We can invest $5 billion to $10 billion in India by 2022: Rajiv Mishra of SoftBank

Mishra was speaking at the sixth edition of Bloomberg’s ‘India Economic Forum 2021’.

“If we find the right opportunities at the right valuations, we can invest $5 billion to $10 billion in 2022.” […] As I say, the amount of capital we’ve been able to invest today isn’t as much because the founders aren’t raising that much money. They’re raising $150 million-$300 million. So each investment is about $200 million – $300 million. Unlike two or three years ago, when we could have deployed a billion dollars in OYO or Paytm. The ticket size has come down dramatically,” Mishra said when asked about SoftBank’s capital commitment to India next year.

“So to invest $3 billion to $4 billion we have to invest in 15 companies,[at the ticket size]$200 million each. So we have a local office, working hard and young entrepreneurs. and building these relationships six months or a year before capital is needed.”

It comes as SoftBank Group Corp. fell into a quarterly loss of $3.5 billion this September, after its Vision Fund unit lost $10 billion from plunging share prices of portfolio companies affected by Beijing’s tech crackdown.

Earlier this week, SoftBank said it would spend about $8.8 billion next year to buy back up to 14.6% of its outstanding shares.

“Indian companies are not just for India. Many Indian companies are going global. So there are a lot of SaaS (Software-as-a-Service) companies from India like Mindtical, Zeta, others who are not only serving Indian brands but are going global. […] But as a story, India is no different from the rest of the world. There is a lot of liquidity in the markets around the world. The cost of capital has become very affordable around the world. There are not many investment opportunities that offer double digit returns – 15% to 25% returns. So it is a global phenomenon that except in China, a lot of capital is going to growing tech companies,” Mishra said.

Speaking on the top opportunities by segment, Mishra said business-to-business (B2B) SaaS, fintech and education remain interesting avenues for investment.

“We have invested in education through Eruditus. But, I think fintech is the biggest opportunity in India as India does not have banking facility. We had invested in Paytm and Policybazaar. We are looking at two other fintech companies Because financial inclusion is imperative in India […] The big businesses we love are still B2B businesses that serve (other) businesses to improve their HR and sales quality. These are not just for India but can be global,” Mishra said on Thursday.

“Of course, education is another big piece in which more fintechs are investing,” Mishra said.

Recently, Paytm, one of SoftBank’s biggest Indian bets, ended its initial public offering (IPO) at around 2x subscription. Now it is gearing up for its other big bet ANI Technologies Pvt. Ltd which operates Ola Cabs and Oravel Stays Ltd which operates OYO Hotels & Homes to hit the public markets.

Recently, SoftBank also invested in Walmart-owned Flipkart, marking its second innings with the e-commerce major after exiting the firm in 2018.

“Walmart bought an 80% stake in Flipkart and we had no idea what the company would look like with Walmart owning 80% of Flipkart. We followed the progress of Flipkart, and were convinced it was going to be one of the two major players in India with Amazon and we went back and invested earlier this year […] It was just that we didn’t know what the majority of Flipkart by Walmart would look like in the next few years,” said Mishra.