SAIF Partners to invest $70-100 mn in mobile, e-commerce, finance
Firm commits to invest $30-$35 mn from January to March, expects close to 10 fresh investments in seed stage alone
New Delhi: Private equity firm SAIF Partners expects to invest at least $70-$100 million in 10-15 companies in 2015, across the mobile, e-commerce and financial services sectors as it continues to increase its presence in India.
SAIF, which has committed to invest $30-$35 million between January and March, is expecting to make close to 10 fresh investments in the so-called seed stage alone, according to Mukul Singhal, principal, SAIF Partners.
Since the start of the year, SAIF has already announced investments in industrial e-commerce platform Industrybuying.com, small and medium enterprise (SME) lending platform Aye Finance and peer-to-peer property listings start-up NoBroker. It also led a $13 million round in SME lending platform Capital Float.
In 2014, the firm invested about $15 million in early stage start-ups and expects its seed stage deals to remain in a similar range this year too. However, the fund is anticipating more investments in mature start-ups—deals that could range anywhere from $5 million to $10 million.
“We are seeing strong pipeline for Series A and B rounds, which were pretty much absent last year. Also, as the cheque sizes in the industry are becoming bigger we will end up investing more this year," said Singhal.
Last year, the firm invested close to $80 million in India, including a large follow-up investment in mobile payment platform Paytm, which was announced in February.
“Apart from doing follow-up rounds in companies where we wrote $1-2 million cheques last year, we are also looking at picking stake in five to seven new companies in the early-mid stage," he added.
SAIF Partners recently raised $350 million for its fifth fund focused on India, according to a 2 March filing with US regulatory body SEC (Securities and Exchange Commission). It has already started making commitments from the new fund.
On the mobile front, SAIF may look at firms operating in the financial services sector such as personal finance management, expense management and peer-to-peer lending platforms.
“We have seen capital being put in personal finance companies across the globe. SME and business-to-consumer lending is seeing some traction too in China and the US," said Singhal.
Last year, China and the US saw significant capital infusion into companies such as Wacai, TongBanJie Network Technology, GreenSky Trade Credit, Social Finance and Mozido. Chinese mobile app developer Wacai, which serves as a bookkeeping service, a mutual fund trading app and also a credit card manager, has attracted over $50 million during 2014. Tongbanjie Network Technology, which allows users to purchase and redeem financial products directly though the app by bundling bank cards, has received $60 million in capital since it started operations.
US-based Social Finance, or SoFi, which in 2014 received $80 million from investors such as Doll Capital Management and Morgan Stanley, connects students and alumni through a dedicated lending pool and a social community.
Singhal is bullish on companies trying to build a social platform to generate content for and drive traffic to e-commerce companies. “I think the next wave of online shopping will happen because of the social paradigm rather than the usual search-intense shopping," he added.
Recently, fashion focused social network Roposo received investment from hedge fund Tiger Global.
“The next set of companies will come in the social product discovery space. Companies such as Pinterest are getting more and more valuable where content is being created by the users," said Abhishek Goyal, co-founder Tracxn, a start-up that sells data on privately held firms to investors. Goyal expects to see the most traction in 2015 in the food, logistics and local services space. “The consumer story will last pretty long in India so you can expect new companies and new business ideas in the online retail space," he added.
Asian private equity firm SAIF, which globally manages over $4 billion, focuses its efforts primarily on China (including Hong Kong and Taiwan) and India. Its investments span sectors such as consumer products and services, technology, media, telecom, financial services, healthcare, travel and tourism, and manufacturing.
The firm, which is already sitting on high liquidity from the Justdial and Makemytrip initial public offerings (IPOs)—it was an early investor in both—could see another exit in 2015 if Manpasand Beverages gets a nod from markets regulator Securities and Exchange Board of India. Fruit drink maker Manpasand Beverages filed for a $65 million IPO in late 2014 and is expected to go public by April.
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