ET Interview: India’s aspirational middle class gives it demographic edge, says Verlinvest CEO Roberto Italia

Mumbai: An aspirational middle class that does not shy away from spending and understand the importance of education gives India a demographic edge like no other economy, said the executive who manages €2 billion of assets for few Belgian families who have been, and are, long-standing shareholders of the largest beer group in the world – AB Inbev. Their 31-year old pool of evergreen capital makes Verlinvest one of the largest backers of trail-blazing entrepreneurs and consumer brands like Vita Coco or Oatly, Juicy Chemistry, Chewy or Epigamia yoghurts and Wakefit.

“A very substantial proportion of the Indian society is becoming or has the ambition to become middle class. That is emerging from an ability to envision for themselves a future that is going to be brighter than today,” said Roberto Italia, 60, its CEO told ET.

“That prompts their ability and willingness to spend.” Italia believes even in the age of artificial intelligence and fears of job losses, the young population of India will remain a strategic asset. “This economy is different from the rest of the world for having a fantastic demographic profile. At every step of the way, India gives me an injection of adrenaline that I rarely get in the West.”


Such dynamism, according to Italia, is pervasive across the country, from big metropolises like Mumbai – which he compares to the vibrancy of New York City of the 1990s – to even smaller towns.

“That kind of energy is going to benefit the whole country. Even in smaller cities like Chandigargh or Coimbatore, you detect elements of entrepreneurship within the society that you wouldn't be able to get in the provinces of France, the provinces of Germany. And I believe that that is at the heart of a society and an economy that will push towards growth.”

With India already returning the capital invested, Verlinvest is keen to crank up its play with investment plans of a €1 billion over the next 5 years. “We are getting more aggressive because India has done so well,” said Arjun Anand, Verlinvest’s Head of Asia. “We certainly see ourselves deploying €100 to €200 million a year in India. We go all the way from small companies in venture to control deals.” Sectors like health, fitness, live entertainment, digital content, sneakers are the next pockets of growth.

Data Revolution

A former PE executive who earned his stripes in Warburg Pincus, Italia, was part of the team that backed Sunil Mittal’s Bharti Airtel in the mind 1990s that heralded the private equity boom in the country. Three decades later, he feels telecom players like Mukesh Ambani’s IPO bound Jio has is redrawing the consumption landscape once again.

Think food retail to quick commerce, online travel to financial services – nearly every means of consumption gets channelled and amplified through such digital “tools,” he points out. “People cannot live without mobile phones… The combination of convenience, technology at one’s fingertips that is aiding us with real time information and spending power is for him game changing.

“Such profound transformation wasn't visible 30 years ago.”

In India, he said, the digital revolution has leapfrogged by making the technology available to a wider population. “We collect information, we disseminate information and with it we become protagonists of the economic activity,” said Italia, a Parma born, Swiss resident. This transformation is also spawning new economic activities which is further playing a pivotal role in the way we buy and spend and even engage socially.

“Think about being an influencer nowadays as a type of activity that did not exist a few years ago. With bandwidth being available at unprecedented speed levels, telecom today has changed into a necessary element that helps one to relate to society altogether. And consumer spending is a byproduct of that.”

Brands to Services

With its roots in the alcobev industry – with marque brands like Budweiser, Corona, Hoegaarden, and Stella Artois -- Verlinvest have been very early investors in global beverage companies – Vita Coco, Oatly -- that have grown substantially. In India, Sula was their first bet which is now fully divested. Lahori (Zeera), Blue Tokai and Kopi Kenangan of Indonesia, South East Asia’s 1st unicorn in the food and beverage space, or VitaminWater came later.

More recently, the firm has started focusing on additional facets of consumer-facing businesses that went beyond brand pull providing an experience or a service. Health-care services, for example is a key focus like backing Eye Foundation, a ophthalmology chain, with a $75 million cheque for a 20% stake or Red Sun, a senior care provider in China.

Across the Cap Table

The firm is flexible from buying into growth and coming on board as a significant minority investor or even taking control like Epigamia or Ferty9, an IVF chain. The cheque sizes vary too – right from a million dollars to $100 million – either through a their venture arm V3 Ventures or Verlinvest itself.

Unlike several of the listed PE peers who have no deploy capital only to raise more and keep a hawk’s eye on their share price, the beauty of Verlinvest’s business model said Italo is “we have no obligation to deploy capital.” This gives the firm to hold onto an investment far longer and more latitude to price assets, Italo said. “That has to be the name of the game for us, otherwise we are at the mercy of an abundant capital market and when there is abundance of capital, prices tend to escalate very quickly.”

While giving the example of Veeba, a condiments and sauces company where the fund is invested for a decade, Anand added, patient capital also plays out in other ways. “We can play the cycles a bit better. As we have even experienced in India, some windows of time are just better for the capital markets than others and there are some windows where you wouldn't want to really take a company public.