India In Sight #09
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
BPEA EQT acquired a stake in Indira IVF Hospital, an IVF treatment chain, from TA Associates. BPEA’s total stake is expected to be 35-40% after the deal, valuing the company at c.$1.1 billion. Financials of the transaction were not disclosed. (July 28, 2023)
Brookfield is looking to acquire Adani Realty’s office project in Mumbai for over $120 million. Deal not closed yet. (July 27, 2023)
Poonawalla Fincorp, the lending arm of vaccine-maker Poonawalla Group, completed the stake sale of its housing finance arm Poonawalla Housing Finance to Perseus, a TPG Global affiliated firm, for $375 million. (July 26, 2023)
Zyber 365, a Web3 and AI startup, raised $100 million from the UK-based SRAM & MRAM Group at a valuation of $1.2 billion, making it India’s first unicorn in 2023. (July 25, 2023)
Auxilo Finserve, an education focused NBFC, raised $57 million in primary equity in a recent round led by Tata Capital, Trifecta and Xponentia. (July 25, 2023)
[Expected] Cipla, a pharma company, is in talks with major global PE investors to sell a part of their total holding in the company. The promoters own c.33% stake in the company. With Cipla’s market cap being over $10 billion, an expected 25% stake sale could raise c.$2.5 billion for the company. Deal not announced yet. (July 27, 2023)
Credit Deals and Issuances
Adani Group is exploring a c.$750 million syndicated loan process with Barclays, Deutsche Bank and Standard Chartered, to refinance the debt taken to fund its acquisition of Ambuja Cements. Adani Enterprises, the new renewable energy-focused unit, also raised a working capital loan of $394 million from Barclays and Deutsche Bank for its integrated solar module manufacturing facility. (July 28, 2023)
Other Credit Deals
Indiabulls Housing Finance, a private home finance lender, to raise over $4 billion via NCDs; Cholamandalam Investment, a financial institution and lender, will raise $188 million through a public issue of c.8% bonds; Andhra Pradesh State Beverages to raise c.$625 million through the issuance of 10 year zero coupon bonds; Power Grid Corp, a state-backed power producer, to raise c.$700 million in bonds on a private placement basis to finance its capex and growth requirements. The bonds will be securitized by cashflows of 4 operational SPVs.
July 2023 Roundup - Key Deals
KEY FUNDS AND FUNDRAISES
Together Fund, an early-stage VC firm, marked the first close of its $150 million second fund. The fund will invest in SaaS and AI-based startups with $1-5 million ticket size. (July 27, 2023)
Omkarm Capital, a logistics focused fund, raised $37 million from Czar Capital, the family office of the Kothari family, promoters of the Czar Group. (July 27, 2023)
SIDBI, an MFI focused government lender that manages a $1.2 billion fund-of-funds for startups, has anchored Vivriti AMC’s latest credit fund. SIDBI will invest c.$90 million for 70% of the fund’s target corpus of $125 million. (July 26, 2023)
We Founder Circle, an angel investment networking platform, launched a $100 million VC fund called Avinya Ventures to primarily back early-stage startups. (July 25, 2023)
hBits, a fractional real estate ownership platform, is looking to raise c.$60 million for its maiden commercial real estate focused fund and plans to mark the first close at c.$15 million. (July 24, 2023)
Ethos Asset Management, a US-based private investment firm, is planning to deploy over $1 billion in India over the next five years, with focus on infrastructure, energy, natural resources and technology. (July 28, 2023)
Piramal Alternatives, the alternative investing arm of Piramal Group, plans to raise $1.5 billion for investment in India’s high-yield companies via private credit. The firm has four existing private credit funds that together have raised $4 billion.(July 25, 2023)
July 2023 Roundup - Key Funds
MARKET INSIGHTS & RESEARCH
Debt landscape
India-focused AUM in private debt reached $15.5 billion in 2022 (up c.2x vs 2021) leading to global players like Apollo Global, Cerberus and Varde stepping up their operations in the country. Read more.
An increasing number of large and middle market corporates are turning to large private banks for their borrowing needs. The share of Indian corporates working with large private sector banks increased to 38% in 2022 vs 33% in 2021. In the domestic cash management business, large private sector banks increased their market penetration to 46% from 40%, while foreign banks expanded to 21% of corporates from 18%. Read more.
SEBI has put in place a framework for Corporate Debt Market Development Fund. The fund will act as a backstop facility for purchase of investment-grade corporate debt securities. It would also enhance secondary market liquidity by creating a permanent institutional framework for times of market stress. CDMDF would be launched as a 15-year close ended scheme and can be subscribed by AMCs and specified debt-oriented mutual fund schemes. Read more.
India's Insolvency and Bankruptcy Code (IBC) might not have been as successful as it was intended to be. With successful case resolutions only at 10% (of total c.6.5K cases) over 7 years, IBC has not shown stellar results despite dozens of amendments and good intent. What are the flaws and how can it be made better? Read more.
Economy
India is set to become the world's third-largest economy by FY2028, according to SBI Research. India could surpass Japan and Germany and account for 4% of the global GDP share driven by growth rates in the range of 7-12%. India's per capita income is likely to grow by c.70% to c.$4,000 by FY2030 vs c.$2,450 in FY2023, helping it become a middle-income economy with $6 trillion GDP. Read more.
As part of the Aatmanirbhar Bharat package, the government announced over $6 billion equity infusion for MSMEs through Self-Reliant India fund, which is managed by the private equity arm of SBI. SRI has invested over $800 million in equity in MSMEs so far. Read more.
The rupee’s lower depreciation vis-a-vis the dollar and its decadal low volatility are a boon for projects dependent on external financing. What are the drivers and what is the impact? Read more.
Industry Insights
India is on track to becoming a key player in the global semiconductor supply chain in the next decade with $10 billion of incentives and assistance provided to encourage local chip manufacturing under the Production-Linked Incentive (PLI) scheme, which attracted multi-billion dollar investment from global firms like Vedanta and Foxconn. The government aims to cap $300 billion in the electronics industry by 2025-26, of which $110 billion will be for semiconductors by 2029. Read more.
Currently valued at $8 billion with a 2% share in the global space economy, India's space market could reach $40 billion by 2040 and claim a $100 billion share of the addressable opportunity in the global space economy. Read more.
The Indian technical textiles sector is poised for a remarkable growth trajectory and is expected to reach a $50 billion market size over the next 5 years (vs the current market size of $22 billion). Read more.
ICYMI
QIA is considering acquiring a minority stake for $1 billion in Reliance Retail, the retail arm of Reliance Group.
Jio Financial, the recently demerged financial services arm of Reliance Industries, and BlackRock will form a 50:50 JV to enter India’s asset management market. The JV will be called Jio BlackRock, with both the entities investing $150 million each.
BYD, a China-based EV manufacturer, shelved its plans for the proposed $1 billion EV investment in India after the proposal faced scrutiny from the government.
Multiple companies and financial institutions announced plans for making significant investments in India in the near future, including:
Vedanta Group will invest $5 billion in the first phase of setting up a semiconductor fabrication plant in India.
Foxconn, a Taiwan-based electronic component manufacturer, is planning to invest $2 billion in India over the next five years. It is also in talks to invest c.$200 million in Tamilnadu, to build a new plant for electronic components.
AMD, a US based chip designer, will invest $400 million in India over the next five years. AMD will set up its biggest design facility in Bengaluru.
The central government and the Asian Development Bank signed a $200 million loan as additional financing for an ongoing urban services project in Rajasthan.
WEEKLY MARKET UPDATE (w/c July 24, 2023)
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