Ranjan Pai has a ‘Powar’ plan for family office

Manipal Group chairman Ranjan Pai, an active new-economy investor and a white knight for troubled startups such as edtech firm Byju’s and online pharmacy PharmEasy, is assembling a full-fledged professional team to capitalise on attractive valuations, and back promising startups amid a prevailing funding crunch in the startup ecosystem.

Claypond Capital, Pai’s family office, is in talks with veteran banker Shyam Powar to head the family investment office as the Manipal chief sharpens his focus on the internet economy.

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Powar founded Allegro in 2002 along with Kunal Kashyap. Powar has been the head of corporate financing at the firm offering a bouquet of financial advisory services including M&A, fundraising. He is likely to join Claypond Capital formally next month, people aware of the discussions said.

The people said Pai has, so far, committed investments worth $400 million across startups such as Byju’s, Aakash, PharmEasy, FirstCry, and BlueStone.

They added that Pai is planning to invest at least a couple of hundred million dollars more after the family office acquires a professional structure in the coming weeks.

Also read | PharmEasy CEO has three-year lock-in, Ranjan Pai to get three board seats

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Powar is expected to hire several executives for deal making at Claypond. The people cited above said Powar and Pai have known each other for long, and he has been reviewing Pai’s investments regardless of scale.

“The hiring process is nearly done, and he (Powar) should be joining next month, officially. Both have been working closely over the past many years. Powar’s colleagues have also been advising some of the top industrialists from Bengaluru on their personal investments,” a person aware of the talks said.

When contacted, Pai declined to comment.

Acceleration with a plan

Pai has accelerated his investments after partially cashing out of Manipal Hospitals in a sale to Singapore government-owned Temasek in April this year. The Pai family office still holds 30% in the hospital chain.

People aware of Pai’s investment plans said he has been investing in the current cycle as startup valuations have undergone a reset due to the funding winter and several startups are showing interest in raising capital through primary and secondary share sales at flat or slightly higher valuations instead of a massive premium as seen previously.

Added to that, some of the biggest and well- funded startups have seen significant course correction in their businesses.

“Many of these bets he (Pai) has taken–they have gone through their own up and down cycle over the past few years not linked to the funding winter. Now, these assets are available at attractive price points and founders behind them are likely to have learnt from previous cycles,” a person aware of Pai’s investments said.

“There are still good companies that have executed well and are not fussed about valuation which is what makes them investable,” this person added.

Pai’s investments in startups have also come with crucial terms attached to the funding. For instance, his investment in PharmEasy is likely to give him three board seats at the firm, ET reported on November 1.

According to the people cited above, Pai’s Claypond is in early talks for more investments but he is also closely involved with struggling Byju’s.

ET reported on November 10 that Pai has invested Rs 1,400 crore (around $168 million) in Aakash Institute, a subsidiary of troubled edtech major Byju’s. This allowed the Bengaluru-based company to clear its debt to US lender Davidson Kempner Capital Management. The investment is likely to give Pai two seats on the board of Aakash, people aware of the matter said.

A full-fledged team at Claypond will also enable Pai to prioritise addressing ongoing concerns in portfolio firms while the team reviews potential new investments.

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Roy Walsh

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