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TPG Growth looks to invest in Indian consumer Internet start-ups

( 13:00, 07-Mar-16)

TPG Growth, which owns a minority stake in Lenskart, is looking to partner with venture capitalists for future funding rounds

TPG Growth, an early backer of ride-sharing app Uber and home rental service Airbnb, is looking to invest in Indian consumer Internet start-ups, a company executive said. The fund will also partner with venture capital funds to invest in these companies.

“We are looking to partner with some of the best venture capital funds, who we know well and we respect their judgement, and work with them in a very partner-like relationship for successive funding and growth capital for their portfolio companies,” said Anjali Bansal, partner and managing director at TPG Growth.

Founded in 2007, TPG Growth is the equity investment platform of global private equity firm TPG, and invests in middle-market companies (firms with annual revenues ranging from $50 million to $1 billion).

Apart from TPG Growth, other large funds that have invested in Indian start-ups include Warburg Pincus, Goldman Sachs Inc., WestBridge Capital Partners, Multiples Alternate Asset Management Pvt. Ltd and Tata Opportunities Fund. India was the top destination for private equity (PE) and venture capital (VC) investors in 2015.

The country received a record $22.4 billion in investments last year, 31.8% more than the previous record of $17 billion in 2007, according to a report by Bain & Co. India Pvt. Ltd. The 2015 deal value marked a 47% increase over the $15.2 billion India received in 2014. Investments in consumer tech grew 46% to $6.9 billion.

In January 2015, TPG Growth made its first investment in an Indian online firm when Hong Kong-based TR Capital Ltd and TPG Growth jointly invested Rs.135 crore in eyewear vendor Lenskart for a significant minority stake. “We have invested in Lenskart, where we came in after IDG and Unilazer. We are very excited about the company and its growth trajectory,” Bansal said.

TPG Growth is keen to further invest in Lenskart in later rounds of capital raising. The fund tends to invest larger amounts, but it did not provide details on the average size of investment it is seeking to do in the country. Working with VCs is one of several ways in which TPG is approaching high-growth start-ups. “We take a variety of approaches. In some cases, VCs identify and scale the company to a certain level and then we come in as partner with operational expertise and global insights that can build a business to the next level,” said Bansal, adding that TPG Growth is not looking at leading each of these funding rounds.

“We are okay with a significant minority (stake) in the company. We are very clear that we want the entrepreneur in the driver’s seat,” she said.  TPG Growth is looking to invest in sectors such as education, healthcare, financial services and consumer. “...they are tapping into unmet need or sometimes even unfelt demand, but creating convenience, price discovery, superior models of delivery, and we want to participate in these spaces,” she said.

According to data from VCCEdge, the financial research platform of VCCircle, TPG has deployed more than $1.5 billion over the past decade, which includes investments by both TPG Capital and TPG Growth.

Though investments in consumer Internet firms have skyrocketed over the years, 2015 also witnessed some large-scale consolidations and write-downs by some of the investors. The start-up space will see consolidation, said Sanjeev Krishnan, partner and leader for private equity and transaction services at PwC India. “A number of businesses have got funded, and quite a few of them are the third or fourth business in the same segment,” he said, adding that beyond the top two or three companies, there might not be too much space in the market.

Source - Mint

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