SoftBank, which is among prominent investors in the Indian tech start-up ecosystem, could invest another USD 5-10 billion in the country in 2022 if it finds the right companies at the right valuation, according to SoftBank Investment Advisers CEO Rajeev Misra.
Speaking at Bloomberg’s sixth ‘India Economic Forum 2021’, Misra said Softbank had been investing in India for over a decade, and has pumped in roughly USD 14 billion over the past six years.
“So far this year, we have invested USD 3 billion and are looking to invest in more. It’s not in three or four companies, we have invested in 24 companies in India.
“So, it’s not that there is a feeding frenzy for three or four assets. There are tech companies, education, e-commerce to Ola Electric to fintech,” he said on Thursday.
Misra noted that like public markets, the private capital market is robust and there is a lot of private capital flowing into India.
Many of the Indian start-ups that SoftBank has invested in are enroute to their IPOs, including PolicyBazaar, Delhivery and Oyo. Companies like Ola are also reportedly looking at approaching the market regulator Sebi for listing in the coming months.
Paytm, another SoftBank-backed company, saw bids for its IPO (initial public offering) close on Thursday.
“If we find the right companies, we could invest another USD 5 billion to USD 10 billion…if we find the right opportunities at the right valuation.
“We came in and invested again in Flipkart, which we had exited in 2018…a lot of investments we have done over the past three years, we will be putting new money into them (as follow-on investment) as they raise new capital,” he stated.
Misra explained that the quantum of capital being raised by founders now is not as high as a few years ago. SoftBank has witten large cheques for companies like Paytm and OYO in the past.
“They’re (founders) raising USD 150-300 million. Unlike two-three years ago, when we could deploy in a billion dollars, the ticket size has come down dramatically. So to invest USD 3-4 billion, it would require like investing in 15 companies,” he added.
Talking about the sectors of interest, Misra said SoftBank has invested in a range of sectors right from edtech to fintech and software-as-a-service (SaaS) companies.
“I think fintech is the biggest opportunity in India because India is underbanked. We had Paytm and Policybazaar, we are looking at a few other fintech companies, because financial inclusion is a must in India…of course education is another big piece of investing,” he said adding that India is a “major part” of SoftBank’s growth ambitions.
Asked if exiting Flipkart in 2018 was a mistake, Misra answered in the negative.
“It was not a mistake, Walmart bought 80 per cent stake in Flipkart and we felt we didn’t know how the company would look with Walmart owning 80 per cent of Flipkart.
“We followed the progress of Flipkart and got convinced that it is going to be one of the two major players along with Amazon in India, and we went back and we invested earlier this year,” he said.
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In July this year, Flipkart Group raised USD 3.6 billion (about Rs 26,805.6 crore) in funding led by Singapore’s sovereign wealth fund GIC, SoftBank Vision Fund 2 and others, which valued the e-commerce giant at USD 37.6 billion.
While the size of individual investments was not disclosed, SoftBank is said to have pumped in about USD 500 million as part of the transaction.
Talking about Oyo’s business, Misra said the hospitality company has cut costs significantly and has been able to manage the business well, especially during the pandemic.
“OYO, I believe, will become profitable by next year. The costs, it managed, Ritesh (OYO founder) did an amazing job managing the crisis, which hospitality business did not get affected by COVID-19.
“Everyone did, travel went down to nothing. So, they did an amazing job in not just cutting costs, but also refocusing the business in the right geographies,” Misra pointed out.
OYO also invested time on strengthening its technology stack, which makes the value proposition much more appealing and brings down the churn for hotel owners, he highlighted.
Asked about investment plans in China in the backdrop of the tech crackdown in the country, Misra said China is a market where SoftBank stay in.
“China has many different aspects where most of the noise that’s coming and most of the regulations that are coming are on B2C businesses where the business is touching the consumer, where there are data issues.
“We believe that China is one of the major centres for AI innovation in the world. On the long run, there are many exciting opportunities,” he added.
Misra noted tat SoftBank is investing in life sciences, SaaS companies, B2B companies, deep-tech, robotics, autonomous vehicles etc in China.
“So, yes, we have reduced our pace in China because we’re not investing so much into B2C businesses that touch consumers, but we are still an investor in China,” he added.
