Chetan Naik has lofty ambitions for the tech fund he’s managing, run by IIFL Asset Management Company (AMC). The company is an arm of financial services group India Infoline (IIFL). “We want to be at the intersection of the best of the VC world and growth-stage PE funding,” says Naik.
He’s sitting in a conference room named after Benjamin Graham, considered the father of value investing, at the IIFL AMC headquarters in central Mumbai for the interview with The Ken. (There are also rooms carrying the names of other legendary investors such as George Soros, Bill Gross, and Ray Dalio.)
“We want to invest in hyper-growth companies but we also look at strong unit economics,” he adds.
Naik’s statement follows a stellar year for IIFL. The company made a splash in 2021 with its Rs 5,000 crore ($670 million) late-stage and pre-initial public offering (IPO) tech fund.
Set up in late 2020, the fund has deployed 60% of its corpus since January 2021. In its portfolio are 17 companies, including online insurance aggregator PolicyBazaar, food delivery platform Swiggy, edtech giant Byju’s, and online meat delivery company Licious.
It’s not entirely unexpected considering that 2021 saw fundraising, both in frequency and size, reach fever pitch. Over $50 billion in venture capital (VC) and private equity (PE) investments went to Indian companies, the largest ever, according to data provider Tracxn.
But that’s also what makes IIFL AMC’s ascent to the cap table of marquee startups an unlikely one. Almost 80% of 2021’s investments came from late-stage deals (Series C and above), a category in which usual suspects such as Sequoia and Tiger Global often make headlines. IIFL, on the other hand, is better known for its wealth management, shadow banking, and broking businesses.
Naik, who’s been a PE investor since 2015, chalks this up partly to his previous experience. During his earlier stint at TVS Capital Funds, Naik invested across stages and businesses such as beauty e-tailer Nykaa and power trading platform Indian Energy Exchange. Observing how Nykaa was scaled while also being “very capital-efficient” also came in handy, says Naik.
The result of that approach is the bevy of bets in his current fund. “The kind of deals Chetan has done… I was telling him a few days ago, ‘Wherever you are doing a deal, take some money from me also’,” says Vivek Gupta, co-founder of Licious. Gupta adds that he isn’t joking.
IIFL AMC is no stranger to backing startups. Since 2015, it has picked up stakes in companies such as cloud kitchen brand EatClub Brands (formerly Box8), conversational artificial intelligence platform Uniphore, and fashion e-tailer Fynd, through early-stage funds.