IIFL Asset Management (IIFL AMC) has launched its latest alternative investment fund that will make late stage and pre-IPO investments in India’s fast growing technology startups, said a senior executive of the firm in an interaction with Mint.
IIFL AMC is planning to raise as much as Rs1,500-2,000 crore for this fund.
“In the US and China around 15-20% of the market capitalisation comes from internet companies but in India there are hardly any meaningful opportunities in the listed space. But the Indian internet economy is today at an inflection point and it will witness very high growth over this decade. This is a massive opportunity and there will be large outcomes. IPOs will emerge as a major exit route for the tech companies.” said Chetan Naik, executive vice president, fund manager, IIFL Asset Management (IIFL AMC).
In the past, IIFL has raised several thousands of crores to invest in pre-IPO opportunities through sector agnostic funds.
“This is a very different fund compared to the Pre-IPO funds that we have raised in the past. We are not only looking at companies that are going public in the next one year. While we will invest in those companies, we are also going to go much deeper and invest in companies that are one to five years away from an IPO. The value creation that happens in these tech companies 3-4 years ahead of an IPO is massive and we want to invest in that opportunity,” said Naik.
Many mature new age technology companies such as Zomato, PolicyBazaar, MobiKwik and others have already started working towards their initial public offerings, as per media reports. The success of the initial few listings could push more tech companies to go public, creating large exit opportunities for investors and leading to more investor interest in the Indian internet ecosystem.
“We will be investing in sectors and companies where there is a multi-decadal growth opportunity, companies with strong unit economics and a path to profitability and sectors where there is low competitive intensity,” said Naik.
“Some of the opportunities that we have already identified are in spaces such as edtech, gaming, enterprise tech, vertical e-commerce, food delivery and insurance-tech,” he added.
IIFL AMC has already managed to garner commitments worth Rs400 crore for the fund.
“We launched the fund just a couple of weeks ago and we have already seen commitments of around Rs400 crore. We will raise Rs1,500-2,000 crore for this fund. The fund is being raised largely from high net worth individuals and family offices,” he said.
The fund will invest in 10-15 companies with cheque sizes ranging from $10-20 million.