China’s CDH Investments to accelerate India investments from March

After placing bets on about five technology startups in India over the past two years, Beijing headquartered CDH Investments is preparing to ramp up its presence in this market. The firm intends to deploy up to 90% of its $200 million emerging markets fund here and expects to start deploying capital from the new fund as early as March 2020, a spokesperson for the firm told TechCircle.

“Having a dedicated fund helps since the investment horizon and the stage is different than what we are doing in China,” the CDH Investments spokesperson said on the sidelines of the recently concluded TiE Global Summit in Delhi.

CDH Investments is one of China’s largest alternative investment firms with over $17 billion in assets under management. The firm started out in 2002 primarily as a private equity investor. The venture capital and growth investments arm was set up in 2015 and its $800 million China focused fund was raised in 2017.

The emerging markets fund will focus on sectors such as consumer internet, fintech and enterprises SaaS and will look at early stage investments. 

“We are looking at cheque sizes of between $5 million and $30 million (for the emerging markets fund). For larger investments we can tap into other sources of capital which include businesses within the CDH group and a lot of our limited partners invest with us. That is why we are also open to larger ticket sizes,” the spokesperson said. 

The larger ticket sizes will mostly focus on the ecommerce and fintech sectors. “In China we started with traditional ecommerce, then moved to online to offline and then to social ecommerce. These are three waves in different times but will unfold in India simultaneously,” he said. 

He added that the firm expects push-driven ecommerce, which includes social and influencer commerce, to grab a larger share of the Indian market than search-driven ecommerce on platforms such as Flipkart and Amazon. This year has seen some big ticket investments in the social commerce space with companies in the sector raising multiple rounds. SAIF partners led a Series B round in social commerce platform WMall earlier this week, while Meesho raised $125 million from Naspers and Facebook and other investors. 

CDH’s accelerated push into the Indian startup market is somewhat of a departure from the pace of its investments here so far. Some of its notable bets include social commerce platform GlowRoad, Cashify, an online platform for selling refurbished electronic goods, Alibaba-backed logistics company Xpressbees, and curated lifestyle ecommerce platform Mayfair.

The emerging markets fund also comes at a time when many of China’s technology majors have consolidated their positions in Indian technology unicorns. Alibaba and its payments arm Ant Financial  hold stakes in digital wallet Paytm, food technology company Zomato and online grocery platform BigBasket. Tencent has also been bullish with investments in ride hailing company Ola, edtech firm Byju’s and online fantasy sport platform, Dream 11. 

Further, financial investors such as Shunwei Capital and Hillhouse Capital Group have started to ramp up their investments in India, according to a report by Observer Research Foundation. Just this month, Shunwei Capital, which is based in Beijing, closed two new deals -- podcast startup Kuku FM and video-based ecommerce platform SimSim.