India In Sight #53
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.
Subscribe to receive the newsletter every week in your inbox!
Stay tuned, Stay ahead!
Key reports in this edition:
Decoding omnichannel: Strategies for D2C brands by Accel, Fireside Ventures and RedSeer
Global EV outlook 2024 by IEA
Boosting exports from MSMEs by Niti Aayog
Sector notes on Indian dairy (Investec), banking and finance (CLSA), chemicals (Dolat Capital), passenger vehicles (ICRA)
KEY DEALS
Equity
[Exit] GIC sold its remaining c.$25% stake in IRB Infrastructure Trust, an infrastructure investment trust, for c.$735 million to Ferrovial, a Spanish infrastructure company. GIC had first invested c.$620 million in IRB InvIT in 2019 and has harvested c.$1.5 billion overall (translating to 2.5x MOIC). (June 13, 2024)
Indkal Technologies, a consumer electronics startup, raised c.$36 million from Aries Opportunities Fund, a Mauritius based investor. (June 13, 2024)
Battery Smart, a battery-swapping services provider, raised c.$65 million in a Series B funding round led by LeapFrog Investments. Other investors include MUFG Bank, Panasonic, Ecosystem Integrity Fund, Blume Ventures and BII. Orios Venture Partners, one of the existing investors made a partial exit in the transaction, generating 25x+ MOIC. Other details of the transaction were not disclosed. (June 11, 2024)
Sabine Hospital and Research Centre, a Kerela-based hospital, secured c.$50 million for 53% stake in a funding round led by CX Partners. Other investors include Sunil Munjal Family Office, ValueQuest, and Tanas Capital. (June 11, 2024)
Candi Solar, a solar and battery solution company, raised c.$38 million in a Series C funding round led by Norfund, Norway’s sovereign wealth fund. Other investors include Kyuden International and STOA. (June 10, 2024)
[Expected] Norwest, a domestic VC and growth stage investment firm, is looking to acquire a controlling stake in RG Scientific, a urology-focused
hospital chain, for an estimated deal value of c.$40-50 million. (June 11, 2024)
[Expected] Blackstone is looking to sell c.15% stake in Mphasis, a technology services and consulting company, in a block deal for c. $800 million. Blackstone currently holds c.55% stake in the company. (June 7, 2024)
Credit
State Bank of India raised c.$100 million via senior unsecured foreign bonds through its London branch, at a floating coupon rate of SOFR+95 bps. SBI is looking to raise c$3 billion via debt in FY2025. (June 11, 2024)(June 15, 2024)
HDFC Bank is looking to raise c.$1.8 billion through the issuance of infrastructure bonds. (June 15, 2024)
KB NBFC, a lending partner and subsidiary of KreditBee, a lending tech startup, raised c.$32 million in debt from investment platforms like Yubi, Dzerv, Neo Group, OfBusiness, and Oxyzo. (June 14, 2024)
Kalpataru Projects, a construction engineering company, raised c.$36 million through NCDs on a private placement basis. (June 13, 2024)
Samunnati, an agri finance solutions provider, raised c.$16 million in credit from Blue Earth Capital, a Switzerland based impact investment fund. (June 12, 2024)
Reliance Infrastructure is looking to raise c.$350 million through the issuance of foreign currency convertible bonds to repay its debt and invest in electric power generation. (June 10, 2024)
KEY FUNDS AND FUNDRAISES
Sixth Sense Ventures is looking to launch its fourth consumer-focused fund with a target corpus of c.$300 million. (June 14, 2024)
Brookfield is looking to raise c.$5 billion for its new climate-focused fund to invest in emerging economies, with a focus on India. The Catalytic Transition Fund was launched by Brookfield in 2023 in partnership with Alterra, a UAE based climate investment fund that has also committed c.$1 billion to the fund. (June 13, 2024)
South Park Commons, a US-based early-stage venture fund, is looking to launch its maiden India focused VC fund in collaboration with Binny Bansal, co-founder of Flipkart. The target size of the fund was not disclosed however the fund has previously raised c.$200 million across two funds. (June 13, 2024)
MARKET INSIGHTS & RESEARCH
Reports
‘Decoding omnichannel: Strategies for D2C brands’ report by Accel, Fireside Ventures and RedSeer highlights that over the past two years, Indian consumer brands have innovated and thrived, with successes both in public markets and venture-backed startups. As India’s retail market heads towards $2.2 trillion by 2030, integrating offline and online channels becomes a transformative opportunity for sustainable growth. Tailoring offerings to diverse consumer needs, these brands use an omnichannel approach, blending online and offline experiences to build trust and convenience. This strategy is essential for scaling, and reflecting unique Indian consumer behaviors. Read more.
‘Global EV outlook 2024’ by IEA talks about the global EV market - EV sales continue to grow robustly, with projections reaching around 17 million in 2024, accounting for over 20% of global car sales. Major markets like China, Europe, and the US are driving this growth, with China expected to have a 45% market share. In India, electric car registrations were up 70% yoy to 80 000, vs 10% growth for total car sales. c.2% of all cars sold are now electric. Purchase incentives under the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme, supply-side incentives under the Production Linked Incentive (PLI) scheme, tax benefits and the Go Electric campaign have all contributed to fostering demand in recent years.
