Bajaj Finserv plans AI-only fund, direct bets in concert: Sanjiv Bajaj, Chairman & MD

Synopsis

Bajaj Finserv is gearing up to elevate its presence in the artificial intelligence sector. With plans to unveil a specialized private equity fund directed at AI initiatives, the financial services giant is also looking to directly invest in nascent AI startups from its own coffers.

Bengaluru: Diversified financial services group Bajaj Finserv, which runs India’s largest shadow bank, has drawn up a two-pronged strategy to double down on investments in artificial intelligence ventures. It will launch a private equity fund exclusively focused on AI investments, and separately, invest in early-stage AI startups directly from its balance sheet.

“The AIF (alternative investment fund) being launched will be amongst the largest AI dedicated funds in India,” Sanjiv Bajaj, chairman and managing director of Bajaj Finserv, told ETin an interview. “We expect to invest Rs 400-450 crore in FY27 from the balance sheet and the AIF, largely into AI-focused companies.”

While more than two dozen venture capital firms have poured over a billion dollars into 890 startups dotted across India’s nascent AI landscape, this marks one of the first instances of a corporate group launching a dedicated fund while also making direct investments in AI firms.

Bajaj Finserv — which runs insurance, housing finance and mutual fund units, apart from flagship NBFC Bajaj Finance — has established alternative investment arm Bajaj Alts.

Other than the AI fund, Bajaj Alts, led by Lakshmi Iyer who joined the group in August last year, will run two funds focused on real estate and public market investments.

Live Events

“As our businesses serve the middle classes and lower end of HNIs (high net worth individuals), we are seeing that over the last 15 years, in India, there is a segment of consumers and households saving a significant amount of money. They are willing to take a higher level of risk for higher returns… more sophisticated products with the right safeguards in place,” Bajaj said, elaborating on the rationale for entering the private equity business.

‘Intelligence at Scale’

At Rs 1,12,562 crore revenue and Rs 14,443 crore profit, Bajaj Finserv posted 16% topline growth for the nine months ended December. Amid global uncertainties, its stock has seen a 12% drop in the past month, with the market cap hovering at around Rs 2.7 lakh crore. Bajaj Finserv, which has been working with several AI startups in areas such as customer service, sales and content development, has invested in half a dozen such early stage ventures. This month alone the company completed two deals, including previously unreported investment in NowPurchase, an AI startup helping small and medium steel companies increase production.

Bajaj said the company evaluates over 200 startups every year to see if their technology can be adopted. “We collaborate with them, we work with them, and where we find them to have particularly unique capabilities, we invest in them. We are doing this from our own balance sheet right now,” Bajaj said. “Our soft power enables their business when we work with them. It becomes a lot more important than the capital. What they need is use cases and scale.”

He calls AI investments as a natural next step for Bajaj Finserv. According to him, the group is “moving beyond deploying algorithms to backing intelligence at scale.” On the scope of sizeable private equity investment in AI companies, he said, “We are seeing the sector scale up. Some of those that we've been working with are starting to scale to the level where they can get into the PE stage. We are still putting together our plans as to what would be the stage of investment that we get in.”

(You can now subscribe to our Economic Times WhatsApp channel)

(Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.)

Subscribe to The Economic Times Prime and read the ET ePaper online.

...moreless

(You can now subscribe to our Economic Times WhatsApp channel)

(Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.)

Subscribe to The Economic Times Prime and read the ET ePaper online.

...moreless