India In Sight #46
India In Sight #46
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:
Weaving India’s future: A tapestry of green and grey energy by Morgan Stanley
State of Indian e-commerce report Q1 2024 by Inc42
Deals at a glance Q1 2024 by PwC
Venture pulse report Q1 2024 by KPMG
Monthly bulletin - April 2024 by RBI
KEY DEALS
Equity
Advent International to invest c.$295 million to acquire a minority stake in Apollo HealthCo, a subsidiary of Apollo Hospitals, a private hospital chain in India. The deal will facilitate the merger between Keimed, a wholesale pharmaceutical distributor, and Apollo 24/7, a digital healthcare platform. Advent will acquire a c.12% stake in the merged entity at a valuation of c.$2.7 billion. (April 26, 2024)
[Exit] ADV Partners, an Asian private equity firm, sold their stake in Arjas Steel, a steel plant company, to Sandur Manganese and Iron Ores (SMIORE), a mining company, for a valuation of c.$360 million. ADV initially invested in the company in 2018 for a valuation of c.$120 million followed by some further investments and exits over the years (translating to 3.5x MOIC overall). (April 26, 2024)
Edelweiss Alternatives, a domestic investment firm, invested c.$180 million in Manyata Tech Park, a software technology park, acquiring MMTP Project’s stake in the tech park (1.1 million sq. ft. area) from its Rental Yield Plus Fund, a commercial office segment-focused vehicle. (April 25, 2024)
Plutus Wealth, a wealth management firm, acquired c.9% stake in Choice International, a financial service company, for c.$70 million. (April 25, 2024)
Northern Arc, a non-banking lender, raised c.$80 million in equity and debt from IFC. They are looking to raise an additional $75 million through another existing foreign investor. The funds will be used for further expansion and improving its reach to end customers. (April 24, 2024)
[Expected] Temasek and Fidelity are looking to invest c.$200 million in Lenskart, an optical prescription eyewear retail chain, through a secondary sale share at a valuation of c.$5 billion. (April 25, 2024)
Credit Deals and Issuances
Reserve Bank of India to auction its G-Secs for c.$3.8 billion, using various price-based methods. (April 26, 2024)
[Expected] Adani Green Energy is looking to raise c.$400 million as a loan from global banks. The loan is expected to be priced at SOFR + 250 bps for five years. Adani Green is also looking to raise c.$1.3 billion through bonds over the next two months. (April 26, 2024)
[Expected] Axis Bank is looking to raise c.$6.7 billion in a mix of debt and equity. The bank will raise c.$4.2 billion through the issuance of various debt instruments including long-term bonds, masala bonds, and sustainable, optionally/compulsorily convertible debentures. The remaining c.$2.5 billion will be raised by issuance of equity shares or related securities. (April 24, 2024)
KEY FUNDS AND FUNDRAISES
Kedaara Capital, a domestic private equity fund, marked the final close of its fourth fund, at c.$1.7 billion, raising the largest corpus by Indian private equity fund. (April 25, 2024)
InCred Alternative Investments marked the first close of its maiden private equity fund at c.$40 million. The fund has a target corpus of c.$60 million. (April 25, 2024)
Inflexor Ventures, a tech-focused venture capital firm, to launch its second VC fund along with an opportunities fund to invest across sectors like healthtech, consumertech, fintech, cleantech, edtech and agritech. The financial details about the funds were not disclosed. (April 25, 2024)
IndoSpace, a warehousing and industrial real estate developer, marked the final close of its fourth fund, at c.$400 million. The fund initially had a target corpus of c.$600 million. (April 24, 2024)
Quona Capital, a fintech-focused venture capital firm, secured a commitment of c.$50 million for its fourth fund from European Investment Bank. The fund has a target corpus of c.$350 million. (April 24, 2024)
OTP Ventures, a venture capital investment firm formed by Suhail Sameer (ex-CEO, BharatPe), launched its maiden venture capital fund with a target corpus of c.$50 million. (April 23, 2024)
Monarch Networth Capital, a domestic investment firm, marked the final close of its third fund at c.$90 million. (April 22, 2024)
Macquarie Group launched Vertelo, its EV financing platform in India, which will invest c.$1.5 billion in EVs - 95% of which will go towards electrifying commercial vehicle fleets, with the remaining 5% directed towards charging infrastructure and additional needs. (April 22, 2024)
MARKET INSIGHTS & RESEARCH
Reports
Morgan Stanley’s report on ‘Weaving India’s future: A tapestry of green and grey energy’' highlights that India is aggressively pursuing economic growth, projected to be the world's third-largest economy by 2030 with a focus on renewable energy to meet power demands and aiming for a net zero target by 2070. Three major areas of opportunity: 1. Power transmission and distribution (T&D); 2. Renewables and battery storage; 3. Electric transportation
Inc42’s report: ‘State of Indian e-commerce report Q1 2024’ provides insights that the Indian e-commerce sector is rapidly expanding into tier 2 cities and beyond, projected to reach over $400 billion by 2030 with a CAGR of 20%, and expected to serve over 500 million online shoppers. The report highlights the growth within the fashion e-commerce segment, set to exceed $112 billion by 2030, and examines the influence of fashion startups during a funding slowdown. [Paywall]
PwC report on ‘Deals at a glance’ lays out that the first quarter of 2024 witnessed a 24% increase in deal volume and a 60% rise in M&A deal value, reaching c.$19.6 billion, despite a dip in private equity deals, with total deal value climbing to c.$25.6 billion. This resurgence in deal-making, especially in traditional sectors like media and entertainment, aligns with India's robust 8.4% GDP growth in Q3 FY24, reflecting a positive economic outlook and market optimism. Read more.
