Fosun, VC fund Iron Pillar tie-up for tech investments in India

New Delhi: Chinese conglomerate Fosun International Ltd has entered into a strategic partnership with Iron Pillar Capital Management Ltd, a venture capital fund focused on mid-stage technology investments, to target opportunities in India, two people aware of the matter said.

The partnership is seen as being significant particularly for Iron Pillar—founded by former director of Morgan Creek, Anand Prasanna, former Citigroup India investment banking head Sameer Nath and former DFJ India head Mohanjit Jolly—as it will provide the Indian fund access to Fosun’s extensive networks, knowledge and platform.

The partnership would help Fosun use Iron Pillar’s knowledge and sourcing opportunities to strengthen its foothold in India.

“However, the partnership is non-binding in the sense that the two funds do not have to necessarily co-invest in an opportunity if diligence criteria is not met by either of the parties,” said one of the persons mentioned above on condition of anonymity as he is not authorized to speak with the media.

“As per our firm policy, we cannot respond to this media query at this time,” said a spokesperson for Iron Pillar fund in an email response.

Iron Pillar, with a focus on mid-to-late stage technology investments, has already secured about $150 million to invest in the Indian start-up ecosystem, with significant commitments coming from China, while another $50 million is to come from the US over the next 3-4 months, said the person mentioned above.

Both Fosun and Iron Pillar have their own funds and separate limited partners. “It’s a win-win for both the parties,” said the second person close to the development, speaking on condition of anonymity.

Founded in 1992 in Shanghai, Fosun International is listed on the Hong Kong Stock Exchange. The group had annual revenue of $12 billion and profit of $1.2 billion in 2015, according to Bloomberg data.

Fosun has interests in wealth management, pharmaceuticals, mining, steel and realty. Under the finance vertical, it owns businesses in insurance, investment, wealth management and Internet finance.

Fosun has spent about $30 billion in the past two decades outside China, mainly acquiring insurance and real estate assets in Europe and the US, as well as making investments in the likes of tourism group Club Med and Canada’s Cirque du Soleil, according to a 16 May Reuters report.

Notably, Shanghai Fosun Pharmaceutical (Group) Co. Ltd, a Hong Kong-listed unit of the group, has agreed to acquire a 96% stake in Hyderabad-based Gland Pharma. Private equity firm KKR and Co. owns a significant minority stake in Gland Pharma. That bid marks a rare instance of a Chinese drug maker seeking to buy an Indian company.

In May last year, Mint reported that Fosun International is looking to launch a private equity (PE) business in India, and has hired Rahul Raisurana, a former managing director at Standard Chartered Private Equity’s India unit, to head the operation.

It is also making its way into the real estate sector and plans to invest close to $1 billion through a real estate private equity platform that it is setting up, The Economic Times reported on 15 September.

Headquartered in Mumbai, Iron Pillar has presence in Mauritius, Palo Alto, Shanghai and Singapore. The founding team includes Harish Hulyalkar, Ashok Ananthakrishnan and Ashish Shah apart from Prasanna, Nath and Jolly.

Iron Pillar funds have completed two mid-stage technology investments along with affiliates: Nowfloats, a leading SME SaaS company in India and Bluestone, a leading online jewelry retail brand, as per the information available on its website.

The interest among Chinese funds in India comes in the backdrop of global e-commerce giant Alibaba Group Holding’s investment in Paytm.

In June last year, Tencent Holdings Ltd—another Chinese Internet giant— invested about $175 million in messaging app Hike Ltd, a home-grown rival of WhatsApp. Tencent had previously invested $90 million in healthcare start-up Practo in August 2015.

Moreover, China’s top online search provider Baidu Inc, which had evinced interest in January last year to invest in the Indian market, has also floated a $3 billion global investment fund to invest in mid- and late-stage deals in the Internet sector globally.