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India's Missing Middle 'Platforms': Unveiling the Untapped Goldmine That Could Change Everything!

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Warren Buffett's timeless wisdom echoes loud and clear in India's private markets, where simplicity and overlooked opportunities hold the key to unparalleled success. As investors eagerly chase the "hottest play," an alternative approach that emphasises cash flow generation, price discipline and tapping into neglected corners holds tremendous value - that true value lies in exploring the untapped potential of India's missing middle. Financial sponsors dominate the prevailing investor base in India's private markets focused on buyouts. While large buyouts may offer alluring prospects, they come with fierce competition, leaving little room for genuine winners. Instead, we seek out opportunities where cash-generating potential and transparent cash flow visibility converge through robust corporate governance and rapid digitisation. India's transformation and growth present a vast and largely untapped opportunity set in this context. India hosts myriad businesses generating revenues ranging from $1 million to $20 million, boasting impressive EBITDA margins that often reach the mid-teens to low thirties. These niche players thrive in industries like ITes, B2B databases, analytics & testing, financial software providers, online classifieds, wealth management, staffing, cold storage, telematics, and software distribution. Leveraging India's consumption boom and its reputation as a skilled workforce supplier, these B2B2C and service businesses hold tremendous potential for growth. Enter "India's Missing Middle," a realm where acquisitive platforms can take the stage. These platforms aim to acquire, enhance, and integrate these businesses, unlocking value for all stakeholders involved. While these companies boast healthy EBITDA margins, they often suffer from unoptimised balance sheets and cost inefficiencies. However, their ability to transform revenues into free cash flows makes them an alluring target for astute investors. From the point of view of exits and secondary market liquidity, Indian equity markets typically witness IPOs on the main board starting from approximately $40 million in revenues. Additionally, as larger PE funds and sovereigns prowl the landscape for high-quality deals, now is the opportune moment to sow the seeds of these platforms. Investing in India's missing middle today promises an awe-inspiring future when it comes time to reap the rewards. In conclusion, the allure of chasing hot trends and glamorous ventures often blinds investors to the genuine gems hidden in plain sight. Warren Buffett's pragmatic philosophy reminds us that the true treasures lie in simplicity and neglected opportunities. By focusing on creating acquisitive platforms that capitalise on India's missing middle, we can unlock the full potential of the country's private markets and pave the way for groundbreaking success. India's growth story is just beginning, and those who choose to embrace this transformation stand to reap epic rewards in the not-too-distant future.


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