India In Sight #24

Weekly updates on Indian private markets

Nov 20, 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 Delhivery, an e-commerce logistics company, for c.$90 million. Softbank had invested c.$345 million in the company for a c.22% stake and has monetized c.$260 million till date with the remaining stake valued at c.$440 million (c.15%+ IRR). (November 17, 2023)
[Exit] Tata Capital Growth Fund, a fund managed by Tata Group, to sell a partial stake in Tata Technologies, a tech company under the Tata Group, for c.$75 million as a part of its IPO. Tata Capital invested in the company in 2011 and its remaining stake is valued at c.$150 million (15x+ MOIC in the latest sell-off). (November 14, 2023)
[Exit] True North, a domestic PE fund, to sell its stake in Fedfina, a subsidiary of Federal Bank, in its upcoming IPO. True North had invested c.$50 million in Fedfina since 2018 and is expected to generate 3-4x returns on the exit. The financial details are yet to be finalized. (November 14, 2023)
[Exit] ICICI Venture, the PE arm of ICICI, to sell its stake in Epack Durable, an air conditioner ODM player, in its upcoming IPO. ICICI had invested c.$24 million in Epack in 2021 and is expected to generate 2-3x returns on the exit. The financial details are yet to be finalized. (November 14, 2023)
Warburg Pincus sold its complete stake in its retail-focused real estate JV with Runwal Group, a real estate developer, for c.$75 million. Warburg had invested c.$30 million in 2019 (translating to c.2.5x MOIC). (November 13, 2023)
InCred Finance, a financial services platform of InCred Group, raised $60 million in series D financing round led by global PE funds, corporate treasuries and family offices. The company is valued at an estimated c.$1+ billion making InCred Finance another Indian unicorn in 2023. (November 9, 2023)
[Exit] British International Investment sold a partial stake in TVS Industrial and Logistics Parks, the logistics arm of TVS Group, to Lingotto, an investment company owned by Exor Group, for an estimated $25 million. BII had invested c.$35 million in 2020 for a c.38% stake. The financial details have not been disclosed. (November 8, 2023)
XpressBees, a logistics-tech unicorn, raised c.$80 million from Teacher Venture Growth Fund, a late stage investment arm of OTPP. (November 7, 2023)
Cappella Educore, an education specialist platform, raised c.$200 million from Alta Capital to expand their education portfolio in India to a valuation of $550+ million in the next three years. (November 7, 2023)
Norwest Venture, a US based VC firm, acquired c.40% stake in Regency Healthcare, a hospital and dialysis clinics chain, for c.$75 million. (November 6, 2023)

Credit

India and Asian Development Bank, signed a policy-based loan agreement worth c.$400 million to create high-quality urban infrastructure in India. (November 13, 2023)
CapitaLand India Trust, a Singapore based investment firm, secured a five year construction loan of $155 million from JP Morgan India for the development of data centres in India. (November 10, 2023)
Ranjan Pai (Group Chairman, Manipal Education and Medical Group) invested c.$170 million in debt in Byju’s, an Indian ed-tech company, to pay off debt raised from Davidson Kempner. (November 10, 2023)
US DFC to invest c.$553 million via private loans in Colombo port terminal project in Sri Lanka (51% owned by Adani Group) to expand its shipping capacity. (November 8, 2023)
[Expected] Aavas Financiers, a domestic mortgage lender, to raise c.$75 million in debt capital from IFC. (November 8, 2023)

Other Deals and Issuances

Reliance raised c.$2.4 billion via 10 year bonds at c.8% coupon, one of the largest issuances by a non-financial Indian company.
Adani Energy looking to raise $360 million through private placement of bonds; Kotak Mahindra Investment to raise c.$60 million through issuance of three AAA-rated bonds; SBI to raise $1 billion from global banks via its dollar bond issue planned in December.

