Kinnevik looks to expand India presence

Mumbai: Sweden-based Investment AB Kinnevik, which manages $6.09 billion in assets, is open to expanding investments in India by three to four times over the next four years despite the indifferent performance of some start-ups in which it has put money.

Kinnevik is looking to increase its investments in India to 8-10% of its corpus from 2-3% now, chief executive officer Lorenzo Grabau said in an interview.

Kinnevik exited its investment in food-ordering start-up Foodpanda (Pisces eServices Pvt. Ltd) last year, but stays invested in Jabong (Jade eServices Pvt. Ltd), online classified portal Quikr (Quikr India Pvt. Ltd) and online furniture store Fabfurnish (Alix Retail Pvt. Ltd).

German investor Rocket Internet is making a “last-ditch” attempt to find an Indian partner to run Fabfurnish, failing which it will shut down the site by March-end, The Economic Times reported on 27 January. In September, Mint wrote about multiple flaws in the culture and processes at Foodpanda. Jabong has experienced a churn in leadership in recent months.

Grabau said Kinnevik is in the process of finding a partner for its investment in Fabfurnish. Kinnevik is one of the largest investors in Rocket Internet.

In September, the furniture seller announced a change in its business model to become a full-fledged marketplace rather than selling private label brands.

“One of the things that I wanted to mention which applies to Fabfurnish and many of the other companies, we believe that there are different roles to value creation. When our companies are not doing very well or if the market is too competitive we look for ways to combine businesses and that’s helpful because it reduces competition and it makes for stronger businesses and it’s the right thing to do for employees who, as opposed to having start all over again, can migrate to be part of another organization,” Grabau said.

“In the case of Fabfurnish, we are exploring options to make the company stronger.”

Grabau said the company would make an announcement on Fabfurnish in the next few weeks.

That’s the same approach the company has in mind for Jabong too, an early entrant in the fashion space that has since lost ground to rivals. Kinnevik is keen to expand Jabong’s platform and will look to acquire companies operating in online fashion niches.

“Jabong has a great opportunity and given the size of the Indian market we might need partners to make it stronger. We suspect over the next two or three years we will continue to raise capital at Jabong and at our other e-commerce companies so that we have other sustainable franchise,” Grabau added.

Apart from investments in Jabong, Kinnevik has earmarked capital to invest in online classifieds firm Quikr, which recently acquired real estate listings firm Commonfloor.com. On 7 January, Mint reported that Quikr has agreed to acquire Commonfloor for $120 million. Since 2008, Quikr has raised about $346 million from Kinnevik, Tiger Global, Steadview Capital Management, Matrix Partners India and others.

In December, Kinnevik sold its entire holding in Russian online classifieds platform Avito for $846 million. It is looking to deploy some of that to support Quikr’s growth.

Grabau said Kinnevik sees a huge opportunity in India and is taking a long-term view on the country.

He admitted that there was a time in the first part of 2015 when a lot of “capital was pursuing” limited opportunities, resulting in high valuations, but that “in the last two or three months that capital has become more scarce, stimulating consolidation in the market”.

In 2015, VC funding in India touched $5.4 billion (across 473 deals), as against investment of $2.3 billion (across 307 deals) in 2014, according to data from VCCEdge, the financial research platform of VCCircle.com.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.