The asset management arm of financial services group IIFL is looking to invest in pre-IPO and late-stage rounds of internet economy companies through its newly launched Rs 1,500 crore fund.This is marked as the first fund in India targeted at only IPO-bound private tech enterprises.

The Category II AIF – IIFL Special Opportunities Fund – Series 8 will look to partner with tech startups - leaders in monopolistic or duopolistic play - headed for IPOs or those in late stage of growth.

The fund also has a greenshoe option of around Rs 500 crore, taking its total size to Rs 2,000 crore.  

“We have already received commitment worth Rs 400 crore within two weeks of launch and have a target of final close by June this year,” says, ChetanNaik, Executive Vice President, Fund Manager, IIFL Asset Management (IIFL AMC).

India Infoline (IIFL) is an Indian diversified financial services public company headquartered in Mumbai. The firm was founded by Nirma Jain, a 1986 graduate from the University of Mumbai and an alumnus of the Indian Institute of Management, Ahmedabad. IIFL and its group companies are backed by Canadian investor PremWatsa, a private equity firm, General Atlantic, and CDC Group, the UK Government's private equity arm.

IIFL Finance Ltd is one of the leading players in the Indian financial services that are engaged in the business of loans and mortgages along with its subsidiaries.

Its services include home loans, gold loans, business loans including loans against property and medium and small enterprise financing, microfinance, developer and construction finance, and capital market finance; catering to both retail and corporate clients.

IIFL AMC will raise the capital from family offices and ultra-high net worth individuals. It will look to invest around $10-$20 million in about 10-15 companies through the fund. 

“We will look to invest in companies that are planning an IPO within a year or expected to list within five years of investment. The late-stage flexibility will give us a large canvas to pick the right opportunities at the right valuation,” says Naik.“Of the 39 unicorns, around 13 companies are Ebitda positive whereas another 18 are CM (contribution margin) positive. So, we have a very defined and filtered pool to invest from,” he added.

A company that has crossed $1 billion in valuation is called a Unicorn, whereas a soonicorn is the one that is valued at more than $500 million and is inching towards the billion-dollar mark.

Contribution margin is the revenue remaining after subtracting the variable costs that go into producing a product. 

Other companies like Delhivery, Freshworks, Byju’s, PolicyBazaar, and Flipkart are also planning for their initial public offerings. Online food delivery platform Zomato is expected to file for its $650 million IPO next month, besides a fund of $250 million that was raised from existing and new investors.

According to the report by Citibank, India’s internet economy is expected to grow over nine times from the current $75 billion to around $639 billion by 2030 that contributes around 9 percent of the GDP from the current mearge 2.3 percent.

Till now, IIFL has invested around $1.8 billion in the Indian market through its various funds. Edelweiss Wealth Management launched a private equity (PE) fund to tap sector agnostic pre-IPO and late-stage investment opportunities with a targeted corpus of Rs 5,000 crore.