Misra told ET in an interview that One IM, which currently has a corpus of $7 billion, participated in a debt issue floated by the Shapoorji Pallonji group, making it the fund’s debut in India. The $50 million credit infusion was part of $1.7 billion raised by the Mumbai-based Shapoorji Mistry-controlled group through a bond sale that closed recently.
The former Deutsche Bank credit trader said One IM will focus on picking local firms beyond the large conglomerates and groups across public and private markets, to tap the India growth opportunity. He will also look to back profitable growth-tech firms if SoftBank passes on them. The finance veteran remains the CEO of SoftBank Investment Advisers, leading the activities for SVF-1.
In May, One IM was in the news for providing a $470 million high-interest loan to office sharing startup WeWork, one of the biggest failed bets made by SoftBank founder Masayoshi Son. It has also invested $250 million in UAE state energy company Adnoc Gas, which went public, and ploughed a few hundred million dollars into the New York-headquartered asset manager, the Fortress Investment group.
“The fund made a first close of $7 billion in January, and will raise more in the next 12 months”, Misra said. “One IM has no investment constraints — it can strike non-tech, tech, debt, or equity deals. We have a six-year investment period, but very importantly, three years to reinvest, which means we can make short-term investments and reinvest again. So far, we have deployed approximately $1 billion. But our first objective was to hire people in New York and London’. One IM now has 20 people on board, he said.
We have focused on figuring out where the best risk-adjusted returns are today — I believe those opportunities are in the lending space. Having said that, in the next six months, we intend to start investing in tech-enabled businesses, and not just in AI. In fact, most of the success stories (like Policybazaar and Nykaa) are not in artificial intelligence. We are also focused on finding great management in unloved sectors — which could even include oil and gas”, he added.
Discover the stories of your interest
One IM’s four sponsors, or limited partners, include the International Holding Company (IHC), Alpha Dhabi, Mubadala, and the Abu Dhabi Office of Finance (Ministry of Finance for Abu Dhabi). “Abu Dhabi is very bullish on India and is planning to deploy a lot of money here. This is the case not just with sovereign funds but also private ones. For instance, the IHC, which is a $250 billion market cap company, has invested in the Adani group and others”, he said, adding that One IM was very keen on India. The interest is not only for the marquee names but also the next tier of companies, he explained.Two key SVF managing partners, Yanni Pipilis and Munish Varma, who were Misra’s key lieutenants, joined One IM last year.
SoftBank rider
Even as he oversees SoftBank’s Vision Fund-I, and continues to remain highly influential within the Japanese group, Misra said One IM will only invest in growth-stage tech if SoftBank passes on those firms. “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 anymore, it stopped in 2019,” he 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, the consent of the fund sponsors is also required. Any new investment in growth-tech is reviewed by SoftBank first. SoftBank can invest in whatever they want, and then One IM can invest. Softbank and One IM are regulated in the UK, US, and other jurisdictions, so their policies, processes and controls are periodically audited’’, he added.
ETtechAs for WeWork, it had loans from Brookfield and Apollo, which it tried to restructure. The loans were already guaranteed by SoftBank. Apollo and Brookfield didn’t want to refinance and One IM decided to step in’’, Misra said on the debt deal with WeWork.
Slow, but steady, on India
Indian companies like Ola, Paytm, Oyo, Delhivery, FirstCry, and Lenskart are a part of SVF-1. “Vision Fund-I has already returned 60% of the $100 billion’’, he said. “Alongside Arm, we have public stakes like Coupang, Doordash, and others. We have big public positions in the Chinese companies Didi and Bytedance, and then there is The Fanatics, which is a big ecommerce gaming firm’’, Misra added.
SoftBank, which has also made new bets from its Vision Fund-2 in Flipkart, Elastic Run, Meesho, and others, has been slow in making fresh investments here. The Japanese fund is yet to cut a cheque in the domestic market in 2023.
“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 waiting. You will see that in the second half of this year; there will be more investments’’, Misra added.
Valuation markdowns, IPO pipeline
According to Misra, companies that raised enough capital in 2021 can survive the ongoing liquidity squeeze and avoid a down round (raise funds at a valuation lower than the previous round). While large international tech firms like payments majors Stripe and Klarna have picked up fresh funds in a down round, not many large tech companies in India have seen their valuations cut in private funding. But Misra said down rounds will eventually hit Indian startups too.
There are still a lot of opportunities in India’’, he added. The stock market is at an all-time high and there is scarcity value, including in tech companies which are up 50%. He said there will be M&As as well, where some of these tech firms will buy others.