Early-stage investment will be a “natural progression” for the company going ahead, said Anshu Kapoor, President & Head, Nuvama Asset Management, while speaking at YourStory‘s falgship startup event, TechSparks 2023.
Since the beginning, Nuvama Asset Management, which invests in companies via its alternative investment arm Nuvama Private Equity (PE), has been clear about investment in late-state companies looking to hit the public market in the next 2-4 years.
It is currently investing from its third late-stage/pre-IPO fund under the Crossover Opportunities banner. This fund has so far raised Rs 4,000 crore.
On the question of backing early-stage startups, Kapoor did not dismiss the idea and termed it as a “natural progression” in the future.
“We spent the last six years perfecting late-stage investing. Opportunity for an early stage was there, but earlier investors did not want to invest in a product for 10 years. They didn’t have the risk appetite,” Kapoor told Shradha Sharma during a fireside chat at TechSparks 2023.
Nuvama first launched a 3.5-year long private equity fund in 2017, which has fully paid out with an IRR of 20% to investors. “It took time for us to build trust. The next growth equity capital fund would likely be for seven years. Early-stage investing is going to be a step function,” he said.
The latest crossover fund has invested in companies such as Ola Electric, DailyHunt, Ozone Overseas, and Course5 Intelligence.
“Overall, we have raised Rs 7,000 crore from 5,000 unique domestic investors. Surprisingly, 30% of them came from locations like Lucknow, Kochi, and Mysore,” said Kapoor.
PAG-backed Nuvama Asset Management is a part of Nuvama Wealth Management Limited (NWML), the group company that operates across different segments in India, including advisory, asset management, broking and distribution services, wealth management, initial public offering (IPO) financing etc., via its nine subsidies.
The group is looking at its stock market debut in the next week.
Need more Indian institutional investors
Commending the growing appetite of investors in Private Equity (PE) and Venture Capital (VC), Kapoor did not hold back from expressing his dismay around the lack of domestic Institutional investors’ participation in the same.
“Demand is not a problem. We have an incredible pool of savings. Indians save $750 billion, and a very small proportion of this goes into other assets besides real estate and gold. Indian institutions do not invest in these opportunities,” said Kapoor.
The leader drew a comparison with countries like the US, wherein a large portion of VC and PE is funded by institutional investors, including pension funds, insurance companies, and sovereign wealth funds among others.
“The awareness is high, but they don’t have the pipe via which they can explore this opportunity. Supply is constrained,” he added.
