I Knew You Were Trouble (For Competitors): The Curious Case of Monopolies

Four weeks back and some 3,500 miles away from the bustling bazaars of India, a different kind of economic boom erupted. Not in the heart of Wall Street, but within the pulsating omphalos of Singapore’s National Stadium. Here, the hottest ticket in town wasn’t a distressed asset or a gleaming infrastructure project.

Surprisingly enough, it was a front-row seat to a phenomenon experts are calling “Swiftonomics” – a story of fiscal success that wouldn’t be told in dusty economic reports, but in the electrifying world of pop music and the roar of a million millennial fans.

Yes, you read that right. We’re talking about Taylor Swift, the billionaire queen of turning her life into lyrics and also, it seems, of economic booms. Singapore, the lucky sole Southeast Asian stop on her “Eras Tour,” witnessed a windfall estimated at a cool US$260 million to US$375 million. Tourist arrivals skyrocketed, businesses boomed, and Singapore’s GDP did “All Too Well” – thanks to the power of pop music.

But the story of Singapore’s tourism success is not just a lucky chance – It’s a masterclass in strategic investment.

News outlet CNA estimates that it is likely to have cost Singapore between US$2-$3 million to secure exclusive rights for all of Swift’s six shows, much to the chagrin of its neighbors (who, contrary to Singapore’s claims, believe it is as high as US$3 million per show).1 By monopolizing Taylor Swift’s record-breaking “Eras Tour”, the Lion City transformed into Swift City – a mecca of millennial meltdowns (and, more importantly, a magnet for tourist dollars). The country’s “Swiftonomics” is a masterstroke in leveraging exclusivity to generate significant economic benefits.

Singapore’s “winner-picking” prowess resonates deeply with the evolving strategy of Indian private markets. The focus now lies in identifying future market leaders with the potential to dominate their niches, a.k.a Monopolies. India is home to many industry-dominating startups such as Lenskart, Blusmart, and more.

One such company that underwent the journey from a startup to becoming listed is Computer Age Management Services (CAMS). Founded in 1986, CAMS foresaw the potential of online investment platforms and built a robust digital infrastructure. This foresight, coupled with strategic investments by private equity firms like Advent International and Warburg Pincus, positioned CAMS to capitalize on India’s burgeoning investment industry. Today, CAMS, a public company, enjoys a near-monopoly in the transfer agency business for listed and unlisted investments, processing over 90% of all transactions. Investors who identified CAMS’ potential early have reaped significant rewards, proving the “monopoly play” can be a real chart-topper.

But here’s the real kicker: the CAMS story isn’t just an isolated anecdote. Other near-monopolies such as InterGlobe Aviation and Balkrishna Industries have also been empowered by the PE-VC industry.

Here’s a deeper dive into CAMS’ funding history, painting a fascinating picture:

Source: Tracxn, The Hindustan Times, Business Standard

So, why the sudden fascination with these “monopoly plays”? Early investment in a future market leader translates to long-term profitability and a stream of meaty dividends – the investor’s equivalent of backstage VIP passes. Additionally, dominant players often have the ability to dictate pricing within their niche, further sweetening the deal. Finally, as these companies mature, they target potential rival companies for mergers and acquisitions, offering investors the opportunity to have lucrative cash payouts.

However, replicating the “Swiftian Singularity” (yes, we’re coining that term!) requires more than just blind faith in the next big thing. Not all potential monopolies are created equal. Investors need to be discerning talent judges, focusing on companies with strong competitive moats – think innovative technology, powerful network effects, or formidable regulatory advantages. Additionally, a healthy balance between risk and reward is essential. Early-stage investments offer the potential for chart-topping returns but also come with a dose of uncertainty. Diversification is key. Finally, building a market empire takes time. Investors need to be prepared for a long-term hold, a commitment akin to waiting in line for concert tickets in the pre-digital era (remember those?)

But here’s the real mic drop: This isn’t just about replicating Singapore’s “Swiftonomics.” It’s about composing a new economic anthem for India, one where savvy investors become the star producers, future market leaders belt out billion-dollar choruses, and the entire nation enjoys the economic encore. Indian private markets and their investors are ready to calibrate their strategies, one “winner-picking” approach at a time.

So, grab your metaphorical backstage passes, folks, because this performance is just getting started!

Frequently Asked Questions