While immediate attention is on China’s latest crackdown of sectors, such as tech and education, and the ability for foreign investors to back them or even if they can make profits, there is greater optimism in another rising economic power: India.
India-based sports-focused Rhiti Group has collaborated with local cement maker Kanodia Group to launch venture capital firm Deep Pockets Capital Venture.
“India is on the cusp of a revolution in technology, including artificial intelligence (AI) and blockchain, which are set to revolutionise agriculture, finance and entertainment in coming years,” according to Rhiti Group Chairman Arun Pandey in the Economic Times of India.
Venture capital funding for Indian firms hit a six-year high of $12.1bn in the first six months of 2021, according to Venture Intelligence, many of them by foreign investors.
Tiger Global has struck almost 170 deals in India since 2006 with 29 so far this year, according to PitchBook data, under a strategy by key executives such as Lee Fixel, alongside other corporate investors, such as Naspers (now called Prosus), and Chinese peers, such as Xiaomi, Tencent and Alibaba.
In 2014, Tiger and Prosus helped lead a $1bn investment in Indian ecommerce group Flipkart, at a valuation that represented a three to four times multiple of the company’s sales, according to the Financial Times in its profile of Tiger.
And exits are starting to flow following the seminal $16bn acquisition of a majority of Flipkart by US peer Walmart three years ago. The successful listing of food delivery service Zomato and expected bumper initial public offerings of payments provider Paytm, insurance aggregator Policybazaar, bueaty retailer Nykaa and delivery company Delhivery. Even Flipkart could reportedly come to the public markets as soon as this year after its latest $3.6bn round.
But India’s regulators favour incumbents and the risks remain that a change in approach to international investment could collapse sentiment in the way the FT reported that SoftBank Vision Fund’s bet on China-based ride hailing service Didi Chuxing had fallen $4bn into the red after the past few weeks since its US listing was subsequently attacked by the authorities.
The Economist this week warned these investors might struggle. Local corporate investors, however, are waking up to the possibilities.
