Bajaj Finserv Expands into Alternative Investments with VC and Real Estate Funds

Bajaj Finserv Enters the Alternative Investment Space

Mumbai: Sanjiv Bajaj-led Bajaj Finserv Ltd is making a significant move into the alternative investment business. The company has established Bajaj Alternate Investment Management Ltd, a wholly-owned subsidiary, to launch an early-stage equity fund and a real estate-focused alternative investment fund (AIF). This strategic expansion will broaden the group’s presence in the financial services sector, which already includes lending, asset management, and insurance.

Formation and Regulatory Approvals

Bajaj Alternate Investment Management Ltd has been recently formed, and the company plans to file for regulatory approvals from the Securities and Exchange Board of India (Sebi) within a fortnight. Lakshmi Iyer, Group President of Investments and CEO of Bajaj Alternate Investment Management (Bajaj Alts), was hired from the Kotak Group, where she held the position of CEO of Investments and Strategy at Kotak Alternate Asset Managers.

Investment Strategy and Target Investor Base

Bajaj Finserv aims to raise between ₹1,500 crore and ₹2,000 crore for these funds. The venture capital fund will focus on Series A and B companies, while the real estate-focused fund will target commercial properties in India. The group will act as the main anchor investor to demonstrate its commitment, and it plans to attract high-net-worth individuals and ultra-high-net-worth individuals from both domestic and international markets.

According to Iyer, there is a strong demand for attractive investment opportunities among investors in tier-I and II cities. “Investors are looking for pedigreed groups to partner with, and we believe Bajaj Finserv’s reputation and track record will be a significant draw,” she said.

Real Estate Focus

For the commercial real estate fund, Bajaj Finserv plans to invest around ₹500-600 crore per deal, aiming to secure meaningful investments. “We believe there are still attractive yields available in the commercial real estate market, both from core assets and development assets. We have already identified spaces in the top five or six cities in India, and the initial response in terms of potential yields is very encouraging,” Iyer explained.

Venture Capital Fund Details

The early-stage venture capital fund is expected to have a size between ₹1,500 crore and ₹2,000 crore, with investments ranging from ₹25 crore to ₹100 crore. The Bajaj Finserv Group has already deployed ₹200 crore in early-stage companies such as KisanKonnect and Ecosoul Home through proprietary capital. These investments will be warehoused into the new fund.

The group is actively scouting for opportunities in automation, technology, and companies that help business-to-consumer brands shorten their go-to-market time. “By March end, we expect to have another ₹150-200 crore in our pipeline, ready for the fund launch,” Iyer added.

Strategic Decisions and Market Positioning

When asked why the group is not entering the growth equity and buyout segments, Iyer explained that these markets have become crowded, leading to higher deal valuations. “We are confident in the categories we have chosen—early-stage venture capital and commercial real estate. These segments offer better opportunities and yields, and we are well-positioned to capitalize on them,” she stated.

Key Takeaways

- Strategic Expansion : Bajaj Finserv is diversifying its financial services portfolio into high-growth alternative investments. - Significant Investment : The group aims to raise up to ₹4,000 crore, signaling a large-scale entry into the market. - Expert Leadership : The appointment of Lakshmi Iyer, a respected veteran from a competitor, adds immediate credibility and expertise to the new venture. - Anchor Investor Role : By acting as the anchor investor, Bajaj Finserv demonstrates strong confidence in its strategy, which is a key selling point for attracting other investors. - Focused Approach : The group is deliberately avoiding overcrowded segments like buyouts and focusing on early-stage VC and commercial real estate, where it sees better opportunities and yields.