IPOs likely in fintech sector, M&As yet to see traction: Elevation Capital

livemint.com:

Paytm, Acko, Swiggy and Mintifi, is increasing its focus on the sector." In an interview, Elevation Capital partner Mridul Arora spoke about his fintech portfolio and upcoming IPOs, besides sharing Elevation’s overall fintech investment strategy. Edited excerpts: We are kind of done for this year. As a focused investor, we do usually 2-3 investments across sectors in a year, but it’s not a hard cap.

Historically, we have deployed $2 billion in India. Of that, one-fourth or even more is fintech or financial services only. And I think that proportion will only increase.

Also, we are not taking a sector approach and have laid out 10 themes. Horizontal platforms have done great so far, but now, vertical platforms will be a focus area. Second bet is the affluent market and third is infra.

Today, Indians are getting richer, they are going more digital and plumbing is getting better with account aggregator, KYC and more. I think the time is right. I think everyone’s getting ready.

All of this follows a cycle. so, obviously after 2021, it has been slow. But what companies have been doing meanwhile is becoming more efficient.

One thing is very clear, the Indian capital markets value growth, but they also disproportionately value being profitable. You take a ballpark guess on how many companies in India, tech companies in India are close to being profitable or will become profitable? And our guess tells us, there are at least 25-30 across the ecosystem. My personal bet would be that in the next 3-5 years, at least 25-30 companies will get listed.

And most of them will be profitable. Do you see any M&A likely among your portfolio companies as many compete? We are not exploring any. In a lending company, I find M&As will be hard.