According to Uday Kotak, Asia’s richest banker, this is the time for overseas investors to invest in Indian digital to consumer sector companies, as the economic fallout of the coronavirus pandemic makes valuations of businesses attractive.
Uday Kotak, the managing director of Kotak Mahindra Bank Ltd, believes the best time to invest in India is when things look more challenging, that’s the best time to put your money to work.
The current situation of India is very similar to the early days of China’s digital, boom, with overseas investors continuously pumping money into Indian companies in sectors from e-commerce to digital payments. As the Covid-19 pandemic pushed the South Asian nation to impose the world’s biggest lockdown in late March, the sector’s importance has only increased this year
By selling 33% of his technology venture Jio Platforms Ltd. to investors including Facebook Inc. and Google, Mukesh Ambani, who’s Asia’s richest man, raised more than $20 billion this year. Also, in the past two months, his Reliance Retail Ventures Ltd. has embarked on its own fundraising spree, mopping up $5.1 billion from private equity and sovereign wealth funds.
Uday Kotak, founder of Kotak Mahindra Bank Ltd mentioned in his conversation with David Rubenstein, the co-founder of Carlye Group Inc, the right sectors to invest in India now include e-commerce, digital, technology, consumers and pharmaceutical. The Indian health care sector is booming with stocks like Divis Labs and Dr. Reddy’s touching new heights, because of this the sector is witnessing a surge in investments. In July KKR & Co. announced it would acquire a controlling stake in J.B. Chemicals and Pharmaceuticals Ltd, on the other hand Carlyle Group purchased a 20% stake in Indian billionaire Ajay Piramal’s pharmaceutical business.
India and China are certainly going to be the best place to invest in the world outside of the U.S. over the next ten years or so- Rubenstein. Compared to India, China has attracted more capital from outside, but I do think in the next ten years that would change, and India is increasingly seen as an attractive place to invest for foreign capital.
Succession Planning
Kotak also addressed questions about succession. There are no rules as of now that cap his tenure at the Mumbai-based bank’s helm, he said, adding that the lender has measures in place for long-term succession planning. At a later stage, and “not in the near future,” he might consider a role as a non-executive director of the bank he founded and manages, Kotak said.
The Reserve Bank of India has proposed a 10-year cap for bank founders who remain as CEO or full-time director. That could mean Kotak, 61, has to step down from his current role in Kotak Mahindra Bank by as early as 2022 upon the date of implementation of the final rules.
The billionaire banker has been the CEO of the bank for 17 years. Kotak had also cut his stake to 26% from nearly 30%, settling an unprecedented court battle with the RBI earlier this year.
In the bank, “we are 26% shareholders as a family, and we are very committed to continuing as long-term owners, shareholders and value creators for all shareholders,” Kotak said.