UAE-India investments: More businesses make full use of two-way fund flow
India’s digital businesses are making an entry into UAE, directly and through alliances
Dubai: What’s common to Mukesh Ambani’s Reliance Industries, the secondhand car selling portal with a near $3 billion valuation Cars24, and the payments-focussed fintech Cashfree? And let’s not forget that fish and grocery selling app FreshToHome.
All these companies from India in these last 20 months have either secured significant funding from UAE-based investors, or made an entry into the UAE markets. Sure, Reliance had all the eye-popping numbers to show, drawing in investments from Abu Dhabi wealth fund Mubadala and ADIA (Abu Dhabi Investment Authority) picking up stakes in the Indian petrochemicals-to-telecom-to-ecommerce giant. Just recently, Reliance has committed to some investments of its own in the UAE, at Abu Dhabi’s TA’ZIZ industrial cluster in a $2 billion venture.
India’s first SWF - National Infrastructure and Investment Fund (NIIF) - drew in most of the global SWFs as anchors and has not looked back in growing its assets under management.
“Indian MNCs like Reliance have picked up the baton set by the Indian Government following the Indian PM’s outreach to targeted investment surpluses of global Sovereign Wealth Funds ( SWFs) and other private/portfolio equity providers,” said Suresh Kumar, Chairman of IBPC (Indian Business & Professional Club) Dubai chapter. “Reliance’s success is predicated on a strong growth story and exemplifies the well-founded value proposition represented by industry titans in India.”
We are elated the strategic investment in Telr, which aligns well with our aspiration to be the leader in the rapidly evolving digital payments space in the MENA region and overall global expansion goals.
Opening up more chances
The two-way investments between UAE entities and Reliance is the most visible of the many investment plays that could be forged in the coming days. There has always been talk about likely UAE/Gulf funding in some of the privatisation moves by India’s enterprises.
Bu there is lots happening away from the limelight that typically falls any move involving Reliance. An Abu Dhabi based enterprise was a participant in a Series F funding for Moglix - a B2B ecommerce portal for machinery and industrial goods. The investment in Moglix was routed by Falcon Edge Capital through their Abu Dhabi entity Alpha Wave Ventures.
As a startup we have built a globally scalable business model and demonstrated ROI to our investors across geographies we operate in.
Moglix, founded by serial entrepreneur Rahul Garg, has now made an entry into the Middle East. “We received a total funding of $220 million from global marquee investors,” said Piyush Malviya, the Dubai-based Senior Director at Moglix. “We find great synergies between our mission to build the operating system for manufacturing and the UAE government’s vision to digitize manufacturing to drive the country’s economic growth and strengthen its digital infrastructure.
“We are the fastest growing B2B commerce unicorn with a valuation of $1 billion. We serve 700,000 plus industrial items across 20,000 plus pin codes in Asia enabling 800+ large manufacturers and 3,000+ factories.”
Malviya declined to comment on whether the Falcon Edge Capital’s funding was linked to Moglix making an entry into the UAE/Gulf. “We cannot comment on investment philosophies for VCs,” he said. “Each VC/fund operates through their unique vision and principles.”
It was among the bigger transactions in the e-tailing space, driven into fresh prominence by the threat of COVID-19 and the disruptions that this brought to traditional retail channels.
Change of gear
For UAE based funds, investing in Indian blue-chips or the next big digital startup makes perfect sense. If earlier the rationale behind such thoughts was to secure a foothold in the Indian market - and the many possibilities that come with it - these days it is about funding an idea or startup that could go global. Healthcare and pharmaceutical sectors are rated as likely possibilities where UAE/GCC funds could try and find a role.
One Indian digital platform, Cars24, is going in the reverse direction, launching its services in Dubai mid-year. Since then, it has managed to break into what is still a sector that is heavily reliant on showrooms and car displays to pick up customer interest. What Cars24 is trying to do is take all of that online for secondhand cars.
We have a wide range of customers from different socio-economic backgrounds and demographic types. Considering the remarkable improvements in the market conditions in the UAE, we are confident our numbers will continue to rise and multiply in the coming quarters.
Meantime, it has leased a 1 million square feet facility at Jebel Ali Free Zone in one of the biggest commercial leasing deals in Dubai, and tapped a Dh75 million debt from Commercial Bank of Dubai to build inventory and further expansion. All this while it steers towards a $3 billion valuation - and setting itself up to be one of the most eagerly awaited IPOs in India as and when it happens.
For now, it is about making “the UAE a strategic market, where we sold more than 2,000 cars since we started our operations in the country just over six months ago,” said Abhinav Gupta, CEO - Gulf. “Considering the remarkable improvements in the market conditions in the UAE, we are confident these numbers will continue to multiply in the coming quarters.
“In addition to pre-owned vehicles, even basic necessities like groceries and medicines are determined by the forces of market demand and supply. Cars24 offers an array of competitively priced vehicles and aims to provide the right car at the right price-point to every customer.”
Connecting India
Another digital entity from India, Cashfree Payments, too has taken a different approach in its UAE and Gulf outreach. It bought a sizeable minority stake - for $15 million - in Telr, the Dubai-based fintech that too is in the payments processing space. This way, Cashfree expects to give its roster of Indian merchants access to faster digital payment routes with clients in the UAE/Gulf.
“Telr’s presence and significant operations in the MENA region provides us an exciting opportunity,” said Akash Sinha, CEO and co-founder, Cashfree Payments, in which India’s biggest financial institution SBI has a stake. “We are grateful to our key institutional investor Apis for helping us source and execute this strategic investment.
“We look forward to nurturing our partnership with Telr by leveraging our learnings and experience from the Indian market and enhancing our reach in the MEAN region by introducing novel offerings.”
That sums it up - and offers a further template for India-UAE corporate alliances and investments to be set - or reset, as the case may be.
• Telecom: This sector saw demand for data shoot up like never before, and after a bruising price war has finally seen increased tariffs and even refunds of bank guarantees of telecom companies along with many sectoral reforms. The sun has never shone brighter for this sector, at least in the last decade.
• Insurance and stockbroking: Star Insurance has just gone public and LIC's IPO will ignite the sector. Demand for both life insurance and health insurance have gone up. Premiums have also increased, but so have claims. In the next couple of years, the sector looks bright.
• Brokerages have never had it so good with retail participation in stock markets going up to unheard-of levels within months.
• Real Estate: A combination of low-interest rates and increased needs for bigger and independent houses has seen the real estate markets revive. Increased buying is there from NRIs. Builders have also been customer-friendly and more willing to cut deals.
• Auto: The sector has also seen increased pent up demand with an increased thrust on EV. The government has offered Production Linked Incentives and rolled out other incentives for new plants, particularly in the EV sector. Supply chain issues could be a drag.
• Healthcare: The sector had to bear the brunt of the pandemic but got a revenue boost due to Covid testing, vaccinations and hospitalisation. Tele-medicine also got well established as a category with mass acceptance.
• Now that elective surgeries are back and Covid tests continue, diagnostic and healthcare chains with integrated offerings will do well. They will also be a beneficiary of the increased availability of health insurance.
• Airlines and hotels: This sector perhaps bore the brunt of the pandemic. There are likely to be some hiccups, but as the world learns to live with the pandemic this sector seems to be poised for growth as both domestic and international travel picks up and price and capacity restrictions go.
• Software: After a brief blip, the industry seems to have far exceeded pre-Covid levels due to unprecedented digitisation demand and 5G rollout in certain countries. The outlook remains bright.
• Online: Ecommerce companies will continue to benefit, and those in base commodities like steel and cement are stabilising. They are also likely to enjoy the benefit of increased government spending.