Edelweiss Head of Investment Management Anshu Kapoor on Indian Tech Companies Going Public

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Edelweiss Wealth Management currently serves nearly 7.28 lakh high network persons (HNI) and approximately 2,500 of India’s wealthiest families, managing assets under advisement of over $22.5 billion. “Indian private equity has seen investments worth $215 billion, which is more than the total of REIT funds coming into India in the last ten years,” said Anshu Kapoor, chairman and head of investment management at Edelweiss Wealth Management.

Guided by the philosophy of managing risk for its clients with an emphasis on scale, Edelweiss Wealth Management, in its cross-funds, today invests in technology-driven, growth-stage companies. Some notable companies include NSE, MedPlus, Ola Electric, Sapphire Foods, Amber Enterprises, CAMS, Daily Hunt and others. “So what we’re seeing today is what I call India’s Alibaba moment,” Kapoor said.

Citing the US and Chinese markets, where tech companies saw great strength from the early 2000s and 2014 in terms of wealth creation, Kapoor said a similar moment has come in India where many tech companies are expanding. embark on the path to an IPO. “With Zomato, that time has come in India, where a lot of these companies not only have the courage, but also the will to access public capital,” Kapoor added, and said it’s a big change that the country is experiencing today. . The same is reflected in their investment portfolio.

Metrics used to construct the portfolio

“Most companies tend to find global or US credentials to invest that they can see here in India. However, our view is more inclined towards Indian references. Currently it is more visible,” Kapoor said.

Citing the electric vehicle ecosystem and their investments in Ola Electric, he said India would go for two-wheelers and not passenger cars. Whereas, if you see in the United States, this conversation does not exist. Basically, you start digging in and asking questions like – who can succeed in EVs, then understand the mindset of Indian consumers, how will that pan out, and so on. “So you start with a nuance and then go deeper into that category,” Kapoor added.

Moreover, talking about vernacular as a category and their investment in Dailyhunt, Kapoor said that it only exists in India. Likewise, the same applies to other sectors like health tech and edtech. “We don’t invest in companies that say – I’ll try these five things, and maybe one of them will work. Instead, we look at companies that have tried all five things, and maybe two works, and now they say, let’s find the next growth factor,” Kapoor revealed.

In addition to this, the company also looks at other metrics such as technology capabilities, leadership, competitive advantage, user traction, unit economics, network effect, and more.

Solving Deep Tech Investment Challenges

Serving a large group of investors is easier said than done, and there are several challenges. This includes client onboarding, fund management, investor communication, real-time information delivery, and more. Kapoor said.

He said that in 10 minutes a customer could board, and the channel partner would then show the products. In addition, he said that they have chatbots that offer personalized suggestions to the customer, as well as the chief communication services of WhatsApp, as it is quite complex to onboard a customer. “A great layer has been created that helps channel partners and customers get on board and be served digitally,” Kapoor said.

But there is more – how Edelweiss Wealth Management manages the communication aspect with its investors. “Imagine going to 3500 people and saying you have to give me 15% more, and getting it done in three weeks is next to impossible. In comparison, LPs and GPs have to make 10-12 phone calls per But, in our case, we can’t make a five-minute phone call,” Kapoor said, stating that they built the entire integration, maintenance, and experience engine in-house.

Here’s how it works

Kapoor said they have an in-house technology team that created this platform, which sits on top of their data warehousing solution. Next comes the engine serving the distributors and another engine serving the customers. “So I think that’s a big problem that we’ve solved and can raise money on,” he added.

Kapoor said they partnered with Microsoft, AWS and all their IPs were built in-house as there is no industry solution available at the moment.

Fund size Edelweiss Wealth Management

Edelweiss Wealth Management has closed Cross Series III at INR 150 crore ($200 million) since its launch in March 2021. So far, across its first three rounds, the company has raised a total of over INR 3,700 crore ( $500 million). In August 2021, it announced the raising of INR 7,500 crore ($1 billion) through its series of pre-IPO and late-stage private equity (PE) focused funds. A crossover fund is an investment fund that holds both public and private investments.

With this fund, the company said it will continue to leverage its experience, expertise and technological capabilities to provide flexible, capital-intensive solutions to Indian investors. It is open to private investment, especially to existing and emerging leaders, including technology companies in fintech, edtech, healthcare, digital media and digital commerce.

The team said the fund allows investors to capitalize early on structural growth trends with reasonable exit horizons. For example, since its inception in 2017, his fund has thrived through two crises and generated compound annual returns of 16.2 and 28.7%, respectively. Additionally, his first crossover series distributed over 60% of the capital raised, after successfully exiting part of his portfolio.

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