Singapore state-fund Temasek Holdings has completed its acquisition of SVB India Finance Private Limited and rebranded it as InnoVen Capital India, with the former chief executive of ICICI Securities (I-Sec) Madhabi Puri Buch as chairperson.
Temasek had announced in January that it had reached a deal with SVB India Finance Private Limited, the specialty lending arm of Silicon Valley Bank, for $45 million.
SVB India was first established by Nasdaq-listed SVB Financial Group in 2007 as an non-banking financial corporation (NBFC), providing venture loans to high-growth entrepreneurial ventures backed by institutional VCs. It provides multiple sources of diverse debt capital including venture debt, acquisition financing, growth capital and capex financing.
This marks Temasek’s second debt business in India as the company is already operating in the NBFC space with its wholly owned Fullerton India Credit Company Ltd (FICCL).
Ong Beng Teck, managing director (enterprise development group) with the Singapore state fund commented that “Temasek is committed to this platform as part of a broader pan-Asian venture debt financing initiative. India is a central piece of that initiative. We believe that the platform will be attractive to the startup community in India – entrepreneurs, venture capitalists and angel investors – not just in the context of promoting the growth of innovative companies in India but also for their expansion as they seek to venture beyond India.”
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In a recent interaction, Rohit Sipahimalani, co-head, investment group; co-head, portfolio and strategy group; and head, India, at Temasek said the company had no plans to merge SVB India Finance (now InnoVen Capital) with with Fullerton India Credit Co. Ltd (FICCL).
Siphaimalani said “Both are very different. If you look at Silicon Valley Bank, it looks at very early stage companies that may not necessarily even have sustainable cash flows to repay.”
He added “You are looking at the background of the VCs, you are looking at the business model and their ability to raise equity to repay you – these are companies that don’t have free cash flow, and it is therefore a very different risk profile and also very different stages that the company is in. Fullerton is like an NBFC which does typical lending evaluation in terms of credit scoring for retail and small businesses. They are in different segments.”
With over 75 loans granted to more than 50 India-based firms, aggregating an outlay in excess of US$110 million of venture debt, portfolio companies include Prizm Payments, Snapdeal, Myntra, Manthan Software and Capillary Technologies, amongst others. InnoVen has built strategic partnerships with leading international and Indian VC funds across India, supporting their portfolio companies, operating across technology, consumer, healthcare and clean-tech verticals.
“InnoVen has been able to attract a strong investor in Temasek. The funding and support from Temasek will not only help us continue to remain the dominant player in venture debt business in India but also build a leading debt platform across key markets in Asia. The new board of directors, led by Madhabi Puri Buch will add valuable experience to InnoVen in crafting its business in India and beyond,” said Ajay Hattangdi, CEO and managing director of InnoVen.
Venture debt in mature markets (i.e. the US and Europe) is nearly eight to 10 per cent of addressable VC investments, according to InnoVen. India’s venture debt market at a nascent stage and is expected to cross US$1 billion on a cumulative basis between 2020 and 2022.