It's no secret that Canadian billionaire investor Prem Watsa sees India as a bright spot when it comes to investments. Watsa's Fairfax Holdings has committed $5 billion as investments to be made in Indian companies by 2024.
In an exclusive interview with Moneycontrol in Bengaluru, Watsa said that the current boom in India's startup industry will open up more avenues and create a level playing field for all those with a drive for entrepreneurship. India saw 44 unicorn startups emerge in just 2021, the highest ever in a year that witnessed a massive surge in investments. On May 2, India got its 100th unicorn after MSME neobanking platform Open raised $50 million.
Watsa said, "You got a 100 unicorns, and you'll have a ton more in India. I am optimistic because it provides an opportunity for the common person, someone who may not have gone to the best schools and universities but has the ability to build a company. This is something that we have seen in the US and Canada and are seeing in India now. Many companies like that will happen."
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Fairfax holds a 49 percent stake in one such unicorn -- online insurance player Digit Insurance which was 2021's first unicorn. In FY22, Digit clocked a 62.4 percent jump in gross written premiums to Rs 5,268 crore, just five years since its inception. The startup's valuation tripled in 2021 after two rounds of fundraising to $3.5 billion. Watsa says that his company is looking at Digit as a long term bet led by the leadership of insurance industry veteran and founder Kamesh Goyal.
"Kamesh is building a very good company over the long term. So when there was extra money, because the company is so good, there was a whole lineup of people wanting to provide capital and so Kamesh was able to do that. We're not like private equity. We like India, so we look for leadership like Digit. When we find it we back them heavily.," Watsa said.
Fairfax's portfolio in India is quite diversified with investments in the Bangalore International Airport, IIFL companies, Catholic Syrian Bank, National Stock Exchange (NSE), Thomas Cook India to name a few. Watsa continues to bet on the India opportunity and sees the government's mega privatisation drive as a positive.
"I'm really very excited about the opportunity in India. I think the opportunity in India is huge for everybody. It will be the place to put money -- growing economy, business friendly and in my mind very good government. So very optimistic about India," he said.
"The large privatisation program announced by the government is a big plus for India because these resources will be more effectively utilised by the private sector."
Over the past few months investment sentiment has slowed down as stock markets took a beating, the Russia-Ukraine war created fears of a possibility of a larger war and central banks around the world began tightening monetary policy. In India, the Reserve Bank of India's (RBI) Monetary Policy Committee announced a surprise rate hike of 40 basis points and the US Fed hiked rates by 50 basis points, the biggest hike since 2000.
However, Watsa says that all is not gloom and doom at this point. "I started my career in the 70s. Back then interest rates were much, much higher. They went up to 21 percent in 1981-82. I don't think that'll happen. US 10-year bond yields are at 3 percent currently, so there is a long way to go before the economy gets derailed. But the economy can slow. We will look through all that and take a long term vision."
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