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    9984   JP3436100006

SOFTBANK GROUP CORP.

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India equity deals set to pick up pace as investors hunt post-pandemic bets

07/29/2021 | 11:25pm EDT
FILE PHOTO: Bombay Stock Exchange (BSE) in Mumbai

HONG KONG (Reuters) - Cash-laden investors are set to step up the hunt for Indian firms, mainly tech start-ups, likely to benefit in the post-pandemic world, after pumping in a record $30 billion via public and private equity deals this year, bankers and analysts said.

Eyeing India's large middle class with access to cheap smartphones and the internet, global investors have flocked to online platforms in the country and helped swell the ranks of unicorns, or start-ups valued at $1 billion or above.

In addition, a regulatory clampdown by China on its technology firms is spurring some foreign investors to turn to the world's second-most populous nation instead, analysts said.

The fundraising boom in India by companies, ranging from an e-commerce platform to a food delivery app operator, comes even as country's economic rebound, already weakened in recent months, faces risk from coronavirus variants.

In private equity capital deals, which include placements and pre-IPO funding rounds, $22 billion has been raised so far this year, according to Pitchbook data, putting India on track to exceed 2020's record of $37 billion.

Of the amount raised in 2021, foreigners invested $13.21 billion in the first half of this year - the most ever - compared with $4.99 billion in the same period last year, separate Refinitiv data showed.

In addition to that, there was $5.4 billion raised via 43 initial public offerings (IPOs) year to date, making it the busiest period ever, the Refinitiv data showed, up sharply from $1.24 billion during the same time last year.

IPO growth in India was about double the rate of growth in Asia, including Japan, in the first half, according to Refinitiv data, which show that $71.6 billion was raised in Asia, up from $31.08 billion in the period a year earlier.

Big ticket public offerings in the pipeline for the rest of the year include an up to $2.2-billion float by Indian digital payments firm Paytm, which counts China's fintech giant Ant Group and Japan's SoftBank among its backers.

"COVID has accelerated the existing trend towards digital consumerism, be that in food delivery, ecommerce or retail," said Gaurav Maria, JPMorgan's head of private capital markets in Asia Pacific.

"That trend in consumer behaviour is unlikely to reverse, which is why you're seeing tech-driven businesses coming to the fore ... Investors are looking to the long-term and are focused on whether these businesses are fundamentally sound."

BILLION DOLLAR DEALS

The near-term IPO pipeline is set to get a boost from Indian food delivery firm Zomato Ltd's blockbuster market debut last week. The stock surged nearly 66% after the company raised $1.3 billion in an IPO.

Rival Swiggy this month completed a $1.3 billion fund raising which attracted Soft Bank Vision Fund II and technology investor Prosus. The company had raised $800 million in April.

Walmart Inc-owned Flipkart also earlier this month raised $3.6 billion in its latest funding round, doubling the Indian online retailer's valuation to $37.6 billion in less than three years, ahead of its expected market debut.

"This is a growing economy where the local market and businesses across sectors will grow faster than pretty much anywhere in the world," said Devarajan Nambakam, a managing director at Goldman Sachs in India.

JPMorgan's Maria said the level of foreign investor interest had increased as larger deals become available in the country.

"There used to be very few situations where you would see a billion dollar fundraise ... We are (now) seeing a greater enthusiasm from investors looking at private companies in India as the capital markets mature," Maria said.

Bank of America equities analysts last week said Australian and Indian tech firms were well positioned to benefit from a weakening China tech sector after Beijing's sweeping regulatory crackdown on its behemoths for antitrust and other violations.

"The Indian market is much more open to foreign investors," said London-based Kiran Nandra, head of emerging equities management at Pictet Asset Management, which invested in the Zomato IPO.

"There are a number of non-Indian companies that own tranches of Indian companies, so the ecosystem is a lot more diverse. It's good for competition."

(This story corrects the last name of Pictet executive in paragraph 19 to Nandra, not Andra)

(Reporting by Scott Murdoch in Hong Kong, additional reporting by Gaurav Dogra and Nallur Sethuraman in Bengalaru; Editing by Sumeet Chatterjee and Sonali Paul)

By Scott Murdoch


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
BANK OF AMERICA CORPORATION 0.75% 40.38 Delayed Quote.33.42%
PROSUS N.V. 0.68% 69.63 Real-time Quote.-21.64%
SOFTBANK GROUP CORP. -5.78% 6634 End-of-day quote.-17.67%
UNITED PARCEL SERVICE INC -0.53% 192.425 Delayed Quote.14.21%
WALMART INC. -0.43% 143.98 Delayed Quote.-0.15%
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Analyst Recommendations on SOFTBANK GROUP CORP.
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Financials
Sales 2022 6 040 B 55 069 M 55 069 M
Net income 2022 1 310 B 11 942 M 11 942 M
Net Debt 2022 14 983 B 137 B 137 B
P/E ratio 2022 9,11x
Yield 2022 0,66%
Capitalization 11 207 B 102 B 102 B
EV / Sales 2022 4,34x
EV / Sales 2023 4,11x
Nbr of Employees 58 786
Free-Float 69,3%
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SoftBank Group Corp. Technical Analysis Chart | 9984 | JP3436100006 | MarketScreener
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Mean consensus BUY
Number of Analysts 15
Last Close Price 6 634,00 JPY
Average target price 10 507,87 JPY
Spread / Average Target 58,4%
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Managers and Directors
Masayoshi Son Chairman & Executive President
Yoshimitsu Goto CFO, Director & Senior Managing Executive Officer
Raul Marcelo Claure Chief Operating Officer & Executive Vice President
Tim Mackey Chief Legal Officer & Group Compliance Officer
Masami Iijima Independent Outside Director
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