SoftBank Vision Fund, the late stage fund led by Japan’s Masayoshi Son and one of the biggest investors in Indian tech-enabled startups, said it is not in a hurry to list the companies it has invested in the country and would wait for the right opportunity.
“Globally, we have had number of companies that have gone public—Uber, Guardant and Slack to name a few. And over the next few years, you will see more companies going public. As India grows, the plan is the same. But there’s nothing on the immediate horizon. IPOs (initial public offerings) are an important one-time decision for the company, so we will take them public when the time is right," Munish Varma, managing partner at SoftBank Vision Fund, said in an interview.
SoftBank recently said it plans to invest $2-4 billion in India. According to Varma, the mega fund’s philosophy in India is no different from the rest of the world.
Given that it is easier to capture and store data with increased computational ability, the strategy is to “see where we can find companies that can use this data efficiently to solve pain points—those could be for consumers or for businesses", Varma said.
“A lot of investors like private spaces as it keeps the reporting scrutiny away," noted Harish H.V., managing partner at ECube, an environmental, social and governance fund, adding there is no compulsion for firms to go public.
SoftBank Vision Fund is “quite sector agnostic", said Sumer Juneja, partner and head of India at SoftBank Investment Advisers. “Specific companies represent specific pain points, using technology to address them in a smart way. So, there is no top-down allocation on countries, regions or sectors. It is all bottoms up," he added.
That said, the mega fund is sharpening its focus on fintech companies. It has already invested in companies like Greensill, Kabbage, Paytm, Policybazaar and ZhongAn Insurance. “It is one of the biggest sectors globally and has created a lot of value. Historically, it has been under-penetrated because it has been difficult to service loans. Technology allows you to service it at a cost that will make you viable," Juneja said.
Varma, on his part, points out that being a SoftBank portfolio company gives a company “access to our ecosystem". “When we started the ecosystem three-four years ago, it was just talk. But today, we have 81-83 companies in the Vision Fund and all these are leaders in their own field," he added.
He has a point. When Gurugram-headquartered Policybazaar decided to raise a fresh round of funding last year, the insurance aggregator had not one but five term sheets. Yet, it opted for SoftBank.
On the flip side, while SoftBank’s capital brings strong advantages to a startup, it often comes with its own set of conditions. This could cause friction between the investor and promoters—Ola being a case in point. Moreover, SoftBank is an investor in Uber Technologies Inc., which competes with Ola in India.
“At the end of the day, everyone has to do what is good for the business. If you are aligned with everyone that you have to build a global and scalable business, as long as that vision is intact, you can always discuss and debate what is the right way to go about it, and in fact, you should. That is constructive, it will help you make better decisions. The board’s role is to be supportive and helpful. All businesses will go through ups and downs—the board needs to support the entrepreneur and give him space to operate," said Juneja.
Meanwhile, SoftBank Vision Fund continues scouting for deals in the country. For instance, food delivery startup Swiggy is in talks with the mega fund to raise as much as $300-500 million in its next round of funding to back its expansion and growth plans, according to a recent report in Mint. If the deal fructifies, it will be SoftBank’s first direct investment in a food tech business in India.
SoftBank is also in advanced stages of due diligence for investing $1 billion in Piramal Enterprises, according to a 22 June report in Business Standard. And eyewear retailer Lenskart is in talks with the mega fund for $350 million in fresh funding, which is likely to value the Delhi-based firm at $1.3 billion, according to a 27 May report in The Economic Times.
Both these deals are underway, said a person familiar with the matter, requesting anonymity. He, however, did not specify any timelines for the deal closures. Both Varma and Juneja declined to comment on these deals.
Deepti Chaudhary from Bengaluru contributed to this story.