Edelweiss Wealth Management currently serves close to 7.28 lakh high network individuals (HNIs) and about 2,500 of India’s wealthiest families, managing assets under advisory of over $22.5 billion. “India’s private equity has seen investment worth $215 billion, which is larger than the total FPI money that is coming into India in the last ten years,” said Anshu Kapoor, president and head of investment management at Edelweiss Wealth Management.
Guided by the philosophy of managing risk for its clients with a focus on scale, Edelweiss Wealth Management, in its crossover funds, today invests in growth stage, tech-focused companies. Some notable companies include NSE, MedPlus, Ola Electric, Sapphire Foods, Amber Enterprises, CAMS, Daily Hunt, and others. “So, what we are seeing today is what I call the Alibaba moment of India,” said Kapoor.
Citing the US and China markets, where tech companies saw a big force from early 2000 and 2014 onwards in terms of wealth creation, Kapoor said that a similar moment has come to India where many tech companies are foraying the IPO route. “With Zomato, that moment has come to India, where a lot of these companies have not only the courage, but also the willingness to access public capital,” added Kapoor, and said that it is one big shift that the country is witnessing today. The same is being reflected in their investing portfolio.
Metrics used to build Portfolio
“Most companies tend to find global or US benchmarks for investing that they may see here in India. However, our view is more inclined towards Indian benchmarks. Presently, it is more visible,” said Kapoor.
Citing the electric vehicle ecosystem and their investments in Ola Electric, he said India would go through the two-wheeler and not the passenger car route. Whereas, if you will see in the US, that conversation does not exist. Fundamentally, you start digging and asking questions like – who can be successful in EV, followed by understanding the mindset of the Indian consumers, how it will pan out, etc. “So, you start with a nuance, and then you go deeper into that category,” added Kapoor.
Further, talking about vernacular as a category and their investment in Dailyhunt, Kapoor said this exists only in India. Similarly, the same is applied to other sectors like health-tech and edtech. “We do not invest in companies that are saying – I will try these five things, and maybe one of them will work. Instead, we are looking at companies which have tried the five things, and maybe two are working, and now they are saying, let us find the next factor of growth,” revealed Kapoor.
Besides this, the company also looks into other metrics like technology capabilities, leadership, competitive edge, user traction, unit economics, network effect, etc.
Solving the Challenges of Deep Tech Investing
Serving a large group of investors is easier said than done, and there exist several challenges. This includes onboarding customers, managing the fund, communicating with the investors, giving out real-time information, etc. “There is a whole data warehouse engine and a cloud-based platform that we are using to onboard customers in less than 10 minutes,” said Kapoor.
He said that in 10 minutes, a customer could come on board, and the distribution partner then shows the products. Further, he said they have chatbots that offer personalized suggestions to the customer, alongside WhatsApp lead communication services, as it is fairly complex to onboard a customer. “A big layer has been created, which helps the distribution partners and customers to come on board and be served digitally,” said Kapoor.
But, there is more – how Edelweiss Wealth Management handles the communication aspect with its investors. “Imagine going to 3500 people and saying you need to give me 15 per cent more, and getting that done in three weeks is next to impossible. In comparison, LPs and GPs have to make 10-12 phone calls a day. But, in our case, we can not make a five-minute phone call,” said Kapoor, stating that they have built the entire onboarding, servicing, and experience engine in-house.
Here’s how it works
Kapoor said that they have an in-house technology team that has created this platform, which sits on top of their data warehousing solution. This is followed by the engine serving distributors and another engine that services customers. “So, I think that is one big piece that we have solved at which we can raise funds,” he added.
Kapoor said that they have partnered with Microsoft, AWS, and all of their IPs have been built in-house as there is no industry solution available at the moment.
Edelweiss Wealth Management Fund Size
Edelweiss Wealth Management closed crossover series III at INR 150 crore ($200 million) since its launch in March 2021. Till now, across its first three series, the company has raised a total of over INR 3700 crores ($500 million). In August 2021, it announced to raise INR 7500 crores ($1 billion) via its pre-IPO and late-stage Private Equity (PE) focused series of funds. A crossover fund is an investment fund that holds both public as well as private equity investments.
With this fund, the company said it would continue to build on its experience, expertise, and technology capabilities to provide flexible and capital solutions to Indian investors. This is open to private investments, particularly existing and emerging leaders, including technology businesses in the area of fintech, edtech, healthcare, digital media, and digital commerce.
The team said that the fund enables investors to capitalise on structural growth trends early on with reasonable exit time horizons. For instance, since its inception in 2017, its fund has thrived through two crises and delivered compounded annual returns of 16.2 and 28.7 per cent, respectively. Plus, its first crossover series has distributed over 60 per cent of the capital raised, having successfully exited part of its portfolio.