Verlinvest, a consumer-brands-focused private equity firm, is doubling down on its India bets, as the country yields significantly higher returns compared to its global investments, Arjun Anand, managing director and head of Asia, has told Moneycontrol.
India accounts for 20 percent of the firm’s assets under management (AUM) globally, Anand said, without disclosing the quantum of returns. Verlinvest manages over 2 billion euros of funding globally.
“We feel bullish on India. We have had a very good journey in India... Indian returns are significantly (at) a premium to our global returns and we are very happy about it. We are happy with our global returns, we are even happier with our Indian returns. We want to expand the pace of our investment now,” Anand said.
He attributed the healthy performance to changing perceptions around India, as the market matures, giving timely exit to the investors while also being stable compared to other markets.
“We have had the right learnings over the years. If you are too optimistic or too pessimistic on India, you will get disappointed…There is optimism in India now,” he said.
The IPO window is wide open and the capital market is thriving. “We want to continue scaling up our business,” he said.
The Belgium-headquartered mid-market PE firm was set up by the family shareholders of beverage giant Anheuser Busch Inbev in 1995. It started investing in India 15 years ago, focusing on food and beverages, retail, e-commerce and healthcare services startups.
It recently participated in a $35-million Series C funding round for Blue Tokai Coffee Roasters. It has invested in eight consumer brands and healthcare services. Other prominent bets in its portfolio are Epigamia, Veeba, Sula Wines, Wakefit, Heads Up for Tails and Purplle. It had previously also invested in e-commerce companies such as Myntra and Jabong.
In the last few years, Verlinvest has invested more than $100 million annually in India, with cheque sizes varying from $20 million and $100 million.
India investment strategy
Verlinvest looks to own between 30 and 50 percent of the portfolio company or a shareholding of around 10 percent at least.
Between 2010 and 2018, Verlinvest raised its stake in Sula Wines from 15 percent to 50 percent, and exited in phases only after the company listed in 2022, Anand said.
The strategy is to have an active portfolio of eight to 12 companies, managed by a local team of 10 people. As it looks to double down on India, the investments will go to existing portfolio brands as well as adding a few new brands.
In terms of increasing average cheque sizes, Anand said, “Because we invest over time, the average in our Indian portfolio historically has been about $40 million. That doesn't mean I invested $40 million on day 1. I may do $25 million and then $50 million. But $40 million has been the average across the companies we have.”
“That is going to move closer to $60 million now. So I will have to increase the size of investment in each company,” he shared. VerlInvest’s investment sizes range from $20-100 million in India.
Among sectors, the PE Firm will be looking at the healthcare services and fitness space, as more people become health-conscious and consumer brands, which have sharper and differentiated products to offer.
Why not quick commerce?
Asked if Verlinvest is exploring the popular quick commerce segment in India, Anand said while a lot of their brands sell through quick commerce channels, investing in one would be difficult from a strategy perspective.
“We are e-commerce investors globally in many categories. In India, we are a large shareholder of Purplle.com. We backed this company and we became the largest shareholder. Then we sold partly… and now our stake is equal to (those of) many of the major investors,” he said.
Investing in quick commerce is difficult mainly because we “cannot be a small shareholder in any company”. “I need to be 30-50 percent. How will I be that? We were 17 percent shareholder of Purplle. Today we are a 10 percent shareholder.”
“That is possible because I went at the right time and the business being of high gross margins in a beauty category was able to compound in that manner…I can't do that in Zepto, it is already a $5-billion company. Swiggy and Zomato are listed already,” he said.
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