Catamaran Ventures to follow patient capital route in bets on India's manufacturing push

“Our thesis is based on the view that over the next 5-10 years in India, from a wealth and job creation perspective, the country needs to develop its supply chain for precision manufacturing," Deepak Padaki, president at Catamaran Ventures told Mint.

Murthy, a co-founder of information technology services bellwether Infosys Ltd, is chairman emeritus of Catamaran.

Over the last year, several funds have been deepening their focus on manufacturing as a sector, with some launching new funds to narrow down on the industry's potential. Much of this is backed by private equity and venture capital's belief that manufacturing and supply chain companies are going to be what pushes India to become an export-led economy.

“Themes like import substitution (for EMS), rising domestic consumption (for packaging, building materials) and India’s emergence as an export hub (for chemicals, auto, engineered solutions, aerospace and defense) are providing structural long-term impetus to companies," said Koushik Bhattacharyya, managing director and head of industrials investment banking at Mumbai investment bank Avendus Capital. (EMS is short for electronic manufacturing services.)

Catamaran has so far made two investments in the manufacturing space, both of which are headed for the public markets: precision aerospace component manufacturer Aequs and SEDEMAC, a mechatronics maker looking to raise up to Rs1,000 crore through an offer for sale. Catamaran has also invested in point-of-care medical diagnostics company Achira Labs.

The family office's sees supply chain manufacturing companies as not a good fit with typical venture capital bets given the long gestation period for such businesses. Most generalist VC funds look for exits in a five to six year horizon.

Manufacturing, which is considered a sub-sector of deeptech given the changing nature of the activity and patents around it, take as long as 10-15 years to come of some scale. For private equity to back such startups, on the other hand, they need them to be more mature businesses.

“We're more mid-market private equity when it comes to manufacturing. We thought about how we as a family office can put money into companies that is patient capital," said Padaki.

Sectors of opportunity

Catamaran is focused on a few areas within manufacturing: aerospace, original equipment manufacturers (OEMs) in the electric vehicle space, medical devices and semiconductor companies.

The family office sees defence as “interesting" while on the lookout for companies that have achieved some scale and can be taken global — of which it has seen very few. Even on the aerospace side, apart from Aequs, despite Catamaran's desire to do more in the coming year, the pipeline is looking thin.

There's more action in electric vehicle OEMs, however. “There's a lot of small component manufacturers in places like NCR (Delhi region) and Coimbatore that are promoter-owned who are switching to EVs because we already have a strong base in auto component manufacturing," said Padaki. “We're more interested in EV supply chain components like motors, electronic systems, that kind of thing."

Catamaran is also looking to back battery recycling companies that are looking to claw back the rare earth materials used to make EV batteries.

In the electronics and semiconductor space, there are two burgeoning ends like a dumbbell. On the one end, there are plenty of startups but they're still very early in their journey, and on the other, there's fabrication companies which require very large investments to build out factories. Catamaran is scouting for those in the middle. “We're looking for companies that are in the semiconductor or data center space that are looking for growth capital support," said the Catamaran president.

Cheques from Catamaran would range from ₹50 crore to ₹250 crore and in some exceptional cases, the family office is willing to go up to ₹400-500 crore, especially when companies from outside India are looking to build joint-ventures for strategic partnerships in the country.

Previously, Catamaran had a joint venture with e-commerce behemoth Amazon back in 2014 called Cloudtail. In 2021, Amazon acquired the family office's stake due to stricter rules for e-commerce marketplaces with foreign investments.

The firm has traditionally been selective in how it makes investments and that's not changing going into 2026. "Our run rate is typically two to three investments, for which we have to look at 10-12 companies" said Padaki. “These are long gestation in terms of companies because we have to understand the promoters for some time to build relationships. Even next year, we're looking to do maybe two or three."

Manufacturing maturity in 2026

India saw some large deals by risk capital players in manufacturing this year. VIP Industries raised $206 million in a round led by Multiples. Euler Motors secured $75 million from GIC and British International Investments, while Scimplify raised $40 million in a deal led by Accel and Omnivore Partners. Rangsons Aerospace also raised capital in a round led by ValueQuest.

Many of the manufacturing startups that cropped up between 2018-2020 are also now on the lookout for their growth rounds. “Valuations need to see a shift," said Padaki. “The reason many of these companies don't get high valuations is because people don't understand that these are ROCE businesses and not growth-at-all-costs businesses."

ROCE stands for return on capital employed and is a ratio used to assess a company's profitability and capital efficiency, essentially giving insight into how well it is doing based on the money it is spending.

Aequs and SEDEMAC are both heading for the public markets and Catamaran hopes their debut will set the precedent for IPOs by other manufacturers. “Today, you don't have that many precedents of small promoter-owned companies that have suddenly gone public," Padaki said.

Given how the various themes are playing out across manufacturing and precision manufacturing, both venture capital and private equity players have their ears perked for companies that are growing sustainably. “While some near-term factors like tariff might lead to temporary uncertainty, we see large amounts of private capital entering this sector in the next 3-5 years," said Avendus' Bhattacharyya.