Born into a second-generation Korean family in Japan and educated in economics and computer science at UC Berkeley, Masayoshi Son has been ambitious and industrious since his youth.
As his educational background should make clear, Son was utterly fascinated by both technology and the entrepreneurial spirit. He took his education and fascination back to Japan to launch his own software distribution company where it grew rapidly before ultimately being crushed with many early tech stocks in 2000.
What would have been a devastating loss to most individuals was merely a step backwards to Son, and he turned around his fortunes by investing $20 million in Alibaba (BABA), at that time a new Chinese e-commerce company. In 2001, he formed Yahoo! BroadBand with Yahoo! Japan, which eventually acquired Japan Telecom, the then-third-largest broadband and landline provider in Japan. In 2013, he took over a majority of Sprint Nextel; currently Sprint is the fourth-largest wireless network operator in the United States.
More recently, Son has also been an active investor in India, a country with both a young population and a growing technology sector.
Benefits of Investing in India
In brief, here is my take on how a youthful population can affect the potential for economic growth of a country and, hopefully, lead to superior investment returns:
1) younger people are just at the beginning of their consumer and investor life cycle – great fuel for upward growth of consumer spending in many areas over a long period of time;
2) a younger population means lower health care and other government retirement benefits – greatly relieving pressure on national budgets;
3) younger people get married and have kids, resulting in spurt in population growth – a key part of the formula for economic growth and a sign of confidence in the future.
But I caution that having a youthful population is far from an automatic success formula. A country needs to have basic institutions in place such as rule of law and an independent judiciary, good primary education, and an open market economy.
India does lag in some of these areas but its technology opportunities make up for some of these shortcomings.
Masayoshi Son also runs a successful hedge fund, SB Management, a wholly-owned subsidiary of SoftBank, with a portfolio value of more than $15 billion, with close to half of its investments in the tech market. Some of these are well-known names such as Amazon (AMZN) and PayPal (PYPL), but SoftBank has now poured $14 billion into India after 10 years, with Son recently declaring:
“We are India’s largest foreign investor. We invested $3 billion in India this year alone. We contribute around 10% of the investment for all unicorns in India.”
Those unicorns (startups valued at over $1 billion) include Lenskart, Swiggy, Zeta, and Ola Electric.
While I can’t help you invest in these Indian startups, here are a couple of ideas to capture India’s youth and technology.
Indian Growth Stocks to Buy Now
MakeMyTrip Limited (MMYT) is a great play on India’s travel industry in a post-Covid world, as well as digital payments and marketing.
The company was founded in 2000 to initially serve the travel needs of the U.S.-based Indian community. But the company has evolved into a leading global travel company as India evolves into a digital marketplace by providing a comprehensive range of travel services. MMYT has made some smart acquisitions and strategic partnerships such as with Ctrip, China’s largest online travel group.
Another appealing Indian growth stock is Infosys Limited (INFY), which provides consulting, technology, outsourcing, and next-generation digital services to clients in North America, Europe, and around the world. In short, it is a technology consultant, helping all sorts of enterprises move deeper into the digital age. Its stock is up about 37% so far in 2021 and not once in the past 20 years has Infosys’ revenue fallen from one year to the next.
Follow Masayoshi Son to India to add some international flavor – and exposure to a young and growing population – to your portfolio.
Do you own any Indian stocks in your portfolio?