India In Sight #47
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:
PE/VC Roundup Q1 2024 by IVCA-EY
Indian startups monthly report - April 2024 by Entrackr
Surging ahead: How electric two-wheelers are rapidly gaining popularity by BCG
REITs – Tapping into India’s real estate potential by Avendus
Navigating new frontiers - Transforming governance with GenAI by KPMG
KEY DEALS
Equity
[Exit] Carlyle Group sold c.2% stake in Yes Bank, a private sector bank, for c.$173 million in a block deal. Carlyle initially acquired c.10% stake in the bank for c.$1 billion in 2022. (May 03, 2024)
CapitaLand Investment Trust, a Singapore-based real estate investment manager, signed an agreement with Phoenix Group, a real estate builder & developer, to acquire 2.5 million square feet of IT buildings in HITEC City, a tech park in Hyderabad, for c.$26 million. (May 03, 2024)
U Gro Capital, an SME focused lender and fintech platform, raised c.$158 million through a mix of compulsory convertible debentures and warrants from existing and new institutional investors and family offices. Samena Capital, a domestic private equity firm, led the funding round with c.$60 million. (May 02, 2024)
Morgan Stanley and InvAscent, a healthcare-focused PE firm, jointly acquired 60%+ stake in Maiva Pharma , an injectables manufacturer, for c.$120 million. (May 02, 2024)
Infinity Fincorp, an MSME focused NBFC, raised c.$34 million in its latest funding round from Jungle Ventures, Archerman Capital and other investors. (May 02, 2024)
Tribe Capital, an India focused venture capital firm, to invest c.$75 million in Shiprocket, an e-commerce logistics and delivery platform. (April 30, 2024)
[Exit] Temasek sold c.87% stake in Medica Synergie, a super-specialty hospital chain, to Manipal Hospitals for an estimated c.$170 million. Temasek had initially acquired a majority stake in Medica Synergie in 2021 (translating to c.2x MOIC in 2.5 years). (April 29, 2024)
Investcorp, a Bahrain-based private investor, acquired a stake in NSEIT, a digital technology business subsidiary of National Stock Exchange (NSE) for c.$120 million. (April 29, 2024)
[Expected] Premji Invest, the family office of Azim Premji (ex-Wipro Head), is looking to acquire a majority stake in Nainital Bank, a subsidiary of Bank of Baroda, for c.$95 million. (May 03, 2024)
[Expected] Quadria Capital, a healthcare-focused PE firm, is looking to invest c.$150 million in NephroPlus Health Services, a nephrology chain operator, at a valuation of c.$240 million. (May 02, 2024)
[Expected] Advent International looking to invest c.$60 million in Venkata Narayana Active Ingredients, an active pharmaceutical ingredients producing company, via Cohance, its pharma focused investment platform. (April 30, 2024)
Credit Deals and Issuances
Five Star Business Finance, an SME focused NBFC and mortgage lender, raised c.$60 million in debt from IFC. The capital will be used to grow its business loan portfolio. (April 29, 2024)
KEY FUNDS AND FUNDRAISES
Nisus Finance, a domestic real-estate investor, established an international vehicle in Mauritius to channel foreign capital to the second fund set up under its real estate stressed assets strategy and is looking to raise c.$200 million overall via its foreign vehicles in Singapore and Mauritius. (May 02, 2024)
Stride Ventures, a domestic venture debt fund, marked the final close of its third fund at c.$165 million (vs initial target of c.$200 million). (May 01, 2024)
Morgan Stanley India Infrastructure to launch its second infrastructure focused private equity vehicle in India with a target corpus of c.$750 million. (May 01, 2024)
ChrysCapital raised c.$700 million for a continuation fund to acquire its stake in the National Stock Exchange (NSE) from its sixth fund. Anchor investors in the continuation fund included Harbourvest Partners, LGT Capital, and Pantheon Ventures. ChrysCapital initially acquired a stake in NSE in 2016 and held a c.4% stake for c.$750 million (as on March 31, 2024). (April 30, 2024)
IvyCap Ventures, a domestic venture capital firm, marked the final close of its third fund at c.$250 million. (April 30, 2024)
Finbridge Ventures, a real-estate focused private equity firm, launched its maiden real estate investment fund with a target corpus of c.$35 million. (April 30, 2024)
Pratithi Investments, the family investment office of Kris Gopalakrishnan (ex-Infosys Head), to launch its maiden fund (Cat-II AIF). The details regarding the target corpus and fund strategy were not disclosed. (April 29, 2024)
Missed our latest Monthly Roundup (April 2024) for deals and fundraises?
MARKET INSIGHTS & RESEARCH
Reports
‘IVCA-EY PE/VC Roundup Q1 2024’ highlights that in the first quarter of 2024, PE/VC investments in India slightly declined by 1% yoy to $13.5 billion, although they were up by 41% qoq, with a 33% increase in deal volume across 290+ deals. Real estate and infrastructure investments surged by 2x to c.$7.5 billion, driven by large ticket deals, followed by buyout investments with $4.5 billion and growth investments worth $3.6 billion of investments.
Entrackr’s report ‘Indian startups monthly report’ highlights that in April 2024, Indian startups secured over $1 billion from 124 deals, including significant growth and early-stage investments, marking a robust start to the year with monthly funding averaging $1 billion—a substantial increase from the previous year's occasional dip below $500 million. This surge was propelled by various financing activities, including pre-IPO and late-stage funding, along with debt deals.
