India In Sight #25
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
Equity
[Exit] Berkshire Hathaway sold its c.2.4% stake in One97 Communications (Paytm), an online payments platform, for c.$165 million. Berkshire Hathaway had invested c.$300 million in the company for a c.2.8% stake in 2018 and monetized c.$40 million at the time of Paytm’s IPO in 2021. Berkshire took a c.30% haircut in its latest transaction. (November 24, 2023)
Qatar Investment Authority invested c.$50 million in Clove Dental, a dental care chain, to help expand its presence across existing and new tier cities. (November 24, 2023)
Vastu Housing Finance, a non-bank mortgage lender, raised c.$40 million in equity from IFC. Existing investors include Multiples PE, Norwest, Faering Capital, Creation Investments and 360 One Asset Management. (November 22, 2023)
Credit
AU Small Finance Bank, a listed commercial bank, raised c.$100 million in debt from IFC. The bank recently acquired Fincare Small Finance Bank and is backed by WestBridge Capital and Temasek. (November 22, 2023)
Cholamandalam Investment, a non-bank lender providing affordable housing loans, raised c. $150 million in debt from IFC. IFC also invested c.$90 million in the company in 2019. (November 21, 2023)
GMR Goa International Airport, a private airport operator, raised c.$300 million in debt from JP Morgan, Tata Cleantech Capital, Aditya Birla Finance, ICICI Bank and IIFCL to build and operate new airport in Goa. (November 22, 2023)
GMR Airports, the holding company for GMR operated airports, is also looking to raise c.$245 million through a high yield debt offering at c.13% coupon (including 5% cash coupon) for refinancing its outstanding NCDs. (November 20, 2023)
Other Deals and Issuances
Jio Financial Services is looking to raise c.$600-1,200 million through issuance of bonds in the last quarter of FY2024.
Bharti Airtel looking to raise c.$1 billion through potential offshore bonds to clear $1.5 billion of deferred liabilities pertaining to spectrum buys in 2015 auction.
Multiple infrastructure related bond issuances in the pipeline:
National Bank for Financing Infrastructure and Development looking to raise c.$1.2 billion; Delhi-Mumbai Expressway to raise c.$375 million; Bank of Baroda to raise c.$1.2 billion via issuance of 10-year infrastructure bonds at c.7.5%; Canara Bank to raise c.$625 million via issuance of infrastructure bonds at c.7.5%; PNB Housing Finance to raise c.$440 million.
KEY FUNDS AND FUNDRAISES
NB Ventures, a Dubai based venture capital firm, planning to launch an India-focused venture capital fund in collaboration with Blume Ventures, a domestic VC fund, with a target corpus size of $50 million. (November 24, 2023)
Hearth Ventures, a domestic impact-oriented venture capital firm, is raising its first fund with a target corpus of c.$30 million and will invest in early-stage startups in the creative, cultural and circular economy. (November 24, 2023)
108.VC, a domestic venture capital firm, launched its first fund focused on growth stage startups with a target corpus of c.$60 million. (November 23, 2023)
Fundalogical Ventures, a domestic venture capital firm, launched its first VC fund focused on startups in pre-Series A to Series B round, majorly in supply chain, logistics and consumer sectors. (November 22, 2023)
Bain Capital marked the final close of its fifth pan-Asia private equity fund at c.$7 billion exceeding its target by 40%. The firm committed c.$750 million in the fund alongside existing and new investors and will be focusing primarily on opportunities across sectors in India, Japan and China. (November 21, 2023)
Portfolio In Focus: Brookfield India
Brookfield’s India Portfolio: c.$24bn AUM as of July 2023 (+$2.7bn monetized since 2021). Key investments below:
MARKET INSIGHTS & RESEARCH
Articles
Abrdn note: India is experiencing a cyclical upswing, marked by a thriving property sector, strong banking balance sheets, and government-led infrastructure spending, enhancing consumer sentiment and urban demand. India's global trade share is growing, fueled by eased restrictions and increased FDI. Read more.
