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Zephyr Peacock India (ZPI), a venture capital firm focusing on the agri, infra and fintech sectors, has received approval for its fourth fund. It expects to close the $200-million fund raise by 2025, says Mukul Gulati, Managing Partner.
Started in 2007, the firm has till date deployed three funds — including two global funds. The average investment from the new fund is likely to be $9-10 million. Gulati says the firm provides its portfolio companies handholding in addition to funds. Edited excerpts from the interview:
What is your investment strategy?
Ever since we entered the Indian market in 2007, we have been investing in small and medium enterprises. Our strategy evolved to prioritise untapped market opportunities in sectors like food-agri, infra-tech, and fintech. We focus on early- to growth-stage enterprises, ranging from pre-series to series B financing. Our approach goes beyond providing capital, encompassing valuable advice and strategic support. We aim to average five investments per year. In the current year, we expect to close at least three deals from the existing fund and two from the new fund. Over the four-year investment horizon for the new fund, we anticipate around 20 investments.
Which are some of the marquee companies in your portfolio?
Our current fund has nine companies. Our investments include the likes of ZippMat, Ripplr, Loanzen, Vidyut, BatX, and MPower.
How much of your $100-million third fund has been deployed?
We’ve allocated 80 per cent of the fund, with 60 per cent invested in new ventures and 20-25 per cent reserved for follow-on investments. We aim for a ticket size of $7-8 million, but may start with $2-3 million and adjust exposure based on performance... expect three to four more investments in the next six months.
What is the status of the planned new $200-million fund?
We’ve received regulatory approval. The next 12 months will be the fundraising cycle for this new fund. The investment strategy remains consistent.
Apart from your focus sectors, are there any others that interest you?
Sectors such as financial services, infrastructure services including metro/railway infrastructure design and port management software, logistics, and clean energy hold potential. Others like EV [electric vehicle] financing, EV servicing, and battery manufacturing and recycling also have high growth potential in India.
What exit strategies are in place for your portfolio companies?
About 25 per cent of our companies go public. Sales to financial sponsors have been surprisingly successful in India due to the market structure. While M&A exits have taken longer, we have executed some, like Miles Software being acquired by Ebix. We have completed around 15 exits.
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