SoftBank Vision Fund will invest at least $2-4 billion in India over the next two years as it looks to bet on new sectors such as financial services, a top company executive said. This is a significant move away from internet and tech-based businesses that the fund has favoured here and globally.
Rajeev Misra, director and executive vice president at SoftBank Group Corp who heads the SoftBank Vision Fund (SVF), told ET in an exclusive interview that the Japanese group will also help bring more than 20 companies to India from its present portfolio by way of joint venture partnerships which they will strike with local businesses here.
The fresh India commitment comes at a time when the $100-billion SVF, the largest pool of private capital globally, is in the midst of raising a new fund expected to be of a similar size. “We should be able to pump $2-4 billion in India, which would be through new investments. We will also make follow-on investments aside of fresh ones when our portfolio firms require capital,” Misra said. The technology fund boasts of 80 companies worldwide in its portfolio.
Financial Services Opportunity
It has been helping a number of these firms tap international markets. Among its India portfolio companies, Oyo has expanded to China, Europe and the US, Paytm has entered Japan and Canada while FirstCry, the baby products etailer, has entered the UAE.
Last month, SoftBank founder Masayoshi Son said at the company’s annual general meeting in Tokyo that limited partners or sponsors of its Vision Fund were in talks to be a part of the group’s next fund expected to be launched soon. Prominent investors in the first fund include the sovereign wealth funds of Saudi Arabia and Abu Dhabi, tech giant Apple, among others. SoftBank has been facing challenges in raising its second Vision Fund, as per global media reports.
SoftBank has already deployed $10 billion across Indian startups such as Paytm, Oyo, Delhivery, FirstCry, among others, out of which $8 billion came from the Vision Fund. Misra had told ET in February that the fund, which is widely seen as reordering tech investing, will start to cut smaller sized cheques in the range of $100 million in companies which are valued at around $500 million. ET reported that eyewear etailer Lenskart is in talks with SVF to secure $350 million in fresh funding, which is likely to value the Delhi-based firm at $1.3 billion.
Talking about striking local partnerships, Misra said, “This is a no risk strategy. All they (potential JV partners) need to do is provide management, staffing, handle the regulatory issues and customise to the Indian market. These products have no competitors here. This is equally an opportunity to create jobs here,” Misra said. He was referring to investments by SFV’s portfolio companies.
While SoftBank has so far not actively chased non-technology themes, traditional financial services platforms with an underlying technology layer have emerged as attractive sector for SoftBank to explore, Misra said. “Financial services is broken in India, and it can be the biggest multiplier of growth. This is a great opportunity that we would look at here,” he said. Misra however declined to comment on the group’s talks to Invest $1 billion In Piramal’s Financial Services, which was reported by business daily Business Standard.
Three high-profile Software companies — Uber, Guardant Health and Slack — have had IPOs in 2019. Going forward it will also assist its portfolio firms optimise capital structuring through debt financing. “These technology companies tend to use expensive equity financing, which is where we come in with our team and help them as we have very deep relationships with these big banks,” he said. SVF itself has held discussions with banks like Goldman Sachs to shore up secured debt against its stakes in these three companies which went public, as was reported by The Financial Times.
