India In Sight #49
India In Sight #49
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:
Education sector: Half-yearly insights (Oct’23 – Mar’24) by Anand Rathi
India: Unlocking the potential by Franklin Templeton
India economic outlook by Deloitte
Sector notes on general insurance and critical minerals by ICRA
KEY DEALS
Equity
Brookfield (REIT) acquired Bharti Enterprises’ 50% stake in their JV which holds four commercial properties in northern India for a valuation of c.$720 million. The four Grade A assets include WorldMark assets at Aerocity New Delhi, Airtel Centre, WorldMark mixed-used property in Gurugram, and Pavillion Mall in Ludhiana. (May 16, 2024)
Canada Pension Plan Investment Board (CPPIB) invested c.$135 million in Enfinity Global, a US-based renewable energy company, to finance the development and construction of 1.2GW of solar and wind projects in India. (May 16, 2024)
Battery Smart, a battery-swapping services provider, raised c.$45 million in a round led by Acacia Inclusion. Other investors include MUFG, Blume Ventures, Ecosystem Integrity Fund, PC-SBI Kurashi Fund and BII. (May 16, 2024)
ChrysCapital acquired Centre for Sight, a chain of eye care centres, for c.$100 million. Mahindra Partners, one of the investors who exited, initially invested c.$30 million in 2019 for c.30% stake in the company and is expected to have generated c.2.5x returns on the investment. (May 14, 2024)
Kotak Strategic Situations Fund invested c.$50 million in Biorad Medysis, a medical device maker, after InvAscent, a healthcare focused PE fund, sold its c.23% stake in the company back to its promoters. (May 14, 2024)
Warburg Pincus to acquire Shriram Housing Finance, a non-bank home loan provider, from Shriram Finance and Valiant Partners for c.$550 million which includes the purchase of Shriram Housing’s equity shares and convertible instruments. (May 13, 2024)
[Expected] Advent International, a global private equity firm, is looking to sell its entire stake in Bharat Serums and Vaccines, a biopharmaceutical company, for a valuation of c.$2 billion. Advent initially acquired c.74% stake in the company in 2019 from Orbimed and Kotak Private Equity for c.$500 million followed by the acquisition of the rest c.26% stake from Daftary Family in 2022 for an undisclosed amount. (May 17, 2024)
[Expected] Jashvik Capital, a healthcare & consumer focused private investment firm, is looking to invest in Dolphin Sutures, a surgical equipment manufacturer, for an estimated deal value of c.$45 million. (May 16, 2024)
[Expected] ChrysCapital and Peak XV looking to sell part of their 20%+ stake each in Awfis Space Solution, a workspace solutions company, in the upcoming IPO of the company at an estimated valuation of c.$320 million. ChrysCapital initially invested c.$30 million in 2019 and is looking to harvest c.$25 million in the IPO with the remaining stake valued at c.$47 million, translating to c.2.5x MOIC over c.5 years. Peak XV (f.ka. Sequoia Capital) invested c.$20 million in 2017 followed by further smaller investments and is looking to harvest c.$30 million in the IPO with the remaining stake valued at c.$40 million, translating to c.3x MOIC over c.7 years. (May 16, 2024)
KEY FUNDS AND FUNDRAISES
10Unicorns (f.k.a 9Unicorns), an early-stage accelerator fund, launched its second fund with a target corpus of c.$200 million. The fund aims to invest in more than 200 startups across various sectors including SaaS, D2C, fintech, electric vehicles, energy, defence, and healthcare. (May 14, 2024)
Avigna, a warehouse developer, is looking to raise c.$120 million through an AIF route (Avigna Atlas Fund) for its expansion and to pay off its debt. This innovative approach will enable Avigna to leverage its completed warehousing rental assets and generate substantial funds for its business operations. (May 16, 2024)
MARKET INSIGHTS & RESEARCH
Reports
Anand Rathi’s report: Education sector insights: Half-yearly updates (Oct’23 – Mar’24) highlights that Indian higher education market size is expected to grow from c.$30 billion in 2023 to c.$90 billion in 2035 at c.10% CAGR. Total funding in the sector stood at c.$415 million (c.$150 million in debt) for the period. Higher education segment could achieve 50% gross enrolment ratio by 2035, resulting into growth in education sector & economy. Skilling is witnessing significant growth, driven by increasing emphasis on vocational training and skill development. [Paywall]
Franklin Templeton’s report: ‘India: Unlocking the potential’ explains the India story from a macro perspective with drivers, trends, opportunities and rising sectors in the economy. India, the fifth-largest economy, contributes significantly to global growth but utilizes only 7% of the world’s output despite having over a sixth of its population. Recent policy reforms have improved its outlook, with GDP growth averaging 5.8% over the past decade and an IMF forecast of 6.3% in the coming years. Challenges remain, including labor market reforms and enhancing women's participation, crucial for capitalizing on its demographic advantages.
