India In Sight #43
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:
Green Hydrogen: A $125 billion decarbonization opportunity by Avendus
Harvesting tech in farming: A deep dive into the $25 billion agritech market opportunity by Inc42
The transformative journey of used car startups in India by Entrackr
Inside India’s ‘soonicorn’ club by Inc42
Unlocking the potential of bike-taxis in India by KPMG
Indian Startup Funding report Q1 2024 by Entrackr
KEY DEALS
Equity
SingleInterface, a marketing software startup, raised c.$30 million in its maiden external funding round led by Asia Partners and PayPal Ventures. (April 4, 2024)
Electronica Finance, an MSME focused non-bank lender, raised c.$50 million in a series B funding round from Leapfrog Investments and Aavishkaar Capital. (April 4, 2024)
General Atlantic to acquire a majority stake in Ujala Cygnus, a healthcare provider, for an estimated c.$200 million from its existing investors Eight Roads Ventures, Somerset Indus Capital, and Evolvence Capital. The exact financial terms of the transaction were not disclosed. (April 3, 2024)
[Exit] True North, a domestic PE firm, sold its stake in HiCare Services, a commercial and residential pest control services company, to Rentokil PCI, a pest control services company. The financial details of the transaction were not disclosed. (April 2, 2024)
Abu Dhabi Investment Authority (ADIA) and Kotak Alternative Investment Fund jointly invested c.$240 million in a deal with Prestige Estates, a real estate developer, for the development of residential projects across key locations in India. The projects are expected to have a combined value of over $2 billion. (April 1, 2024)
[Expected] Advent International is looking to sell its stake in Bharat Serums and Vaccines, a biopharmaceutical company, for a valuation of c.$1 billion. Multiple leading global private equity firms like Warburg Pincus, Permira, EQT, Bain, and TPG are considering investing into the company. (April 5, 2024)
[Expected] Navi Technologies, a non-bank lender with a lending platform, is looking to raise c.$300 million from external private investors for a valuation of c.$2 billion. (April 4, 2024)
[Expected] Zepto, an online grocery delivery app, is looking to raise c.$300 million from global investors at a valuation of c.$2-3 billion. (April 2, 2024)
Credit Deals and Issuances
Salcomp Technologies, a manufacturer and developer of electronic devices for Apple in India and a subsidiary of Lingyi iTech, to raise c.$150 million from IFC in a seven year debt facility for setting up new manufacturing units with an overall project cost of c.$250 million. (April 4, 2024)
Oaktree Capital Fund invested c.$195 million in the bonds issued by Sesa Resources, a natural resources company and part of the Vedanta Group, at 10% coupon rate. (April 3, 2024)
[Expected] Vedanta is looking to raise c.$300 million through issuance of secured, rated and redeemable NCDs. (April 4, 2024)
KEY FUNDS AND FUNDRAISES
Filter Capital, a technology-focused investment firm, marked the final close of its maiden fund with a target corpus of c.$95 million. (April 8, 2024)
Iron Pillar, a domestic multi-stage venture capital firm, secured an equity commitment of c.$10 million from the US DFC, a US-based development finance investor. The fund has a target corpus of $50-100 million. (April 4, 2024)
Holani Consultants, a domestic merchant banker and stock broker, launched an SME focused ‘angel’ fund (AIF Category I) with a target corpus of c.$50 million. (April 4, 2024)
Centre Court Capital, a sports and gaming focused domestic venture capital fund, marked the first close of its latest investment vehicle at c.$25 million. The fund has a target corpus of c.$45 million and is sponsored by Parth Jindal from JSW Group, and is managed by Mustafa Ghouse (ex-CEO, JSW Sports) and Alok Samtaney (ex-investment director, TVS Capital and Sabre Partners). (April 4, 2024)
MARKET INSIGHTS & RESEARCH
Reports
Avendus’ report on ‘Green Hydrogen’ highlights that India's green hydrogen sector is poised to attract $125 billion in investments by 2030, fueled by a strong sustainability focus, proven commercial viability, diverse applications, and robust regulatory support. The industry is reaching a critical growth threshold, with competitive production costs and emerging key players indicating that initial investment risks will be transient. [Paywall]
Inc42’s note on ‘Indian Agritech market’ highlights a $25 billion opportunity in the agritech space. The World Economic Forum reports a significant rise in agritech startups in India, growing from 43 in 2013 to over 1,000 by 2020, with the sector consolidating as mature companies expand their solution portfolios. Since 2014, the agritech sector has attracted over $2.4 billion in funding through 280+ deals. As of 2022, the Indian agriculture market stood at $436 billion and is expected to reach $580 billion by 2028, growing at 5% CAGR. [Paywall]
Entrackr report on ‘used car startups in India’ highlights that the Indian used car market is undergoing a significant shift and is expected to reach $30+ billion in 2024 and $64 billion by 2029 at a 15% CAGR, influenced by changes in mobility preferences due to the COVID-19 pandemic, more financing options, and new car scrapping norms, leading to increased demand and supply. This sector, featuring growth leaders like Cars24 and Spinny, has created four unicorns, with Cars24 valued at $3.3 billion. The market is also experiencing substantial revenue growth, with Cars24 leading in earnings despite a recent decline, while Spinny and CarDekho have shown impressive revenue expansions.
