India In Sight #40
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 reports in this edition:
India Venture Capital Report 2024 by Bain
Digitizing Make in India 2.0 Report by Matrix Partners and BCG
Green Hydrogen BLUprint by Blume Ventures
Indian startup FY23 financials tracker by Inc42
Indian Banking Sector Report 9MFY24 by BCG
Read below for insights and links to the reports!
KEY DEALS
Equity
Roadway Solution India Infra, an infrastructure company, raised c.$120 million in equity from AG Dynamics Fund, a Mauritius-based India-focused sector-agnostic firm. (March 15, 2024)
Hinduja Tech, an automotive engineering and digital services provider and part of the Hinduja Group, raised c.$50 million from Creador, a Southeast Asia-based private equity firm, for c.20% stake at an overall valuation of c.$255 million. (March 14, 2024)
[Exit] GIC sold c.25% stake in IRB Infrastructure, an infrastructure developer, along with c.25% stake in IRB Infra InvIT, the infra investment trust, to Cintra, a developer owned by Spanish infrastructure development firm Ferrovial, for c.$810 million. GIC acquired c.49% stake each in the company and the InvIT in 2019 with the remaining stake (25% in both entities) valued at c.$840 million. (March 14, 2024)
HiLabs, a health data analysis firm, raised c$40 million in Series B funding led by Eight Roads Ventures, Denali Growth Partners, and F-Prime Capital. (March 14, 2024)
Lohum, a battery-tech startup, raised c.$55 million in Series B funding from Singularity Growth, Baring Private Equity, Cactus Venture Partners, Venture East, and other existing investors. (March 13, 2024)
GIC acquired c.1% stake in ITC Limited, an Indian FMCG and hotel conglomerate, for c.$500 million in an open market transaction. (March 13, 2024)
[Expected] SAR Group, which owns Livguard (batteries) and Livpure (water purifier) businesses, is looking to raise c.$100 million through external investors for Lectrix, its EV scooter business. (March 13, 2024)
Credit Deals and Issuances
Adani Capital, the NBFC arm of Adani Group, raised c.$35 million through the issuance of three-year senior secured bonds at a coupon rate of 10%. Adani Airport Holdings, the operator of Mumbai International Airport, raised c.$18 million through the issuance of senior secured listed NCDs at c.10%. (March 15, 2024)
IIFL Finance, an NBFC lender, looking to raise c.$240 million through a mix of rights issue and NCDs via private placement. (March 13, 2024)
KEY FUNDS AND FUNDRAISES
Neoliv, a residential real estate focused investment platform, marked the first close of its real estate fund at c.$35 million. The fund was launched in 2023 with a target corpus of c. $150 million. (March 14, 2024)
SucSEED Ventures, an early-stage investment firm, is looking to raise c.$100 million for its maiden venture capital fund. The fund will invest in pre-Series A stage across healthtech, edtech, enterprise SaaS, regtech and other emerging tech related sectors. (March 14, 2024)
Prath Ventures, an early-stage venture firm, marked the second close of its maiden fund at c.$15 million. The fund has a target corpus of $25-30 million. (March 13, 2024)
Avaana Capital, a climate-focused venture capital firm, raised c.$25 million from Green Climate Fund, world’s largest climate fund. The fund is looking to raise c.$120 million for its maiden climate-tech fund and marked the first close in June 2023 at c.$70 million. (March 12, 2024)
Endiya Partners, a domestic venture capital firm, which launched its third fund with a target corpus of c.$120 million in February 2023, secured c.$15 million in LP commitment from IFC. (March 12, 2024)
MARKET INSIGHTS & RESEARCH
Reports
Bain’s India Venture Capital Report 2024 outlines that India's venture capital funding moderated to $9.6 billion in 2023 vs $25.7 billion in 2022, reflecting global caution, yet the country remained the second-largest VC destination in Asia-Pacific. Despite a decrease in deal volume (from 1,611 to 880 deals) and average deal size (from $16 million to $11 million), tech-first sectors like consumer tech, fintech, and SaaS continued to attract significant investment (60% of overall investments), while interest in traditional and emerging sectors like electric mobility and generative AI indicated optimism for India's long-term growth potential.
Matrix Partners and BCG’s joint report - ‘Digitizing Make in India 2.0 Report’ highlights that India is poised for transformational growth, aiming to become a $10 trillion economy by 2030, with the manufacturing sector expected to play a pivotal role, contributing 32% to the incremental Gross Value Added (GVA). This growth is anticipated to be driven by sunrise sectors such as Semiconductors ($120 billion market by 2030), Electronics Manufacturing ($500 billion market by 2030), Electric Vehicles (14 million EV unit sales by 2030), Renewable Energy ($140 billion in investment), and Defense ($40+ billion market by 2030 at c.20% CAGR). The report emphasizes the importance of large domestic demand, global supply chain realignment, government initiatives, export potential, and a supportive financial ecosystem as key drivers for India to become a global manufacturing hub, underlined by a surge in B2B and manufacturing-tech innovation and company creation.
