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"India's Private Companies Everywhere, But Not A Deal In Sight: The $10 Trillion Dilemma!"

Photo of Money in India's Private Market

By AltG Research On Behalf Of Poornima Vardhan And Taponeel Mukherjee

As our team wrote today's newsletter, our analyst ran an online news search on "India's Private Markets". The top 3 search results given below are a perfect mix to discuss the enormous opportunity that India's private market presents and yet the challenge in tapping into the goldmine!

  1. Why private capital in India is ready for a reset in the Economic Times

  2. India's private equity race for growth in Private Equity News

  3. Why India's PE growth is more pull than push in Private Equity International

Here's a flavour of what the articles discuss and our firm's views on the path forward:

  • "Profitless unicorns and the upcoming shakeout" - The article discusses the proliferation of loss-making and non-revenue generating unicorns that won't survive because they do not have a business model or product the consumer wants. What's baffling is when we analyse India's private markets today using AltG's APEXX Formula, we see 30,000 existing private companies with a high-quality revenue pool of more than $1 Trillion and a profit pool converging on $100 Billion. This revenue pool will be closer to $15 Trillion over the next three decades.

Takeaway: India's existing private markets are where the opportunity lies. This is a market for investors to supply capital, scale and structure via large platforms. There's A Time To Reap And A Time To Sow, Now Is The Time To Reap.

  • "It was a lot easier to do deals five years ago than it is now" - One solution suggested in the article is having a sector focus; however, we don't believe that's the solution. Private equity GPs and LPs' biggest challenge in India is that they're designed to do large ticket-size deals. "Large is the enemy of the great."

Takeaway: The fund structure is where the challenge is. The real question that needs answering is how do you tap into the next 100 companies that will be worth a Billion Dollars each in the next decade? They're worth $20-50 Million today. Unless you can structure a fund that can deploy capital across a multitude of platforms, you will struggle to allocate. We see $1 Trillion in revenues through our APEXX Formula, and the opportunities for generating exceptional risk-adjusted returns abound.

The SINGLE BIGGEST OPPORTUNITY for an India Focused Private Market strategy is to focus on building the $200-300 Million platforms to address the biggest gap in the market - 1000s of private companies with Trillion of dollars in revenue and large global investors with Billions of AUM - This is the 10X opportunity!


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