Bertelsmann Next enters India with acquisition of Let’s Transport

Pankaj Makkar, managing director, Bertelsmann India Investments (BII), said: “In the US and Europe, where the startup ecosystem is mature, founders prefer to work with conglomerates from which they derive significant benefits. This maturity has now come to India.” Mint. Makkar will lead Bertelsmann Next India (BNI).

The Bertelsmann Next platform generally invests in companies in the fields of mobile technology, HR technology and pharmaceutical technology. With BNI, the holding will focus more on mid-market opportunities, but the thesis in the country will be different from its investments in Europe and the US.

The institutional investment vehicle’s entry into India comes at a time when more and more investors are pouring money into mid-cap companies. Largely industry agnostic, these investments are driven primarily by these companies’ earnings potential, strong revenues, growing market share and potential to disrupt larger players in the market.

“Think of us as half strategic, half financial investors,” Makkar said. “Everything that is 100% financial comes from our venture capital units, strategies come from a different business line. Whatever is in the middle comes from Bertelsmann Next.”

Bertelsmann tends to think more long-term, focusing solely on acquisition through the BNI platform. While one may take a minority stake before, the ultimate long-term goal is to own a majority stake. Even so, the minority stake tends to be significant, not less than 20%.

In India, the investment platform is first focusing on consolidating the logistics sector by acquiring 80% stake in Let’s Transport, making Let’s Transport the first portfolio company of BNI. Bertelsmann cleared the cap by providing exits to a number of investors, including Alteria Capital, Stride Ventures and Rebright Partners.

Over the next 18-24 months, BNI will consolidate its investment in Let’s Transport through a series of acquisitions. The platform typically makes one to three acquisitions in an anchor investment before moving on to create another large business in another industry.

The holding is looking for companies that are industry leaders or are on their way. “We generally look for companies that have already crossed two thresholds: product market fit and market entry strategy,” Makkar said. “Any industry we invest in must have the ability to generate a billion dollars in revenue within 7 to 10 years.”

Between Bertelsmann’s corporate venture capital investments and the Next platform, the holding has invested a total of €2.1 billion since 2006. The group currently has more than 320 active investments.

BII, its venture capital arm in India, has invested in many companies in services, education, logistics and even healthcare. Some of its investments include unicorns Eruditus and Shiprocket, as well as companies like health tech firm Inito, meat delivery company Licious, furniture marketplace Pepperfry, and deep-tech chemicals maker Scimplify, among others.

Investments made through BII will remain largely separate and they are unlikely to be transferred to the BNI portfolio, Makkar said.

“If there is a synergy between the startup and what we’re trying to do, then yes. But it won’t be a natural path,” Makkar said. “Like Let’s Transport, this will be the exception to the rule.”

The acquired entity will be rebranded as Let’s Transport Group. The company currently does $100-150 million in sales and is growing at about 15% annually, according to the startup’s founder, Pushkar Singh.

This year’s focus is on a new vertical, part-load business that allows companies with shipment sizes up to 250kg to reach rural India with faster turnaround times.

“We are also building ecosystem services for the trucker network. This will allow them to access insurance, fuel cards and vehicles at more competitive prices,” Singh said. They are also opening up their trucking networks to small and medium-sized businesses, giving them access to a logistics ecosystem previously only used by large companies. “This is generally how you reduce logistics costs in India,” he said.