India In Sight #44
India In Sight #44
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.
Subscribe to receive the newsletter every week in your inbox!
Stay tuned, Stay ahead!
Key reports in this edition:
Outlook reports on Retail, Industrial & Logistics, and Residential real estate by CBRE
Financing for Sustainable Development Report 2024 by United Nations
Sector views on India auto, auto ancillary and paper manufacturers by India Rating
KEY DEALS
Equity
[Exit] TPG sold part of its stake in Five Star Business Finance, a non-banking finance company, for c.$50 million in a secondary market transaction. The PE firm invested in Five Star across multiple tranches during 2018-21 and has harvested c.$275 million till date with the remaining stake valued at c.$240 million (c.30% IRR). (April 12, 2024)
NIIF, India’s quasi-sovereign wealth fund, to invest c.$200 million in iBus Network, a digital infrastructure solutions company, through its Master fund. (April 10, 2024)
Warburg Pincus acquired a stake in Appasamy Associates, an eye surgical & diagnostic equipment manufacturer. The transaction details of the deal were not disclosed however the deal value is estimated to be around c.$300 million for a 60%+ stake. (April 10, 2024)
[Exit] Bain Capital sold their remaining c.1% stake in Axis Bank, a private sector bank, for c.$430 million. Bain Capital invested c.$1 billion for a c.5% stake in 2017 and has harvested c.$1.5 billion on its investment (1.5x+ MOIC). (April 09, 2024)
Blackstone to acquire c.12% stake in India Bulls Real Estate, a real estate company, for c.$150 million through its real estate fund alongside Embassy Group and Baillie Gifford & Co., who will invest c.$140 million and c.$25 million respectively. Other investors in the round included Quant Active Fund, Poonawalla Finance, and Capri Global. India Bulls Real Estate (to be rebranded as Equinox India Developments) raised a total of c.$470 million via equity and warrants in the fundraise. (April 08, 2024)
[Exit] Nexus Venture Partners, a domestic multi-stage venture capital firm, sold its portfolio company Eka Software, a commodity trading focused digital solutions company, to STG, a US based PE firm which will merge Eka with Quor Group, one of its portfolio companies. The financial details of the transaction were not disclosed. Nexus had first invested $10 million in Eka in 2009 followed by a $40 million round in 2013, along with Silver Lake Kraftwerk. (April 08, 2024)
[Expected] Zypp Electric, an EV fleet startup, is looking to raise c.$40 million from Tribe Capital for expansion and tech development, at a $300-350 million valuation. (April 12, 2024)
Credit Deals and Issuances
Muthoot FinCorp, a non-bank finance company, to raise c.$45 million through issuance of NCDs for a coupon rate of c.10%. (April 10, 2024)
Edelweiss Financial Services, a financial services company, raised c.$25 million through the issuance of NCDs at an annual coupon rate of c.10%. (April 08, 2024)
KEY FUNDS AND FUNDRAISES
Synergy Capital Partners, an early and growth stage fund, to launch its maiden equity investment fund with a target corpus of c.$70 million. (April 10, 2024)
Endiya Partners, an early-stage venture capital firm, secured a c.$12 million commitment from Self-Reliant India Fund for its third fund with a target corpus of c.$100 million. (April 10, 2024)
Cornerstone Ventures, an early-stage venture capital firm, launched its second fund with a target corpus of c.$200 million. The fund would make $5-15 million investments in 15-20 early and growth stage B2B enterprise tech startups. (April 10, 2024)
Arbour Investments, a real estate investment platform, is looking to launch its maiden credit fund with a target corpus of c.$100-120 million. (April 09, 2024)
MARKET INSIGHTS & RESEARCH
Reports
India Retail outlook 2024 report by CBRE outlines that India's retail sector is poised for further growth in 2024, driven by robust consumer demand and the completion of new shopping malls in key metropolitan centres. In 2023, the sector saw a space take-up of c.7 million sq. ft. in Tier-1 cities, up by 47% yoy while the supply addition rose by 3x yoy with the addition of 13 malls. Anticipation of cautious optimism among both retailers and consumers suggests continued expansion within Tier-I cities, while several Tier-II markets are expected to emerge as attractive destinations for retail development. The evolution of shopping malls into experiential hubs is shaping the future of the industry. Fashion and apparel category forms 32% of the overall demand across categories with homeware and department stores contributing 17% to the demand.
India Industrial & Logistics outlook 2024 report by CBRE highlights that in 2023, India's Industrial & Logistics (I&L) leasing activity volume reached a historic high at 38.8 million sq. ft., led by third-party logistics firms (45% of total leasing volume), with significant contributions from the Engineering & Manufacturing (E&M) sectors, bolstered by government initiatives like 'Make in India'. Mumbai, Delhi-NCR, and Chennai dominated the leasing activity, driven by 3PL companies optimizing costs and adapting to new economic strategies. The supply in I&L sector also reached the peak in 2023 with 36 million sq. ft. of space getting operational.
India Residential outlook 2024 report by CBRE outlines that India's residential sector saw record sales and property launches in 2023, surpassing 300K units sold despite concerns over rising loan rates, while the luxury real estate market flourished with a 75% yoy growth, appealing particularly to high-net-worth individuals and non-resident Indians amid global economic uncertainties.
Financing for Sustainable Development Report 2024 by United Nations highlights the severe financing gaps hindering progress on the Sustainable Development Goals and climate action that need to be addressed. The report highlights India’s growing appeal to multinational corporations. It discusses investment in India’s manufacturing sector as India is seen as an alternative to China by developed economies which are looking to diversify their supply chains. Read more.
