$20bn wipeout means India tech darlings’ shares snapped up by Franklin Templeton

Franklin Templeton bought shares of some Indian technology startups after concerns over valuations and high interest rates recently shaved more than $20 billion off market value from five high-profile market debutants.

“We are seeing new tech companies as their valuations have been reset,” Anand Radhakrishnan, chief investment officer for equities at Franklin Templeton’s India unit, said in an interview. “More importantly, there is data available about their business model.”

Initial public offerings of Indian internet firms boomed in 2021, thanks to the pandemic-triggered easy-money policy and government efforts to boost startups. Stocks were hit last year by caution on fundamentals and governance, exacerbated by the effects of the global tech selloff amid a tightening of Federal Reserve policy.

Radhakrishnan noted that some new tech firms have begun to show signs that they can make gains backed by first-mover advantage and large market shares.

Funds managed by Franklin Templeton bought at least 3.3 million shares of e-commerce logistics provider Delhivery Ltd and more than 2 million shares of PB Fintech Ltd, operator of online insurance marketplace Policybazaar, in November, according to data compiled by Bloomberg.

The two stocks that bought as well as One 97 Communications Ltd, digital payments firm Paytm, online food delivery company Zomato Ltd and FSN E-Commerce Ventures Pvt, which owns beauty product e-retailer Nykaa, saw huge losses. Paytm was the biggest loser, with its market capitalization reduced by $12.7 billion.

“Except for Zomato, we did not participate in these IPOs, but now we see a lot more transparency, a lot more discussion with the management,” Radhakrishnan said.

The firm, whose $1.3 billion India flexi cap fund has outperformed 86% of its peers over the past three years, recognizes the disruptive nature of some of these businesses and “their medium- to long-term potential to make money”. .

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