Bharat Biotech promoter family-backed Skegen to raise ₹3,000-5,000 crore fund to invest in Indian manufacturing startups

Skegen Asset Management LLP, the asset management company backed by the family office of Bharat Biotech promoters is planning to raise ₹3,000 crore to ₹5,000 crore for its second fund, which will invest in start-ups in the manufacturing sector.

In the first round, the company has invested into advanced materials production company Midwest Ltd, unmanned autonomous vehicles developer Sagar Defence Engineering, precision engineering company Raghu Vamsi Machine Tools, B2B instant coffee manufacturer Continental Coffee among others.

“The first fund, of around ₹2,500 crores, is coming to a close. We are now looking at raising our second fund. While the family is the sole limited partner (LP) in the first fund, we would like to bring institutional investors on board for the second fund. The family, however, will remain one of the largest LPs”, said Raches Ella, chief development officer, Bharat Biotech and a second-generation member of the company’s founding family.

Bharat Biotech was co-founded by Krishna M Ella and his wife Suchitra Ella. Their daughter, Jalachari Ella, managing director of Ella Foods and Anamay Biotech, is the fourth member of the promoter family.

“When we started this fund, we took a contrarian approach, and said India needs to be a manufacturer of the world. Yes, India can be great in services, but services have that potential for disruption. When you manufacture something, are tangible physical assets, it's very difficult to get disrupted by AI. So essentially, this fund invests only in manufacturing companies," Raches said.

An ideal investment for Skegen would involve acquiring a 10-25% stake. Its mandate is to back first generation, promoter driven, companies which often require support beyond capital. “At times they lack financial discipline. At times they lack business development, exposure or opportunities. We try to assist them in these areas because through Bharat Biotech, we have a reach across 120 markets to which we supply our vaccines”, Raches said. Skegen also takes a patient approach to investing recognising that it can take more than three to five years for a company to reach an IPO. “Our fund life, the lifespan of the fund is also longer. It's a 10-year fund," Raches said. There is no pressure to exit, he adds, since the fund is primarily backed by the family.

In fact, Midwest has already gone public, though Skegen continues to remain invested in the company. “Sagar defence will go IPO; they have filed their DRHP as we speak. Ragu Vamsi will go to IPO very soon. Continental Coffee and Dodla are already listed companies. Eastman will also go IPO," Raches said. However, majority of their equity remains, even post-IPO, as they see tremendous growth opportunity, he added.