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India's Ajay Piramal sees value in VC investing

February 22
2:02 AM 2016

Indian billionaire Ajay Piramal has made an entry into venture capital (VC) investing. Piramal has floated a new VC funding entity 'Montane Ventures,' which will focus on early-stage funding requirements. Piramal has infused $50 million into Montane Ventures.

Ajay Piramal's new initiative will be the first move by any Indian entrepreneur floating a venture capital firm as an anchor investor. Piramal's business entity is engaged in pharmaceuticals, finance and private equity (PE) segments. Montane Ventures has been registered as Alternative Investment Fund.

The Times of India reports that in addition to the $50 million capital, Piramal will mobilize additional funds of $150 million from external investors. Piramal is planning to explore the potential of fast-growing entrepreneurial ecosystem in India. However, his family didn't disclose the financial commitment from Ajay Piramal and his associates.

Piramal's venture is the first VC fund from any Indian business leader to purely into venture capital activity. Other Indian business tycoons such as Ratan Tata, NR Narayana Murthy, Azim Premji, Mukesh Ambani and Sunil Mittal have ventured into VC funding privately or through their family offices. But, no one has floated a VC fund with their largest holding. 

Recently, Piramal Group has floated a $1billion stressed asset fund along with Nirmal Gangwal, a founder of Brescon Corporate Advisors Pvt Ltd. The fund focuses on stressed assets when lenders are in the process of cleaning up their balance sheets. This situation will create investment opportunities for those who want to make them turn around. Piramal Capital manages assets over INR22,000 corre ($35 milllion), according to Deal Street Asia

Ajay Piramal sees investment opportunities in real estate, infrastructure, financial services and pharmaceuticals as Indian government's campaign 'Make In India' is taking off encouragingly. "Our country is growing exponentially over seven percent and will soon be the second-largest economy in the world." 

According to Piramal, the world was betting on India as top-grade investors such as Goldman Sachs, Warburg Pincus, Canada Pension Plan Investment Board and APG Asset Management pour money into the Indian real estate, infrastructure and financial services sector.

Montane Ventures will provide seed capital and Series A round of investment for startups in technology, cross-border and consumer segments. Montane Ventures will compete with Quotient, Kae Capital, Blume Venutres, Orios Venture Partners and others. 

Josh Bornstein, a former co-founder at Footprint Ventures, will lead Montane Ventures alongwith Peter DeYound, the son-in-law of Piramal, as its director. Bornstein said, "Most of the VCs are now investing from funds with more than $250 million under management. Therefore, a gap exists in the market for funds to write traditional large seed and Series A cheques."

As of late, the venture capital ecosystem in India has grown into a more mature way over the past decade. The quality of entrepreneurial teams has been moving up the valuchain considerably. The optimum fund size will be $50million to $100million for early-stage investments.

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