Internet stocks could be in for more pain, as more pre-IPO investors look to sell shares.
As of March 2023, private equity and venture capital firms hold around $7 billion in listed Indian internet companies, according to data compiled by Kotak Institutional Equities. Had it not been for market volatility, the amount would have been smaller, believes Kotak.
“In our view, weak market conditions coupled with large derating in some of these companies may have limited the extent of such exits,” it said in the report.
Inflow of foreign direct investment in India has shot up over the past few years and so has the outflow. Gross FDI outflows for overseas entities stood at $14 billion in H1FY23 compared to $29 billion in FY22 and $18 billion in FY21, according to a report by Kotak Institutional Equities.