When HDFC raised Rs 11,000 crore on Saturday, the list of marquee investors included one domestic fund: PremjiInvest, which invested Rs 1,000 crore in India’s largest mortgage lender. The other investors in HDFC were all established global heavyweight asset managers: Singapore’s GIC, which manages $359 billion globally, alternative asset firm KKR with a $153-billion corpus, Canadian pension fund OMERS with $85 billion, and
French AMC Carmignac which manages $74 billion of assets.
PremjiInvest, which according to three independent and conservative estimates, manages at least $3 billion of assets — predominantly in the public markets — is by far the largest family office in the country. The firm has a runway to increase assets under management to $6 billion, according to one of these sources. “There are only five mutual funds larger than PremjiInvest when you look at their public markets corpus,” said an investment banker, on the condition of anonymity.
HDFC has been among a slew of bets made by PremjiInvest, which has been active in financial services and consumer-facing companies. “The consumption thesis is important, and they look for leaders in the categories,” said a venture capital investor in Bengaluru. “They are very selective of who they invest in.”
Azim Premji began the fund in 2006, as an effort distinct from the family’s philanthropy (Azim Premji Foundation) and core business (Wipro). According to a source in knowledge of the inception, the intent was to participate in growing domestic companies.
“Mr Premji envisaged it as an investment office — not a family office,” he said, adding that Premji wanted PremjiInvest to attract professional talent from private equity and investment banking. It has been a quiet rise in the markets, with the firm abstaining from even having a website. Since then, it has grown to a 40-persons outfit beside the Wipro campus at Sarjapur Road in Bengaluru. Its investment analysts number less than 10 for private equity deals, and at least 15 for the public markets, with the remaining staff in administrative roles. On the public markets, the team actively tracks the top 200 stocks, according to one source familiar with their functioning.
“What Premji has done is the right way to do it,” said Ranjan Pai, chairman of Manipal Education and Medical Group. “He put together a really high-quality team, which has invested in both public markets and private equity,” Pai added. In January 2017, former Wipro vice-chairman TK Kurien was appointed chief investment officer of Premji Invest, succeeding Prakash Parthasarathy who is credited with building the structure and processes at PremjiInvest. In the past seven years, there has been a quiet shift in its public markets portfolio. The firm has exited from most of the companies in the broader infrastructure sector like cement (India Cement, Prism Cement), ports and logistics (Gujarat Pipavav, Gateway Distriparks) and engineering, procurement and construction (HCC, IVRCL).
Out of the 13 investments in infrastructure made by the firm, it holds only three right now: NCC, Schneider Electric Infrastructure and Ramco Cements. On the other hand, it has continued to hold most of its portfolio in the consumer space, with some positions like Parachute hair oil and Saffola cooking oil maker Marico, which have been held for nearly a decade. Of the current set of 28 known public market positions held by PremjiInvest, 12 are in consumption and retail sectors. The major ones include Domino’s franchise owner Jubilant Foodworks; FMCG players like Jyothy Labs, Marico, Zydus Wellness and retailers like Future Lifestyle Fashion, Shoppers Stop and Trent. Financial services is the next big theme in the public market portfolio, with eight of the 28 investment in banks, NBFCs and insurance companies, according to data from Prime Database analysed by ET.
This focus on financial services and domestic consumption is also reflected in the private equity investments made by the firm. Since 2015, it has invested in companies like Hygienic Research Institute, the country’s third-largest hair colour maker known for Vasmol and Streax products; ready-to-eat packaged foods maker ID Fresh Foods and ethnic apparel maker FabIndia. In financial services it has backed insurance companies like ICICI Prudential Life and HDFC Standard Life in pre-IPO rounds besides home finance company Shubham and online financial products seller Policybazaar.
After backing companies like Snapdeal and Myntra in the online retail space in 2014, it has mostly stayed away from investing in startups in India. Most of the investments in startups is now focused in the US market where it has backed artificial intelligence venture Apttus, enterprise planning cloud firm Anaplan and ServiceMax, provider of cloud-based field service management solutions. In its private investments, PremjiInvest has a 10-15 year horizon, said the source close to PremjiInvest. According to two sources, Premji Invest has left most of the tech investments to Wipro, whose core business is IT services. Under Wipro’s chief strategy officer Rishad Premji, the company has built a mechanism to invest in next-generation companies. “Premji Invest has mostly stayed away from tech, and focussed on larger ticket size investments being sector-agnostic,” said one of the sources cited above.
“They don’t go by the hype, but fundamentals of a business,” said the VC investor. “They know the metrics that need to be driven, and the governance levels that need to be driven,” he added. Premji Invest has had sour experiences with investments like retail chain Subhiksha in 2008, when it had infused Rs 230 crore. Some other investments like car services player Carnation Auto and online marketplace Snapdeal have also not worked out. Crucially, according to the sources, having started out early has helped Premji Invest stay the course and lead a fast-growing tribe of family offices. “They are the most organised of family offices in terms of strategy,” the VC investor said. “Family offices tend to be opportunistic because they are driven by a successful promoter. Premji Invest is the most organised–opportunities by sector and intrasector categories. They bring a lot of conviction into the thesis.”