India In Sight #08

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

• Bain Capital announced acquisition of 90% of Adani Capital and Adani Housing, the two NBFCs of the Adani Group. The transaction will buy out 100% of Adani family’s private investments in the company. Bain Capital also committed $120 million in primary capital and $50 million in NCDs. (July 23, 2023)

• Federal Bank, a Kochi-based private-sector bank, to raise $120 million from IFC, increasing IFC’s total exposure to c.$250 million in the bank. IFC previously invested $126 million in 2021. (July 19, 2023)

• o9 Solutions, an enterprise AI software firm and KKR portfolio company, raised $116 million from existing investors led by BeyondNetZero, General Atlantic’s climate-focused growth equity venture. The latest round values the company at $3.7 billion vs $2.7 billion in Jan 2022. (July 19, 2023)

• RenewBuy, an insurtech startup, raised $40 million in Series D from Dai-ichi Life, a Japanese life insurance firm. RenewBuy will deploy the fresh proceeds to expand its presence across Asian markets and improve its product stack and technology experience. (July 18, 2023)

• [Exits] The Rohatyn Group, a PE firm, sold c.12% stake in Sansera Engineering, an automotive and aerospace component maker, via secondary market transactions for c.$75 million (c.7x MOIC in 10 years). (July 20, 2023)

• [Exits] CA Media, a media focused PE fund, sold a 49% stake in Endemol Shine India, one of India’s leading production studios, to Banijay Group, an independent content creation company, for $90-100 million. (c.7x in 11 years).  (July 18, 2023)

Credit Deals and Issuances

• India Resurgence Fund (IndiaRF), a distressed and special situations fund, is in talks to acquire the API business of the Ind-Swift Labs, a pharma company, for c.$125 million. Deal not closed yet. (July 21, 2023)

• Renew Energy, a renewable energy platform listed on NASDAQ, secured credit facilities for a total of c.$7.8 billion from PFC and REC, government backed power companies, for financing its current and upcoming energy transition projects. (July 21, 2023)

• Jayaswal Neco Industries, a steel company, is in talks with special situations and private credit funds to refinance a debt of $400 million. Expected pricing at 18-20% in INR. Deal not closed yet. (July 21, 2023)

• IIFL Home Finance, a housing finance firm, secured $50 million debt capital from US Development Finance Corporation (DFC) to grow its affordable home loan operations. (July 17, 2023)

• SRF, a chemicals manufacturer, to raise $100 million in debt from IFC to expand its specialty chemicals business. (July 17, 2023)

Other Credit Deals

• State Bank of India to issue 15-year infrastructure bonds worth c.$1.2 billion; Samvardhana Motherson, an auto component player, is looking to raise c.$500 million in overseas bonds and PMI Electro Mobility, a commercial EV manufacturer, secured a $60 million debt funding line from REC.

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KEY FUNDS AND FUNDRAISES

• Welspun One Logistics Parks, a logistics focused fund, is targeting $1 billion in assets under management after raising the base corpus for its second fund to over $125 million.

• GEF Capital Partners secured $20 million from Swiss Investment Fund for Emerging Markets for its $300 million South Asia focused growth fund; Edhina Capital, a PE firm, raised c.$10 million from Self Reliant India (SRI) Fund for its c.$115 million fund.

• Ultra rich, HNIs and family offices are looking to invest in alternative investment funds focused on India’s real estate market, as new instruments unburdened by red tape and promises of higher returns seem to offer lucrative opportunities. Read more.

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MARKET INSIGHTS & RESEARCH

Articles

• PE/VC investments in Indian companies declined by c.23% to c.$27.5 billion in January-June 2023 vs 2022. However, investments (in value) were up 33% against July-Dec 2022. Read more.

• Agreements for offshore debt by companies, ECBs (External Commercial Borrowings), rose to c.$12 billion in the April-June quarter, up c.3x YoY. The latest spurt in the use of the ECB route for project financing is despite the elevated interest rates in the offshore markets. Indian firms are using c.60% of commercial borrowings to fund expansion, acquisition or investing in capital goods. Companies are now confident of investing in creating capacity even though dollar loans are far costlier now on a fully hedged basis than they were two years ago. Read more.

• Digital open networking can eliminate the intermediaries between the consumer and the service provider, while platforms act as intermediaries themselves. Will ONDC bring in the next revolution for e-commerce after UPI? Read more.

Reports

• As per Standard Chartered’s ‘India Market Outlook 2H 2023’ report, as we enter H2 2023, two competing narratives are likely to influence Indian assets. First, India’s robust domestic macro environment that remains ahead of its major peers, making a case for increasing exposure to risk assets. Second, a delayed but increasing likelihood of a recession in developed economies, a scenario that warrants trimming of risk asset exposure. What will be the outcome?

• This quick report indicates that despite the slowdown in the overall funding momentum into startups in India, VC firms are continuing to raise significant funds this year. The total VC dry powder in 2023 stands at a massive $3 billion where early-stage deals accounted for 57% of the total funding in H1.

• Consumers were the first beneficiaries of India’s rapid digitization wave and businesses are up next. ‘The emergence of B2B marketplaces in India’ report by Bessemer lays out the hypothesis for B2B marketplaces in India. What are the key opportunities here?

• Auto sector recorded 16 deals, financial services 52 deals, retail and consumer sector 72 deals and technology sector 99 deals. Explore a collection of sector specific deal activity reports in ‘Sector Dealtrackers’ by Grant Thornton for Q2 2023.

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ICYMI

• Japan is looking to invest over $35 billion in India across various sectors, with a major focus in the steel sector.

• Temasek is looking to triple its usual investment in India to $9 bn in 3 years. Temasek has been ramping up investments in India in the last 5-6 years, buoyed by the performance of its own portfolio, attractive demographics and increasingly deeper capital markets. c.60% of Temasek’s investments are direct stakes, largely in financial services sector.

• Reliance Industries' financial arm, Jio Financial Services, demerged and listed separately on NSE and BSE to tap the growing demand for new age financial services for retail and small-business customers.

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KEY INDICATORS

• India has significantly reduced multidimensional poverty in the past five years, according to the National Multidimensional Poverty Index, released by NITI Aayog. 135 million Indians moved out of multidimensional poverty, with the proportion of poor reducing from 24.8% to 14.9%.

• Indian businesses projected a boost to business activity and capex over the coming 12 months owing to favourable demand conditions. The net balance of Indian firms forecasting output growth improved to 26% (on a scale of -100 to 100) in June from 21% in February.

• The Reserve Bank of India released its latest monthly bulletin this week. As per the report, market expectations of future interest rates have gone up in response to the hawkish policy stance; equity prices have flattened; and bond yields have hardened. Manufacturing and services activity continues to expand and the overall BoP surplus has improved strongly.
  Below is a quick snapshot of the services sector performance from the report.

  

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  WEEKLY MARKET UPDATE (w/c July 17, 2023)

  

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