Mumbai: NVP India, the Indian arm of Silicon Valley-based venture capital firm Norwest Venture Partners, has invested about $15 million (Rs77.55 crore) for a stake less than 5% in OnMobile Global Ltd, a provider of value-added services for mobile phones, a person familiar with the matter said.
The firm bought shares in the Bangalore-headquartered spin-off from Infosys Technologies Ltd directly from the market, he added, asking not to be named.
NVP India’s first investment in a listed company indicates an emerging willingness among venture capital firms, which traditionally invest in early-stage private businesses, to consider listed companies that offer compelling valuations.
Preference: Matrix India’s Avnish Bajaj says he would prefer to invest in a company on a primary basis rather than buy shares. Abhijit Bhatlekar / Mint
“Norwest is actively evaluating a number of opportunities in the listed space. We see a lot of value in public companies across sectors and we expect to make a number of investments through the secondary markets,” said Sohil Chand, managing director of NVP India.
OnMobile’s market capitalization had slumped to Rs1,339.52 crore as on Friday, from Rs2,996.23 crore when it listed on Indian stock exchanges on 19 February 2008. At Friday’s close, its share price was Rs231.75, a huge dive from Rs521.90 on listing.
Other traditional venture capital firms too are looking at investing in listed companies in India. Sequoia Capital India, which raised a $725 million fund for growth-stage investments in the country in August, has invested in electrical products maker Havells India Ltd, according to a person familiar with the matter.
Mint could not verify this independently. A spokesman for Sequoia said he didn’t want to comment.
Matrix Partners India, the local arm of the US-based venture capital firm, too is considering investing in listed companies here.
The firm started as a $150 million venture capital fund in India in 2006, and later topped this with another $300 million to also invest in growth-stage companies. Compared with the $2-10 million it could invest per transaction in early-stage ventures, the $300 million added to the fund allows it to now invest up to $50 million per transaction. This could potentially mean taking stakes in listed entities as well.
“Yes, we would consider them (listed companies) but this (is) not driven purely by valuation. Our approach is sector specific—and if the best company run by a top-notch management team in our investment size happens to be public, it does not stop us from taking a serious look at the opportunity,” said Avnish Bajaj, co-founder and managing director of Matrix India.
“However, our bias would be to invest in such a company on a primary basis rather than buying shares from the stock exchange. As it stands, public market valuations are lower than private market expectations, so obviously this makes more sense right now. But I believe it is a passing phase.”