Edition #7. Three of the world’s largest technology companies – Microsoft, Amazon and Google – have committed investments worth close to $70 billion in India focused on AI. The gold rush is well and truly on.
This week, Microsoft and Amazon announced plans to deploy $17.5 billion and $35 billion respectively over the next 4-5 years.
The two will pump money into building new data centers, beefing up infrastructure and expanding AI capabilities, among others.
In October, Google unveiled a five-year, $15 billion investment outlay to establish a multi-gigawatt AI campus at Visakhapatnam in Andhra Pradesh.
And, last month, private equity major TPG committed $1 billion to Tata Consultancy Services’ bid to build gigawatt-scale AI data centres in the country.
Most private capital investment activity focused on AI in India has so far been concentrated on the venture side. With TPG stepping into the ring and the investment outlays announced by global technology majors, infrastructure build-outs spell new and potentially lucrative investment frontiers for private equity. India’s data centre capacity, currently at about 1.5 GW, is projected to touch 10 GW by 2030.
Deep Tech Rising
Staying on AI and deep tech, IIT Bombay has decided that it wants a piece of the action.
It has launched IIT Y-Point Venture Capital Fund to back deeptech startups emerging from its own campus and other academics and research institutes in the country. The fund, which will operate under the aegis of its on-campus incubator Society for Innovation & Entrepreneurship (SINE IIT), will have a Rs 250 crore ($27.5 million) corpus and aims to build a portfolio of 25-30 startups, investing about Rs 15 crore in each.
More early stage capital is headed deeptech’s way. IAN Group has completed fundraising for its second IAN Alpha Fund at $100 million. Deeptech forms the core of the investment thesis for the fund and it has already made a dozen-odd investments in spacetech and semiconductors, among other segments. In September, it invested in drone startup EndureAir and the following month it backed semiconductor startup Morphing Machines.
But Consumer is Still the Crowd Favourite
JSW Group scion Parth Jindal has put his weight behind Centre Court Capital, a venture capital firm focused on sports-tech and gaming. Anchored by Jindal, the fund has raised Rs 410 crore from a bunch of domestic institutional investors, including SIDBI, local family offices, sportspersons and entrepreneurs. It will invest in sports, fitness, wellness and social gaming at the seed and Series A stages and is targeting a portfolio of 15-18 companies.
“Recent industry estimates value India’s broader sports economy at about $19 billion today, expected to reach nearly $40 billion by 2030,” Mustafa Ghouse, the firm’s founder and general partner said in a statement. Ghouse was formerly CEO of JSW Sports.
The firm has already started making investments. The portfolio includes Airoclip, which is using AI to build personalised casual puzzle games; sports broadcasting technology company Quidich; and sports infrastructure development company Michezo.
Is the Avendus Sale Finally in the Bag?
Back to the private equity side of the shop, separate reports suggest that the year-long campaign to find a buyer for Avendus Capital is close to the finish line. Mint reports, citing anonymous sources, that Avendus founder Ranu Vohra has struck an agreement with existing investor KKR to sell his 6-7% stake in a deal that values the firm at Rs 11,500 crore. If the deal is through, it clears the path for Avendus’ sale, which has gone back and forth over valuation misalignments.
The prime contender for snapping up the Mumbai-based investment bank is Japan’s Mizuho, according to reports. Private equity firm KKR owns a 60-63% stake while Gaja Capital, other investors, employees and the founders hold the rest. Avendus was founded in 1999 by Vohra, Gaurav Deepak and Kaushal Aggarwal. Moneycontrol reports that KKR has agreed to sell all of its stake at a valuation of Rs 6,000 crore.
The sale, when it goes through, would be among the largest private equity exits from the financial services sector, which has traditionally been a money-spinner for the asset class.
Quickly, before we go
Startup IPOs are all the rage this year and Meesho’s blockbuster debut this week has everyone in venture capital grinning from ear-to-ear. But, it’s also good to keep your ear to the ground. Z47’s Avnish Bajaj has a couple of well timed takeaways.
“In any IPO, you’re selling 10-15%... and it is treated like an exit event. We forget that it is actually an investment event…” he says in a series of LinkedIn posts.
That’s a wrap for this week. We’ll be back next Saturday.
Have a good week ahead.
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