India In Sight #35
India In Sight #35
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
Entero Healthcare Solutions, a distributor of healthcare products, raised c.$90 million in a round led by GIC and PremjiInvest. Other investors included Smallcap World Fund, CLSA Global, Societe Generale, Morgan Stanley and Goldman Sachs. OrbiMed, a healthcare focused PE and an existing backer who owns c.58% in the company, is selling a third of its stake in the upcoming IPO (5x+ MOIC over 5 years). (February 09, 2024)
Northern Arc Capital, a non-banking finance company, raised c.$80 million in equity and debt (split equally) from IFC ahead of its IPO. Existing investors Leapfrog and Accion are looking to sell their partial stake in the company (c.10x IRR). (February 08, 2024)
[Exit] Warburg Pincus sold c.2% stake in Kalyan Jewellers, an Indian chain of jewellery showrooms, for c.$80 million. Warburg first invested c.$200 million in the company in 2021 followed by additional investments over the years and has harvested c.$520 million till date (c.20% IRR overall). (February 08, 2024)
GIC increased its stake from c.7% to c.9.5% in Data Infrastructure Trust, an infrastructure investment trust, by buying additional stake for c.$112 million from Axis Bank. (February 06, 2024)
[Expected] Kedaara Capital, a domestic PE firm, is looking to invest c.$110 million in Dairy Classic Ice Creams, an ice cream producing brand. (February 06, 2024)
[Exit] PremjiInvest sold half of its remaining stake in Policybazaar, an online insurance aggregator and broker. The details of the transaction were not fully disclosed. The family office first invested in the company nine years ago and has harvested c.$140 million across tranches with the remaining stake valued at c.$50 million (translating to c.10x MOIC overall). (February 05, 2024)
Credit Deals and Issuances
HDFC Bank raised c.$300 million by issuing sustainable finance dollar-denominated bonds at a yield of c.5.2%. It is looking to raise a total of c.$750 million via three-year dollar sustainability bonds and five-year conventional bonds out of its branch in GIFT City, Gujarat. (February 07, 2024)
Canara Bank is looking to raise c.$250 million through the issuance of additional tier-1 (AT-1) bonds. (February 07, 2024)
India Infrastructure Trust, an InvIT sponsored by Brookfield, is looking to raise c.$775 million to refinance its debt by issuing NCDs (CRISIL AAA/Stable). (February 05, 2024)
KEY FUNDS AND FUNDRAISES
Dezerv, a domestic wealth management platform, launched Dezerv Credit Fund, a Fund of Funds scheme to invest in private credit funds in India, with a target corpus of c.$75 million. (February 09, 2024)
Temasek and Seviora (Temasek’s subsidiary fund) to jointly invest in late venture and early growth stage agri and food companies in India and Asia Pacific via a jointly managed fund with a target corpus of c.$175 million. (February 09, 2024)
Orient Growth Ventures, a Dutch investment firm, marked the final close of its second India and Southeast Asia fund at c.$90 million. Orient Growth Fund-II, aims to increase its investment in India by backing early-stage venture capital firms. (February 08, 2024)
Cactus Venture Partners, a domestic early growth-stage venture investment firm marked the final close of its maiden fund with a target corpus of $75 million. The fund will invest in 15+ startups across climate tech, enterprise software and health tech. (February 07, 2024)
Hillhouse Investment is collaborating with IT industry veterans to create Novarete, a $400 million IT-enabled business performance management platform, targeting expansion in healthcare, insurance, and BFSI sectors. (February 06, 2024)
MARKET INSIGHTS & RESEARCH
Articles
CRISIL reports that SIDBI fund of funds invested c.$200 million in 129 startups beyond Tier-I cities, focusing on sectors like deeptech and healthtech. Since its 2016 inception with a $12.5 billion corpus, the initiative aims to improve India's startup ecosystem and has facilitated c.$2.2 billion worth investments in 900+ startups. Read more. [Paywall]
A recently announced government policy aims to revolutionize India's residential solar market by installing rooftop solar systems in 10 million households, aligning with India's goal to achieve 50% of its power capacity from non-fossil sources by 2030. This initiative, highlighting the untapped potential of 630+ GW in the residential sector, is set to significantly boost solar adoption and contribute to India's renewable energy targets. Read more.
