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DUBAI: Indian expatriates in the UAE are investing heavily in repatriated real estate and gold – but there is a wider range of assets that could attract investors. For some NRIs, this means chasing the possibility of the next big “unicorn” (valued at $1 billion) from India.
Neelesh Bhatnagar, managing director of NB Ventures in Dubai, said investors should not focus on possibilities in only one direction. Because of the UAE-India CEPA (Comprehensive Economic Partnership Agreement), investment opportunities have truly become a two-way flow.
“On the one hand, CEPA will provide an opportunity for Indian start-ups to tap into the Middle East and benefit from (the resources available) in the region,” said Bhatnagar, who was previously a director at the highly diversified Landmark Group. “On the other hand, regional institutional funds will have more confidence to invest in Indian companies that also have local operations. This is a win-win for both parties.”
Bhatnagar is cautious about the two-way flow of funds. Post-CEPA, there has been a noticeable surge in UAE and Gulf region public and private institutions trying to pick and choose where to park their funds in India.
CEPA, which went live on May 1, has successfully boosted trade between the UAE and India following its initial push. But amidst this trend, driven by the likes of DP World, asset manager GII, and others, a wealth of investment opportunities is also being created.
NB Ventures was very busy on this even before CEPA. Bhatnagar said its investments included investments in edtech portal Byju’s, as well as “already unicorn” entities such as Healthifyme, Purple.com and Unacademy.
“We believe our investments in companies like Let’s Transport, USPL, WebEngage, IDfy, Pernias Pop up Studio, Curefoods and others have great potential to become ‘unicorns’ for us.”
Can Indian unicorns have another year?
Over the past two years, the splashy IPOs of companies such as beauty retailers Nykaa, Paytm and Zomato have struck a chord with Indian investors looking to enter true unicorns.
Could 2023 offer more of the same? Indian stocks are still rebounding, with the latest update on inflation pressures – down from over 7% in September – lending a more positive tone. But will stock market investors seek solid returns from the safe-haven sector, or are they willing to seek more returns from another round of IPOs?
“Overall negative market sentiment after the IPO hit some of these recent companies,” Bhatnagar said. “Low global growth expectations, rising interest rates, recession fears led to heavy selling by institutional investors.
“Of course, the valuations of these companies are not supported by fundamentals and balance sheets, and they have high cash burn.”
Not that Bhatnagar (who also has a stake in the T10 cricket team) is complaining, as he plans to take a bigger stake in the digital venture. (The number of Indian startups/pre-IPO digital companies he has invested in exceeds 50.) “We have good exposure in this space,” he added. “We believe consumer-centric businesses are promising and highly scalable.
“Having said that, we are very industry agnostic and have investments in SaaS (software as a service), artificial intelligence, logistics, healthcare, food tech and cloud kitchens.”
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