India In Sight #39
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] Morgan Stanley PE Asia is looking to sell its entire c.17% stake in Sahajanand Medical Technologies (SMT), a cardiac stents maker, at an expected company valuation of c.$450 million. Existing investors Samara Capital and the promoters could also be looking to sell 15-20% stake overall. (March 07, 2024)
[Exit] Antfin, the fintech arm of Alibaba Group, sold c.2% stake in Zomato, a food delivery platform, for c.$340 million via bulk deals in the secondary market. Morgan Stanley also acquired part of the stake sale for c.$110 million. Ant Group invested c.$470 million in Zomato between 2018 and 2020, and has harvested c.$1.1 billion till date with the remaining c.4% stake valued at c.$730+ million (4x+ MOIC). (March 06, 2024)
Fairfax India, the Indian arm of the global investment firm, to invest c.$200 million in IIFL Finance, a business, home and gold loan provider, for liquidity support. Fairfax has been a long term investor in IIFL Finance and recently sold a c.6% stake in 2023 for c.$145 million. (March 06, 2024)
Matrix Gas & Renewables, a natural gas and green hydrogen Infrastructure company, raised c.$42 million in its pre-IPO round from Blue Lotus, a global asset manager, and NAV Capital, a Dubai-based wealth management firm, and other existing and individual investors. (March 05, 2024)
[Exit] Kedaara Capital and Partners Group sold c.13% overall stake in Aavaas Financiers, a housing loan finance company, for c.$165 million in a secondary market transaction. Kedaara harvested c.$97 million and Partners Group harvested c.$68 million in the transaction. Kedaara acquired a c.45%+ stake in 2016 for and has harvested c.$410 million till date across tranches with the remaining stake valued at c.$200 million (c.9x MOIC). Partners Group initially invested c.$90 million and has harvested c.$270 million across multiple tranches with the remaining stake valued at c.$140 million (4.5x MOIC). (March 05, 2024)
Svatantra Microfin, a leading microfinance lender run by Ananya Birla, raised c.$230 million from Advent International, a global PE firm, and Multiples PE, a domestic PE firm, to finance the acquisition of Chaitanya India Fin Credit, an NBFC lender owned by Sachin Bansal’s Navi Group, for c.$180 million. (March 04, 2024)
Credit Deals and Issuances
Adani Group is looking to raise c.$1.2 billion through the issuance of dollar bonds for refinancing its existing loans. (March 06, 2024)
Ajmera Realty & Infra, a real estate company, raised c.$60 million in debt through a structured deal led by Standard Chartered and ICICI Bank at c.11% interest rate, for the development of a luxury residential project and repayments of previous loans. (March 06, 2024)
mPokket, a digital lending platform, raised c.$60 million in debt from BPEA Credit, a global private credit manager. (March 05, 2024)
Alok Industries, an Indian textile manufacturing company, raised c.$840 million from Reliance Industries, its parent company, Axis Bank and SBI. The company raised c.$440 million in term and working capital loans from the banks and c.$400 million from Reliance at 9% rate. (March 05, 2024)
GMR Highways raised c.$85 million in debt from Zeal Global Opportunities Fund and Nova Global Opportunities Fund to prepay its loans from Yes Bank. The funds invested c.$42 million each in secured, unlisted, and unrated bonds of GMR Highways maturing in Feb 2028. The company has issued bonds at an interest rate of 14% p.a. for 48 months, with 100% equity shares pledged. (March 04, 2024)
KEY FUNDS AND FUNDRAISES
Eversource Capital, a climate-focused fund and a JV between Everstone Group and Lightsource BP, is looking to launch its second fund with a target corpus of c$900 million. IFC committed c$50 million for the latest investment vehicle. (March 08, 2024)
Stonepeak, a US-based global alternative investment firm, marked the close of its first infrastructure fund dedicated to Asia with a target corpus of c.$3.3 billion. (March 08, 2024)
Colossa Ventures, a sector agnostic venture capital firm, marked the first close of its maiden fund, Colossa WomenFirst Fund, at c.$12 million. The fund has a target corpus of $60 million and will invest in women entrepreneur-focused firms. (March 07, 2024)
Ascent Capital, a mid-market PE firm, launched its third fund with a target corpus of c.$300 million. The PE firm is looking to mark its first close by next quarter at c.$150 million. (March 06, 2024)
Gulf Islamic Investments, a UAE-based global investment company, is looking to launch its third India-focused fund with a target corpus of c.$200 million. (March 06, 2024)
Axis PE, a PE arm of Axis AMC, is looking to launch its third fund in the next six months with a target corpus of $240 million. (March 06, 2024)
Edelweiss Alternatives, the alternative investment arm of the Edelweiss Group, marked its final close for its second infrastructure fund with a target corpus of c.$965 million. (March 05, 2024)
Ankur Capital, a domestic venture capital firm, to mark the first close of its third fund with a target corpus of c.$150 million. (March 05, 2024)
MARKET INSIGHTS & RESEARCH
Articles
Inc42’s report - How India Accelerator’s ‘Multiverse’ is building the 4Cs of startup success details that India Accelerator, launched in 2017 with Global Accelerator Network, has nurtured 225 startups, with two-thirds securing follow-on funding by January 2024. Achieving exits for 33% of these startups, India Accelerator has garnered 6x returns on investments over the past six years. [Paywall]
SEBI issued an advisory to mutual funds regarding schemes investing in small and mid-cap companies, citing concerns about low liquidity and higher volatility risks. Mutual funds are urged to inform investors about these risks and engage in self-regulation for such schemes, which could also lead to some funds restricting further inflows in mid-cap and small-cap schemes. Read more.