India's power sector is transforming to meet rising demand and shift towards non-fossil fuels, with the Revamped Distribution Sector Scheme (RDSS) leading the charge. With $35+ billion investment by 2026, this initiative is enhancing distribution networks, introducing smart metering, and promoting operational efficiency, driving the nation towards universal electrification. Read more.
Home purchases in India's top 10 cities soared, doubling from an annual average of 250k during 2015-2021 to 476k in 2023, highlighting a rapid 54% and 31% increase in the last two years, signaling a significant market rebound. Multiple factors have led to this surge in home sales with a clear push from the government. Read more.
Generative AI could boost India's GDP by c.$1.5 trillion within the next seven years. Upskilling and education are key, with CEOs prioritizing GenAI and initiatives promoting digital literacy and structured learning with digital learning platforms bridging the skill gaps. Read more.
55% of investors anticipate 2024 as favorable for exits, with more Indian companies expected to pursue IPOs due to high Sensex and Nifty50 levels. However, after a poor funding year in 2023, slow M&A activity may continue in the Indian startup ecosystem. Read more. [Paywall]
Reports
As per a new report by Chiratae Ventures and Digital Fifth, the Indian enterprise fintech market is projected to reach $20 billion, driven by increasing demand from banks and financial institutions for better reach, customization, and compliance solutions. The sector is expected to attract c.$8 billion in funding by 2030. Read more.
As per Mercom Capital report, in 2023, India's energy storage sector witnessed a 59% surge in VC funding to $9.2 billion, despite a 28% decline in overall corporate investments (including funding through debt and public market financing) to c.$19 billion, marking the highest-ever VC/PE investment in the sector, up from $5.8 billion in 2022. Read more. [Paywall]
TERI’s note on Accelerating the Growth of Green Bonds in India outlines that India's climate finance relies on boosting private investment via green bonds, which remain underutilized. Overcoming this through standardization, incentives, and international support is crucial.
Colliers’s Real Estate Quarterly Q4 2023 report discusses that the Indian economy showed resilience in Q4 2023, including a record 92% yoy increase in office leasing activity and the highest industrial and warehousing leasing in two years, despite a 37% yoy decline in real estate investment inflows for Q4, vs 10% annual increase in 2023.
As per CBRE report- Beyond Metros: Tier-II Cities Fuelling India’s I&L Boom: India's tier-II cities are emerging as hotspots for industrial and logistics sector expansion, driven by enhanced connectivity, the e-commerce surge, and a push for local distribution networks for quick deliveries. Developers are investing in land near key infrastructure projects, positioning themselves to benefit from this growth.
ICRA’s report on personal loan securitisation provides insights on rising personal loan securitisation in India's finance sector, accounting for 3% of total volumes. Although performance remains strong, the market is dominated by a few key originators, with high-rated AA-category securities preferred for lower risk.
KPIs
India's state-run banks to yield c.$2 billion in dividends next fiscal, benefiting from reforms, with net profits expected to surpass $12 billion this year due to robust credit demand.
Indian individuals earning over $120k (INR 1 crore) rose to 216k in 2023-24, with a notable increase in 'Professional' income, while personal income tax collections jumped by 28% due to tax reforms and compliance efforts.
The budget for FY 2024-25 reduces India's gross and net market borrowings to c.$176 billion and c.$146 billion, respectively, leading to a significant drop in bond yields. This strategic move, aimed at boosting private sector credit and maintaining fiscal deficit below 4.5% by 2025-26, is viewed positively by experts, contrary to the concerns that it might drive investors towards equities for higher returns.
ICYMI
ADIA to establish a $4-5 billion fund in Gujarat's GIFT City to invest in India.
Advent International looking to invest $5-10 billion in India over the next five years. Advent invested $7 billion last year in deals across cybersecurity, pharma, and realised $8.4 billion via exits - higher than their previous five-year average of $5.7 billion.
WEEKLY MARKET UPDATE (w/c February 09, 2024)
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