Growth-private equity platform Singularity Growth is currently on its second fund, which it expects to deploy entirely by September 2024. Of the ₹850 crore raised so far, it has deployed around ₹150 crore across four deals, Yash Kela, Chief Investment Officer of the company, said. Edited excerpts from an interview.
What is Singularity Growth’s core investment strategy?
We invest in companies that have passed the product-market fit test and possess a clear direction in terms of business model, unit economics, brand, technology, and founder-market fit. Preferred sectors include consumer, financial services, energy transition, manufacturing of auto components, defence, and software.
Our portfolio is invested in three categories: 60 per cent towards private growth; 20 per cent towards capital markets — the listed growth equity players; and 20 per cent to operator VC [investor with domain expertise] — categories that we understand well and can grow 10x every four years.
What is your average investment per company?
Our portfolio comprises 21 companies — 17 from Fund I and four from Fund II, including names like Allcargo, SAMHI, NSE, PSL, and Exotel. So far, 16 are profitable, and the rest aim to achieve profitability within 24 months. The average investment per company is ₹50-250 crore.
What is your preferred exit route?
The average holding period is two-and-a-half to seven years. We prefer disciplined exits, with 15 per cent of the portfolio aiming for listing, while the rest may see exits through M&A [mergers and acquisition] or secondary sale of our position. In the next three months, we plan to exit four companies from the first fund.
Until 2021, Singularity was part of our family office. During 2016–21, we made 42 direct investments and 16 fund investments, among which we exited 42 companies.
How much funding have you deployed since the company’s inception?
We are currently deploying Fund II, having raised ₹850 crore, with ₹150 crore deployed across four companies. The total corpus planned is ₹1,500 crore, with a greenshoe option of ₹500 crore.
On average, it takes about three years to completely deploy funds, so the completion is expected by September 2024.
Our first fund of ₹560 crore was launched in 2021, with a final close in March 2023. We invested in 17 companies across consumer goods, enterprise SaaS, and fintech infrastructure platforms such as m-caffeine, Servify, Lohum, Jana Small Finance Bank, ORO Inc, Veeda, and NSE.
Do you avoid any sectors?
We prefer to avoid sectors like financial services, payment banks, payment gateways, embedded insurance, and peer-to-peer lending due to historical performance and compliance concerns in these segments.