India In Sight #04
Weekly updates on Indian private markets
We are Ambassador Capital Partners, an investment firm with a focus on private credit and private equity. Deeply embedded in the private markets ecosystem, ACP works with large global institutions to provide creative capital solutions for companies and asset managers.
In the spirit of making Indian private markets more accessible and transparent to global LPs and GPs, we have launched ‘India In Sight’ – consolidating and curating relevant information and insights from Indian private markets including trends, key deals, fundraises, KPIs and top tier research.
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KEY DEALS
Private Equity
Carlyle, a global PE firm, completed its full exit from Delhivery, a B2B/C2C e-commerce focused logistics company, after selling its remaining 2.5% stake for c.$90 million in a secondary sale transaction. Carlyle invested c.$100 million for c.7% stake in 2017 and has sold its stake in tranches since then. It made c.$50 million (IPO round, May 2022) and $70 million (block deal, Nov 2022) prior to the current c.$90 million stake sale. Carlyle made an overall return of c.3x MOIC and c.30% IRR (local currency). (June 22, 2023)
L Catterton, a global consumer-focused PE fund, acquired a minority stake in Drools, a pet food products maker, for c.$60 million. (June 20, 2023)
Buyout group BPEA EQT and Indian private equity firm ChrysCapital acquired a c.90% stake in HDFC Credila, an education finance company, for c$1.3 billion. (June 19, 2023)
Private Credit
Kotak Investment Advisors, Kotak Group's alternative assets arm, invested $90 million in RattanIndia Power, a power generation company, through its Kotak Strategic Situations India Fund and Kotak Private Credit Fund. The proceeds will be used to refinance its existing debt. (June 23, 2023)
Infra.Market, a B2B construction material startup, raised $150 million in convertible notes from Varde Partners, a credit-focused alternative investment firm. (June 20, 2023)
Other Credit Deals and Issuances
National Highways Authority of India (NHAI) is seeking to raise $7.5bn through securitisation of four under-construction road projects over the next three-five years.
PFC, a state-backed power company, raised c.$500m in 7.48% bonds while REC, a subsidiary of PFC, raised $375m via perpetual bonds (20% base; 80% greenshoe).
IIFCL, an infra-focused financier, is looking to raise $2bn across multiple tranches in FY2024; Reliance, a leading Indian conglomerate, is looking to raise $1.6bn from global banks (15 yr facility priced over SOFR) to fund its equipment purchase; NTPC, a state-backed thermal power company, is considering a $1.5bn fundraise via NCDs; Yes Bank, an Indian private bank, is planning to raise $300m via NCDs; Kotak Mahindra Bank, a Kotak Group owned private bank, is looking to raise $300m via a domestic bond sale (50% base; 50% greenshoe; maturity in 2030); Tata Power, a Tata Group owned power generation company, is looking to raise $200m via 10-year bonds (7.8% yield; 5-year put-call option); Shrem InvIT, an infra investment trust, will issue $125m NCDs to buy two highway projects; Go First, the Indian airline under bankruptcy, is seeking $122m in additional funds from lenders to resume operations in July.
KEY FUNDS AND FUNDRAISES
Avaana Capital, a homegrown climate-focused VC firm, completed the first close of its second climatetech fund with commitments of $70 million.
Blume Ventures, an early-stage VC firm, marked the first close of its third growth fund, raising $25 million of the $50 million target corpus.
Lumikai, a gaming and media focused VC firm, launched its second fund targeting a $50 million corpus from global investors. The fund will make investments in pre-seed to series A start-ups with an average ticket size at $500K.
National Investment & Infrastructure Fund (NIIF), a government backed fund, is in talks to raise c.$250 million for an infrastructure investment trust through a private placement.
Small Industries Development Bank of India (SIDBI), which manages c.$1.2 billion fund-of-funds for startups, is looking to disburse another c.$250 million by March 2024 as a part of its last deployment cycle.
The Investment Fund for Developing Countries (IFU), a Denmark-based government owned fund, aims to double its AUM in India over the next few years and is looking to deploy upto $350 million in India in the near term.
MARKET INSIGHTS & RESEARCH
Articles
The HDFC merger could benefit other housing finance companies, which will now be able to borrow funds at a lower cost as supply diminishes even though demand for such debt remains steady. The demand for HFC papers will increase, as the number of quality issuers and their issuance will be lower than the demand. The spread between government bond yields and HFC papers may ease to below 50 bps from the current level of over 60 bps. Read more.
The central government has set an asset monetisation target of $22.5 billion for FY2024, with a robust pipeline of brownfield assets in roads, mining, power, petroleum and ports. The public sector asset monetisation unlocked capital worth $12 billion, 110% of the annual target. Read more.
In a recent filing, SEBI re-emphasized that pledging of securities held by an Alternate Investment Fund (AIF) in the portfolio company for loans availed by such portfolio company is in violation of AIF regulations and the prescribed code of conduct. Read more.
Direct startup deals by family offices are expected to increase significantly as many family offices are expected to moat their portfolio with high-return startup bets. While the number of deals could be relatively small but the quantum may be much higher than a micro VC. Read more.
Reports
As pent up demand and acceleration of occupiers’ return to office (RTO) plans drove leasing momentums in 2022, the office sector in India witnessed a remarkable recovery from the pandemic lows. Read further insights in the CBRE India Office Occupier Survey 2023.
Read Startup Governance Playbook 2023 - a joint report by IVCA and Deloitte which is a corporate governance guide for India’s startup ecosystem with insights from founders, investors and industry experts.
As per India’s Startup Investor Landscape Report 2023 by Inc42, there are 2.5K+ active PE/VC firms and 5K+ active angel investors in India. The number of tech startups is expected to reach 180K by 2030 with 22K+ startup investors. Read more.
ICYMI
PM Narendra Modi’s US visit might lead to economic spin offs and deals worth over $6 billion and other intangible gains.
SEBI barred IIFL Securities from onboarding any new clients for 2 years for violating the code of conduct regulations for stock brokers.
Many global firms are looking to make significant investments in India in the near future.
Amazon to invest $15bn more in India by 2030.
Google to set up its global fintech operation centre at GIFT City, Gujarat. The investment comes from its $10bn India Digitisation Fund. Google might also move the production for its Pixel phones to India.
Apple is looking to launch its credit card, Apple Card, in India and is currently in talks HDFC Bank for the same.
Tesla is looking to invest in India in the near term.
Boeing will make $100 million investment in infrastructure and programs to train pilots in India.
KEY INDICATORS
The Reserve Bank of India released its latest monthly bulletin this week. As per the report, higher retail inflation in India is slowing down personal consumption expenditure, which in turn is leading to a moderation of corporate sales and holding back private investment in capacity creation. The central bank continues to highlight the need to monitor inflation closely.
Below is a quick snapshot of the services sector performance from the report.
WEEKLY MARKET UPDATE (w/c June 19, 2023)
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