PremjiInvest becomes the top investment company in India

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.

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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.”

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Wipro buys Yardley's personal care business

Wipro, India’s No. 3 software services exporter, said on Thursday it had agreed to buy some personal care businesses of Yardley for about $45.5 million, adding to its consumer goods business.

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Wipro said it had signed an agreement with UK-based Lornamead group, which owns the Yardley brand, for the businesses in Asia, the Middle East, Australasia and some African markets. The transaction is expected to be completed by mid-December, it said in a statement.

Lornamead’s global turnover is estimated to be close to $650 million. Its portfolio straddles various categories of personal care products including hair-care (Brisk, Aqua Net and Vosene), cosmetics and skin-care (Amplex and Handsan), oral care (Brilliant and Goldspot) and home care brand Stergene.

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Tura is a significant player in soaps and skin care in Nigeria, with an annual turnover of close to $50 million.

This is Wipro’s second big buy-out in the FMCG space in two years. In July 2007, Wipro had acquired Singapore-based personal care products manufacturer Unza Holdings Ltd for $246 million (Rs 1,010.2 crore) in an all-cash deal. That deal with Unza’s portfolio of shampoos, creams, lotions and detergents had marked Wipro’s big plunge into the global FMCG space.

Full article here

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Wipro's Green Gamble

40 years after he took over his family’s vegetable oil company and turned it into a $5 billion company selling IT services, computers, consumer care, lighting and medical equipments, Azim Premji is on the lookout for his next billions.  He sees them coming from renewable sources of energy.  Water and Eco-energy are the two areas of focus for Wipro and that is where they believe the next billions will come for the company.

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For those who know Premji, it is not uncommon to see the fifth richest Indian on the Forbes List and the 63-year-old chairman of Wipro switching off the lights before leaving office. It is this commitment to avoid waste that has turned Premji’s attention to ecology and sustainability.

In October 2008, even as it warned of slowing growth in its main software outsourcing business in the backdrop of a global financial crisis, Wipro released a recruitment ad for two new businesses, Wipro Water and Wipro EcoEnergy. The company has spent the previous two years preparing for this diversification, which may turn out to be the company’s third big change. The first was when a 21-year-old Premji took charge at Wipro after his father’s sudden death; the next was when the vanaspati and soap maker transformed itself into a multi-billion dollar information technology giant in the 80s and 90s.

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Chief Financial Officer Suresh Senapathy says green services and solutions will bring in up to one out of every four dollars of the company’s revenue, three years from now. In the financial year ending March 2009, Wipro had revenue of more than Rs. 25,000 crore. Even if the revenue were to stagnate, a fourth of it — Rs. 6,250 crore — from ecology is no small amount. The plan also aligns well with Premji’s desire to ease down IT’s profit contribution from 93 percent currently to 70 percent in the next few years.

The new idea was first thought up by the 41-year-old head of Wipro Infrastructure Engineering (WIN), Anurag Behar. The two new ecology businesses will be housed under WIN. In January 2007, Behar made the first formal presentation about the ecology business to Wipro’s board of directors. The board reacted positively but also advised caution: Ecology was a nascent field with rapidly evolving technology and Wipro should not get locked in a technology that ran the risk of becoming obsolete soon.

Wipro has turned its 50-acre campus at Electronic City in Bangalore into a test bed. While 25,000 software engineers write code for Fortune 500 corporations, waste food from the cafeteria turns into methane for lighting burners, harvested rainwater is used to cool air-conditioning towers, a paper pulping plant recycles waste paper into writing pads and a micro windmill lights bulbs along the perimeter of the campus. Wipro’s Sarjapur campus a few kilometres away has India’s largest LED installations — all compact fluorescent lamps have been replaced with LED lights, helping save 75 percent in electricity consumption. Since 2003, Wipro has cut water usage in its offices across India by nearly two-thirds.

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