Rishad Premji-led gambles win big
Wipro's investments in new technologies and platforms have generated more than ten times returns since Rishad Premji has taken over as head of strategy at the nation's third largest software exporter.
Rishad, son of chairman Azim Premji, has led the company to invest also in two startups, the valuation of one of which has more than tripled in just 12 months.
"These investments have helped different business units keep up with growth numbers and helped drive growth and we believe we have generated over 10X returns over the last three years (considering if we had to buy these technologies now)," said an executive from Wipro's strategy division. The executive declined to share details of the investment, but said it could be millions of dollars over the past 36 months.
The company plans to invest more in innovative ideas through a $100 million corporate venture fund. Rishad has been named to spearhead that venture.
Some experts say the returns on corporate venture funds aren't usually as high as that of independent venture funds, which makes this performance of Wipro "extremely good". "Certainly, a 10 times return is extremely good from the perspective of financial returns of either independent or corporate venturing funds," said Josh Lerner, who is the professor of investment banking and head of the Entrepreneurial Management unit at Harvard Business School.
Wipro declined to provide details of its investment. "Any data points that are being talked about or written are all speculation and cannot be relied upon," it said in a statement.
Rishad Premji joined Wipro in 2007 as business head of the vertical that provides services to the banking and financial services sectors. He was elevated to the current role of head of strategy four years later. Under his watch, Wipro has backed companies in technologies that are called disruptive because they are capable of disrupting the existing market, as well as picking stakes in US-based startups focused in data analytics and machine-to-machine learning.
He has been assisted by Anil Raibagi, head of mergers and acquisitions. Wipro's $5 million (about Rs 30 crore at current exchange rate) investment in US-based Axeda in June 2013 underlines the team's successful bets.
When Wipro first made an investment to pick a stake of close to 8%, Axeda was valued at $50 million. In July this year, Nasdaq-listed PTC acquired Axeda for $170 million in cash, taking the value of Wipro's ownership to more than three times its initial investment. PTC and Axeda declined to comment whether Wipro will exit the investment. Wipro said any decision will be taken once the transaction is concluded.
"Since he (Rishad Premji) took charge, the strategy team (which includes Wipro's M&A division) has been more proactive than being very reactive," said an executive directly familiar with the changes.
"Initially, we (Wipro) were dependent on investment bankers to make the pitch on what the company should invest in. After he joined, now investment banks just give the names and in some case we don't even require them, as internally we evaluate which companies we should invest in."
On partnerships, Anurag Srivastava, who is overseeing the youngest business unit, called Change the Business, has helped Wipro partner with at least 30 startups since 2011. One such partnership of Wipro is with Pingar, a New Zealand-based text analytics company. Over the last 12 months, Pingar has been helping Wipro's existing and new clients on "auto-tagging and classification capabilities across multiple enterprise content management solutions".
"Typically, corporate venture funds have both strategic and financial goals. Strategic goals may be identifying potential acquisition targets, getting a window on new technologies, or paving the way for joint ventures," said Lerner of HBS.
"These strategic returns can often be very important, but are more difficult to measure, especially for outsiders."
Wipro's investments in new technologies and platforms have generated more than ten times returns since Rishad Premji has taken over as head of strategy at the nation's third largest software exporter.
Rishad, son of chairman Azim Premji, has led the company to invest also in two startups, the valuation of one of which has more than tripled in just 12 months.
"These investments have helped different business units keep up with growth numbers and helped drive growth and we believe we have generated over 10X returns over the last three years (considering if we had to buy these technologies now)," said an executive from Wipro's strategy division. The executive declined to share details of the investment, but said it could be millions of dollars over the past 36 months.
The company plans to invest more in innovative ideas through a $100 million corporate venture fund. Rishad has been named to spearhead that venture.
Some experts say the returns on corporate venture funds aren't usually as high as that of independent venture funds, which makes this performance of Wipro "extremely good". "Certainly, a 10 times return is extremely good from the perspective of financial returns of either independent or corporate venturing funds," said Josh Lerner, who is the professor of investment banking and head of the Entrepreneurial Management unit at Harvard Business School.
Wipro declined to provide details of its investment. "Any data points that are being talked about or written are all speculation and cannot be relied upon," it said in a statement.
Rishad Premji joined Wipro in 2007 as business head of the vertical that provides services to the banking and financial services sectors. He was elevated to the current role of head of strategy four years later. Under his watch, Wipro has backed companies in technologies that are called disruptive because they are capable of disrupting the existing market, as well as picking stakes in US-based startups focused in data analytics and machine-to-machine learning.
He has been assisted by Anil Raibagi, head of mergers and acquisitions. Wipro's $5 million (about Rs 30 crore at current exchange rate) investment in US-based Axeda in June 2013 underlines the team's successful bets.
When Wipro first made an investment to pick a stake of close to 8%, Axeda was valued at $50 million. In July this year, Nasdaq-listed PTC acquired Axeda for $170 million in cash, taking the value of Wipro's ownership to more than three times its initial investment. PTC and Axeda declined to comment whether Wipro will exit the investment. Wipro said any decision will be taken once the transaction is concluded.
"Since he (Rishad Premji) took charge, the strategy team (which includes Wipro's M&A division) has been more proactive than being very reactive," said an executive directly familiar with the changes.
"Initially, we (Wipro) were dependent on investment bankers to make the pitch on what the company should invest in. After he joined, now investment banks just give the names and in some case we don't even require them, as internally we evaluate which companies we should invest in."
On partnerships, Anurag Srivastava, who is overseeing the youngest business unit, called Change the Business, has helped Wipro partner with at least 30 startups since 2011. One such partnership of Wipro is with Pingar, a New Zealand-based text analytics company. Over the last 12 months, Pingar has been helping Wipro's existing and new clients on "auto-tagging and classification capabilities across multiple enterprise content management solutions".
"Typically, corporate venture funds have both strategic and financial goals. Strategic goals may be identifying potential acquisition targets, getting a window on new technologies, or paving the way for joint ventures," said Lerner of HBS.
"These strategic returns can often be very important, but are more difficult to measure, especially for outsiders."
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