India In Sight #38
India In Sight #38
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] Apis Partner, a UK-based PE firm, sold c.2% stake in Star Health and Allied Insurance, a private health insurance company, for c.$67 million. The PE firm initially invested c.$25 million in 2016 and additional c.$25 million over the years across tranches and has harvested c.$200 million till date with the remaining stake valued at c.$100 million (translating to 6x MOIC overall). (March 01, 2024)
Domestic PE firms - Samara Capital and Convergent Finance to acquire c.52% stake in Agro Tech Foods, a food ingredient company, from Conagra Brands, an American consumer packaged goods company, for c.$80 million. The PE firms will acquire an additional c.26% stake for c.$45 million through a mandatory open offer taking the total investment amount to c.$125 million. (March 01, 2024)
Newspace Research & Tech, a drone manufacturer and defense company, raised c.$52 million in a bridge round. NRT raised $33 million in equity from Cornerstone Venture Partners, 360 ONE Asset and Volrado Venture Partners, and $19 million in debt from SBI and SIDBI. (March 01, 2024)
Lighthouse Funds, a mid-market PE firm, acquired a stake in Kushal’s Retail, a fashion and silver jewellery brand, for c.$35 million in a secondary buyout from India SME Investments. (February 28, 2024)
Shadowfax, an e-commerce logistics company, raised c.$100 million, in a Series E round led by TPG NewQuest. Other investors included Mirae Asset Ventures, Flipkart, IFC, Nokia Growth Partners, Qualcomm, and Trifecta Capital. (February 27, 2024)
[Exit] EQT Asia (f.k.a BPEA EQT) sold its remaining c.27% stake in CMS Info Systems, a cash management and payments solution company, for $187 million. BPEA EQT had initially bought CMS for c.$280 million in 2015 and has harvested c.$560 million to date across tranches (c.13% IRR). (February 27, 2024)
Capillary Technologies, a customer engagement solutions focused SaaS platform, raised c.$95 million in its Series D funding from its existing investors led by Avataar Ventures, extending the round to c.$140 million. Other investors include Pantheon, 57 Stars, Unigestion, Filter Capital, Innoven Capital. (February 27, 2024)
SBL Energy, an explosives manufacturing company, raised c.$40 million from Synergy Capital, India SME Investments and other individual investors. (February 26, 2024)
Everstone Capital, a domestic private equity fund, to acquire c.8% stake in MG Motors India, an automotive maker, for $75-100 million. (February 24, 2024)
Credit Deals and Issuances
IRB Infra, a highway construction company, raised c.$540 million via senior secured notes, receiving bids worth $2+ billion from global investors. (March 01, 2024)
National Highways Infra Trust, an infrastructure investment trust, is looking to raise $240-360 million via private placement of bonds in the next two months. (March 01, 2024)
Tata Capital, the financial and investment service provider arm of the Tata Group, is looking to raise c.$750 million through overseas bonds to diversify its liability base in 2025. Tata Capital's loan book stands at c.$18 billion and is targeting 25%+ growth. (February 28, 2024)
Torrent Power, an Indian energy and power company, raised c.$85 million through NCDs via private placement at 8% coupon. (February 28, 2024)
Adani Green Energy, the renewable energy company of the Adani Group, is looking to raise c.$410 million through US dollar-denominated bonds to redeem the $500 million 6% senior secured notes due in 2024. (February 27, 2024)
KEY FUNDS AND FUNDRAISES
InCred Alternative Investments, a domestic alternative assets manager, marked the first close of its second private credit fund at c.$35 million. The fund has a target corpus of c.$90 million and will look to provide non-dilutive, long term, senior secured credit to performing mid-market corporates across sectors. (February 29, 2024)
IFC and Solcon Capital (f.k.a. Convergence Partners), an African tech-focused PE firm, to launch a co-investment platform to invest in deeptech businesses across India and South Africa. The financial details were not disclosed. (February 28, 2024)
Kedaara Capital, a buyouts focused private equity firm, has raised c.$1.5 billion for its fourth fund which was launched in 2023 with a target corpus of $1.7 billlion, making it India's largest-ever fundraise for a private equity fund. The firm is looking to mark the final close by May 2024. (February 27, 2024)
Somerset Indus Capital Partners is looking to mark the first close of its third healthcare focused PE fund at $100 million. The fund was launched last year with a target corpus of c.$250 million. The fund recently received c.$25 million in LP commitments from SRI Fund. (February 27, 2024)
Goldman Sachs and Mubadala to jointly launch a Separately Managed Account (SMA) to co-invest c.$1 billion in private credit opportunities in India and Asia Pacific. (February 26, 2024)
MARKET INSIGHTS & RESEARCH
Articles
Late-stage and growth private equity firms have gained attention over the past couple of years due to rising deals among firms, companies, and specifically deals involving promoter exits. Indian capital markets have become deeper and more mature, allowing PE funds to exit some of their profitable investments. Read more.
