That India is critical to the world’s second-largest consumer goods company Unilever Plc., is reflected in the fact that more than 50 per cent of its sales come from the emerging markets. The consumer goods major is now all set to take a step further. It is now extending its corporate venture capital model (initially established for developed countries) to developing nations and is very bullish on China and India. In an interview with VCCircle, Martin Grieve, managing director of Unilever Corporate Ventures, says that the company is particularly bullish on the consumer-related business in India. However, it will also invest in life sciences, materials science, clean technology and consumer-related technology. Capvent, an institutional private equity fund and direct co-investor with both global and emerging Asia-focused investment programmes, will act as the core partner for the firm to source and invest in private equity funds and consumption-driven business.
Grieve joined Unilever Corporate Ventures as managing director in 2009. His role requires overall portfolio management of Unilever Corporate Ventures, delivering financial return targets and driving new business opportunities and strategic benefits for Unilever. He is also leading capabilities expansion into emerging markets. He has also worked as the CFO of the Global Laundry and Hygiene categories and CFO of Unilever HPC, Mexico. Born in the UK, Grieve is a mechanical engineer from Bristol University and a chartered accountant, qualifying with Coopers & Lybrand. Excerpts from the interview:
Why do you think India will be a key milestone in your roadmap for growth?
India is a very important market for us. Around 56 per cent of the group’s revenue comes from outside Europe and the USA – mainly from Asia. And by 2020, that figure is likely to increase to 70-75 per cent. Therefore, you can understand how important India is as a market. This is a strategic shift for ventures towards emerging markets and, as we see it, the consumption levels are rising with the income growth of the lower middle class and their demand for consumer goods. In fact, the next billion consumers are in these markets. We see this as a fantastic investment and growth opportunity, and this view is shared by many private equity funds and promoters with whom we have spoken. They can also see the opportunities to work closely with Unilever.
Initially, you were purely into start-up funding. Going ahead, how do you plan to evolve?
Formed in 2002, Unilever Corporate Ventures has a portfolio of fund and direct investments with €600 million ($850 million) of assets under management. First of all, our VC fund based in London is fully backed by Unilever Plc. Unilever Ventures is a venture capital firm providing funding and management skills to start-ups and early-stage businesses looking for successful growth. Initially, we did focus purely on start-up investments. But we are now considering investments at later stages as well, including expansion-led capital and buyouts.
Within our fund portfolio, we also have two anchor investments in Physic Ventures and Langholm Capital. While Physic Ventures in the North America invests in health and sustainable living and consumer-related technology, Langholm Capital is an independently owned and managed mid-market private equity firm, part-funded by Unilever. Langholm manages a fund of around €250 million ($360 million) and invests in mid-market private companies, capitalised between €20 million ($28m) and €200 million ($280 million, in high growth consumer sectors across Western Europe.
We also plan to invest directly into companies and into VC and growth/private equity funds, which have the consumer sector as their key focus area.
What are the sectors that you are looking at?
Being a corporate venture capital arm, our objectives are strategically aligned with that of the parent group. We are mainly looking at consumer products and related services businesses, with a focus on food & drink, home and personal care, beauty, water, cleantech, digital marketing, e-commerce, health and well-being. We also have the mandate to invest in businesses which support the Unilever vision to halve our environmental footprint.
How are you building relationships in India? Tell us more about your relationship with Capvent.
We are building relationships with the funds working in India, China and across the emerging Asia markets. Capvent is our core partner across Asia and will help us reach out to prospective private equity funds and companies. We have been working with them for more than a year now and plan to invest together in consumption-driven business opportunities. We both share the same views regarding the fantastic consumer opportunities that exist across Asia.
We also plan to hire a small team of people in Mumbai and will start investing in the near future. Till now, Dimple Sahni has been working for me on the entry strategy in India and in July this year, Asha Gopalakrishnan has joined us as venturing director (Asia).