Series 49 – Navigating the 2024 Economic Terrain: India’s Bright Spot

This week, we are sending you an article that displays India as Bright spot and analysis that provides a nuanced view of India’s economic and investment landscape, emphasizing the potential for 2024 to be a favourable vintage year for the private market. The cautious approach of foreign investors and the delayed influx of foreign capital present opportunities and challenges that will shape the trajectory of the Indian private market in the coming years.

The article highlights the below –

Our Economic Landscape:

1. Comparative Analysis with BRICS Nations: India’s unique trajectory is highlighted, with a sustained commitment to policies supporting entrepreneurialism, leading to a higher Economic Freedom of the World Index (EFWI) score compared to other BRICS nations.
2. Infrastructure Investments: Significant investments in roads, airports, and digital infrastructure emphasize the role of infrastructure development in fostering an improved entrepreneurial environment.
3. EFWI Score: India’s EFWI score surpassing other BRICS nations indicates a commitment to economic freedom, including property rights, sound money, and the rule of law.The positive economic outlook is attributed to sustained policy measures, infrastructure investments, and a focus on fostering entrepreneurialism and innovation.

Private Market Analysis:

1. Vintage Year Performance and Indications for 2024 as a Favorable Vintage Year:

1. • Private market investments are evaluated based on the vintage year of the fund, considering market conditions during entry, value creation, and exit stages.

A favorable vintage year is characterized by moderate valuations, lack of FOMO during entry, and the prospect of a buoyant exit market in the future.

1. • Various indicators, such as moderating valuations, increased down-rounds, and declining valuations among Indian unicorns, suggest that 2024 may be a favorable vintage year.

Despite substantial dry powder in funds, fundraising has slowed, reducing pricing pressures and FOMO.

2. Composition of Capital in Indian Rounds:

2. • Rupee capital plays a significant role in pre-seed and seed rounds in India, while foreign capital becomes the majority in later rounds.

The influence of foreign investors can impact capital availability and valuations in later stages of funding.

3. Influence of Foreign Capital Influx:

3. • While a positive market outlook for India in 2024 raises expectations for increased foreign capital, the analysis suggests that the influx may not happen in the near term.

This creates an opportunity for domestic investors to capitalize on market conditions.

4. LP Sentiment Towards India:

4. • Surveys indicate a positive view of India for portfolio allocation among market analysts, but VC/PE professionals may not share the same level of optimism.

5. Expectations for the US Market:

5. • Expectations of more down-rounds in existing US VC portfolios, but a majority believes 2023 will be a good vintage year, with even more optimism for 2024.

Opportunities for Investors:

1. Opportunity for Domestic Investors:

1. • Cautious foreign investors and a delayed influx of foreign capital create an opportunity for domestic investors to potentially benefit from market conditions.

2. Market Dynamics:

2. • The performance of 2024 as a vintage year remains contingent on various factors influencing market dynamics.

The complete article can be viewed in the below link-

Navigating the 2024 Economic Terrain: India’s Bright Spot – OISTER (oisterglobal.com)

 

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