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A fund co-run by the banking arm of Sumitomo Mitsui Financial Group Inc. plans to pour the bulk of the $200 million it has raised into Indian startups, betting that the country’s booming IPO market will create opportunities to cash out. Initial public offerings in the country have exceeded $16 billion so far this year, as soaring demand from small investors adds to a wave of buying by insurers and local mutual funds. That is raising the prospect of more venture capital and private equity funds using the stock market as a venue for exits or stake reductions.
“The ability for these companies to tap into public markets upon maturity creates a valuable liquidity event for potential investors,” said Rajeev Ranka, a partner at the SMBC Asia Rising Fund.
Since its launch around two years ago, the fund has committed $100 million to a dozen startups in India and Southeast Asia, including Vayana Pvt, Modifi and M2P Solutions Pvt. A few more investments are being finalized, said Ranka.
SMBC expects to invest the entire fund by the second half of 2026, with about a quarter of the capital targeted at startups in Singapore, Indonesia, and Vietnam.
Several factors stand out in India’s fintech ecosystem, with the level of innovation and scalability unparalleled among Asian countries, he said.
The latest investment strategy reinforces SMBC’s increased focus on India, following the Japanese giant’s recent $1.58 billion purchase of a 20 per cent stake in local lender Yes Bank Ltd.
The SMBC Asia Rising Fund, co-run with Japan’s Incubate Fund, acquires stakes in companies with a typical holding period of five to six years. It aims to generate an internal rate of return in the double digits.
