Fidelity-backed Eight Roads finds India ‘exciting’, eyes 5-6 deals

“We see this year as a good time to accelerate our investments in the country. I expect five to six deals in India that we would like to support, and we are seeing deal flow in the market. So we are looking to distribute more,” said Alex Emery, the firm’s president. Mint in an interview. He said that businesses in the country will continue to grow rapidly in line with the Indian economy.

Emery emphasized that India is the biggest opportunity in Asia for the company. “Historically, China has been pretty big. But we see India really surpassing China in terms of opportunities, at least in terms of the types of investments we make and support,” he said.

His comments come almost two decades after the investment firm started investing in India in 2007. Over the years, Eight Roads has committed approximately $1.6 billion in the country and supported 80 businesses. While 38 of these investments were partially or completely abandoned, 11 of them turned into businesses worth more than 500 million dollars and some of them turned into businesses worth more than 1 billion dollars. The company has seen approximately five of its portfolio companies remain listed on the public market; two of which are traded on Nasdaq.

Investing in technology and healthcare, Eight Roads typically invests in early growth and expansion stage businesses. Within technology, fintech has supported companies in sub-segments such as enterprise, consumer and increasingly AI-focused themes, including now intermediary solutions. In healthcare, the investment company does a combination of life sciences, advanced manufacturing and pharmaceuticals. Check sizes are in the lower range of $5 million to $10 million, $25 million to $30 million and even $40 million in some cases.

“Healthcare, which was the fourth or fifth largest sector in terms of private investment in the country until a few years ago, has become the largest sector in the last few years,” said Prem Pavoor, managing partner and head of the firm’s India Ventures. “With themes evolving over the years, we’re seeing pharma and MedTech moving up the innovation curve and newer and more innovative companies emerging. Even in topics like healthcare, we’re seeing a lot of interesting formats.”

Beyond India, the firm invests in China, Israel and Japan and has invested around $3-4 billion in Asia in the last few years. Other Indian companies supported by Eight Roads include Laurus Bio, Manthan, FarEye, Ekincare, Toothsi and Toppr.

“When you think about the opportunity emerging in Asia, we think there is great value in being present in the three leading markets, but there is no doubt that India is the most exciting opportunity for the foreseeable future.” Emery added that various factors such as a solid digital infrastructure and payment network form the basis for investments in the country.

While the firm is optimistic about India, it continues to operate with a different mindset as it deploys capital through its pan-Asian fund to invest in the country. “The benefit of having a pan-Asian pool is greater collaboration across the team. We’ve found that over a period of time, whether it’s India, China, Japan, other parts of Asia or the world, the environment is very cyclical,” Emery said.

As for exits, the Fidelity-backed investment firm sold part of its stake in software-as-a-service (Saas) platforms MoEngage and Whatfix and logistics firm Shadowfax to TR Capital in a $50 million secondary transaction in June last year. While the company did not disclose the total value of the capital returned to date, Pavoor stated that Eight Roads will return more capital than has been invested in India to date.

Emery said exits are a key area of ​​focus for investors today. “We need to take advantage of these opportunities when they arise because sometimes you don’t get the full exit over a long period of time. The concept of secondary transactions has been a relatively small part of the market. It’s growing, and CVs (or follow-on vehicle) type transactions are definitely on the rise,” Emery said.

“We believe this is going to be permanent. This is not a temporary thing because there was low liquidity. I think this is one of the tools that GPs (general partners) need to provide opportunities to return capital to LPs (limited partners) and de-risk deals over time,” he said. “We think this will remain a part of how venture capital firms will operate in the future, including in India. So this will continue to grow in percentage terms.”