PEVC investments in consumer sector reached $2.6 billion in 2023, vs $1.2 billion in 2022, up by 100%+ yoy. The supermarket category in the retail and consumer sector witnessed a 300x jump in deal value in 2023 vs 2022, majorly driven by the $1.8 billion investment in Reliance Retail Ventures. Read more.
Section 10(23FE) of the Income Tax Act grants tax exemption to specified persons, including sovereign wealth and pension funds, on certain incomes arising from investments made in India, subject to conditions. The Finance Bill, 2024 aims to extend the investment period to March 31, 2025, encouraging further investments. Read more.
Reports
BCG’s report ‘Unlocking the $2 trillion retail opportunity in the next decade’ outlines the current state and future growth potential of retail sector, projecting a $2 trillion market in the next decade amidst short-term challenges but sustained by long-term economic trends. It advises retailers to balance growth with profitability, adapt business models to changing trends, and activate value-creation themes such as leveraging digital technologies, enhancing value chain efficiencies, fostering partnerships, and embracing localization strategies.
KPMG report - ‘Achieving seamless commerce in India’ highlights that Retail is evolving into a seamless blend of digital and physical experiences, demanding end-to-end operational visibility and customer-centric strategies for success. Personalization and data-driven insights are pivotal for retailers to stay competitive and capitalize on new market opportunities.
Edelweiss' report ‘India-Infrastructure - Coming of age’ outlines that India plans an 80% hike in infrastructure capex to $1+ trillion from 2024 to 2028, targeting roads, railways, and urban development. Infrastructure investment has surged by 8x since 2014, with a power sector growth forecast of 6% and renewable energy capacity set to rise by 4x by 2030. Urban infrastructure funding is also expected to grow more than 2x.
Alverez and Marsal’s ‘Green Hydrogen: India’s opportunity for a strategic shift in global energy trade’ report examines the competitiveness of different global regions in green hydrogen production, particularly focusing on electrolysis with renewable energy. The report analyzes 10 countries and offers recommendations for India to enhance its position in this sector, aiming to spark enthusiasm and action among stakeholders towards green hydrogen adoption.
Edelweiss’ report ‘India: An era of compounding’ talks about India's economic growth accelerating due to regulatory reforms, major infrastructure investments, and rapid digitalization, with key reforms like GST and the PLI scheme boosting resilience and attractiveness for investment. This economic momentum is underpinned by strong domestic consumption and technological advances like India Stack, positioning India as a burgeoning global leader in digital solutions and AI expertise.
Waterfield Advisors’ ‘Insight into 25 key wealth trends in India’ report provides insights into India's wealth landscape which is rapidly expanding, with a notable increase in millionaires and billionaires impacting industries like wealth management and luxury goods. Digital adoption and a financial revolution post-pandemic are fueling a startup boom and diversification into alternative investments. This economic transformation is captured through detailed infographics, highlighting trends such as the rise in ultra-high-net-worth individuals and the country's global position in wealth creation.
CRISIL’s report - ‘Indian Economy: Walking in sync’ lays out February's policy announcements which navigated a resilient economy amid global uncertainties, boasting a 7.3% GDP growth, albeit challenged by inflation above RBI's 4% target. The coordinated fiscal and monetary policies, highlighted by a non-inflationary interim budget, aim to support investment cycles and asset creation, though RBI remains cautious due to lingering inflation concerns.
KPIs
Foreign Portfolio Investors have purchased c.$8.7 billion worth of Indian government bonds since JP Morgan's index inclusion announcement in September 2023.
India's economy expanded by 8.4% in Q4, with robust growth indicators including a 12.5% increase in GST collections, record-high car sales, and a surge in manufacturing, UPI transactions, and energy consumption.
India's per capita disposable income is expected to reach c.$2,550 in FY 2023-24, with an 8% growth, as per revised GDP data and a higher gross national disposable income forecast.
Indian government utilized 80% of its revised c.$114 billion capital expenditure and 79% of its c.$425 billion revenue spending for FY24 by January 2024, aiming to achieve a fiscal deficit of 5.8% of GDP.
As per Household Consumption Expenditure Survey, between 2011-12 and 2022-23, the top 20% drove nearly half of urban consumption growth, while the bottom half received 27% of it. Similarly, in rural areas, the top 20% accounted for 45% of consumption increase, indicating their significant role in driving premiumization.
ICYMI
Tata Sons to invest c.$90 billion in emerging industries by 2027, across industries like mobile components, semiconductors, electric vehicles, batteries, renewable energy, and e-commerce.
Reliance Industries, Viacom18, and Disney have agreed to merge Viacom18's media business with Star India, forming a joint venture to enhance their media and entertainment footprint.
WEEKLY MARKET UPDATE (w/c February 26, 2024)
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