Softbank, Saudi’s wealth fund PIF sketch India playbook
NEWDELHI: Saudi Arabia’s sovereign wealth fund, Public Investment Fund (PIF) of Saudi Arabia, has put in $45 billion into Softbank’s $100 billion Vision Fund, which, in turn, has already invested $10 billion into Indian startups.
Ergo, the Saudis already have a significant interest in the Indian startup ecosystem, besides direct investments in other traditional areas.
So, when Saudi Crown Prince Mohammed bin Salman Al Saud flew into Delhi for a strategic state visit, it was almost mandatory that the two partners in the fund too demonstrate proof of their intent in India.
Putting aside reports of differences of opinion on investment valuations, PIF managing director and chief executive officer (CEO) Yasir Al-rumayyan and Rajeev Misra, CEO of Softbank Investment Advisors, met selected journalists for a brief glimpse into the playbook of the largest agglomeration of capital in the global venture capital business.
The Saudi interest is clear. It wants to tap into the vast Indian markets, not directly with products and services, but through investments in home-grown startups by way of the Vision Fund, even while it looks for other such strategic partners.
As Al-rumayyan explained, the criteria for investments is potentially double-digit returns, especially in areas that allow the country to diversify into newer revenue streams beyond its conventional holdings.
Thus, Oyo, Delhivery and Firstcry aren’t just Softbank investments, but also vehicles for the Saudis to understand the Indian market, as well as platforms for expanding into the country.
With $300 billion of assets under management, and looking to deploy an additional $100 billion, the PIF boss is keen on what he described as “one of the most promising markets” in the world.
After a flurry of investments, Softbank is now looking at creating what Misra calls “an ecosystem of tech companies”, which will feed on each other’s strengths and leverage synergies across the world. A case in point is the synergy between prized investee Oyo, a hospitality company, and work spaces sharing company Wework, for co-living spaces.
Besides, Softbank is now pushing Indian startups to get into the Saudi market as the kingdom opens up to businesses from abroad.
With $70 billion already deployed and another $30 billion in the kitty, the company is also well poised for an early entry into new ventures, especially after its successful exit from Flipkart and Nvidia, which gave the fund a return of nearly 25% in less than two years, with an average investment period of just nine months.
Come 2020, Softbank sees a flurry of exits, mostly through initial public offerings (IPO). That may be just what the moribund Indian IPO market needs to get investor interest back.