Despite the significant appreciation of the Nifty Smallcap 250 Total Return Index, many small-cap mutual fund schemes have underperformed, with 77% failing to beat the benchmark index over the past year.
While the index gained 57.8%, small-cap funds yielded an average return of 45%. Similarly, over a three-year period, 51% of schemes trailed the benchmark, with returns averaging 25.8% compared to the index’s 27.2% gain.
Global PE firms and PE-backed entities are increasingly interested in acquiring Indian IT and software services companies, driven by a surge in growth capital investments within the sector.
The number of PE firms holding majority stakes in Indian IT services companies has doubled between 2019 and 2022, reaching over 50, with inbound deals from global investors rising by 35% in 2023.
Major acquisitions in 2023 include HIG Capital-backed 3Pillar Global’s acquisition of Chenoa and Tailwind Capital-funded Onix’s purchase of Datamatica.
Sameer Brij Verma, managing director at Nexus Venture Partners, plans to leave the firm and launch his own investment fund focusing on multi-sector, multistage investments, including public markets.
During his 13-year tenure at Nexus, he invested in startups like Postman, Unacademy, and Infra.market. His new venture aims to emulate global crossover funds, hiring executives to assist portfolio firms in preparation for IPOs, with initial check sizes ranging from $4-5 million. The fund is expected to be around $150-200 million, with him as the solo general partner.
Ultrahuman raised $35 million in its Series B round from investors including Blume Ventures, Steadview Capital, and Deepinder Goyal. The funding, consisting of $25 million in equity and $10 million in debt, will be used to boost manufacturing capacity and advance health tracking research.
Despite revenue growth from Rs 2 crore to Rs 24 crore between FY21 and FY23, Ultrahuman saw losses rise from Rs 3 crore to Rs 57 crore during the same period. Mohit Kumar (CEO) aims to increase EBITDA margin to 10-15 percent in six months. The company operates in 150 retail outlets and equally relies on retail, D2C, e-commerce, and B2B channels for sales.
Norway’s Government Pension Fund Global, the world’s largest sovereign wealth fund, increased its India investments to 2.2% of its total equity portfolio in 2023, amounting to about $22 billion, as Indian equities surged.
This rise occurred amid a year of net purchases exceeding $20 billion and a 20.1% increase in India’s benchmark index.
The fund’s top Indian holdings include ICICI Bank and Infosys, with technology stocks being the best performers. Despite geopolitical turmoil, the fund’s equity portfolio returned 21.3% in 2023. With India’s market cap ranking fifth globally and expected growth, its weight in global indices may increase, making it a significant market for large global investors
India’s top 1% holds 22.6% of income and 40.1% of wealth, reaching historical highs in 2022-23, surpassing even developed economies like the US, according to a World Inequality Lab paper titled “Billionaire Raj”. The report highlights a rise in inequality since the early 2000s, attributed partly to a regressive tax system.
It suggests restructuring the tax code and making broad public investments in health, education, and nutrition to address this imbalance. A proposed “super tax” on the wealthiest families could yield significant revenue and mitigate inequality.
The top 10% now holds 60% of income, while the bottom 50% owns only 15% of wealth, emphasizing stark wealth disparities in India.
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