The RP-Sanjiv Goenka Group has created a venture capital fund of $14.74 Mn (INR 1 Bn) to invest in fast-moving consumer goods (FMCG) startups. Chairman Sanjiv Goenka has made this move considering the capital appreciation in the FMCG sector.
Speaking to the Business Standard, Goenka has said, “If the companies are good, our inputs can help them scale up. At some stage, they could become very good acquisition targets. Many of them will want to exit in three to five years, so then we give them an automatic exit option.”
Goenka has also been scouting for acquisitions in the sector with an aim to expand the company’s product portfolio and expand its geographical presence in the country.
He is ready to experiment with and consider investments ranging from seed funding to picking up equity stakes in FMCG startups. He has already launched the Too Yumm brand of savoury snacks and has also acquired a controlling stake in Apricot Foods for $64.8 Mn (INR 4.4 Bn). This has further helped the brand bring the eVita brand in its portfolio.
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Other FMCG companies such as Marico and Emami have also invested in startups in recent times. While Marico has picked up a 22.5% stake in an all cash-deal in Ant Farm-incubated fitness and holistic wellness platform Revofit, Emami has invested in two startups, Helios Lifestyle and Brillare, to foray into the premium care segment.
Big corporate names including Tata Sons’ Chairman Emeritus Ratan Tata, former Infosys board member and Manipal Global Education chairman Mohandas Pai and Biocon chairman and managing director Kiran Mazumdar-Shaw have also been increasing their activity in this space.
The FMCG sector has been booming in India and has become the fourth largest sector in the Indian economy. The sector is projected to grow at a CAGR of 20.6% to reach $103.7 Bn by 2020. Given the pace of development in the sector, Goenka may raise more capital for the venture capital fund as many other investors are also likely to boost the sector.