BCG’s report ‘Surging ahead: How electric two-wheelers are rapidly gaining popularity’ provides insights that the electric two-wheeler sales in India soared from about 45K units in FY 2021 to c.950K in FY 2024, necessitating deeper understanding of consumer preferences. This research also highlighted the significant influence of contextual variables beyond just demographics in shaping 2W consumer behavior.
The detailed note by Avendus on ‘REITs – Tapping into India’s real estate potential’ lays out that REITs offer an accessible way to invest in real estate assets through publicly traded units on exchanges like NSE and BSE, distributing net cash flows to unitholders after expenses. The Indian REIT market, predominantly office, and retail spaces, has evolved from a focus on residential properties to a significant international presence, with a market cap of c.$10 billion across 4 listed REITS having a gross AUM of c.$16 billion and properties covering 115 million square feet.
Cushman & Wakefield’s report on ‘India investment market beat Q1 2024’ highlights that in Q1 2024, India's GDP grew 8.4% yoy, driven by significant gains in the manufacturing and construction sectors, with manufacturing PMI reaching a 16-year high. The investment was predominantly in the residential sector, representing 63% of the quarter's total, with major projects underway in top cities like Bengaluru, while the residential segment also led fundraising activities, contributing 93% to a total of $563 million. Read more.
KPMG’s report ‘Navigating new frontiers - Transforming governance with GenAI’ provides insights that Generative AI is set to revolutionize various industries with a global market potential of $50 billion by 2025, as developed nations dominate investment and market share, while India is enhancing its capabilities and infrastructure to become a significant player. India stands sixth with c.$8 billion of private investments received for AI during 2013-22 however it is now growing at 30%+ CAGR.
SalesForce report on ‘State of Service’ highlights that customer service is adapting to higher expectations and increased demand by integrating AI and automation, aiming for quicker, more personalized services while balancing efficiency and quality. With 85% of decision-makers expecting service departments to generate more revenue and 73% of Indian organizations using or evaluating AI, organizations are leveraging technology to enhance service capabilities and meet evolving customer needs more effectively. Read more.
Sector notes from ICRA:
‘Hotels’: 7-9% projected revenue growth for the Indian hotel industry in FY2025, following a 14-16% increase in FY2024, driven by sustained domestic leisure, MICE events, business travel, and the rise of spiritual tourism in tier-II cities. Operating margins expected to remain robust at 31-33%. Positive outlook for the sector supported by high occupancy rates and rising average room rates.
‘Mortgage finance market’: 11% growth in NBFC-HFCs' on-book portfolio for 9M FY2024, with disbursements expected to rise. The home loan segment has grown to 75% of the portfolio, while non-home loans are expected to stabilize at 25-30%.
Articles
IFC is set to boost its investments in India to c.$4 billion this fiscal year, focusing on climate finance and supporting the country's ambitions for renewable energy and a net zero economy by 2070. Key areas include financial inclusion, digitalization, and infrastructure, with an emphasis on public-private partnerships to drive growth. Read more.
RBI has issued new regulations to improve infrastructure financing and risk management, setting out guidelines for project lending that include consortium lending and moratorium limits. These guidelines also stipulate that the total repayment period for a project, including any moratoriums, should not exceed 85% of the project's economic life. Read more.
SEBI has updated its regulations to allow Venture Capital funds more flexibility in managing unliquidated investments after their funds' tenure ends - an option to such VCFs to migrate into Alternative Investment Fund (AIF) norms and avail the facilities available for AIFs to deal with unliquidated investments. Additionally, SEBI is creating a framework to facilitate easier participation by NRIs, overseas citizens of India, and resident Indians in foreign portfolio investments within India's IFSC GIFT City. Read more.
The RBI issued stricter KYC guidelines for payment aggregators - now requiring physical verification for current merchants and bank-grade KYC for new ones, aiming to enhance compliance. Read more. [Paywall]
Experts highlight India's success in fostering private innovation atop open digital infrastructure like UPI and ONDC, emphasizing their role in economic development and inclusivity, demonstrating a model for global emulation. Operational costs must be reduced to enable entrepreneurial service provision for the majority, rather than just the elite, promoting economic inclusivity. Read more.
KPIs
GST collections hit a new record of $25.3 billion in April, up by 12.4% yoy, driven by a 13.4% increase in domestic transactions and an 8.3% uptick in imports.
IMF raised India's growth forecast for FY25 to 6.8% from 6.5% and for FY24 to 7.8%, surpassing the government's estimates, attributing the positive outlook to robust domestic demand.
CRISIL’s note highlights that RBI has maintained its interest rates and policy stance, reflecting global trends of diverging monetary policies post-COVID-19 and amid varying economic conditions. RBI aims to manage inflation, particularly from food prices, while dealing with potential disruptions from rising crude oil prices and geopolitical shifts, despite forecasts of above-normal rains potentially easing food inflation pressures.
ICRA’s note on ‘Financial markets & banking’ projects the 10-year G-Sec yield in India to initially trade between 7.0-7.2% and then ease to 6.8-7.0% in mid-2024, driven by a mild dip in government market borrowings and bond index inclusion. Despite volatility due to global market shifts and regional tensions, robust Q4 FY2024 bond issuances and a substantial influx of foreign investments into Indian markets underscore a promising financial outlook.
The energy transition, often discussed in terms of reducing coal use and increasing renewables, also has significant effects at the household level. This analysis focuses on how these shifts influence household spending on energy and non-energy goods and services, using data from the HCES 2022-23 survey. The expenditure on food has declined to 47.5% in 2022-23 for rural areas, down from 52.9% in 2011-12 with similar trends in urban areas. Read more. [Paywall]
WEEKLY MARKET UPDATE (w/c April 30, 2024)
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