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Roots Ventures founder Japan Vyas.
Roots Ventures founder Japan Vyas.

Roots Ventures to raise ₹300 crore for maiden fund

In early stage, Roots Venturesan alternative asset managerwill invest in ticket sizes of 4-5 crore, while its growth stage investments will be of 10-30 crore

Mumbai: Alternative asset manager Roots Ventures is raising its maiden fund with a target of 300 crore, founder Japan Vyas said. The fund will invest in various sectors and stages, a strategy Vyas has worked on across multiple funds he has managed.

“We are a category 2 AIF (alternative investment fund). We pioneered the hybrid investing model when I did my first fund in IDFC, which was a mix of private equity and venture investing. I still firmly believe that is the best way to go for the investor segment we are targeting, which is domestic family offices and HNIs," said Vyas, a former fund manager at IDFC Investment Advisors Ltd and partner at venture capital fund Sixth Sense Ventures.

“Early stage investments will form a small part of the fund. Large part will be growth stage unlisted private equity and pre-IPO kind of investments as well as investments in listed-small cap and mid cap companies," said Vyas.

In early stage, the fund will invest in ticket sizes of 4-5 crore, while its growth stage investments will have a ticket size of around 10-30 crore.

According to Vyas, a hybrid investment approach suits well for the Indian market, given the lack of depth in certain pockets of the market, especially the startup ecosystem.

“My belief is that we still don’t have that kind of depth in the start-up market, neither do we have a large investor on the domestic side which has a 10-12 year investment horizon. Most successful start-ups globally, they’ve taken 8-13 years until multi-bagger returns kick in. I believe that hybrid products work really well when you look at existing market conditions," said Vyas.

Vyas has teamed up with Ravinder Vashist, an former IDFC colleague for Roots Ventures.

Delhi-based businessman Karanpal Singh’s Hunch Ventures has taken up a significant minority stake in the investment firm.

While it is sector-agnostic in its investment approach, Roots Ventures will focus on certain key broad trends to identify investment opportunities.

“We are looking at consumer sector, businesses which are organizing the unorganized spaces due to structural changes in the economy. We are also looking at challenger brands, that is an interesting area for us and we are also looking at niche segments, which look nascent today, but could become large later," said Vyas.

The fund will also seek opportunities in the technology space, and in sectors and companies where there are turnaround opportunities.

“We will also look at technology businesses which are disrupting large IT behemoths, business models which are taking small pies away from TCS and IBMs of the world. Also we will be looking at sectors where profitability is at a multi-year low and is in a position for a turnaround. We will look for companies whose operating leverage can be played upon," Vyas said.

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