India has largely been on the sidelines of the global artificial intelligence (AI) investment boom, with the US, China and Taiwan commanding greater attention. The market narrative suggests India could benefit if the AI trade loses steam elsewhere. Yet, private equity (PE) investors appear to see an opportunity in India's AI ecosystem, even as public-market investors have few sizeable listed companies through which to play the theme.
In its 19 October report, investment bank Goldman Sachs estimated that prospective initial public offerings (IPOs) over the next 2-5 years could add $50-$100 billion in incremental market capitalization to India's listed AI complex.
Does the growing interest of private equity investors in Indian AI companies suggest that equity market investors are underestimating India's role in the global AI value chain?
“It’s not about ‘underestimating’, but availability of paper,” said Somnath Mukherjee, managing partner and chief investment officer, ASK Wealth Advisors.
There aren't many AI companies listed in India today, leaving equity market investors with few options to invest in the theme. The stocks that offer exposure to AI are also few in number, and most are too small to support investments at scale, he explained.