Inc42’s note on India’s ‘soonicorns’ lays out the trends and insights on the upcoming unicorns in the country. Indian startups valued between $200 million and $1 billion collectively boast a combined valuation of over $40 billion, having raised more than $15 billion since 2014. The fintech sector leads with 36 soonicorns, followed by e-commerce with 19 soonicorns. PayMate, a B2B solutions provider, tops the soonicorn valuation list at $930 million. [Paywall]
KPMG report on ‘Unlocking the potential of bike-taxis in India’ highlights the significant role of bike-taxis in enhancing sustainable urban mobility and supporting the gig economy. It underscores bike taxis as affordable and efficient solutions for last-mile connectivity in rapidly urbanizing Indian cities, linking increased two-wheeler use to reduced traffic congestion and greenhouse emissions, and positioning them as essential for the expanding electric vehicle market.
Entrackr’s report on ‘Indian startups fundraising in Jan-Mar 2024’ lays out that Indian startups attracted $2.8 billion in funding across 325+ deals in Q1 2024, with March witnessing over $1 billion in investments, marking a significant recovery. Despite this influx, the sector still faces challenges such as layoffs, shutdowns, and executive departures.
Inc42’s ‘Indian tech startup funding report Q1 2024’ highlights that India’s tech startups raised over $2 billion in investments in Q1 2024, down 33% yoy. The median ticket size reached $3.7 million with 460+ investors participating in 200+ deals. 66% of investors believe in India’s AI potential with the market AI applications market expected to exceed $17 billion by 2030, growing at c.50% CAGR.
Collier’s report on ‘Real Estate Investment Snapshot Q4 2023’ provides insights that the capital inflows in Q1 2024 in the real estate market reached c.$1 billion, a 40% yoy decline, but surged by 21% on a sequential basis. Office and Industrial & warehousing segments cumulatively accounted for c.75% of the total inflows in Q1 2024. Domestic investments rose by 15% yoy, primarily driven by office and residential assets.
EIU’s report on ‘Assessing the best places for doing business’ expects strong economic growth between 2024 and 2028 with more FDI coming into India as companies look for manufacturing destinations other than China. India is third on the list of most improved countries for business destination as a result of its youthful demographic, which promises strong demand and availability of good labour supported by focused government initiatives.
Articles
In FY2024, Indian companies primarily opted for the bond market to raise funds, securing a record c.$117 billion through private bond placements, a 15% increase vs FY2023, as it proved more cost-effective and quicker than raising funds via equity. Equity fundraising still reached c.$15 billion, the second-highest mark after FY2021, with over 50% raised via QIPs. Read more.
India is targeting an average of $100 billion in FDI annually over the next five years, a significant increase from the previous $70 billion. This initiative is part of a broader "China plus one" strategy, attracting global companies like Apple and Samsung to diversify their manufacturing into India to mitigate geopolitical risks. Read more.
RBI has announced that foreign investors can now invest in sovereign green bonds via the International Financial Services Centre (GIFT City) route, as part of the Centre’s efforts to enhance debt markets. This new provision will be detailed further in coordination with the Government and the IFSC Authority. Read more. [Paywall]
The integration of Generative AI has revolutionized India's edtech landscape by enhancing learning efficiency, improving student satisfaction, and boosting user engagement and retention. GenAI can provide the much needed boost to the edtech sector, however, alongside these advancements, concerns over data privacy have become more pronounced. Read more. [Paywall]
KPIs
A recent RBI survey indicates that consumer confidence in India has reached its highest point since mid-2019, driven by positive views on the current and future economic conditions and promising investment opportunities as manufacturing capacity utilization increases. Consequently, the RBI's Monetary Policy Committee has maintained the repo rate at 6.5%.
As per CRISIL report on ‘Indian Economy’, India's GDP growth for fiscal 2024 has exceeded expectations, hitting 7.6%, with the potential to reach 8%, despite global economic uncertainties. This growth comes amid robust U.S. economic performance, which could benefit India's exports. However, growth is expected to moderate to 6.8% in the next fiscal year, influenced by high-interest rates and a reduction in fiscal spending. The focus for future growth includes increased private corporate investment and strengthening private consumption, which remains a critical component of the economy.
CRISIL projects a favorable credit outlook for Indian companies in the 1H FY2025, anticipating more upgrades than downgrades. Benefiting from government spending, sectors like infrastructure, hospitality, and education are expected to perform well. Strong balance sheets and robust domestic demand are likely to underpin overall credit stability.
India Ratings’ note on FY25 State Finance outlook highlights the control of revenue deficits, which leads to states’ increased fiscal flexibility. This allows the states to maintain their emphasis on capital expenditure projects. India Ratings has kept a neutral outlook for Indian state finances in FY25, projecting the states’ revenue deficit at 0.4% of GDP for FY25, down from 0.5% in FY24, with fiscal deficits expected to decrease to 3.1% from 3.2%. Despite lower grants from the central government, revenue growth is buoyed by robust tax income, expected to increase 9.5% annually.
WEEKLY MARKET UPDATE (w/c April 1, 2024)
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