Norwest Venture Partners that has interest in early to growth-stage companies in India, US and Israel is going to increase its investment size in India along with scouting for senior executives and a managing director to add to its local team in the country.
It usually invests around USD 75 million a year in India. Now it will make minimum investments in the region of USD 7-8 million, which could go up to a ceiling of USD 50 million, a company executive told local media Mint.
The investment firm will double its investment size across sectors like financial services, technology, internet, consumer, healthcare and logistics, Niren Shah, managing director and head at Norwest India told Mint. In August this year, Norwest India invested USD 7.80 million in Mumbai-based real estate services firm SILA.
As a future strategy, Shah says the investment firm is going to distance away from sectors that has not worked for the company such as infrastructure and PIPE (private investment in public equity) or pre-IPO (initial public offer) deals.
“We will invest more in what has worked for us, and stay away from what has not.”
Norwest India seeks to collaborate with companies like Swiggy in the venture space with the objective of receiving handsome returns on exit.
Many investment firms in India have been caught on the back foot when it comes to handling exits. To mitigate this status quo enable a succesful exit, Norwest India has taken a variety of measures including acquisitions of its portfolio firms, secondaries and even IPOs. Although five of its portfolio companies such as Persistent Systems Ltd, RBL Bank, Thyrocare Technologies Ltd, Sadbhav Engineering Ltd., and Snowman Logistics Ltd., have gone public, there has been a drought in such IPOs since 2016.
The company says four of its Indian portfolios such as Five Star Finance, Veritas Finance, NSE and Ess Kay Finance are expected to go public within a couple of years. Ambareesh Murty, founder of seven-year-old online furniture retailer Pepperfry recently said the company is expecting to post profit in financial year 2021. According to Murty, 15 months later the company should be ready to hit the bourses. Pepperfry has raised around USD 200 million from investors inlcuding Norwest India, Goldman Sachs, State Street Global Advisors, and Bertelsmann India Investments.
Norwest India had gone against the grain with its bets in growth-stage firms. It infused capital worth USD 700 million between 2008 and 2017, and got a whopping USD 1.1 billion in returns which it has since channelled back to its limited partners. A case in point is the funding of the India-based RBL Bank, in which Norwest India invested USD 20 million. The bank went public in 2016 resulting in profits for Norwest India, which were seven to eight times more than its initial investment.
In the first six months of 2019, seed and Series A investments in India rose by 23% to USD 505 million, from USD 411 million a year last year, according to finance research firm Venture Intelligence.