Masayoshi Son-led Softbank Group Corp. would like to invest close to $5-10 billion in India next year if it finds the right opportunities at the correct valuations, SoftBank Investment Advisers CEO Rajeev Misra said on Thursday.
“We could invest another $5-10 billion in 2022, if we find the right opportunities at the right valuation [...] As I say, the quantum of capital we are able to invest today is not as high because the founders are not raising as much money. They're raising $150-300 million. So, each investment is roughly $200-300 million," said Misra while speaking at Bloomberg’s sixth edition of the ‘India Economic Forum 2021’.
He added that two or three years ago, "we could deploy a billion dollars in an Oyo or Paytm" but now "the ticket size has come down dramatically”. Given this scenario, said Misra, Softbank would have to invest about $200 million each in 15 companies to make a total investment of $3-4 billion. "We have a local office, which is working hard and building relationships with the young entrepreneurs and building these relationships six months or a year before they need capital,” Misra added.
Misra comments come at a time when Softbank Group slumped into quarterly losses on the back of its Vision Fund unit taking a $10 billion hit from the decline in share prices for portfolio companies that were impacted by Beijing’s tech crackdown.
Earlier this week, Softbank said it would spend up to about $8.8 billion over the next year to buy back up to 14.6% of its outstanding shares.
“Indian companies are not just for India. There are a lot of Indian companies going global. So, there are a lot of SaaS (software-as-a-service) companies from India like Mindtickle, Zeta, (and) others which are not just serving Indian brands but are going global [...] But India as a story is no different from the rest of the world. There is a lot of liquidity in the markets across the globe. The cost of capital has become very cheap around the globe. There aren’t many investment opportunities that provide double digit returns –15-25% returns. Hence, it's a global phenomenon that a lot of capital is going into growing tech companies, excluding China,” said Misra.
Speaking on the top opportunities by segments, Misra said business-to-business (B2B) SaaS, fintech and education continue to be interesting avenues for investments.
“We have invested in education through Eruditus. But, I think fintech is the biggest opportunity in India because India is unbanked. We had (invested in) Paytm and Policybazaar. We're looking at two other Fintech companies, because financial inclusion is a must in India [...] The big ones that we like are still B2B businesses that serve (other) businesses to improve their HR and sales quality. These are not just for India but can go global,” said Misra on Thursday.
“Of course, education is another big piece we are investing in and fintech,” added Misra.
Recently, Paytm, one of Softbank’s biggest Indian bets, concluded its initial public offering (IPO) at almost 2x subscription.