Rajeev Misra’s $7 billion fund eyes more India play; SRK may say bye to Byju’s

Also in this letter:
■ ZestMoney gets funding lifeline
■ Groww launches UPI-based Groww Pay
■ Big IT battles deal rampdowns

Rajeev Misra’s $7 biliion fund eyes more India play post Shapoorji Pallonji deal debut

Hi, this is Samidha here in Mumbai. A year ago, Japanese tech billionaire Masayoshi Son announced that his top lieutenant, Rajeev Misra was going to step back from his active role as head of SoftBank’s Vision Fund (SVF) to focus on his new venture.

One year on, my colleague Digbijay and I caught up with Misra in an hour-long chat, and talked about One Investment Management (One IM), SVF, and the Abu Dhabi money which is making its way into India. What’s amply clear is that Misra is very much a key part of the gargantuan Vision Fund, which has had a few tumultuous years, to say the least.

Driving the news: Misra’s fund has hit a first close of $7 billion and plans to up that in the next one year. One IM made its India debut by participating in a debt issue floated by the Shapoorji Pallonji group. The $50 million credit infusion was part of the $1.7 billion raised by the Mumbai-based, Shapoorji Mistry-controlled group through a bond sale that closed recently. As for SVF, expect it to get more active, especially with global IPOs of Arm, China’s Didi, and Bytedance likely soon.

Investing all across: The former Deutsche Bank credit trader said One IM will focus on picking local firms beyond the large conglomerates, and is open to investing across tech, non-tech, debt, and equity. The fund has already pumped $1 billion distributed across WeWork, UAE state energy company Adnoc Gas, New York-headquartered asset manager Fortress Investment group, and India’s Shapoorji Pallonji group, which are its first few picks.

Conflict with SoftBank? “We have an established framework on how to identify and manage potential and actual conflicts (with SoftBank) and to correctly handle any price-sensitive information. SVF-1 doesn’t make new investments any more, it stopped in 2019’’, Misra said. If One IM invests in any SVF-1 or SVF-2 company, it has to receive approval from SoftBank, and for SVF-1 investments, even the consent of the fund sponsors is required.

SVF’s waiting not shut: “If you look at India, the opportunities are in the early stages, between $1 and $20 million. While we can make a $20 million investment, we won’t do anything less than that as SoftBank. So, we are just waiting. You will see that in the second half of this year there will be more investments’’, Misra said. SVF’s portfolio includes the likes of Paytm, Oyo, Delhivery, Swiggy, and Policybazaar.

King Khan’t: SRK to end endorsement deal with Byju’s

Edtech startup Byju’s woes seem to have no end. After an exodus from their board and the resignation of auditor Deloitte Haskins, the biggest name in the Indian film industry, Shah Rukh Khan, wants to dissociate from the troubled edtech firm.

Big deal: In 2017, SRK signed up to be Byju’s’ brand ambassador for an annual fee of Rs 4 crore. He has been the Bangalore-based company’s most visible and recognisable face since. Renewal of the deal is due for September this year.

Also read | Byju’s and the debt trap haunting Indian tech startups

Not the first rough patch: Khan’s association with the edtech firm has hit rough weather in the past as well. In April this year, a district consumer disputes redressal commission in Madhya Pradesh fined Byju’s and the actor Rs 50,000 each “for not meeting teaching standards, and false ads’’.

The Bollywood star has also been questioned by his fans on social media for associating with the brand.

For the past several months, Byju’s has not released any new campaigns featuring Khan.

Also read | Byju’s breaking bad: Will Indian startups feel the aftershocks

Expert-speak: Industry watchers say celebrities naturally tend to distance themselves from controversial brands. Lloyd Mathias, business strategist and former marketing chief of PepsiCo, said: “Associating with a brand under such intense scrutiny would be detrimental to any big name. Even Byju’s would be looking at paring its exposure, considering the crisis it is mired in.”

Lifeline for ZestMoney as existing backers pump in funds

ZestMoney founders Priya Sharma, Ashish Anantharaman and Lizzie Chapman

A clutch of existing investors are trying to keep ZestMoney alive and have pumped in around $5 to $7 million in a fresh equity infusion.

What’s the news? ZestMoney is in bad shape. Its founders have moved on, one of its major investors has written off the company, and a chunk of its employees have joined PhonePe.

But a clutch of its investors led by Quona Capital are trying to revive the company with a fresh fund infusion, and turn it around.

