India In Sight #45
India In Sight #45
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:
Private Credit: India Deals & Rankings by Reorg
How PE/VC industry in 2023 navigated challenging times with resilience by EY
Consumer and Retail Dealtracker Q1 2024 by Grant Thornton Bharat
Outlook reports on India Real Estate, Alternative Sectors, and Senior Care by CBRE
KEY DEALS
Equity
Ecozen, a cleantech startup that offers solar-powered systems to farmers, raised c.$30 million in a mix of equity and debt from its existing investors including Nuveen. InCred Credit Fund and US DFC made a debt investment in the company as part of the funding round. (April 19, 2024)
Altum Credo, an affordable housing finance company, raised c.$40 million in a Series C round led by Z3 Partners, Oikocredit, and BII. Some of the existing investors including Aavishkar Capital, Amicus Capital, and PS Pai & Family sold their stake in the transaction. (April 18, 2024)
Shinhan Bank, a South Korean bank, acquired c.11% stake in HDFC Credila, an education finance company, for c.$180 million at a valuation of c.$1.6 billion. Last year, BPEA EQT and ChrysCapital acquired c.90% stake in HDFC Credila at a valuation of c$1.3 billion. (April 17, 2024)
ProcMart, a B2B marketplace, raised c.$30 million in its Series B funding round led by Nandan Nilekani, Fundamentum Partnership, Edelweiss Discovery Fund, and Paramark Ventures. (April 16, 2024)
Lighthouse Funds, an India-focused private equity firm, invested c.$85 million in Parsons Nutritionals, a contract manufacturer in the FMCG sector. Other investors in the round included IFC, Evolvence India, HDFC Fund of Funds and family offices. (April 15, 2024)
[Expected] Antara Senior Care, an independent senior living and assisted care services company owned by Max Group, is looking to raise capital by selling 5-10% stake in the company. (April 19, 2024)
[Expected] Neuberg Diagnostics, a super specialty diagnostics chain, is looking to raise c.$100 million in its pre-IPO funding round from PE funds. (April 17, 2024)
[Expected] CX Partners and Sunil Munjal Family Office, owned by Hero Enterprise, looking to invest an estimated c.$50 million in Sabine Hospital and Research Centre, a Kerela-based hospital. (April 17, 2024)
Credit Deals and Issuances
Power Grid Corporation, an electric power transmission utility company, to raise c.$14.5 billion through issuance of bonds in multiple tranches in FY2024-25. (April 17, 2024)
Aye Finance, an MSME-focused non-bank lender, to raise c.$30 million in debt funding from FMO, a Dutch development bank. (April 16, 2024)
Motilal Oswal Financial Services is raising c.$120 million through a series of eight secured redeemable NCDs at a coupon rate of 9-10%. (April 15, 2024)
[Expected] Vedanta, a metal and mining company, is looking to raise c.$300 million via the issuance of rupee-dominated bonds. (April 15, 2024)
KEY FUNDS AND FUNDRAISES
ICICI Ventures, the PE arm of ICICI Bank, has raised c.$110 million for its fourth real estate fund and will be looking to mark the final close at c.$125 million in July-September 2024. The fund would make debt investments in affordable and mid-income housing projects. (April 18, 2024)
Domestic venture capital funds, Caret Capital and Ev2 Ventures, have jointly launched Caret Capital Fund II, an India-focused venture capital fund with a target corpus of c.$50 million. The fund will invest in early-stage businesses in the sustainability sector. (April 18, 2024)
Inviga Healthcare Fund, a healthcare-focused PE-style investment fund, marked the first close of its maiden healthcare fund at c.$20 million. The fund has a target corpus of c.$50 million and will invest in pharmaceuticals, life sciences, and healthcare companies. (April 17, 2024)
NIIF, India’s sovereign infrastructure investment fund, is looking to raise c.$1 billion for its second Private Markets Fund to invest in PE/VC funds in India via a Fund of Funds strategy. Asian Infrastructure Investment Bank (AIIB), a multilateral development bank, has committed to invest c.$125 million in the fund ($100 million in PMF-II fund and $25 million via a co-investment sleeve). (April 16, 2024)
Evolvence India, a private equity fund, raised c.$225 million for its fourth fund and is looking to mark the final close at c.$250-300 million. (April 16, 2024)
MARKET INSIGHTS & RESEARCH
Reports
Reorg’s Private Credit: India Deals & Rankings provides private credit deal data and insights for India. In FY2024, Indian corporates secured $9.4 billion in private credit across 69 deals, with over 65% across three conglomerates: Vedanta ($3.2 billion, 6 deals), Shapoorji Pallonji ($1.8 billion, 2 deals), and GMR Group ($1.1 billion, 8 deals). c.$7 billion (75%) were used for refinancing while c.$6 billion (65%) were issued in the form of NCDs. Metals & mining (38%) and real estate (25%) sectors led the deal volume, with most deals offering 18-20% IRR. Varde Partners (10%), Kotak Alternate Asset (9%) and Oaktree Capital (8%) emerged as the top private credit providers by deal count.
