Tiger Global slowly steps up pace of India investments

Bengaluru/New Delhi: Tiger Global Management is slowly increasing its pace of investments in start-ups after reaping attractive returns from share sales in Flipkart and Ola.

Once the most prolific start-up investor, Tiger had almost entirely stopped investing in the past two years after its rosy investment thesis on the consumer internet business did not play out.

Instead, the New York-based firm shifted its attention to getting out of some of its riskiest investments.

But in the past six months, Tiger Global has invested in six of its existing portfolio companies, the highest since it suddenly pulled the plug on start-up investments at the end of 2015.

Since October, Tiger Global, whose private equity investments are led by 38-year-old fund manager Lee Fixel, has invested in PolicyBazaar, InShorts, NestAway, Grofers, Razorpay and Chargebee.

Two people familiar with Tiger Global’s thinking said the firm may start making new investments this year after the proposed buyout of Flipkart by Walmart goes through.

That deal is likely to provide Tiger Global its biggest exit ever in India. Walmart is in talks to buy a majority stake in Flipkart.

Unlike 2015, Tiger Global is not looking at early-stage start-ups, the two people said.

The investment firm is likely to invest in mature start-ups, they added.

“Lee has been looking at new deals for a few months. He’s not going to invest in the same way as before but this year, it looks like he will make new investments again,” one of the people cited above said.

Tiger Global declined to comment.

Starting May 2014, Tiger Global’s Fixel went on an investment spree for 18 months. He pumped in more than $1.5 billion, picking up stakes in more than two dozen Indian start-ups and leading three massive capital infusions into Flipkart, according to Mint research. Fixel believed that the Indian consumer internet market would see explosive growth, somewhat like what was seen in China, where Fixel had generated very lucrative returns from internet investments.

Fixel’s aggressive investment started a funding boom for start-ups, prompting other investors like SoftBank Group, Sequoia Capital, Accel Partners and others to follow suit.

Some 18 months later though, it became evident that the consumer internet market here would grow at a slower pace than what Fixel had anticipated.

He abruptly halted all start-up investments and pushed portfolio companies to slash losses and conserve cash. Again, other investors followed his lead. Some investors and entrepreneurs criticized Fixel for pushing up start-up valuations to unreasonable levels, and predicted that Tiger Global would struggle to even get its capital back. But Fixel proved that he is adept at making exits.

Over the past two years, Tiger Global has earned nearly $1 billion from selling shares to Japan’s SoftBank Group in Flipkart and Ola as well as from the sale of two portfolio companies, jewellery retailer CaratLane and online music platform Saavn.

That’s the most that any investor has earned from investing in Indian start-ups.

Fixel was also instrumental in changing the CEO of Flipkart twice; the second time around he installed a Tiger executive Kalyan Krishnamurthy as the head of Flipkart, which was Fixel’s biggest and riskiest bet.

With the impending takeover of Flipkart by Walmart, Fixel’s risky bet that once was in danger of unravelling looks like it may pay off, providing respite to the fund manager who triggered both a start-up funding bubble in 2014 and the consequent funding winter of the past two years.livemint

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