Blume Ventures’ Green Hydrogen BLUprint report highlights that the green hydrogen market in India is projected to be worth $8 billion by 2030 and $340 billion by 2050. Major investments and developments in electrolyser technology are anticipated, though the market faces high entry barriers and challenges such as cost parity achievement and geopolitical issues. The startup ecosystem is recognized for potential innovation, particularly in biohydrogen production and hydrogen fuel cell technology, despite the challenges of competing in a market dominated by established conglomerates.
Inc42’s Indian startup FY23 financials tracker highlights the financials of 130 leading new-age tech companies in India for FY23 which generated a total operating revenue of c.$34 billion; 96 of these companies faced a combined loss of c.$8 billion with the others generating a profit of c.$1 billion.
BCG’s report on Indian Banking Sector provides quarterly insights into India's banking industry, covering macroeconomic trends, key performance indicators, risk management, PSU banks' valuation, digital banking adoption, and future projections. For 9M FY2024, total deposits increased by 12% yoy, net interest income and PAT rose by 17% yoy and 35% yoy respectively with RoA and GNPA at 1.2% and 2.9% respectively.
CBRE’s report on India's luxury real estate provides insights into India's luxury market, including goods and residences, which is experiencing rapid growth, driven by an expanding affluent class and a demand for sophisticated lifestyles. The luxury retail sector saw a 1.6x rise in retail space uptake in 2023, while luxury housing sales showed a 75% yoy growth, reflecting rising disposable incomes and changing aspirations. The luxury segment shows strong potential with luxury retail sales expected to reach c.$10 billion by 2028.
Colliers report - Housing Price Tracker Q4 2023 discusses that the average housing prices surged by 9% annually, driven by strong market momentum, while new launches led to a 7% yoy increase in unsold inventory. Over 2021-2023, housing prices in India's top eight cities surged by approximately 20%, with Bengaluru, Delhi NCR, and Kolkata witnessing the highest rise of about 30% in 2023 vs 2021. [Paywall]
Articles
Morgan Stanley forecasts India's capital expenditure cycle to persist, fueled by government expenditure and private investment resurgence, with the investment ratio projected to increase from 34% in FY24 to 36% of GDP by FY27. Meanwhile, the Indian government anticipates a 7.6% GDP growth in FY24, and central government capital expenditures are expected to rise up to 3.4% of GDP in FY25. Read more. [Paywall]
Venture capital investments in India dropped to pre-2017 levels with both the value and number of deals decreasing by over 60%. This decline was particularly acute in late-stage funding, which saw an 82% drop since 2021, while seed funding also halved. This decline has also impacted the emergence of new unicorns, with their number decreasing from 45 to just two in 2023, prompting startups to consider early IPOs as late-stage funding dwindles and former leading investors withdraw. Read more.
As per CII research, new unicorns are expected to contribute $1 trillion to India's economy, potentially reaching a $7 trillion size by 2030 and creating 50 million new jobs, under the 'Unicorn 2.0' scenario. Read more.
RBI’s new policy requires credit card issuers to provide a selection of card networks to consumers, potentially enhancing competition among networks without significantly altering consumer choices, which are primarily driven by lifestyle and personal needs. Read more.
Tech-centric VCs are increasingly investing in innovative D2C brands which appeal to a wealthy, young customer base. Investors see potential in new-age consumer brands which can tap into the evolving consumer preferences in India. Read more.
India's successful Chandrayaan-3 moon landing marked a historical achievement in space technology, positioning the country as a global powerhouse and heralding a new era dominated by private sector and startup contributions, alongside government support. India’s space sector could reach $44 billion market size by 2033 as India faces the dual challenge and opportunity of implementing strategic policy reforms to fully harness the private sector's potential in space exploration. Read more.
KPIs
India is on track to become an upper middle-income country with a projected economy of $15 trillion by FY47, with sustained high growth rates and overcoming global demand and trade challenges being vital for its development transition.
India's GDP grew at an average of 6.2% annually, accelerating to over 7% growth in the last three fiscal years, with a projected growth of 7.6% this fiscal, surpassing previous estimates. India remains poised to maintain its status as the fastest-growing large economy driven by a rebound and ‘servicification’ of manufacturing sector, strong capex plans, leveraging of productivity gains, and balancing of India’s decarbonization plans. Read more.
WEEKLY MARKET UPDATE (w/c March 11, 2024)
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