Indian IT czars' wealth wars: Murthy's Catamaran still nowhere close to PremjiInvest

Infosys co-founder N R Narayana Murthy and his wife sold a part of their stake to set up a venture fund. With Rs 600 crore, Catamaran Ventures was established in 2009-10.

Murthy was following Azim Premji, founder of Wipro, who had set up a private equity arm, PremjiInvest, to manage his wealth. PremjiInvest, with Rs 10,000 crore, up from Rs 1,500 crore in 2007, making it the largest family office in Asia, made its first investment in 2007, buying a three per cent stake in National Stock Exchange (NSE) for $100 million.

Catamaran put its first bet on SKS Microfinance in March 2010. SKS Microfinance’s initial public offering was successful. But after the sector ran into a crisis, Catamaran had a hole, as SKS’s valuation dropped.

PremjiInvest had entered the market with a larger corpus. Catamaran put money in Ace Creative Learning the same year.

According to reports, Catamaran has real estate, heavy industry and infrastructure on a negative list. Consumer sectors are preferred.

Narayanswamy said: “We don’t comment in public about anything specific.”

Over five years, Catamaran has put money in 20 companies and in 100 through angel investors. Its latest alliance is a venture with Amazon’s Asia unit to help small and medium enterprises in India. Catamaran has exited TD Power Systems and NRB Bearings.

PremjiInvest has pumped money in 60 companies and made 20 exits, with an average holding of 54 months. For PremjiInvest, the exit multiples have been five times its investments, according to sources.

While Catamaran has pumped money in Yebhi thrice between 2011 and 2013, the one that could bring it fortune is Hector Beverages. Catamaran put money in the latter in two tranches between 2011 and 2013. Footprint Ventures and Sequoia Capital have invested in it.

In an interview in 2012, Narayanswamy had said Catamaran would like to stick to what it had been doing: Multi-stage, multi-sector.

“We are looking for diversification. Over time, we expect to transition more to a limited partner approach,” he had said.

One of largest investments for PremjiInvest, which works like an asset management company that puts in money in listed equity, private equity and real estate, among others, is the NSE, its first. Other large ones include Manipal Global Education Services, in which Catamaran invested and both exited in 2013. PremjiInvest pumped a good amount into FabIndia Overseas and Myntra.

Two-thirds of PremjiInvest’s allocation is in listed equities in the financial services, consumer and technology sectors, say analysts. PremjiInvest did not respond to queries on its investments.

According to some angel investors and private equity investors, PremjiInvest’s successful investments include DishTV India, JustDial, FabIndia Overseas and Marico, while it lost Rs 300 crore on Subhiksha Trading Services that shut in 2009. Other investments include Bata. There is also Bangalore-based cancer hospital chain HCG that has grown from Rs 81 crore in revenue in 2008 to Rs 500 crore in 2014-15.

PremjiInvest’s interest in retail has grown. Last year, it put Rs 125 crore into Kishore Biyani’s Future Lifestyle Fashions. Before this, it had invested in Tata Group’s Trent, and Shoppers Stop.

According to analysts, most family-owned funds like Catamaran and PremjiInvest have turned cautious and are investing after a lot of due diligence. A Bain & Co report says private equity asset allocation to India has declined in recent times, driven by lower-than-expected returns from investments, low liquidity and uncertainty around government policy and regulations. Though investors continue to believe in the long-term potential of India, they see the value of staying invested, but with increased caution and clarity, it adds.

Each year, say experts, five to seven family offices and a bunch of venture funds crop up in India. Unlike earlier days of industrialists and professionals putting their wealth into government bonds, gold or fixed deposits, they now prefer riskier start-ups, where the returns can be manifold.