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There Is Excitement For New-age Businesses
OIJIF MC and Space World Group deliberate on key industry trends and what lies ahead in 2022
Photo Credit :
Srinath Srinivasan, CEO, Oman India Joint Investment Fund Management Company (OIJIF MC) opines on the key trends across the industry
The Indian alternative investments industry has growth by leaps and bounds. Last year we witnessed over 1,200 deals worth over USD 75 bn, nearly 3x the value of deals closed in 2017.
We now have a deep market for seed-stage, growth, pre-IPO and buyout investments. There is excitement for new-age businesses alongside continued traction for lucrative traditional businesses. In short, the Indian alternative investments industry is maturing well - it is becoming deeper, increasingly segmented and more specialized.
Some overarching trends which will define the industry going forward and underpin our investment strategy:
∙ Consumer behavior is changing, with many customers pursuing a digital-first approach in many categories. D2C businesses will remain sought-after, subject to proving their salience in a crowded market. New use cases of consumer tech in services (health-tech, wealth-tech etc.) are gaining prominence.
∙ Disruptors of traditional value chains are enjoying rapid uptake from small businesses, which have long suffered at the hands of inefficient supply chains. E-commerce based B2B businesses will remain prime property, subject to them serving large addressable markets with sustainable unit economics.
∙ Scaled businesses with economic moats in the form of brands, technology or distribution will gain from the secular shift towards organized players. Succession planning and aspirations to mature as institutions will compel promoters to look at PE funds as long-term partners in creating value.
∙ Beyond just ESG compliance, the ability to drive the ESG agenda will motivate investment decisions. For example, the entire EV ecosystem will present many compelling investment opportunities.
∙ Penetration of organized BFSI channels will rise, driven by a growing formal economy, greater digital adoption, increased awareness of financial products and competitive advantage of organized players amongst other factors. BFSI will remain an important PE investment theme in India for multiple fund vintages to come.
As a mid-market PE fund, we are geared to build our portfolio around the above themes:
∙ We are invested in two high-growth, new age businesses (Homelane and ShopKirana), both serving large addressable markets with best-in-class unit economics.
∙ We are firm believers in backing businesses with unique intellectual property, having backed solid consumer brands (Stanley, Crompton Greaves, Senco Gold) and businesses with strong technical capabilities (Divgi TTS - India’s largest EV transmission manufacturer, Strides Pharma –focused on niche pharma products and developing a high-value biotech business).
∙ Furthermore, we also believe that BFSI will remain amongst the largest, long-term investment themes in India and have done multiple deals across the vertical (PNB Metlife, Annapurna Finance, Capital Small Finance Bank, DCB Bank).
"Change has been the only constant for the past 2 years"
Ankit Goel, Co-Founder and Managing Director, Space World Group mulls decodes industry trends, and what lies ahead.
We are currently going through one of the most significant historical changes ever experienced in the last 100 years. For businesses and entrepreneurs, change has been the only constant for the past 2 years now. Business leaders today agree that they must be continually prepared to change, take calculated risks and be prepared to execute fast, or their business is likely to get disrupted. To ensure business continuity and improve productivity, digital transformation of business is a must.
A Leap in Technological Advancement
Technology will continue to drive innovation across business models in various industries, allowing new businesses to enter the market and disrupt incumbents in serious ways. In order to drive business growth, stay relevant in changing times, and differentiate from the competition, business leaders must be able to think creatively and embrace innovation to create break-through value for their customers. In the post COVID-19 era, there will be a greater need to increase innovation and move away from the comfort of operating ‘business as usual’. If organisations do not adapt to new ways of working, they may experience an existential crisis.
Emergence of Hybrid Workplace
The remote working arrangements introduced during lockdowns have established new norms for the working conditions, redefining work life and personal life boundaries. Many companies, who once were stringent with respect to physical attendance and work timings, had to adapt to new norms of remote working, providing their employees sufficient equipment and adequate connectivity to do their work. Seamless connectivity and smart utilization of workplaces will become the new norm. We as an organisation are committed to take on the growing demand of digitization through creating a Neutral Optical Fibre Cable (NOFC) Infrastructure that supports next generation seamless communication services and smart building services for tech-savvy customers.
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