India In Sight #05
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 DEALS
Goswami Infratech, a Shapoorji Pallonji group company, completed its c.$1.7 billion debt raise at an estimated 18.75% yield. Another SP group company, Afcons, is expected to launch another $1bn debt raise. Stake in Tata Sons expected to be in the collateral package, enforceability of which is questionable. Global funds participating include Varde, Cerebrus, DK amongst others. (July 01, 2023)
Reliance Capital's Committee of Creditors (CoC) has given its approval to the resolution plan proposed by the Hinduja Group (Looking to acquire Reliance Capital for c.$1.2bn in upfront cash). (June 29, 2023)
Warburg Pincus acquired a majority stake in Watertec India, a bath fittings brand. Company generated revenues of c.$150m and EBITDA of c.$30m in the last financial year. (June 27, 2023)
Kotak Strategic Situations Fund invested c.$55 million in Viney Corp, an auto components manufacturer, focused on wiring harnesses. The funds will be used to clean up the capital structure and prepare the company for future expansion and fundraising. (June 27, 2023)
Other Credit Deals and Issuances
IIFL Finance, the NBFC arm of IIFL, raised $175m in 3 year ECB (priced at SOFR +200 bp) for onward lending purposes from HSBC and Indian banks; Aarti Industries, a speciality chemicals maker, raising $130m from IFC for capacity expansion; Cube Highways InvIT, also raised c.$130m through long-term listed NCDs from IFC; Punjab National Bank, a state-owned bank, raised c.$385m through the sale of 15-year tier-II bonds at 7.74%; Small Industries Development Bank of India (SIDBI), a state-owned SME focused financial institution, raised c.$375m via bonds 3 year bonds at 7.55%.
Monthly Roundup - June 2023
KEY FUNDS AND FUNDRAISES
Good Capital, an early-stage AI and tech focused VC firm, launched its second fund worth $50 million. (June 30, 2023)
NeoLiv launched a $150m fund focused on residential real estate; 360 One (formerly IIFL Wealth) acquired a significant minority stake. (June 30, 2023)
Sundaram Alternate Assets, a subsidiary of Sundaram AMC, is looking to raise $180 million its fourth real estate-focused private credit fund. The fund aims to invest in a senior secured debt structure, aiming to fetch gross returns in the 18-20% range. The fund has a five-year tenure, with average investments maturing within three to four years. (June 29, 2023)
RTP Global, an early-stage global VC firm, launched its fourth fund with a corpus of $1 billion. The sector agnostic firm will aim to invest in 20 Indian startups with a primary focus on seed and Series A rounds. (June 28, 2023)
Epiq Capital, a growth-stage tech investment firm, made the final close of its second fund at $225 million. The new fund will make growth equity investments in 10 companies in the tech space with $20-25 million ticket sizes. (June 28, 2023)
Omnivore, an agri and climate focused fund, raised $150 million for its third fund. The firm aims to make 25-30 new investments in seed and series A rounds with $1-5 million ticket sizes. (June 28, 2023)
Dallas Venture Capital, a US-based and India-focused VC firm, is looking to raise c.$45 million, to invest in enterprise tech startups in India. The fund has received commitments from Self-Reliant India Fund (SRI Fund), a state-backed fund and NewcrestImage, a US-based family office. (June 28, 2023)
ASK Group, a wealth and investment management company, plans to raise $120 million for its debut private credit fund. (June 27, 2023)
Arkam Ventures, a tech focused VC firm, is looking to raise its second fund with a $180 million target corpus. (June 27, 2023)
Ski Capital Services, a stock broking platform, launched its maiden SME-focused AIF with a c.$75 million target corpus. (June 26, 2023)
Monthly Roundup - June 2023
MARKET INSIGHTS & RESEARCH
Fundraise for Indian startups remained a challenge during 1H 2023 due to tough market conditions, lack of larger rounds amid absence of top investors, and mass layoffs across the ecosystem. As per the latest Entrackr Indian Startups Fundraising Report, Indian startups raised $6 billion in 1H 2023 (vs $20 billion in 1H2022, down 70% YoY) with no unicorns this year so far.
Global CEOs are thinking about India as a big growth opportunity while recognizing some of the challenges with investing in the country. David Solomon (CEO, Goldman Sachs) believes that India has a very high growth trajectory, with a 6-7% growth over the next three years. Read more.
The Indian Microfinance Industry could be back on the track of growth, given stabilising asset quality post-Covid and strong capital levels of companies. The market share of NBFC MFIs stood at 38% in Dec 2022 vs 31% for FY21. With growth rates normalising and outlook sanguine, MFIs are on track to grow at 20-25%. Read more.
The Indian specialty chemicals industry has emerged as a vital component of India's economic growth and development but is it ready for a quantum leap? Read the EY report on Indian Specialty Chemicals sector.
ICYMI
UPI will account for 90% of retail transactions in the next 5 years as per RBI. Currency in circulation decelerated to 5.3% in June from 8.3% a year ago, owing to withdrawal of Rs 2,000 banknotes.
Multiple firms announced plans for making significant investments in India in the near future, including:
Vedanta to set up a $4bn LCD panel fabrication facility in India.
Adani Total Gas to invest $2.5bn in India in the long term to add more CNG stations and expand its network of gas pipelines.
The World Bank approved $1.5bn in financing to accelerate the development of India’s low carbon energy sector.
UAE-based conglomerate, Lulu Group, will invest over $1.2bn in India in the next 3 years, majorly to develop shopping malls.
P&G India will invest $250m to establish a new personal healthcare manufacturing facility in Gujarat
KEY INDICATORS
As per the latest RBI Financial Stability Report, the Indian economy is resilient and is supported by strong macroeconomic fundamentals - solid growth momentum, moderating inflation, a narrowing CAD, and rising forex reserves. Scheduled commercial banks' net NPA ratio fell to a 10-year low of 3.9% in March 2023. Indian companies (except telcos) exhibited viable debt servicing capacity despite rise in their borrowing cost last year. Debt servicing capacity of manufacturing companies moderated to an interest coverage ratio (ICR) of 7.3 in 2022-23 from 8.4 in 2021-22.
India's external debt rose by 0.8% to reach $624.7 billion for FY2023, although the debt-GDP ratio declined to 18.9%. Valuation gains due to the appreciation of the US dollar were placed at $20.6 billion.
India's forex reserves reached closer to $600 billion in June 2023 with weekly addition of $2.4 billion. Healthy foreign portfolio investment have helped India's forex reserves to rise over the past six to eight months.
India's core sector grew 4.3% in May 2023 (vs 19.3% in May 2022), unchanged from April as the drag from slower global growth impacted the gains from strong government capex that lifted key sectors like cement and steel. Sequentially, the Index of Eight Core Industries rose by 3.5% in May as per the latest Eight Core Industries press release.
GST collections at $20.1 billion in June 2023, up 11.7% YoY. As per the Indian Finance Minister, monthly GST collection above $20 billion could become the new standard. The implementation of GST has also led to a high tax buoyancy driven by the growth in tax collection.
WEEKLY MARKET UPDATE (w/c June 26, 2023)
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