Global investors will intensify involvement in e-commerce: Deepak Gaur

Q&A with managing director, SAIF Partners India

With experience of about 12 years and a billion-dollar portfolio in India, leading private equity firm SAIF Partners plans retain its focus on consumer-facing sectors such as technology, internet and e-commerce. Deepak Gaur, managing director of SAIF Partners India, in an interview with Anusha Soni, talks about key investments in the coming year and profitability in the e-commerce segment. Edited excerpts:

In terms of investment, what are your key areas this year?
We will continue to invest in consumer-facing sectors such as technology and specialised vertical companies in e-commerce such as food, content, entertainment and finance. We are also considering investing in some payments and logistics companies. In e-commerce, we have invested in Firstcry, Zovi, PropTiger, among others.

Though e-commerce has gathered momentum in the past year, profitability remains a concern for most companies. As an investor, how do you address that?
Most of our investments in e-commerce companies are long-term investments---for five-seven years. I don't think in the coming two years, any e-commerce company is likely to be profitable. Our concern isn't immediate profitability, but how robust the growth is, how large the market is and what kind of team the company has. E-commerce holds a lot of potential, but currently, it is in an expansion stage. There are different models, but none is necessarily unprofitable. It is more specific to the demands of the category. But I believe for large vendors, marketplace is the model for India. Large players could also consider going for public listing to get real valuations and enthuse more confidence.

With a new government at the Centre and big mergers and consolidations in the e-commerce space, what is the sentiment among private equity players?
Things are looking positive and there is hope the e-commerce market will grow rapidly. People are becoming more comfortable buying online; smartphone penetration is increasing; supply chain and logistics issues are witnessing increasing innovation. The fastest growth is coming from tier-II and tier-III cities, and that is very encouraging. You will see more consolidation in e-commerce in the coming times. Existing international investors or strategic investors will intensify their involvement.

Currently, the government is considering allowing foreign direct investment (FDI) in e-commerce. How will that impact investors?
If the government decides to go ahead with FDI in e-commerce, it will invite a wide variety of investors. There will be more clarity and room for experimentation for entrepreneurs and investors to venture into different categories, as one will be able to hold inventory. It will add to the positive sentiment among investors.