KPMG report on IPOs in India - performance and capital market highlights – 9M FY24 provides insights that in 2023, India showcased its economic resilience and growth potential amid global challenges, while the US saw a dip in IPO listings but stabilized capital markets, suggesting a potential rebound in issuance activity for 2024. India's capital markets remained vibrant in FY24, with FPI pouring in c.$25 billion from April to December. India saw 50 new listings with total funds raised at $5.6 billion during the period with $220+ billion in total subscriptions. This performance underscores India's growing status as a key global investment hub.
As per India Ratings, the auto ancillary sector is expected to see continued growth in FY2025 driven by vehicle premiumization and electrification trends, though tempered by weaker domestic commercial vehicle demand and modest export growth of 6%-8% yoy. While EBITDA margins are expected to remain stable, potential prolonged geopolitical tensions like the Red Sea crisis could impact raw material costs and affect profitability. [Paywall]
India Ratings provides insights in India's auto sector for FY25, predicting a slowdown in growth with passenger vehicles (PVs) and two-wheelers (2Ws) expected to grow at moderated rates of 6%-9%, while commercial vehicle (CV) sales may remain flat due to election disruptions. Despite this, the sector could see modest revenue growth of 5%-7%, stable EBITDA margins, and sustained capital expenditure, particularly towards EVs and new technologies. [Paywall]
ICRA’s note on affordable housing finance companies shares that the loan portfolio of affordable housing finance companies (AHFC) saw a 26% yoy growth in the first nine months of FY2024, surpassing $12 billion, driven by strong demand and government housing initiatives. Despite pressures from rising systemic rates, AHFCs maintained stable asset quality and profitability with net interest margins at c.7% and credit costs at c.0.4%, although future profitability may be pressured.
Articles
Funding for space startups rose to $6.5 billion in Jan-Mar 2024 (vs $2.9 billion in Jan-Mar 2023, up by 125%), driven by robust government spending and geopolitical needs for satellite-derived data, marking a strong rebound and growing commercial interest in the space economy. Satellite capacity cost declines have further fueled commercial utilization of space assets. Read more.
India's Web3 adoption deepens with 1000 + startups - India leads in blockchain adoption in 2023 with 35+ million trading accounts and a robust web3 ecosystem featuring 1,000+ startups, despite a dip in total funding from 2022. The nation boasts a growing pool of web3 developers, now 12% of the global share, and a gaming sector where 90% of web3 gamers engage for NFTs and tokens, with significant institutional and governmental engagement in blockchain initiatives. Read more.
Individual investors are increasingly looking for securitized debt instruments (SDIs) issued by mid-sized companies for potentially higher returns. These SDIs bundle debt together, similar to bonds, but are backed by the cash flow of the issuing companies. There is increasing appetite for bonds rated below AA which could potentially offer returns above 10% via fixed instruments (SDIs). The growing popularity of such securities also opens up a new source of funding for India’s small- and mid-sized firms, who often face challenges in accessing capital. Read more.
India's direct-to-consumer (D2C) market is expected to reach $100 billion by 2025, driven primarily by fashion startups that dominate this segment and are projected to grow to c.$43 billion by 2025. D2C brands are targeting the increasing demand for innovative products as consumer loyalty to traditional brands diminishes. Read more. [Paywall]
India Ratings notes a decline in EBITDA margins for Indian paper manufacturers in FY24 due to heightened competition and lower prices driven by increased imports from ASEAN countries and China, leveraging cheaper raw materials and trade concessions. The surge in imports, particularly at zero import duty from ASEAN and reduced tariffs from China, has forced Indian producers to cut production volumes, with imports rising 23% year-over-year in FY23 and expected to grow further. Read more.
Large enterprises are cautiously adopting generative AI primarily to enhance operational efficiency before deploying customer-facing solutions, yet their eagerness to use GenAI for improved work performance and business results is high, with leading firms like TCS, Wipro, and Infosys already utilizing its capabilities for various purposes. Read more. [Paywall]
India is emerging as a potential economic powerhouse, fueled by its massive and youthful population. The government is actively pushing for a manufacturing boom. However, this hopeful outlook is tempered by significant hurdles like infrastructure concerns, low female workforce participation, and a large rural populace. Despite these challenges, experts believe India has the potential to become the world's top driver of economic growth this decade. This could reshape global dynamics, offering the US a strategic partner and raising concerns about environmental impact as India develops. Read more.
KPIs
India surpassed the 100 million mark for active credit cards in use, with the top four banks holding around 70% of these cards, and HDFC Bank being the leader with 20% market share at 20.4 million cards, followed by SBI (18.7 million), ICICI Bank (16.8 million) and Axis Bank (13.9 million). This achievement highlights the country's growing credit market however it will be interesting to see whether the growth can be sustained in the future. [Paywall]
Eight Indian states will have economies surpassing $1 trillion by FY47, with Maharashtra, Karnataka, and Gujarat expected to reach this milestone first by FY39. [Paywall]
WEEKLY MARKET UPDATE (w/c April 8, 2024)
Thank you for reading India In Sight!
Read our other editions here.
Disclaimer:
The content provided on this platform contains references and links to external sources, including articles, reports, websites, images, or videos. We do not own or claim copyright over the content found in these external sources. The ownership and rights of the content belong to the original creators.
This post and the information presented are intended for informational purposes only. The views expressed herein are the author’s alone and do not constitute an offer to sell, or a recommendation to purchase, or a solicitation of an offer to buy, any security, nor a recommendation for any investment product or service. While certain information contained herein has been obtained from sources believed to be reliable, neither the author nor any of his employers or their affiliates have independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author and affiliated persons and companies assume no liability for this information and no obligation to update the information or analysis contained herein in the future.