Motilal Oswal MF’s new Digital India Fund will invest in India focused digital native businesses that are growing at a multiple of the country's GDP on the back of disruptive ideas executed effectively.
The fund will not consider traditional IT services companies and will also not look at traditional businesses that are digitizing parts of their operations.
Digital native businesses include consumer facing platforms that we use everyday in the retail, food, fintech, travel and other spaces as well as disruptive B2B and B2B2C digital platforms with proven execution skills.
Varun has extensive experience in investing in digital businesses and is a thought-leader in our investment management world on new paradigms to be applied to value digital disrupters.
He believes using traditional PE based valuation metrics is inappropriate in this winner-takes-it-all market share grabbing approach of digital disrupters.
You run a significant risk of losing out on generational wealth creation opportunities, he believes, if you don’t apply the right valuation metrics for new age digital businesses.
He believes many digital businesses are significantly undervalued – their stock prices haven’t even caught up with business growth over the last 5 years – let alone bringing in re-rating considerations into the equation. There are several listed stocks in this space he says which have seen stock price appreciate 2x to 2.5x when business has grown 5x.
We’ve seen the kind of wealth creation that digital native businesses have delivered in the last decade in the US. Varun believes we will see a similar story playing out in India over the next 5-10 years, and he intends positioning this new fund to make the most of this opportunity.