After raising a new global fund in March this year worth $1.6 billion, Bessemer Venture Partners is now looking at writing much bigger cheques and investing in new sectors like healthcare. Bessemer, which has made over 30 investments, is now looking forward to investing up to $100 million in private equity deals in the infrastructure sector, said BVP India managing director Vishal Gupta.
“If you see today’s environment, the capital for infrastructure has become scarcer. The opportunity and the capital needed are humongous, and we would not want to miss out on those. If we get transactions where we can make capital gains, along with some structured returns, we would be delighted,” said Gupta in an interview with VCCircle.
Bessemer, which has been investing directly in India since 2005-2006, has typically invested between $5 million and $25 million in several companies. Some of the bets made by Bessemer in the core infrastructure segment include Rs 100 crore in IL&FS Transportation Network Ltd (one of the largest players in the BOT road segment) and Rs 115 crore in Ind-Barath Power Infra (power generation firm).
Healthcare is another big focus area right now and Bessemer is in the process of closing a transaction in this segment, said Gupta. “We are looking at the sector from an ecosystem perspective like claims processing and also from a healthcare provider’s perspective, like the super-specialty chains,” he added.
Bessemer is currently looking to invest in infrastructure and allied capital goods & services; consumption related sectors like financial services and retail, besides Internet and early-stage technology.
Bessemer has closed its seventh fund at $1.6 billion on March 31 this year and plans to invest approximately a quarter of this corpus in Indian companies. Its limited partners (LPs) include university endowments and corporations and family offices, among others. Besides India and the USA, Bessemer also invests in Israel.
According to Gupta, the fund was raised on the backdrop of large liquidity as it had made several exits in 2010 and 2011. These include Quidsi (acquired by Amazon), Vertica Systems (by Hewlett Packard), Alnara Pharmaceuticals (by Eli Lilly) and Playdom (Disney), among others.
While Bessemer has 25 per cent allocation for India, being a global firm gives it flexibility. “Since we are a global fund, we look at where the best opportunities are and make sure that the capital goes there,” explained Gupta.
For instance, Bessemer invested 30 per cent of the sixth fund in India, which was higher than what was initially allocated. Several other Silicon Valley-based funds like Norwest Venture Partners and New Enterprise Associates also invest in India from their global funds.
The firm has been a fairly aggressive investor over the past 12 months, closing over seven-eight transactions. “I think what the LPs like about Bessemer is that we are also company-builders, rather than just investors. Our abilities to bring together entrepreneurs and ideas, invest early in the stage and build large companies on top of that, are quite unique,” said Gupta.
Bessemer had formed a 50:50 joint venture with Shriram EPC back in 2007, for Orient Green Power. Now one of the largest IPPs in the renewable energy segment in India, Orient Green Power raised Rs 900 crore through its IPO last year.
Some of the other companies where Bessemer has invested at the power point presentation stage over the past one year include solar power firm Kiran Energy (founded by former KPMG India I-banking head Ardeshir Contractor and Tata Sons executive director Alan Rosling) and Clean Max Enviro Energy Solutions (founded by former McKinsey partner Kuldeep Jain).
Bessemer, which was set up in 1911 to invest Henry Phipps's share of the proceeds from the sale of Carnegie Steel, is also widely known for its anti-portfolio (multi-bagger deals it passed on) which figure companies like Apple and Google.
Investing In The Power Value Chain
Bessemer has also made fairly big bets in the country’s energy & power value chain. It has made seven-eight investments in the segment – ranging from renewable & solar energy to power trading exchange to distribution firms. Two of its latest investments in the sector are Clean Max Enviro Energy Solutions and Spanco Power Distribution Ltd.
“Spanco is a play on the distribution inefficiencies in India where we have losses amounting to more than 35 per cent on an average and distribution companies are bleeding with losses of Rs 75,000 crore-plus. But there is a huge incentive from the government and the Planning Commission to increase the efficiencies,” said Gupta, adding that putting up more generation capacity is only one side of India’s power scenario.
It has invested Rs 80 crore in Spanco Power Distribution Ltd., which recently won the bid to distribute power in Nagpur for 15 years.
Bessemer has also incubated Clean Max, which will offer gas-based power and cooling solutions to offices and shops in India.