George Soros, the left-progressive billionaire investor and philanthropist, has been making headlines for his critical remarks about Indian Prime Minister Narendra Modi and business tycoon Gautam Adani.
However, despite his criticisms, Soros has continued to invest in Indian startups and tech companies, including the Chennai-based software-as-a-service unicorn, Freshworks.
This apparent paradox has raised questions about the motivations behind Soros’ investments and his relationship with India’s political and business landscape. This article explores the contradictions between Soros’ public criticisms and his private investments in India, shedding light on the complex nature of his involvement in the country’s startup ecosystem.
George Soros’s investment in India?
George Soros, a prominent hedge fund investor and philanthropist, has made significant investments in Indian startups and emerging technologies.
One of his most notable investments is in Freshworks, a Chennai-based software-as-a-service (SaaS) company, which became the first Indian unicorn in this category to be listed on the Nasdaq in September 2021.
However, despite its impressive debut, Freshworks’ stock has since fallen by 68% from its peak of $50 to $15.76 as of February 17, 2023, due to a decline in the technology sector. This decline has been attributed to a broad selloff in tech stocks, as investors grow increasingly wary of high valuations and rising interest rates.
Soros Fund Management initially added Freshworks to its portfolio in the third quarter of 2021, but subsequently sold its entire stake of 27,000 shares in the following quarter when the stock began to decline. In the first quarter of 2022, the fund purchased a record 1.95 million shares of Freshworks when the stock averaged $20.34.
Despite the continued decline in the stock over the following two quarters, Soros’ fund increased its exposure by buying an additional 2.26 million shares, which is currently worth $35.68 million and represents 1.12% of the fund’s assets.
This move by Soros’ fund suggests that they view Freshworks as a long-term investment opportunity despite the short-term fluctuations in the stock price. It also highlights Soros’ continued interest in the Indian technology sector, which has been experiencing significant growth in recent years. However, the decline in Freshworks’ stock serves as a reminder of the risks associated with investing in high-growth companies, particularly in a volatile market environment.
Interestingly, Soros’ recent purchase of Freshworks shares coincides with three U.S.-based law firms – The Schall Law Firm, Scott+Scott, and Bragar Eagel & Squire – filing a lawsuit against Freshworks, alleging that the company provided false and misleading information about its business at the time of its initial public offering (IPO).
Despite revenue growth of 34% to $498 million in 2022, Freshworks’ net loss increased by 20.9% to $232 million. The company, which is based in Chennai but has a presence in California, provides business software tools in three areas: customer experience, IT services management, and sales & marketing.
George Soros’s SONG Fund
Although Soros has no direct investments in India, he has tapped into the local startup ecosystem through the SONG Investment Company (SONG Fund). This early-stage fund, which is worth $17 million, is backed by Soros Economic Development Fund, Omidyar Network, and Google, with the Centre for Emerging Market Solutions at the Indian School of Business serving as a strategic partner.
The fund was managed by Aspada, a holding company that was supported by the Soros Economic Development Fund until it was sold to the LGT Group (Liechtenstein) in September 2019 to create Lightrock. As of December 2022, Lightrock India had invested in 53 companies, with the most recent deal being Neogrowth’s ₹300 crore financing on December 15, 2022.
The fund has had 8 exits, including investments in MediBuddy, Vogo, and Lithium Urban Technologies, and has used multiple investment vehicles across different stages of investing.
Back in 2010, Soros had bought a 4% stake in the Bombay Stock Exchange from Dubai Financial Holding, owned by Sheikh Mohammed bin Rashid al-Maktoum, for $35 million (₹163 crore). However, he sold the entire stake at a loss during the IPO in 2017.
George Soros’s view on Narendra Modi
Recently, the 92-year-old has made headlines for his controversial remarks on Prime Minister Narendra Modi. He suggested that the crisis at Gautam Adani’s business empire had shaken the faith of investors in India and could lead to a democratic revival in the country.
Soros also commented that Modi would need to answer to foreign investors and the Parliament regarding the allegations against Adani.
Soros is known for being a left-progressive political donor billionaire and the founder of the Open Society Foundation (OSF). The OSF provides grants to individuals, groups, and non-governmental organizations that promote democracy and freedom of speech.
In 2020, the OSF initiated legal action by moving the Delhi High Court against the Modi government’s decision to place it under a “watch list” for supporting NGOs and associations that were not registered under the Foreign Contribution Regulation Act.
Samridhi holds a Bachelor’s degree in Economics. Her research interests lie in examining the intersection of the social sector with poverty and inequality,
Along with this she is keen in understanding the systemic and structural issues that governs growth and development with an interdisciplinary focus.