India In Sight #12

Weekly updates on Indian private markets

Aug 21, 2023

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

Equity

ChrysCapital acquired c.10% stake in GMM Pfaudler, an engineering equipment manufacturing firm, for c.$72 million, as part of the 13.6% stake sale by Deutsche Beteiligungs (DBAG). (August 18, 2023)
Dr. Agarwal’s Health Care, an eyecare hospital chain, raised $80 million from its existing investors TPG Growth and Temasek. (August 17, 2023)
[Exit] Ares SSG sold its entire stake in Religare, a financial services company, for $67 million. Ares SSG had invested c.$20 million across two tranches (2017 / 2021); estimated IRR of 40%. (August 16, 2023)
[Exit] Motilal Oswal Alternates, a domestic PE fund, to partially exit its c.12% stake in Happy Forgings, an auto components manufacturer, in the proposed c.$60 million IPO. Initial investment of c.$25 million across multiple tranches (2018-19) is expected to be valued at $100-125 million (translating to a 4-5x MOIC). (August 16, 2023)
[Exit] ICICI Venture, a domestic investment fund, to partially exit its 20% stake in Epack Durable, a home appliances manufacturer, in the proposed c.$40 million IPO (translating to over 3x MOIC). (August 14, 2023)
Asiya Capital Investments, a Kuwait-based investment firm, acquired c.30% stake in SAMHI Hotels, a hospitality chain, for an estimated amount of c.$105 million. Previous investors include Sam Zell’s Equity International, GTI, IFC and Goldman Sachs. (August 14, 2023)

Credit

Vedanta Resources is looking for a potential extension of US dollar bonds to manage over $6 billion of scheduled debt repayments ($1.3 billion in FY24 and $4.3 billion in FY25). (August 19, 2023)
CreditAccess Grameen, a microfinance company, to raise c.$125 million in redeemable NCDs at c.10% coupon. (August 19, 2023)

KEY FUNDS AND FUNDRAISES

Axis Asset Management to raise a c.$155 million private credit fund, with the first close targeted at c.$60 million. (August 14, 2023)
Motilal Oswal Alternates to raise $240 million for its sixth real estate-focused fund which will make structured debt investments in the affordable housing category. (August 17, 2023)
Credent Asset Management, the AMC arm of Credent Global Finance, to raise a real estate-focused fund with a target corpus of c.$30 million, with focus on premium residential sector. (August 17, 2023)
BHIVE, a co-working space provider, launched a c.$50 million fund to invest in commercial real estate sector. (August 16, 2023)

MARKET INSIGHTS & RESEARCH

As per the EY-IVCA PE/VC Roundup report, 1H2023 recorded $27.5 billion in PE/VC investments, down 23% vs 1H2022. Growth investments were the highest during the period at $11.2 billion, down 7% YoY, while buyouts recorded a strong rebound at $6.4 billion, up 74% YoY. PE/VC investments declined by 5% to $3.9 billion across 59 deals in July 2023. The number of transactions were down by 26% YoY and 20% MoM. Read more.
The Reserve Bank of India allowed infrastructure debt fund NBFCs to raise funds through offshore loans in addition to bond issuances. IDF-NBFCs were earlier allowed to raise funds through rupee or dollar-denominated bonds of minimum five-year maturity, however, under the revised provisions, IDF-NBFCs can now raise funds via loans under external commercial borrowings with minimum tenor of five years, though the loans should not be sourced from foreign branches of Indian banks. Read more.
Pension funds, retirement funds and SIPs could contribute $20 billion of flows into India’s equity market every year, providing a natural hedge to volatility in FII flows. Some interesting data points here.
Tepid demand hits businesses across apparel, footwear, fast food sectors as consumers go slow on discretionary spending amid sticky inflation. Read more.
Sector views: As per JM Financial research, the Indian hotel sector is expected to grow driven by rising domestic demand, revived inbound tourism, and upcoming major global events like the G-20 summit. Room supply and demand growth are expected to be c.5% and c.10% respectively for FY23-FY27. Revenue CAGR could be in the 12-20% range over FY23-26E with EBITDA margins in the 20-30% range. Read more.
As per Inc42’s Decoding India’s Unicorn Club Report 2023, India has emerged as a significant global player in the unicorn landscape with a total of 110 unicorns with c.$350 billion in combined valuation, having raised c.$100 billion in total funding.

KEY INDICATORS

CPI rose to a 15-month high of 7.4% in July (vs 4.9% in June), breaching the upper tolerance band of RBI’s inflation target of 2-6%, driven by rising food prices.
India's merchandise exports declined by c.16% in July to $32 billion due to a global demand slowdown and lesser outbound shipments of petroleum, jewellery and other products.
As per the latest RBI monthly bulletin, the investment activity is gaining momentum and capex is set to rise by c.80% to c.$21.3 billion in FYE Mar-24. The improvement in capacity utilisation of the manufacturing sector, pick-up in credit demand and improving consumer sentiments are helping the capex cycle.
Understanding RBI's latest assessment of the Indian economy through five key charts. Read more.
Below is a quick snapshot of the services sector performance from the RBI bulletin.

WEEKLY MARKET UPDATE (w/c August 14, 2023)

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