Dubai: Indian expats in the UAE are doubling back into property back home and gold in a big way - but there’s a wider swathe of assets that could tempt investors. For some NRIs, that means chasing possibilities in the next big ‘unicorn’ (a $1 billion valuation) from India.
Neelesh Bhatnagar, the Dubai-based Managing Director of NB Ventures, says investors should not only be looking at possibilities in one direction. Because with the UAE-India CEPA (Comprehensive Economic Partnership Agreement), investment opportunities have truly become a two-way flow.
“On the one hand, CEPA will give an opportunity to Indian startups to expand into the Middle East and benefit from (what’s available in) the region,” said Bhatnagar, who had been a director at the highly diversified Landmark Group before. “On the other side, regional institutional funds will be more confident to invest in Indian businesses that have presence locally as well. It’s a win-win for both.”
Bhatnagar is on the ball about two-way funding flows. Post-CEPA, there has been a distinct spike in UAE and Gulf institutions - public and private - trying to pick and choose where to park their India-bound funds.
CEPA went live on May 1 last, and in its initial push, has managed to raise the profile of trade volumes between UAE and India. But in this slipstream, ample investment opportunities are also being created, driven by the likes of DP World, the asset management firm GII, and others.
NB Ventures has been quite busy on this front even before CEPAs. Its investments include those in the Edtech portal Byju’s, as well as entities such as Healthifyme, Purple.com, and Unacademy, which are ‘already unicorns’, according to Bhatnagar.
“We believe our investments in companies like Let’s Transport, USPL, WebEngage, IDfy, Pernias Pop up Studio, Curefoods have a huge potential and could be ‘soonicorns’ for us.”
Can it another year for India Unicorns?
In the last two years, the likes of beauty product retailer Nykaa, Paytm and Zomato made quite the splash with their IPOs, striking instant chords with Indian investors wanting to get into bonafide unicorns.
Can 2023 offer more of the same? The Indian stock markets are still on the bounce, and recent updates on inflation pressures - down from 7 per cent plus in September - bring out more positive vibes. But will stock market investors go for solid returns from risk-off sectors or be willing to seek more from another round of IPOs?
“Overall negative market sentiment hit some of these recent companies after their IPO listing,” said Bhatnagar. “Muted global growth expectations, interest rate hikes, recession worries have led to a huge sell-off from institutional investors.
“Of course, valuations of these companies were not supported by fundamentals and balance-sheets, and their cash burn was high.”
Not that Bhatnagar - who also has bought into a T10 cricket team - will be complaining as he plans to take on more stakes in digital ventures. (His portfolio of Indian startup/pre-IPO digital companies number more than 50.) “We have a good exposure in this space,” he added. ”We believe consumer focused businesses have huge prospects and are highly scalable.
“Having said that, we are very sector agnostic and have investments in SaaS (Software as a Service), AI, logistics, healthcare, foodtech and cloud kitchens.”