India In Sight #19

Weekly updates on Indian private markets

Oct 09, 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

[Exit] Softbank sold c.2.5% stake in Policybazaar, an insurance aggregator-platform, for c.$105 million. Softbank had invested c.$190 million in the company for a c.16% stake in 2019 and has monetized c.$475 million till date with the remaining c.2.5% stake valued at c.$105 million (>3x MOIC). (October 6, 2023)
Abu Dhabi Investment Authority (ADIA) to invest c.$625 million as additional capital into Reliance Retail Ventures, increasing its stake from 1.2% to 1.8%. (October 6, 2023)
True North, a domestic PE firm, invested c.$75 million in iLink Digital, a digital transformation services and consulting company, for a minority stake. (October 5, 2023)
[Exit] Brookfield sold c.13% stake in Data Infrastructure Trust, an InvIT that owns telecom towers in India, for c.$625 million. The firm had initially invested c.$3.7 billion in 2019 for c.88% stake with the remaining c.75% stake valued at c.$3.8 billion. (October 5, 2023)
Bizongo, a B2B vendor digitization platform, raised c.$50 million in a Series-E round led by Schroder Adveq, a Zurich-based private equity firm. Other investors include IFC, Chiratae Ventures, B Capital and BII. (October 4, 2023)
Warburg Pincus to invest in Everise, a US based customer services provider to healthcare companies, at a valuation of c.$1 billion. The financial details of the transaction were not disclosed, however the deal value is estimated to be c.$450 million. (October 3, 2023)

Credit

EvolutionX, a growth stage debt financing platform, invested c.$40 million in debt and convertible notes in Mensa Brands, an owner and operator of multiple D2C brands. (October 5, 2023)

Other Deals and Issuances

ICICI Bank raised c.$500 million via 10-year bonds in a private placement at c.7.5% coupon. (October 3, 2023)

KEY FUNDS AND FUNDRAISES

NIIF and Japan Bank for International Cooperation to jointly launch India- Japan fund for $600 million. The fund will focus on investing in environmental sustainability and low carbon emission strategies. (October 4, 2023)

MARKET INSIGHTS & RESEARCH

Articles

India registered over 10 billion cashless transactions in August 2023. The nation's payment revenue soared to $64 billion last year, ranking fourth globally driven by digital commerce and broadened credit card usage. Read more.
The RBI retained policy rates, with a monetary stance of "withdrawal of accommodation," despite the backdrop of slowing inflation. RBI emphasized its goal to maintain inflation around 4% however, projections suggest a CPI inflation of 5.2% for Q1FY25, underscoring the bank's cautious approach towards any imminent rate cuts. Read more.
India and the UAE explored incentives to amplify UAE's sovereign wealth fund investments in India. The discussions emphasized on sectors like renewable energy and health with both nations targeting a $100 billion non-oil trade by 2030. Read more.

Reports

Recent trends suggest a decline in gross NPA ratio to a 7-year low of 5% and net NPA ratio to a 10-year low of 1.3% amongst PSBs in the country, owing to the measures adopted by the government to promote private credit. The ‘Liquidity in distressed assets market’ report analyses the entry routes available for investments in the Indian distressed assets market and the way forward to encourage private credit in the country.
OCEN 101: India's MSME sector faces significant financing barriers. Open Credit Enablement Network (OCEN) is an innovative platform that standardises and simplifies access to credit from multiple lenders. It aims to promote financial inclusion, reduce costs, foster competition among lenders, and democratise financial services. The introduction of digital infrastructures like the OCEN may bridge the credit gap, benefiting both lenders and borrowers. Read the complete report by Observer Research Foundation (ORF).
This study by ORF on India’s UPI market predicts the future size of India's UPI market, considering different GDP growth scenarios and examines factors influencing digital transaction behaviours. Results suggest that UPI market values could range between $3-7 trillion by 2030-31.
The ‘Leveraging E-commerce for the growth of MSMEs’ report is a survey of MSMEs in India that delves into the integration of MSMEs with e-commerce platforms. Integrated firms generally experience enhanced sales, profitability, and operational innovations with the ease of obtaining loans, as digital footprints can establish creditworthiness.
IBC revised the priority of payment to creditors in the event of the corporate debtor (CD) being liquidated, providing for secured creditor dues to be paid in precedence to dues owed to statutory authorities (referred to as crown debts). This piece by AZB Partners analyses the treatment of crown debts under IBC, the interpretations by judiciary thereof, and makes suggestions for reform.
Semiconductors: ‘Harnessing India’s chip power for the future’ report by Matrix Partners lays out the landscape for the Indian semiconductor industry and the various opportunities that lie ahead. Can India be the next global semiconductor hub?
Carbon Offsets: India has become the world’s second-largest source of carbon offsets in the voluntary carbon market (VCM). ‘Discredited: Does VCM benefit people and climate in India?’ report explores whether VCM truly helps in the reduction of global GHG emissions and guarantees financial benefits to carbon-sequestering communities.
Data Centres: India accounts for 4% of the global installed data centre capacity which is expected to increase by 6x in the medium term, supported by data explosion, favourable regulatory policy initiatives and an investment outlay of $20 billion in the pipeline.
Macro and Policy Updates: The MPC voted unanimously to keep policy rates unchanged with the repo rate at 6.5%. The MPC remained cautious on inflation, which is facing supply-side risks from elevated food prices. Here is a quick overview by SBI on the MPC announcement along with NIPFP’s mid-year macroeconomic review.
ICRA’s Monthly Research Compendium offers a multi-sector summary of latest data and reports released in September.

KEY INDICATORS

India's services sector PMI stood at 61 - the strongest output in 13 years in September, driven by strength in domestic demand and higher international sales. Business sentiment and job creation also remained solid. India's manufacturing activity slowed down in September, with the PMI falling to 57.5, its lowest level in five months. The decline was primarily due to a softer increase in new orders, although export orders remained strong.
Individuals in India earning above Rs 5 lakh per annum (c.$6K p.a.) have increased by 5x in the last decade which has led to the uptick in India’s consumption demand.
Rise in the stock markets in the past two decades, integration of economy through digital payments systems, and foreign companies creating high-income jobs have led to a booming "octopus class" in India which is fueling consumption growth. Read more.

ICYMI

India will bear a higher brunt of climate change than its peers, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) said, as it pointed out that the Asia-Pacific region had fallen further behind in financing climate action.
As per a UNESCAP report, India could lose 35% of its GDP to climate change by 2021 vs 24% for the rest of developing Asia. Average losses for Asia-pacific economies due to climate change could grow to c.$1.4 trillion.
Saint-Gobain, a French glass and building materials conglomerate, to scale up its investment in Tamil Nadu to c.$1 billion.
Indian Oil Corporation to invest c.$325 million in setting up several greenfield units and expanding its facilities across the northeast over the next few years.

WEEKLY MARKET UPDATE (w/c October 2, 2023)

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