EY’s report: How PE/VC industry in 2023 navigated challenging times with resilience talks about the PE/VC funding environment and stats in 2023. In 2023, PE/VC investments in India decreased by 11% to c.$50 billion across 850+ deals, with infrastructure attracting c.$12 billion, becoming the leading sector. Despite a fall in startup investments, exits hit a record $25 billion over 300+ deals. Read more.
CBRE’s 2024 India market outlook report provides comprehensive insights into India’s Real Estate sector with a special focus on alternative sectors. The report predicts continued growth in the sector, with a focus on office space, industrial and logistics, retail, and residential markets, driven by strong economic fundamentals and targeted government initiatives. Investment is expected to rise, with diverse areas like flexible workspaces and healthcare showing promising trends. The report projects an upswing in ‘Alternate Sectors’: data centers, sustained hospitality sector which is growing due to spiritual tourism, a healthcare boom post-pandemic, and increased demand for specialized office spaces in life sciences.
As per Grant Thornton Bharat’s Consumer and Retail Dealtracker, in Jan-Mar 2024, India's consumer and retail sector saw a significant increase in M&A and private equity deals, with overall deal values rising by nearly 33% to c.$1.8 billion and volumes increasing by 20% yoy to 102 deals. The Food and Beverage industry is expected to reach $30 billion by 2026 while the quick commerce market could reach $250 billion by 2028 at 10% CAGR.
CBRE’s paper on ‘The future of India’s senior care’ outlines that India's senior population is expected to grow by 2.5x, making it the fastest-growing demographic segment globally. By 2050, India is projected to house up to 340 million seniors, constituting c.17% of the world's elderly population. The senior living industry in India offers diverse housing and care options for adults aged 60 and above, promoting independence and social engagement, with promising growth potential driven by demographic shifts and increasing life expectancy. However, challenges such as affordability and acceptance still persist, yet the sector is set for significant expansion, attracting investors and providers.
Articles
EQT, a global PE firm, highlights the firm's robust deal pipeline in India as it plans to deploy an additional $5 billion across various sectors in India this year. EQT manages $250 billion in assets and have invested over $8 billion in 30 companies. Major sectors of focus to be IT, financial services and healthcare. Read more.
Road construction in India is projected to grow by 5-8% to 12-13k kilometers in the current fiscal year, following a 20% expansion in the previous year. This growth will be underpinned by a substantial project pipeline, increased government spending, and the Ministry of Road Transport and Highways' emphasis on project completion, despite a slight decline in project awards due to monsoon delays and bureaucratic hurdles in FY24. Read more.
The future of global technology will be driven by digital public infrastructure (DPI) rather than major tech firms with India making a significant impact. India, having developed significant DPI components like Aadhaar and UPI, plans to export this model globally, which will offer substantial opportunities for Indian entrepreneurs and necessitate robust investments from domestic sources like insurance and pension funds to fuel the startup ecosystem. Read more.
India’s Finance Minister emphasized India's focus on policy to become a global hub for manufacturing and investment, highlighting initiatives to attract foreign capital including Gujarat's significant role in drawing FDI and its preparedness for semiconductor manufacturing. Read more.
The Ministry of Finance has announced the increase of FDI ceilings for activities related to satellites, as stipulated in the Foreign Exchange Management (Non-Debt Instruments) Rules. As per the new rules, up to 100% FDI is allowed in the space sector. However, up to 74% FDI is permitted under the automatic route in satellite manufacturing and operation, satellite data products and ground and user segment. Beyond 74%, FDI in these activities requires government approval. Read more. [Paywall]
KPI
India's wholesale inflation rate rose to a three-month high of 0.53% in March 2024 (vs 0.20% in February), mainly driven by food and primary articles, while retail inflation fell below 5% for the first time in five months in March, easing to 4.85% (vs 5.09% in February).
As per IMF data, India is ‘one of the strong performers’ with a projected 6.8% growth rate in 2024 and 6.5% in 2025. India continues to be the fastest growing economies of the world and ahead of China's 4.6% growth projection. As per UNCTAD, India grew by 6.7% in 2023 and is expected to grow by 6.5% in 2024.
India's net direct tax collections rose by 17.7% yoy to $236 billion in FY2023-24 (vs $200 billion in FY2022-23), surpassing the revised estimates by c.$1.6 billion.
WEEKLY MARKET UPDATE (w/c April 15, 2024)
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