KEY FUNDS AND FUNDRAISES

Carlyle Group looking to raise its sixth Asia-focused fund with a c.$6 billion target (down 30% from $8.5 billion announced earlier), 35% of which will be allocated in India (largest market in Asia). (November 16, 2023)
A.K. Alternatives, a domestic private credit fund manager, is raising c.$48 million for its latest private credit fund with a four-year duration and targeting 14% annual returns. (November 6, 2023)

MARKET INSIGHTS & RESEARCH

Articles

Venture debt in India, currently at 3-4% of VC investments, could offer $5 billion of investible opportunities in the near future, driven by more awareness and supply increase, offering companies growth funds with less dilution amid a tight VC funding environment. Read more.
RBI has increased the risk weight for personal and credit card loans from 100% to 125% to mitigate rising risks in unsecured lending. The loan cost for digital lenders is expected to increase by 5-8% while loans disbursals could drop by 10-15% while banks' capital adequacy could fall by 60 bps, slowing loan growth and increasing lending rates. The new norms for unsecured loans will require an additional $10+ billion in capital for banks. Read more.
RBI noted a global economic slowdown in Q3 FY2024 but forecast increased GDP growth for India, despite global labor market instability. Read more
India aims to revise and enhance PLI norms in five key sectors, including textiles and pharmaceuticals, to better utilize its $24 billion industrial incentives and boost local manufacturing. Read more.
Indian Pharma: India aims to quadruple its pharmaceutical industry to $200 billion by 2030 through incentives and collaborations, positioning itself as a global manufacturing leader. India has the largest number of FDA-approved plants in the US with exports worth $50 billion to 200 countries. Read more.

Reports

RBI's India Finance Report provides detailed insights on the NBFC sector and highlights financial inclusion, rapid digital transformation, and emerging challenges in the sector. India has c.10K NBFCs with the credit-GDP ratio increasing from 8.6% to 11.5% for the NBFCs during 2013-18; retail lending by NBFCs grew by over 220% in the last decade.
CBRE’s report on India’s Global Capability Centres talks about GCC’s role in India’s tech success, driving office demand. India has c.1,600 GCCs with c.30 million sq. ft. in office leasing space (2022 - 1H 2023), contributing c.1% to the GDP.
The latest SBI report on employment and labour market in India indicates a notable drop in India's unemployment rate from 6.1% in FY18 to 3.2% in FY23, with a rise in labor force participation rate from 36.9% to 42.4%, particularly among women. The self-employed population within the employment grew to 57.3% in FY23 vs 52.2% in FY18 with main traction coming from rising share of household helpers.
BCG report’s on Indian healthcare sector highlights the key drivers fostering innovation and investment in Indian healthcare sector. The govt expenditure on health rose from 1.4% in 2018 to 2.2% in 2022, indicating that the overall healthcare market could grow from c.$170 billion in 2022 to c.$460 billion in 2030.
EY’s report on AIFs highlights that with the total AUM crossing $100 billion mark in 2023, Indian AIFs should focus on refining back-office operations and improving outsourcing quality for key functions like fund accounting and reporting. Read more.
EY’s report on India's renewable energy sector indicates a $240 billion investment potential in the sector, majorly driven by growth in solar PV manufacturing and battery sectors, supported by skilled labor and export incentives. Read more.
ICRA’s report on Indian tractor industry provides insights on EV adoption in the Indian tractor industry which is expected to grow due to government support and cost benefits, despite challenges in infrastructure and financing.

KEY INDICATORS

The RBI reports easing inflation in India with recent declines, yet challenges remain as retail inflation stays above target amid fluctuating food prices and continued reliance on domestic demand. India's annual retail inflation eased to a four-month low of 4.87% in October vs RBI's 4% target; average inflation is expected at 5.4% in 2023-24.
India's GDP grew 7.8% in Q1 FY24, with a projected annual growth of 6.5%. Despite global trade uncertainties, India is poised to be a key growth driver in the global economy.
Below is a quick snapshot of the services sector performance from the latest RBI bulletin.
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ICYMI

Actis to invest $2.5 billion in India's sustainable infrastructure sectors, leveraging its expertise in renewable energy and infrastructure.
Adani Enterprises to invest c.$1.5 billion in its data center business over the next three years.
Ashok Leyland to invest c.$150 million in Switch Mobility, its electric vehicle arm.

WEEKLY MARKET UPDATE (w/c November 13, 2023)

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