investors for the former’s maiden private equity fund, which will focus on midcap unlisted investments across the Tata ecosystem and beyond.

“While the Tatas will invest 10-20 per cent of the fund’s corpus, Mizuho will be an anchor investor in the international tran-che of the Tata Capital Mid Market Fund,” said Shailendra Bhandari, head (private equity), Tata Capital. Govind Sankara-narayanan, chief financial officer of Tata Capital, said the fund is estimated to raise between $350-400 million. The Tatas will invest between $30 million and $80 million in the fund, based on the expected collections from third party investors. While the domestic tranche will focus on raising money from institutional investors and ultra high networth investors on an invitation basis, the offshore tranche will be mobilised using the expertise and relationships of Mizuho Securities.

In February 2008, Tata Capital and Mizuho Securities announced a preliminary non-exclusive understanding to promote an alliance in private equity, investment banking including cross-border mergers and acquisitions, securities business, including broking and distribution, structured finance and other business areas such as wealth management. “Mizuho will market the international tranche in Japan and Taiwan. We expect this tranche to be launched once the domestic tranche is closed,”

said Bhandari.

If Tata Capital manages to raise its targeted sum for its first PE fund, it would have bettered the $100 million fund raising that Aditya Birla Private Equity managed in its first fund.

Financial Chronicle in May reported that almost 20 per cent of this $100 million fund aimed at domestic institutional investors came from the group itself.

Aditya Birla PE had, prior to the raising of the first tranche, purchased a minority stake in the Bombay Stock Exchange and VMart a mid-sized retailer of affordable apparel and related merchandise.

Rather than buy-outs, Tata Capital PE will look for mid-market companies with a proven business model where it can invest to take the firm to the next level by enhancing operating leverage.

Tata Capital will also make available expertise from the Tata Strategic Management group and Tata Quality Management Services where appropriate, to help companies improve their systems or design a structured business plan that will help them grow to manifold in revenues and profits over the next couple of years.

“We are close to finalizing a few deals for our sector agnostic mid-market fund which will give potential investors some idea of our thesis,” said Bhandari.

The company expects its typical investment in this fund to be between $25-30 million each with a portfolio of around a dozen investments in all.