Ascent Capital is a India-focused independent private equity firm that currently manage $600 million across multiple funds. Over the past 15 years, it has worked across diverse sectors such as technology, ecommerce, healthcare, financial services etc. In e-commerce and technology, it has investments in e-tail major Big Basket.com and Vizury, a firm helping marketers secure customers-for-life through personalised marketing solutions. In an interaction with Gireesh Babu, Raja Kumar, founder and CEO of Ascent Capital Advisors, and former Commissioner of Income Tax and ex-Regional Director of Securities and Exchange Board of India (Sebi), speaks about the e-commerce boom and the company's future plans. Edited excerpts:
What are your views on the e-commerce sector and the valuations?
The e-commerce moment is real. Today the internet penetration is 15%, the moment it touches 25%, that will be an important moment for Indian e-commerce. We are expecting about 8-10 times growth in online users, especially online customers who will actually buy and sell through the internet.
India has 50% population below 30 years and they are easily adopting technology and using smartphones. Smartphone costs are coming down and internet access is improving. China is a comparable example. It is very safe and fair to assume that Indian e-commerce is a real opportunity. This kind of rapid growth of 8-10 times in the next five years is a very steep growth.
Given the kind of dynamics, investors are grabbing the opportunity. They are coming in and paying high valuations for high growth. They are also buying companies for market share. It is not completely irrational or illogical. They have their own basis, own homework and math, why they are paying such valuations and getting into Indian e-commerce.
Whether it is sustainable or not? Yes and no. It may undergo fluctuations, but the opportunity is real.
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What will happen if it goes the way the internet boom went in 1999-2000?
Whether it will be like the tech bubble that happened in 1999-2000, whether that kind of correction is going to be there is the question. I think it may not be. There is some substance here and real transactions are happening and goods and services are really being handed over. They are not simply thin business models like the dot com era. That is why I said that the valuations may fluctuate, but the opportunity is real.
How do you see net neutrality in the e-commerce context? What is your opinion on it?
I think ultimately every e-commerce company will honour net neutrality, because that is fair and equitable. So ultimately every e-commerce company will value net neutrality, that is logical to expect.
What are the plans of Ascent Capital this fiscal year?
We are still investing from Fund III, which is an India focused fund of $350 million. We have some more investments to make. We will be investing in at least another four to five companies.
What are the plans for the next fund?
Nothing concrete as of now. We will be raising capital globally, but investing mostly in Indian opportunities. We are not ready to say anything on the size of the fund.
The focus will on same things. There are growth sectors like healthcare, pharmaceuticals, financial services, brands, technology and e-commerce. We have expertise in certain sectors and we are identifying opportunities in these sectors.