Fund focus: Emphasizing the partnership approach

Hari Buggana, a managing director of Invascent Capital, sees the firm’s investment last year in Indian pharmaceutical developer Symbiotec alongside Motilal Oswal Private Equity as a sign of things to come. While not technically a control transaction – the investors acquired a 70% stake collectively, but neither owns a majority by itself – the deal shows that Indian founders are increasingly willing to share ownership of their companies with the right PE partners.

With more than a decade of experience investing in Indian life sciences, Invascent believes it is a good match for entrepreneurs in the pharmaceutical, hospital, and medical devices spaces. Buggana therefore expects situations like Symbiotec to feature prominently in the firm’s third fund, which recently closed at the hard cap of $250 million.

“A bunch of entrepreneurs are now comfortable running a business along with financial partners, but the partners need to bring something to the table,” he says. “We bring extensive domain knowledge and a long track record, and promoters take comfort from that fact.”

This ability to play an active role in its portfolio companies should be enhanced by the growing appetite among LPs for co-investment, which will allow Invascent to take larger stakes. The Symbiotec deal is once again representative in this regard: more than half of the $55 million committed came directly from LPs. However, the size of its holding is less important than an owner’s willingness to listen.

“When we invest in a company, one of the key criteria is our judgment of the mindset of the business owners, and whether they will allow us to give input,” Buggana says. “We’re very particular about truly partnering, and not just being a source of capital. If the underlying asset is attractive, and the owners are open to our participation, then whether it’s a 20% stake or a 70% stake, we’ll do it.”

The new fund represents a significant expansion from Invascent’s last vehicle, which closed in 2014 at INR8.7 billion ($130 million). Buggana sees the larger corpus as vital to the firm’s plans to pursue a range of opportunities in a growing, and increasingly globally-focused, Indian healthcare sector. 

International markets are expected to feature in every segment Invascent covers, albeit in different ways. Developers of generic pharmaceuticals will likely do well in developed markets, where there is growing demand for replacements for complex medications, which Indian companies are well-positioned to supply. 

“There are a lot of medical device patents about to expire, and we believe the emerging markets are a fabulous opportunity for Indian medtech companies to introduce generic medical devices, just like generic pharmaceuticals were introduced,” says Buggana. “And of course, with rising household incomes in emerging markets, there is a move away from public hospitals to private hospitals, where they can get better-quality healthcare.”   

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• Topics
• South Asia
• Growth
• Healthcare
• GPs
• Fundraising
• India
• Invascent