Bertelsmann, the German media group is looking to invest $200-$250 million in Indian startup ecosystem over the next four years, reports ET. According to the media reports, the media firm targets to invest $50-$60 million each year in India.
Commenting on the development, Pankaj Makkar, MD, Bertelsmann India Investments told ET, “ “We made our first investment in 2013-end in India. If we include the commitments that we have lined up for the next 12 months for deals that we have an outlook for, the deployment would be about $200 million. This is just for our follow-on investments and new deals will be over and above this.”
As per the Makkar, for the firm, its India portfolio gives it an extremely strong internal rate of return (IRR) between 30%-40%. But with only three years of deal-making in the country, its first set of exits is still 12-24 months away.
Three years after it made its first investment in India, Bertelsmann India Investments (BII) has a deployment book of $150 million, having made 30 deals in the country.
A growth stage strategic investment vehicle of Bertelsmann SE & Co KGaA, the company invests a part of the profit of its parent. The fund typically invests in three to four new deals a year starting with Series-B and Series-C levels. According to Makkar, Series B is a great space to be in right now, because there is more demand than supply.
Earlier, the firm has invested in the Indian internet ecosystem include furniture marketplace Pepperfry, Lendingkart, Saavn, and budget hotel chain Treebo which raised Rs 226 crore ($34 million) in its Series-C round last week.
Bertelsmann is also training its focus on fintech and edtech. Education joins healthcare as a sector that investors are slowly warming up to, given its potential to shore up sizeable returns over long periods of time.
As the strategic investment arm of Bertelsmann SE & Co. KGaA, BII however, will not look at media plays for strategic buy-outs from the fund with such initiatives being driven by the parent.
“Yes, Bertelsmann is looking for strategic buyouts. However, it will not get done by the fund. The fund actually invests in areas where we don’t have strategic businesses in the country. From that perspective, this fund is not a strategic acquisition vehicle for the group,” concludes Makkar.