Bajaj Finserv Group enters Alts biz, to launch VC and real estate focused funds
Bajaj Finserv is launching an alternative investment business through a new subsidiary, Bajaj Alternate Investment Management.
MUMBAI : Sanjiv Bajaj-led Bajaj Finserv Ltd is entering the alternative investment business and has made a top-level hire to help launch an early-stage equity fund and a real estate-focused alternative investment fund (AIF). This will broaden the group’s strategy into other asset classes, as it has a presence in lending, asset management and insurance, among other things.
Bajaj Alternate Investment Management Ltd has recently been formed as a wholly owned subsidiary of Bajaj Finserv. The firm will look to raise anywhere between ₹1,500 crore and ₹2,000 crore towards these funds, respectively, a senior company executive said.
The new entity has been incorporated, and the company plans to file for regulatory approvals from the Securities and Exchange Board of India (Sebi) within a fortnight, Lakshmi Iyer, group president, investments, and chief executive officer (CEO), Bajaj Alternate Investment Management (Bajaj Alts) said in an interview with Mint. Iyer was hired from the Kotak Group, where she was CEO of investments and strategy at Kotak Alternate Asset Managers.
Bajaj Finserv wants to launch an early-stage venture capital firm that will focus on Series A and B companies and a commercial real estate-focused fund in the country. It will look to raise third-party capital but will have the Bajaj Finserv Group as the main anchor to demonstrate skin in the game, said Iyer. “We want to target high-networth individuals, and ultra-high-networth individuals from India and overseas as our investor base."
According to her, investors across tier-I and II markets are hungry for attractive investment opportunities and want to partner with pedigreed groups.
Real estate strategy
“For commercial real estate, any fund below ₹2,000 crore would not be meaningful. We plan to invest around ₹500-600 across each deal through that fund," Iyer added.
“It’s clearly in the commercial space where we believe that still there are yields available, both from a core asset perspective and development asset perspective. And we’ve done an initial recce of the spaces available within the top five or six cities in the country. And the early response in terms of what kind of yields that can accrue in this segment is something which is really encouraging."
It will also look to launch a Category-3 AIF in the real estate space. “We do understand that there is a growing capital market awareness, and people love this space. Therefore, the category three offering will be a combination of two things. One is to try to provide a long-only offering, but with a quantitative overlay and fixed income returns through a long-short strategy."
Venture capital focus
The size of the early-stage venture fund is likely to be between ₹1,500 crore and ₹2,000 crore, with the sweet spot ranging from ₹25 crore to ₹100 crore.
“The Bajaj Finserv Group has already deployed ₹200 crore and made half a dozen investments in early-stage companies such as KisanKonnect and Ecosoul Home through proprietary capital. We will look to warehouse these deals into the fund," Iyer said.
The group is scouting for opportunities in automation or technology, and companies that help business-to-consumer brands shorten their go-to-market time.
“I’d say between now and March end, in addition to this ₹200 crore (already invested as proprietary capital), I won’t be surprised that we have another ₹150-200 crore up our sleeve well ahead of our fund launch."
Asked why the group is not looking at larger deals in the growth equity and buyout segment, Iyer said the private credit and buyout industry has become crowded, which impacts deal valuations. “We are confident of being able to play a meaningful role in the category we have chosen," Iyer said.
- Bajaj Finserv is strategically expanding its financial services portfolio into the high-growth alternative investments space.
- The group is aiming to raise up to ₹4,000 crore, signalling a serious and large-scale entry into the market.
- The appointment of Lakshmi Iyer, a respected veteran from a competitor, lends immediate credibility and expertise to the new venture.
- By acting as the anchor investor, Bajaj Finserv is demonstrating strong confidence in its strategy, which is a key selling point for attracting other investors.
- The group is deliberately avoiding overcrowded segments like buyouts and focusing on early-stage VC and commercial real estate, where it sees better opportunities and yields.
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