Investing

Prosperity

The flow of global investment capital is set to shift as the major trading blocs of America, Europe, and China are joined by India as an economic and trading power adding 1.3 billion people as consumers and so shifting the balance of power back to democracy, ushering in a new world order

At the core of the global changes that are disrupting and redefining the world’s politics, economics and societies are five fundamental themes centred on people - financial, digital, healthcare, education and work place inclusion - and these are the drivers of India’s growth too and form the basis of our investment thesis


  • 600m Indians have gotten access to the internet over the last decade, with nearly half of these over the last five years, as the country has rapidly built out its 3G/4G networks, and low-cost smartphones have proliferated
  • Internet access is transforming India with new delivery models for all types of services (education, healthcare, retail) and access to information for people at the bottom of the income pyramid allows them to succeed as consumers, employees and entrepreneurs
  • In spite c.6.5x growth in India’s internet user base over the last decade, internet penetration in India is still only c.50% compared to c.60% in China and c.80% in the US, indicating significant further potential

  • The size of India’s education sector is expected to increase by c.2x to US$180bn by 2020, driven by growth in India’s “young population” (ages 6-17) and the increasing adoption of digital learning
  • Despite this growth, there are significant gaps in India’s education infrastructure; there are 3-5x more primary schools than secondary schools in the country, there is a shortage of c.1.5m trained teachers and the country’s average student-teacher ratio of 42 is one of the highest amongst emerging market economies
  • As such, there is significant potential to transform India’s education and skills development capabilities, with a combination of physical and digital infrastructure required to deliver higher quality education in the country

  • 355mn new bank accounts opened in India with c.US$14bn of deposits, since Aug-2014 under the financial inclusion campaign initiated by the Government of India resulting in increase in Indians having bank accounts from 35% to 80%
  • This has resulted in an increase in credit access in rural India, improved efficiency in India’s welfare distribution system and a reduced reliance on the cash economy
  • This increase in bank accounts notwithstanding, c.20% of the Indian population still does not have access to a bank account; additionally, of the new bank accounts opened in the last 5 years, 15% are “zero balance” accounts

  • India’s healthcare market is one of the fastest growing in the world (forecast to grow by c.US$372bn by 2022), driven by rising disposable income levels, greater healthcare awareness and an increase in lifestyle-related diseases
  • Additionally, government expenditure on healthcare is expected to increase from c.2% of GDP today to c.7.5% of GDP by 2030, in line with the healthcare spends of other emerging market economies
  • However, despite these growth drivers, there are sizeable gaps that need to be filled across India’s healthcare sector, particularly across areas like doctor availability (0.7 doctors per 1,000 people), hospital beds (1.3 beds per 1,000 people) and health insurance coverage (c.85% of India’s population lacks health insurance)

  • India’s current labour force of c.500m is greater than the combined forces of Japan, the European Union and the United States; further India’s working age population is expected to cross 1bn and surpass China in the next 10 years
  • This demographic dividend has the potential to fundamentally reshape India’s position in the world, creating a global leader across a wide range of sectors that will benefit from a young, growing and most importantly, well-trained labour force
  • However, women’s labour force participation remains extremely low, and a large portion of India’s c.500m labour force is severely under-employed in either the agriculture or ‘unorganised’ sectors

GPC adopts a distinctive approach to investing in India based on creating market leaders, which, at this stage in India’s development, recognises the role of globalisation of Indian businesses and helping these businesses penetrate international markets as well as bringing international business to India


GPC has a built a proprietary thematic research capability generating Indian, cross-border and international investment themes. This research has been effectively used to drive origination and deal flow for the Fund. Key investment themes developed so far include: Mass Inclusion; Digital Leapfrog; the Rise of the Indian Multinational; the Industrial and Infrastructure Revolution; a parallel Agricultural Revolution and Changing Demographics and Consumers

 

GPC invests primarily in healthcare, technology and services recognising that India needs international grade companies to emerge and foreign participation to drive mass market participation

Mass healthcare provision

  • Current Gap: India’s ratio of 0.7 doctors per 1,000 people that is significantly lower than the WHO average of 2.5 doctors
  • Future Trend Indicator: India’s healthcare sector is expected to grow to at a 16% CAGR to US$280bn by 2020

Mass technology & digital participation

  • Current Gap: Indian Internet penetration at c.27% compared to 51% in China and 88% in the US in 2015
  • Future Trend Indicator: Internet usage is growing at c.40% in India, compared to global growth of c.10%

Financial inclusion

  • Current Gap: 19% of the Indian population does not have access to a bank account
  • Future Trend Indicator: 255m new bank accounts opened in India with c.US$11bn of deposits, since Aug-2014

Mass education & skills development

  • Current Gap: Only 8.2% of Indians are graduates with illiterates being six times more than graduates
  • Future Trend Indicator: Size of India’s education sector expected to double to US$180bn by 2020

Workforce inclusion

  • Current Gap: c.91% of India’s workforce is part of the unorganised sector
  • Future Trend Indicator: At least 280m more people will enter India’s job market by 2050

The fund selects technology, healthcare and services, particularly financial, as meeting its criteria in terms of growth, profits, internationalisation scope and governance, Given, Indian companies have far lower cost structures, which, in the Fund’s target sectors, GPC estimates are 30-50% lower than in the U.S., this creates an opportunity for the Fund to partner with local companies which are looking to internationalise and in particular diversify and grow into more profitable developed markets

 

GPC’s International Approach to India

 

GPC investments help create companies with international revenues and a low cost structure utilising India’s advantages and leverage international know-how to help them succeed in the domestic markets too


Creates highly successful international businesses that operate in the most attractive international markets leveraging India’s cost structure advantage and providing access to India too

Creates market leaders in India by taking high potential quality Indian companies into the most attractive international markets and bringing them international partners

As part of its investment process, GPC develops a “value blueprint” for each company, which encompasses multiple initiatives in which GPC will participate. The initiatives are selected according to Portfolio Company business needs, their impact on value and GPC’s value addition skill set. GPC executes these initiatives in partnership with the the leadership teams of its portfolio companies, and the team has a demonstrable track record of working with senior management teams and business owners, to unlock value and reposition companies for growth