Norwest's $4 billion fund to back India's manufacturing, healthcare, AI
Norwest Venture Partners, a multi-stage investment firm, plans to deploy a “significant” part of its newly raised $4 billion fund in Indian opportunities across value-added manufacturing, healthcare, pharma, financial services and consumer.
“The fund is a global fund, so there is no specific allocation to India. But Norwest continues to be very bullish on India,” Niren Shah, managing director and head of India at Norwest said in an interview with Mint. “Over time, Norwest has developed a deep understanding of India and continues to believe strongly in its prospects for the foreseeable future.”
The firm, which has backed companies such as Swiggy, Expressbees, Ofbusiness, Mintify, among others, will "continue to invest in India at a very significant pace of $250-300 million a year”, Shah added.
After raising its largest-ever fund, Norwest’s total capital under management stands at $18 billion. The firm, which is celebrating its 20th year of investing in India, is looking to add value-added manufacturing and manufacturing-related services as a thesis to its investment strategy.
“This is something that has started over the last year, and I think we will continue to increase our investments in this area. The increase in the fund size is also a representation of the opportunity,” Shah added.
Norwest invests in early, growth and buyout opportunities in the US, India and Israel.
From its 17th fund of $3 billion, the firm has invested in companies such as Padmini VNA in automotive and JJG Aerospace, Shah said. “Even now, there are multiple investments at the final stages that are related to these segments.”
Apart from manufacturing, Norwest is also focusing on healthcare, AI and deeptech, financial services and consumer businesses.
“AI and deep tech are more of a venture theme, although most of our other investments are in growth equity. We also made investments in AI and deep tech in the last fund, such as Pascal AI, where we see a strong focus on AI coming from India, for India or for global markets.”
Shah believes India has several promising AI and deeptech companies, despite perceptions that the country is lagging in the global AI race. He said these businesses need greater visibility as well as investment.
“We are starting to do that. And I think this will also come of age. When we were doing internet, everyone said, "Oh, India will not have internet; it will all be offline." That's not true. Yeah, sometimes it's running two years behind, but that story will happen. I think some of these narratives will change” he said.
"Maybe LLMs have made a big noise, and maybe one category you could argue is well suited to some other countries. But the rest of AI is going to proliferate quite rapidly, and I think to that extent, Indian AI companies will also exist and thrive and be very large,” he added.
The firm has been harvesting some of its older bets in India too. In the last two decades, it has seen 30 exits from portfolio companies. “Of those, 10 have gone public through IPOs, which is a significant number.”
Norwest is also preparing its next cohort for initial public offerings (IPOs). While companies like Five Star Finance, Veritas and Everbrands have filed for IPOs, four more companies, including Ofbusinenss, and Mintifi, are in the process of appointing bankers. They are expected to file for IPOs over the next six months.
For global investment firms, India is a must-have market. Some of the other global firms, such as Accel, Matrix and Lightspeed, among others, have either recently raised new funds to deploy in markets including India or are in the process of raising an India-focused fund, a mark of growing investor confidence in the region.