For India’s start-ups, the UAE and Gulf are the go-to places when planning for expansion — and raise new funds, if possible. That is the script two of India’s unicorns are planning to follow.
“UAE and the Gulf have lots of capital and — now — they are definitely investing in India,” said Sujeet Kumar, co-founder of Udaan, a Bengaluru-based company that is an online platform for retailers and India’s ‘kirana’ shops. “Instead of selling to the consumer, we sell to retailers — the products are listed by manufacturers who sell directly to shops, restaurants and offices.”
Udaan has its own supply chain logistics and credit facilities to buyers. “We have a platform called Udaan Capital through which we give them working capital financing,” said Kumar.
Anchored to India — for now
Udaan, which is planning an IPO, will “concentrate on India for the next 2-3 years because there’s a lot of room to grow there,” said Kumar. “We haven’t thought beyond India; our investments will mostly be going toward strengthening the infrastructure and automating more warehouses. Most of it will be technological investments.”
Udaan currently manages 10 million square feet of space across its warehouses and may need 100 million square feet in the next 7-8 years. It is ‘expand or perish’ for Udaan as competition heats up in the space. E-commerce giants such as Amazon, Walmart and Reliance dominate the businessto-customer segment and they are constantly looking for new growth avenues.
“Still, in B2B e-commerce, we have more than 70-80 per cent of market share,” said Kumar.
Fund flows
Meanwhile, asset management firm True Beacon allows foreigners and non-resident Indians (NRIs) to invest in India. “Up until now, they were routing their money through Singapore or Mauritius and entering India through feeder funds — we are trying to eliminate that and bring them (funds) directly into the country,” said Nikhil Kamath, co-founder at True Beacon.
GIFT (Gujarat International Finance Tec-City) City is an attractive proposition for investors looking to enter the Indian market. “It’s a more tax efficient jurisdiction where you don’t need things like PAN cards — the Indian government is trying to attract capital directly,” said Kamath. “In Dubai, we are hoping to get a new kind of clientele that would like to take advantage of this.”
Like a mutual fund
“Think of us as a mutual fund for ultra-high net worth individuals — we run long/ short funds, which are hedged perpetually,” said Kamath. “We don’t have any management fees whatsoever, whereas our peer companies have about 2 per cent. Instead, we have a 10 per cent carry and that kind of makes it very client-aligned.”
Last month, India’s Commerce Minister Piyush Goyal said that a comprehensive economic partnership agreement with the UAE would be finalised before the end of 2021. A potential deal could result in investments in a range of sectors, including infrastructure and logistics.
(Except for the headline, this story has not been edited by The Finance World staff and is published from a syndicated feed.)
