Unilever Sets up VC Fund to Tap Indian Growth

By Trefis Team,

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Unilever (NYSE:UL), the leading consumer goods company in India, is planning to set up a venture capital fund to invest outside its core business in the field of media and technology in the country. Unilever Ventures Limited along with its two closely associated partner companies - Unilever Technology Venture and Langholm Capital- have been investing in the west in healthcare, clean tech, water, media and environmental services through seed capital in startups, expansion capital in established businesses and by supporting management buyouts in companies seen as strategic additions to its existing portfolio. Unilever which competes with Procter & Gamble ( PG ), Colgate-Palmolive (NYSE:CL) and Kimberly-Clark ( KMB ) now plans to extend its model to emerging economies beginning with India and China.

We value Unilever's stock at a Trefis price estimate of $35 , roughly at a 10% premium to the current market price. Here we take a closer look at the various business sectors in India that Unilever is likely to invest in.

Why India?

While India is the second most populous nation, and it has a young demographic with almost half of the population under 25 years. This combined with sound information technology capabilities makes India an ideal for investments in technology startups.

Business Areas of Interest to Unilever

While Unilever's venture capital investments are more financial than strategic in nature, Unilever still seeks investment opportunities that leverage its existing brand, technology or expertise.

In India's context, we expect Unilever to fund technologies that help it reach out to more consumers in remote and inaccessible parts of the country. This is in line with Unilever's Project Shakti, wherein rural women serve as direct-to-consumer sales distributors selling Unilever's soaps and shampoos in villages with no retail distribution network, no advertising coverage and poor roads and connectivity. Information systems using mobile phone platforms that help Unilever receive orders and track shipments on a more real-time basis could particularly be of interest to Unilever.

Technologies in biodegradable and eco-friendly packaging material, and low cost manufacturing using renewable energy sources could be other areas of interest helping Unilever reduce its overall carbon footprint.

View our detailed analysis for Unilever here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Investing Ideas , Stocks , US Markets
Referenced Stocks: KMB , PG

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