Investors are cautious about funding EV manufacturers due to long gestation periods, intense competition, and significant capital needs, and are instead focusing on related sectors like battery production and EV infrastructure. In 2023, the Indian EV sector has already raised over $780 million, slightly surpassing 2022's $758 million. Read more. [Paywall]
Recoveries under Insolvency and Bankruptcy Code (IBC) fell to 32% in September 2023 vs 43% in March 2019, while the average resolution time increased from 324 to 653 days, surpassing the stipulated 330 days. IBC has a backlog of 13,000 cases, which includes 2,073 ongoing corporate insolvency resolution. Read more.
Achieving the FY2024 capex target demands a 28% year-on-year increase in capital expenditure and net lending by 21 states, a challenging task given the upcoming elections in the country. Read more.
Indian government bonds could attract nearly $25 billion in foreign investment if included in Bloomberg bond indexes, according to DBS Bank India. This potential inclusion, anticipated by bond traders, could lower the India 10-year bond yield by about 7 bps. Read more.
The RBI's hike in risk weightages for unsecured credit from 100% to 125% for NBFCs and banks has caused significant disruption, particularly as consumer lending has recently surged. As per RBI data, in the last two years, credit card outstanding went up by 64%, while personal loans and consumer durable loans went up by 57%. Read more.
However, as per Fitch ratings, this is a ‘credit-positive’ move and is beneficial for credit stability to control emerging systemic risks associated with rapidly growing consumer credit, which has outpaced total system-loan growth.The GTRI recommends reducing import duties on inputs and capital goods in India to decrease reliance on export schemes, as major partners like the EU and US often impose countervailing duties, viewing these schemes as subsidies. India's average tariff or customs duties for industrial products is 14.7% vs EU's 4.1%. Read more.
Reports
As per the latest EY-IVCA report for October 2023, PE and VC investments down by 3% yoy at c.$3.4 billion in Oct (19% down vs Sep 2023) while the number of deals fell by 13% yoy. Startup investments rose to $1.3 billion, up by 2x yoy, with retail and consumer products leading at $623 million across five deals.
BCG’s report ‘Winning in certain times’ lays out the five key drivers and themes for Indian banks to navigate through a period of heightened economic uncertainty including banking distribution, digital public infra, GenAI adoption, risk management maturity and climate strategy.
Elevation Capital’s report: ‘Mapping a billion’ captures the deep thesis on the fintech sector and explores the key themes in play that are driving the Indian fintech ecosystem to a $400 billion worth market by FY2030.
O3 Capital’s digital practice’s sector note, focusing on India’s Insurtech sector highlights that Insurtech is transforming the insurance industry by aligning innovative products with evolving customer needs, as digital-first companies drive innovation and tailor offerings to specific market demands.
White & Case report on ‘Investing in India: From challenges to solutions’ provides insights on India's regulatory reforms that have enhanced its appeal to global investors, as evidenced by its climb to 63rd in the World Bank's 2020 "Ease of Doing Business" rankings, up from 134th in 2013. This compendium explores opportunities for foreign investors and addresses India's current challenges.
The latest SBI note on the power of digital transactions underlines the technological advancements that have transformed India's payment system, shifting from a cash-dominated economy to one predominantly driven by smartphone-based payments.
ICYMI
Tesla plans to invest up to $2 billion in an Indian factory, contingent on a reduction of import duties to 15% for the first two years.
India and the EU have signed an MoU to collaborate on semiconductor supply and innovation, fostering joint efforts in this key technology sector.
The Asian Development Bank has approved a $500 million loan for Maharashtra to improve tertiary healthcare and medical education, aiming for universal healthcare by 2030. ADB sanctioned a $170 million loan for upgrading Kochi's water supply, aiming to provide reliable clean water in Kerala.
L&T Finance and ADB have agreed on a $125 million financing deal to boost lending in India's rural and peri-urban regions, with a focus on women borrowers.
WEEKLY MARKET UPDATE (w/c November 20, 2023)
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