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Falcon Edge Raising Money for New India Fund

The fund founded by a Blue Ridge veteran posted a huge gain in its hedge fund last year. Now it’s looking to capitalize on India’s private markets.

Falcon Edge Capital, the hedge fund firm headed by Richard Gerson, has launched a new fund focused on India.

The firm is currently raising money for Falcon Edge India I, a private equity fund that will invest in financial services companies, according to an offering document obtained by Institutional Investor. It hopes to raise as much as $150 million, according to the document. 

This is the firm’s second India-focused fund. In 2015 it launched Falcon Special Opportunities, which specialized in Indian e-commerce companies. Falcon Edge declined to comment.

Falcon Edge’s hedge fund has invested in several Indian companies over the past few years as part of its strategy to include private investments. Among its big winners are Ola, the ride-sharing company, and Mswipe Technologies, an independent merchant payment service some people call the Square of India.

In its offering document, Falcon Edge asserted that the Indian financial services industry is “at a tipping point of multiple secular disruptive trends,” saying the convergence of these trends “will enable well-capitalized, well-managed private business models with differentiated origination and underwriting in specific consumer/SME [small-to-medium enterprise] lending niches, to generate super-normal returns.” 

The trends include the bankruptcy of 60 percent of the banking system, “unprecedented” financial/political reforms, certain structural reforms, the creation of tools such as a biometric ID system, and a pan-India VAT (value-added tax), and the rapid growth of smartphone and e-commerce penetration.

Falcon Edge told clients its goal is to acquire “meaningful stakes” in potential category killers at valuations ranging between $40 million and $150 million. “We can back and buy substantial stakes in 4-5 top tier, seasoned entrepreneurs, who are building outstanding businesses,” the firm added in the document.

Gerson founded Falcon Edge in 2012. He is sometimes called a Tiger Grandcub since he was previously a founding executive at Tiger Cub John Griffin’s now-closed Blue Ridge Capital.

Last year the hedge fund gained 11 percent, making it one of the most successful long-short funds, according to an individual who has seen the results. The fund benefitted in part from running a low gross and net exposure. It also was driven by special situations and merger arbitrage investments.

As Institutional Investor earlier reported, the fund had a huge position in British media giant Sky, accounting for 11.6 percent of its assets as of the end of May, according to a monthly document obtained at the time. Last year, Comcast acquired Sky for $39 billion, beating out Twenty-First Century Fox in a bidding war. 

Falcon Edge’s portfolio also benefited from its investment in media giant Tribune Media.

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