KPMG report ‘Venture Pulse Q1 2024’ highlights that in Q1 2024, global VC investment fell to c.$76 billion over 7,500+ deals due to geopolitical tensions and a downturn in late-stage investments, with the Americas leading at $38.2 billion. Venture capital investment in India doubled sequentially in the March quarter, touching $3.2 billion across 354 deals, outperforming a subdued global market. Read more.
Articles
Indian dairy market generated $70+ billion in revenue in FY2024 and is expected to grow at a CAGR of 7% till 2028. Indian dairytech startups are addressing traditional challenges in the dairy industry such as poor quality feed and animal healthcare, while leveraging advanced technologies like IoT, AI, and ML to overhaul the sector. These innovations are propelling a new phase of India's dairy development, building on the country's position as the world's leading milk producer since the inception of Operation Flood in 1970. Read more.
Allianz’s note on ‘Ten reasons to invest in Indian equities’: India's equity market, characterized by significant depth and a robust capitalization exceeding $4.3 trillion, is increasingly seen as indispensable for global investors due to structural advantages like youthful demographics, digitalization, and substantial infrastructure investments. These factors, alongside a diverse stock market and a reform-oriented government, make Indian equities an attractive, long-term investment opportunity.
JP Morgan’s note on ‘Why India now?’ provides insights that India's stock market has surged by 45%+ over the past three years, outperforming global and other emerging market equities, drawing parallels to U.S. market success driven largely by robust corporate profits. This sustained growth, marked by an 9% annualized return pre-Covid over two decades, positions India uniquely among emerging markets due to its strong corporate fundamentals.
India's burgeoning EV industry, encompassing manufacturers, suppliers, and charging providers, is beginning to tackle the major challenge of charging infrastructure, a critical barrier to the widespread adoption of electric vehicles. Comprehensive standards and mandatory requirements for interoperability should be put in place, along with data protection measures. Read more. [Paywall]
PwC experts highlight India as a top destination for global private equity, emphasizing its attractive valuations and stable market conditions. Technology, healthcare, and industrial sectors are expected to see growth in investments despite ongoing challenges in the startup ecosystem. LPs are looking for their big private capital clients to be able to provide a very diversified, well organized, and efficient investing option for them. Read more.
In 2023-24, corporate bond mobilization in India hit a record high of $120+ billion, up 17% yoy, driven by robust economic growth and high credit demand. The majority of funds were raised by All-India Financial Institutions/Banks and the private sector, with significant contributions from government entities. Read more.
RBI emphasized the necessity of bridging the digital divide in banking, advocating for targeted digital literacy programs to prevent the exclusion of those unfamiliar with digital platforms, stressing the importance of collaborative efforts among stakeholders and the pivotal role of educating women in these financial literacy initiatives. Read more.
KPIs
Deloitte India forecasts a 6.6% GDP growth for India in the current fiscal year, driven by consumption, exports, and capital inflows, alongside a burgeoning middle class fueling luxury demand. Despite inflation and geopolitical risks, it recommends enhancing rural employment and infrastructure investments to maintain spending levels.
The RBI bulletin highlights that India needs to sustain an 8-10% growth rate to leverage its youthful demographic for investment appeal, focusing on labor quality improvements driven by the services sector. It also warns of potential short-term food inflation volatility, advising caution. Read more.
India's finance ministry reports a robust economic outlook with resilient growth, stable prices, and a strong external sector, buoyed by domestic demand and manufacturing. Favorable monsoon forecasts are expected to enhance agricultural output and mitigate inflation concerns, contributing further to economic stability.
India's private sector activity hit a 14-year peak with the PMI Output Index reaching 62.2 in April, driven by strong service growth and steady manufacturing. Despite rising optimism and better margins, inflation continues to exceed average levels.
Rupee-denominated euro bond issuance reached $2.5 billion in the first four months of 2024, surpassing the total of $2 billion for 2023. Read more. [Paywall]
Below is a quick snapshot of the services sector performance from the latest RBI bulletin April 2024.
WEEKLY MARKET UPDATE (w/c April 22, 2024)
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