Interest on external commercial borrowing, professional fees, referral fees, and dividend income for finance companies and banking units in IFSC will be TDS-exempt from the next fiscal year. The recent notification extends TDS exemption to 14 payment categories for IFSC units, easing cash flow, effective April 1, 2024. Read more.
Domestic companies pursuing M&A will require clearance from the Competition Commission of India if their combined assets and annual turnover in India exceed $300 million and $900 million respectively, up from $240 million and $720 million previously. For those with overseas operations, the combined assets threshold stood at $1.25 billion vs $1 billion earlier. Read more. [Paywall]
Global interest in Indian government debt, spurred by its inclusion in a JP Morgan index, has led to increased demand of the derivative product called the total return swap (TRS). TRS instruments are used by offshore investors without FPI licenses - such as certain hedge funds - to gain exposure to Indian bonds by using their international account networks. Read more. [Paywall]
Following the central bank's discovery of retail customers using credit cards for commercial payments such as rent and tuition fees, through third-party apps, these transactions are deemed as Business Payments Solution Provider (BPSP) type retail transactions, falling outside the purview of the apps' licenses. This aligns with the central bank's recent decision to prohibit Visa and MasterCard from providing its BPSP facility for card-based commercial transactions. Read more.
Reports
Blume Ventures’ ‘Indus Valley Annual Report 2024’ dissects the Indian startup ecosystem and discusses major themes including the paradox of India, Indian consumer segmentation, equity markets, rise of personal loans, digital native brands and the overall impact of the strengthening India stack.
KPMG & CII’s report on NBFCs in India lays out that India's NBFC sector, valued at $325+ billion, has flourished through contributions from housing finance, microfinance, and consumer finance, propelled by a rising middle class, financial inclusion, and supportive policies. Leveraging digitization, NBFCs have enhanced service efficiency and targeted the MSME segment. The sector's focus on digital innovation, including super apps and data analytics, along with emerging models like FLDG and co-lending, positions it for future expansion despite competition from traditional banks.
Inc42’s ‘State Of Indian Fintech Report Q4 2023’ shares that in Q4 2023, India's fintech funding fell 12% yoy to $410 million with the smallest median ticket size in 3 years, yet lending tech and fintech SaaS sectors showed resilience. The report also focused on the burgeoning rural fintech market which is set to hit $208 billion by 2030, opening up opportunities in insurance, digital payments, and lending within the $2.1 trillion industry.
Entrackr’s February Funding Report highlights that February saw improved funding for Indian startups, especially in growth-stage firms, alongside traction for early-stage startups despite ongoing challenges like layoffs. With $900 million raised across 120+ deals (up 20% yoy), including notable rounds like Shadowfax's $100 million Series E and Capillary Technologies' $95 million secondary round, the month surpassed last year's funding. Top early-stage deals included Avail, AstroTalk, and Metalbook securing significant funding amounts.
CRISIL’s report ‘Continuity on three fronts’ discusses that the fiscal deficit is projected at 5.1% of GDP for next year, down from 5.8%, moving 60 bps closer to the 4.5% target by 2026, thanks to lower spending and higher revenue collections despite slower capex growth. Government capex is expected to grow by 18% next fiscal, focusing on core infrastructure with a shift towards direct budgetary support over PSU and off-budget financing, reducing off-budget borrowing reliance.
JLL’s report on India-UAE collaboration in the logistics sector explores the strategic India-UAE collaboration in logistics, highlighting its evolution, impacts on sectors like maritime and air transport, and the boost from the Comprehensive Economic Partnership Agreement since May 2022. It underscores the partnership's role in trade facilitation, economic growth, and renewable energy initiatives, showcasing it as a model for leveraging bilateral relationships for mutual benefit.
Colliers’ report ‘India Office: Repurposed to scale-up’ provides insights into the office leasing sector in India which is set to surpass 50 million square feet in 2024, with domestic enterprises leading demand, GCCs gaining traction, BFSI and manufacturing sectors driving Grade A office demand, flex spaces contributing 15-20% to overall leasing, and large-sized deals (100,000 sq ft or more) comprising 50-55% of leasing activity, while about 30-35% of Grade A office demand is expected from peripheral business districts (PBDs). [Paywall]
KPIs
India's unemployment rate fell to 3.1% in 2023, down from 3.6% in 2022, driven by a decrease in urban unemployment to 5.2% and rural unemployment to 2.4%, amid the country's impressive economic growth.
India’s SME IPO market is witnessing growing interest as during Jan-Feb 2024, the SME IPO market flourished with 30 IPOs collectively raising c.$120 million, marking a 30% increase in average ticket size.
The recently released Household Consumption Expenditure Survey 2022-23 data reflects India's poverty decline over the past decade. Key findings from the survey show a drastic reduction in extreme poverty to less than 2%, compared to 12.5% in 2011-12, alongside a decline in consumption inequality, contradicting earlier discussions on increasing inequality. Read more.
WEEKLY MARKET UPDATE (w/c March 5, 2024)
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