Challenges galore: But turning around this beleaguered startup will not be easy. Because:

1. Competition has heated up. Paytm Postpaid has scaled up. Banks are processing EMIs on credit as well as debit cards.
2. Its partners are not confident of doing business with ZestMoney anymore. It will be tough to reactivate its dried up lending sources.

Leveraging the brand: ZestMoney has a couple of things going for it. The brand has a strong recall value. It has a platform which is compliant with RBI’s digital lending guidelines. And it is offering financial incentives to its remaining employees, hoping to get them to stick around. Will these be enough? Let’s see how it works out.

Groww Pay offers UPI-enabled payments

Stock broking startup Groww has started rolling out UPI-enabled payments on its app. The feature will let users make peer-to-peer (P2P) payments, as well as pay merchants.

What’s happening? Financial investment services like Groww have been looking to boost their active user base, which often diminishes when trades turn unprofitable or markets experience a decline.

Additionally, Groww’s decision coincides with the reduced retail participation in stock markets currently. In April, 67 lakh unique retail investors participated in the cash market on the NSE out of the total demat account base of 11.61 crore, ET had reported earlier.

By leveraging avenues such as UPI, Groww aims to grow its existing active user base, taking advantage of the recurring nature of digital payments.

Groww’s NBFC push: Earlier this year, Groww introduced instant personal loans of up to Rs 5 lakh on its platform, which can be repaid over a period of three months to five years. This came after Groww secured the licence for a non-banking financial company (NBFC), and approval from the Reserve Bank of India (RBI) for its payment aggregator licence.

Darling UPI: Since the start of 2022, several fintechs like Slice and Cred have shifted their focus towards UPI in a bid to gather newer users as well as activate existing ones. Now in a reverse move, the UPI market leader, PhonePe, which claims to have amassed 460 million users, is planning to launch stock broking services as it looks to further monetise its customer base.

Big IT cautious as it battles deal rampdowns

Major IT firms are taking a cautious stance due to a rise in deal cancellations and rampdowns by technology clients. Experts say the approach stems from the prevailing challenging and uncertain macroeconomic conditions.

Recent rampdowns: Infosys called out a revenue hit due to the cancellation of a significant deal during the fourth quarter of the previous fiscal year. In June, Tata Consultancy Services (TCS) announced the loss of a $2 billion deal with Transamerica midway through the execution cycle of the decade-long agreement. Analysts believe that incidents like these will prompt IT vendors to adopt a more cautious approach when pursuing such large-scale agreements.

Reason for caution: Outsourcing expert Pareekh Jain said that large, long-term deals are typically priced with aggressive discounts, and their margin advantages typically materialise during the latter half of the execution period. Therefore, he says it is prudent for vendors to be cautious when negotiating such deals, particularly in an environment of uncertain spending.

Shift in deal dynamics: Analysts anticipate vendor consolidation, primarily in the smaller deals. Spencer Ng, an analyst at S&P Global Ratings, said that during periods of uncertainty, clients tend to focus on vendor consolidation, potentially resulting in some revenue loss from clients at the lower end of the pyramid (typically generating revenues of less than $1 million).

Other Top Stories By Our Reporters

Microsoft India elevates key hands in top-deck rejig: There has been a significant top-level restructuring at Microsoft India with several key leaders being elevated. ET has learnt that chief operating officer Irina Ghose has been promoted as managing director of India. The current MD, Sashi Sreedharan, has been elevated to a bigger role.

Meta to launch of Twitter rival ‘Threads’ on Thursday: Instagram’s highly anticipated Twitter rival is expected to launch Thursday, according to a listing on Apple Inc.’s App Store. The app, called Threads, will function similarly to Twitter, with text-based posts that can be liked, commented on and shared, according to examples of screenshots on the App Store listing.

Infy vet Sushanth Tharappan to take over as new HR head: Sushanth Tharappan will soon be the new head of human resources at Infosys, replacing Richard Lobo, who held the position for over six years. This marks the second big change in Infy’s HR department this year.

Lt Gen MU Nair is the new national cybersecurity coordinator: The government has appointed Lt Gen M U Nair as the new national cybersecurity coordinator (NCSC). Nair takes over from Lt Gen Rajesh Pant, who is also a veteran of the Corps of Signals of the Indian Army.

Startup20 Engagement group seeks $1 trillion investment in startup ecosystem: The Startup20 Engagement Group has sought to raise the joint annual investment of G20 nations in the global startup ecosystem to $1 trillion by 2030. It plans to do this by making debt and venture debt products more accessible to startups, and by facilitating the flow of public and private capital.

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