MUFG's Dragon Funds to deepen India-Japan, Asia-Pacific focus; eyes $600 mn fund

Backed by Japan’s largest bank Mitsubishi UFJ Financial Group, Dragon Funds is the equity financing arm of Mars Platform. Its first fund was about $500 million in size, of which $400 million has already been deployed across 8 companies across India alongside other global markets.

Mumbai: Mitsubishi UFJ Financial Group (MUFG)-backed Dragon Funds is looking to strengthen its presence in the India-Japan and Asia-Pacific corridor as it seeks to raise its second fund with a $600 million corpus to invest in high-growth startups, Aakash Tulsani, managing director and investment committee member at the firm, said.

Dragon Funds’ second fund will continue to focus on sectors such as financial services, consumer and enterprise, targeting companies that have the potential to grow faster while maintaining a sustainable business model. The $600 million fund size reflects the firm’s strategy and its plans to invest in India and across the broader Asia-Pacific region. The fund will formally begin raising money next year.

“We have a strong commitment from Japan’s MUFG Group and that is one of our key differentiators. We want to further deepen our presence in the India-Japan corridor by enabling scale-ups and explore partnerships with Japanese firms,” Tulsani said on the sidelines of the Global Fintech Fest held in Mumbai last week.

“We also enable portfolio companies expand overseas by leveraging MUFG's vast global presence,” he said, citing the examples of companies like Cohesity, Bolttech, Moengage that have some presence in Japan. “Japan is one of the most underpenetrated software markets with high growth prospects,” according to Tulsani.

Backed by Japan’s largest bank MUFG, Dragon Funds is the equity financing arm of Mars Platform. Its first fund was about $500 million in size, of which $400 million has already been deployed across eight companies across India alongside other global markets.

About half of the capital has been invested in Indian startups including Moengage, Meesho, Zepto and KreditBee, making the country one of its core areas of focus, while its other portfolio companies include Vinted, CarDekho SEA, Bolttech and Cohesity.

Tulsani's comments come a few months after MUFG and its subsidiary MUFG Bank announced plans to integrate the operating functions of Ganesha Fund, which invests in Indian startups, with Dragon Funds to consolidate management of their corpus. Ganesha Fund has made growth investments in companies including Shiprocket, Neo Wealth and Lentra.

“The aim was to consolidate MUFG's strong partnership with India tech ecosystem and play a meaningful role in the growth equity space in India. We see India as a strong market for growth equity investments despite a slowdown in growth rounds by 20-25% in recent months,” Tulsani explained.

“We have been amongst the most active investors in the region in the growth equity space. By combining the platforms, we will continue to work closely with the portfolio companies,” he added.

This integrated management of Ganesha by Dragon Funds will deepen MUFG’s relationships with India’s startup and technology ecosystem and will act as a bridge between Japanese and global investors and operating companies.

Launched in 2023, Dragon Funds has attracted domestic and international investors with opportunities in high-growth markets around the world, including India. The investment firm will continue focusing on late-stage technology companies and cut cheques in a range of $50-80 million.

“Sectors like financial services stand out for us in India as we are seeing many interesting opportunities emerge in the space. We aim to marry patient capital with evergreen companies and hope to play a meaningful role in India's tech ecosystem," Tulsani said.