India In Sight #27
India In Sight #27
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] TPG, Matrix Partners and Peak XV sold their stake in Five Star Business Finance, a non-bank lender, for a combined value of c.$200 million in secondary market transactions. TPG, Peak XV and Matrix harvested c.$80 million (c.4x MOIC), c.$40 million (c.9x MOIC) and c.$85 million (c.50x MOIC) respectively. (December 08, 2023)
[Exit] Softbank sold its remaining c.1% stake in Zomato, a food delivery platform, for $135 million and has monetized c.$375 million till date. Softbank had invested $200-300 million in Blinkit, a quick commerce and grocery delivery platform, and received c.3% stake in Zomato after the share swap deal with Blinkit. (December 08, 2023)
[Exit] Madison India Capital and Nexus Ventures to sell their stake in India Shelter Finance Corporation, a housing finance company, for c.$30 million and c.$18 million respectively, in the upcoming IPO of the company. Madison India to generate 2-3x MOIC while Nexus Ventures is expected to make c.10x MOIC on the transaction. (December 08, 2023)
[Exit] Warburg Pincus sold a part of its 4% stake in IDFC First Bank, a private bank, for c.$95 million in a secondary market transaction. Warburg Pincus has monetized c.$300 million worth of IDFC stake this year. (December 07, 2023)
ChrysCapital, a domestic private equity firm, acquired c.75% stake in ProHance Analytics, a workforce analytics and operations management platform, for an estimated c.$50 million, however the exact financial details were not disclosed. (December 07, 2023)
Sarvam AI, an Indian generative AI start-up, raised c.$40 million in a Series A round led by Lightspeed. Other investors include Peak XV and Khosla Ventures. (December 07, 2023)
[Exit] Warburg Pincus sold its entire c.20% stake in Computer Age Management Services (CAMS), a mutual fund transfer agency, for c.$325 million in a secondary market transaction. Warburg Pincus had invested c.$190 million in the company across tranches and has monetized c.$600 million in total (translating to 3x+ MOIC). (December 04, 2023)
Credit
Kotak Strategic Situations Fund, the private investment arm of Kotak Mahindra Bank, invested c.$45 million in Cropnosys, an agrochemical firm, to scale up its manufacturing capabilities and product offering. (December 07, 2023)
Other Deals and Issuances
Life Insurance Corp (LIC) subscribed to the bond issuance by Reliance (RIL) for c.$1.6 billion out of the $2.5 billion issue priced around 8%; LIC is estimated to account for 22% of the overall domestic corporate bond market.
Arka Fincap, an NBFC backed by Kirloskar Group, is looking to issue NCDs for c.$40 million at c.10%; Canara Bank to raise c.$440 million through issuance of additional tier-1 (AT-1) bonds; Bank of Maharashtra to raise c.$125 million via tier-2 bonds.
KEY FUNDS AND FUNDRAISES
Circulate Capital, a circular economy and impact investment firm, marked the final close of its new fund for c.$75 million. (December 05, 2023)
Portfolio In Focus: CDPQ India
CDPQ’s India Portfolio: c.$6bn+ AUM. Key investments over the years:
MARKET INSIGHTS & RESEARCH
Articles
The digital economy is expected to constitute 20% of India's GDP by 2026, a significant increase from 4.5% in 2014 and 11% today, marking a transformative period in India's technology and innovation sector since the launch of the Digital India program in 2015. Read more.
India's tax department intensified scrutiny of PE / VC funds using India-Mauritius and India-Singapore treaties, delving into detailed operations and decision-making to assess tax benefits and counter avoidance tactics. Read more.
In India, certain alternative investment funds run by non-bank finance companies to leverage the regulatory arbitrage in real estate, risk stricter scrutiny going forward. These funds, part of an $83 billion private credit and equity market, aid distressed borrowers, potentially skirting bankruptcy and impacting the sector's integrity amidst global regulatory tightening. Read more.
Reports
The ‘Unlocking Opportunities: India’s Private Credit Landscape’ report by Praxis and IVCA lays out the trends and themes in India’s private credit market. India's AIFs are expected to grow by 4x to reach $60-$70 billion by 2028, fueled by a surge in private credit investments to $5.1 billion across 63 deal in the first half of 2023 and an increase in large-scale deals. Also on similar lines, a short note from True North on Indian private credit.
CBRE report - From Bytes to Business: India Data Centre Market Powering Progress in 2023, gives a snapshot of the current data centre trends in India, policy enablers across various states in the country and strategies for occupiers, operators & investors in the coming years.
EY’s report on key trends shaping India's $45 billion building products market indicates that India's building products sector is rapidly evolving, with a significant shift towards eco-friendly, designer materials and smart systems, catering to a growing market demand for sustainable and advanced building solutions.
ORF’s paper: A Green Bank for Global South Climate Finance summarizes the need for a new financial entity, the Global Green Bank, designed to address market deficiencies and inefficient capital flows.
Macquarie’s paper: Financing India’s decarbonisation ambition indicates that India exemplifies the challenge and opportunity of climate change, targeting 50% clean energy by 2030 through government-led renewable and EV initiatives, but needs enhanced public-private cooperation and investment in sustainable infrastructure and resource management.
EY Parthenon’s report on ‘Unleashing India's renewable energy potential’ emphasizes that India's renewable energy sector, with over $240 billion investment potential, is poised for significant growth in solar PV and ACC battery sectors, underpinned by affordable financing, skilled workforce, and continuous electricity supply, enhancing its global standing in sustainable energy innovation and manufacturing.
‘PWC Global Consumer Insights Pulse Survey: India perspective' gives insights into the global and Indian consumer markets laying out new trends and themes - c.50% of Indian consumers regularly use smartphones for in-store price comparisons and social media reviews before purchasing, while e-commerce sites and search engines are key pre-purchase information sources for 50%, with traditional TV and social media ads influencing 40% of their buying decisions.
ICRA’s note on renewable energy details that India’s renewable energy capacity is expected to reach 170 GW by Mar 2025, led by strong policy support and moderation in solar module prices.
Transitioning to a circular economy through cross-sector convergence: India's nascent circular ecosystem poses challenges for industries transitioning to sustainable models, necessitating strategic collaborations, bold investments, and cross-sector partnerships. Pioneers in this field are leading the way, highlighting the importance of industry-academia-government cooperation to drive innovation and mainstream circular economy practices.
Sector views: ICRA provides quick summary and updates on key Indian industries including steel; sugar; hotel; and power sector.
KPIs
BCG's India Economic Monitor provides a monthly overview of the Indian economy, analyzing over 30 crucial macroeconomic indicators such as industrial activity, trade, financial services, and economic sentiments, comparing them with recent trends across various sectors.
In 1H FY24, India's information and broadcasting (I&B) sector garnered FDI worth $750 million, exceeding the previous year's total of $470 million and contributing 3.6% to the overall FDI inflow during the same period.
CII anticipates stronger, more diverse private investments in H2, boosting economic growth to 6.8% in FY24, with sectors like real estate, hotels, and infrastructure showing increased activity and high capacity utilization.
SBI research note reiterates that RBI kept policy rates steady, holding the inflation forecast at 5.40% for FY24 and raising GDP projections to an optimistic 7%. It introduced digital enhancements like increasing UPI limits and a cloud facility for data security, with potential rate cuts delayed until at least August 2024.
The RBI's household inflation expectation survey reveals that while current and short-term (three months) inflation expectations are stable, households anticipate a continued double-digit inflation rate over the next year, with median expectations rising to 10.1% in November 2023.
WEEKLY MARKET UPDATE (w/c December 4, 2023)
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