Lighthouse Canton, the Singapore-based global investment firm, is set to ramp up its investments in India, Pradeep Gupta, Executive Director and Head of Investment at Lighthouse Canton, told Outlook Business during a recent interaction. The bigger bet is due to the opportunities in the public and private markets in India, Gupta said.
The company deals in the asset and wealth management space in India and has invested in multiple companies since its launch in 2020, including electric vehicle ride-hailing service BluSmart and careers platform Internshala.
“We are managing assets worth $3.2 billion globally. The target is to reach $30 billion by 2030. Given the momentum in the Indian economy, the country is going to constitute a large share of additions in our investment portfolio,” he adds.
The company’s India division is planning to reach $1bn in assets under management and assets under administration by the end of 2024.
Investment Strategy
The investment firm’s bullish bets on India come amid significant buoyancy in the public and private markets in the country. Both debt and equity segments are on the growth trajectory as India’s gross domestic product (GDP) growth numbers remain stable and upward. In the financial year ended March 31, 2024, the Indian economy grew by 8.2 per cent, Union government data shows.
Gupta says this momentum is playing out well for Lighthouse Canton in dealing with both equity and debt markets. “The venture equity fund launched in 2021 has been fully subscribed and deployed. The fundraising for the venture debt fund is also ongoing and is expected to close by the end of this financial year. We are looking to raise around Rs 750–800 crore in this fund,” he adds.
Lighthouse Canton has set up a fund management entity in Gujarat’s GIFT City—a city near capital Gandhinagar built to ease the flow of foreign capital into India.
More new funds are on the horizon. Lighthouse Canton is looking at a dedicated fund for best-performing companies that were part of its first cohort. Gupta says a key plank for the company’s investment strategy is to identify opportunities that can play a long-time role.
“We do not seek out fly-by-night opportunities. The themes which we want to play in should be aligned with the long-term India story. This is why energy, defence, artificial intelligence and precision robotics, among others, are important themes for us,” says Gupta.
The firm’s focus aligns with broader trends visible in Indian industry. A Bain & Company report says the share of traditional sectors, including manufacturing, healthcare and energy increased in the overall pool of private activity and venture capital funding. This share increased from 60 per cent in 2022 to 75 per cent in 2023.
For Lighthouse Canton, an important factor in considering sectors is how much one stands to benefit from the government’s investment boost. Gupta says the company wants to capture India’s shift to an investment-led economy.
In the last five years, the Union government has increased its capex budget nearly four times from Rs 3.1 lakh crore to Rs 11.1 lakh crore. Companies have also been bolstered by public participation in retail markets. Demat accounts in India have grown from 4 crore in April 2020 to 15.4 crore in 15.4 crore in April 2024.
Is It All Rosy ?
Despite the growth, not all is good with the valuations available in the Indian markets. Concerns have been raised about signs of irrational exuberance in a bull market. On May 31, the forward price-to-earnings ratio of Nifty50 companies was 21.4x, one of the most expensive in the world.
Gupta acknowledges that it is crucial to factor this in while preparing a long-term strategy. “Investors have to be cautious about the risk-to-reward ratio. There is no doubt that Indian markets are richly valued right now. However, there is no de-rating on the horizon as the valuations are connected to good earnings,” he says.
“There has been massive progress in the last 10 years. The pace of reforms needs to continue. It is important to ensure stability as it is important in attracting capital. We have seen participation in the Indian landscape from Qatar to South Korea in our portfolio. This will grow bigger if the Indian economy continues to perform,” he says.
Gupta’s comments come as the country awaits the formation of the new government. Prime Minister Narendra Modi is set to return once again but with a reduced majority for the ruling BJP. Experts await to see how the return to coalition era would impact the trajectory of policy making.
