Corporate venture investing seems to be taking wings in India. After the $200 million healthcare fund by Piramal Enterprises recently, it’s now the turn of auto major TVS group to foray into private equity/venture capital.
It’s not known whether TVS will invest only in ventures that have a direct bearing on the group’s businesses – auto and auto components, and electronics – or whether it will look at opportunities without any sector-bias.
But what’s for sure is that the group is looking at hiring and operations are set to start soon. The website of IIM Calcutta hosts the company’s recruitment requirements.
Gopal Srinivasan, whole-time director of TVS Electronics Limited, joint managing director of Sundaram-Clayton Limited and TVS Motor, and also director of various other TVS Group companies, is said to be spearheading the initiative.
Srinivasan also serves on the board of ICICI Venture. The group’s foray into the venture capital/private equity space comes at a time when many Indian corporates have started getting into this space.
The Piramal group recently launched a $200 million healthcare-focused fund. “Our objective is to initially get into growth-oriented companies in the healthcare sector, add value and take them to their IPOs,” said Vikram Gupta, chief operating officer (COO) of IndiaVenture Advisors, the advisor to the new Piramal-promoted fund.
He added that in Phase I of the investment strategy, the fund will look at start-ups only selectively.
Corporate venture investing usually happens when a company tries to grow its own business and the industry in which it operates by raising and investing money in start-ups in the same line of business. There are also corporates which enter the space purely for returns.
The Tatas, the Reliance group and the Godrejs are examples. Godrej Industries owns 19% of CBay Systems & Services, an American medical transcription company listed on the London Stock Exchange.
It also owns 20% of a British BPO company called Compass Connection. Besides, it has a 5% stake in Avesthagen, a Bangalore-based biotech company and an 8% stake in the Silicon Valley-based Version.
A recent report suggests that the Birla group is also getting into the private equity space. Corporate venture investing has been around for a long time, globally.
Intel Capital, Intel’s investment arm, is a perfect example. It started off in the early 1990s by investing in companies whose products and services filled the gaps in Intel’s own product lines and capabilities.
Today, it has grown into a mammoth investor, seeding companies in the internet and technology space. “While financial return is imperative, our greater mission is to spur innovation and inspire the entrepreneurial spirit to thrive,” says the company’s website.
It also mentions that, since 1991, Intel Capital has invested more than $6 billion in nearly 1,000 companies in more than 40 countries.
Among global corporates which invest in start-ups related to its own field is German chemicals company BASF, which operates through subsidiary BASF Venture Capital.
It has a €100 million fund, which invests across the globe, mainly in chemical companies.
Then there’s Japanese general trading firm Mitsubishi Corp, whose venture capital unit, Captech Corp, invests in startups specialising in high-tech metal products. General Electric (GE) Equity, a business unit within GE Capital, which invests in new ventures, is another example.
Source: DNA India