Deloitte’s note on ‘India economic outlook’ highlights that India's GDP surged by 8.4% in Q3 of fiscal year 2024, surpassing expectations and prompting a revised annual growth forecast of 7.6%-7.8%. Despite anticipated modest growth in Q4 due to election uncertainties, the near-term forecast aligns with previous predictions. Future growth is projected at around 6.6% in fiscal 2025 and 6.75% in fiscal 2026, influenced by geopolitical factors and consumer spending shifts towards luxury goods. Rising household debt and inflation pose challenges to long-term economic stability.
Sector notes from ICRA:
General insurance: Industry gross direct premium income (GDPI) expected to grow to c.$38 billion by FY2025 and c.$44 billion by FY2026 from c.$33 billion in FY2024; private insurers to expand further to 70.5% of GDPI in FY2026 from 67.6% in FY2024
Critical minerals: Mineral intensity of green energy is significantly higher than conventional energy systems. Thus, transformation of energy systems to increasing mineral intensity from increasing energy density is an irreversible process for meeting net zero commitments. This is expected to result in a surge in demand for critical minerals required in such green technologies.
Articles
CPPR’s note: ‘Vision 2030: India’s potential in Saudi Arabia’s healthcare and pharmaceutical landscape’: Saudi Arabia's Vision 2030 aims to transform its healthcare system with over $65 billion in investments, focusing on restructuring, privatization, and technological advancement. India, known for its strong pharmaceutical industry, has opportunities for collaboration, highlighted by successful COVID-19 vaccine partnerships. Despite regulatory challenges in Saudi Arabia, streamlining approval processes could enhance Indian investment, supporting Saudi Arabia's goals of increased private sector involvement and improved pharmaceutical manufacturing capabilities.
India has recently relaxed FDI norms in the space sector, allowing 100% overseas investment in satellite component manufacturing. Further FDI liberalization is possible under the new government. Despite a 13% decline in overall FDI to $32 billion in April-December 2023, the production-linked incentive schemes have attracted c.$13.6 billion in investments, resulting in significant sales, exports, and job creation. Read more.
India's economy is experiencing robust growth and has become an attractive alternative investment destination for many western companies, as foreign investment in China decreases. The UN revised India's GDP growth forecast for 2024 upwards to 6.9%, driven by strong public investment and resilient private consumption, with a projected growth of 6.6% in 2025. Read more.
After a decline in 2022, Indian crypto exchanges are recovering and growing, with CoinSwitch becoming the largest exchange with 20 million users in 2024. Bitcoin hit over $73K in March 2024, boosting the total crypto market cap to $2.5 trillion. The market's recovery is supported by Bitcoin ETFs, crypto-backed exchange-traded notes, and Bitcoin halving, though volatility remains. The maturing market now attracts institutional investors and aligns with stricter regulations. Read more. [Paywall]
KPIs
India is expected to contribute 30% of global GDP growth between 2035-2040 driven by structural reforms that have boosted the country from a ‘fragile 5’ state to one of the top five economies, achieving an 8.4% growth rate in the last three quarters.
Urban unemployment decreased slightly to 6.7% in Q4 FY24 from 6.8% in the same period last year, but rose from 6.5% in the previous quarter due to layoffs in IT, telecom, and startups. Female unemployment improved slightly, while male unemployment increased. Although self-employment rose, regular wage employment remained low.
A SKOCH research note outlines that over 514 million person-years of employment were generated between 2014 and 2024, with 198 million resulting from governance-led interventions and 316 million from credit-led interventions. The report, based on 80 case studies, highlights the job-generative impact of Modinomics. Read more.
WEEKLY MARKET UPDATE (w/c May 13, 2024)
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