NITI Aayog’s whitepaper on ‘Boosting exports from MSMEs’ details that MSMEs comprise of 64 million enterprises and contribute c.27% to India’s GDP. MSMEs play a crucial role in economic development through innovation and employment. Expanding into international markets enhances revenue streams, mitigates risks, and boosts competitiveness. Comprehensive research underlines the need for strategic support to elevate MSMEs' global presence and economic contribution.
Investec’s India dairy sector views provides a detailed analysis of the Indian dairy sector which presents a strong investment opportunity due to rising discretionary consumption and a shift towards a more organized industry. Private dairy companies are poised for substantial growth driven by evolving consumer preferences toward value-added dairy products and decreasing inflationary pressures. The sector benefits from India's position as the top global producer and consumer of dairy, with significant potential for further growth given the low per capita consumption compared to global standards.
CLSA note on India Financials is a detailed analysis of Indian banking sector with a focus on banks that are well-positioned with strong balance sheets and sharply rebounded profits, showing the highest sector ROE since FY11. Loan growth has increased from an average of 10% (FY12-22) to 15% in the past two years, with deposit growth expected to follow. PSU banks have outperformed private banks recently, but private banks, with good business outlooks and lower valuations, are expected to deliver better returns. The key risk is a sharp repo rate cut impacting NIM improvement.
Dolat Capital’s coverage on Indian chemicals industry details that India is a top 10 global exporter of organic chemicals, growing at ~8% CAGR. Despite a weak FY24, with significant declines in revenue and EBITDA, long-term investments in capacity and capability building are expected to pay off. The demand environment is improving, and the chemicals sector is forecasted to see significant EBITDA growth in FY25-26.
ICRA’s note on Indian automobile industry (Passenger vehicle): Retail sales in May 2024 decreased by 10% due to extreme heat and General Elections but showed slight YoY improvement. Utility vehicles dominated the passenger vehicle market, comprising 63-64% of volumes, and exports grew by 9% YoY. The industry is expected to grow 3-6% in FY2025 after an 8% growth in FY2024, with domestic wholesale volumes strong at 3.5 lakh units, up 4% sequentially.
Articles
Indian venture investors are increasingly shifting from tech startups to safer investments in non-tech sectors, consumer markets, and multi-stage vehicles to ensure exits and returns for their limited partners. This shift, driven by market downturns, is changing the venture industry in India, with VCs now investing in traditional sectors like luggage, handbags, beauty, and apparel, making the industry resemble mid-market private equity. Read more.
India's direct-to-consumer market is projected to reach $100 billion by 2025, with fashion startups leading the segment. The fashion industry, expected to grow to $43 billion by 2025, has the highest potential. D2C brands are capitalizing on Indian consumers' growing demand for innovation and decreasing loyalty to traditional brands. Read more. [Paywall]
Over the past few years, Global Capability Centers (GCCs) in India's BFSI industry have transformed from 'proof of concept' entities to strategic 'Centers of Excellence' for innovation and digital mindsets, significantly enhancing the FinTech sector. The technology risk functions within these centers proactively manage technology-related risks, ensuring cybersecurity and resilience. Key drivers for offshoring these functions to India include skilled talent, cost efficiency, round-the-clock operations, and faster innovation. Read more.
The Adani Group is planning to enter the payments sector, after Reliance launched Jio Financial Services, which could disrupt the market. Both conglomerates have significant financial resources, policy influence, and extensive consumer engagement across various businesses, positioning them strongly in this space. Read more.
India needs an action plan since achieving a developed economy status by 2047 requires a sustainable and inclusive approach. Immediate action is needed to boost rural consumption, but this must be balanced with a cohesive fiscal policy to avoid unsustainable debt levels. Additionally, the development of physical and digital infrastructure should be carried out with consideration for broader societal needs and environmental changes. Read more. [Paywall]
KPIs
The Index of Eight Core Industries (ICI) grew by 6.2% in April 2024 compared to April 2023, with positive growth recorded in electricity, natural gas, coal, steel, refinery products, crude oil, and cement. The cumulative ICI growth rate for 2023-24 was 7.6%. Notably, coal production increased by 7.5%, electricity by 9.4%, and steel by 7.1% during this period.
In 2022-23, India's informal manufacturing and service sectors grew faster than the informal trade sector, with gross value added for unincorporated manufacturing companies rising by 19.1% and services by 18.9%. Despite this growth, the informal manufacturing sector saw only a 6.3% increase in employment, compared to a 13.4% rise in the informal services sector. Urban informal enterprises outperformed rural ones, adding 10.4% more to business and 9.1% more jobs.
The World Bank revised India's FY25 growth forecast upward to 6.6% from 6.4%, citing strong public and private investment and increased private consumption. India's FY26 growth forecast was also raised to 6.7%, with benefits from agricultural recovery and declining inflation, and FY27 growth is projected at 6.8%. The report highlights robust investment growth and solid per capita growth.
WEEKLY MARKET UPDATE (w/c June 10, 2024)
Thank you for reading India In Sight!
Read our other editions here.
Disclaimer:
The content provided on this platform contains references and links to external sources, including articles, reports, websites, images, or videos. We do not own or claim copyright over the content found in these external sources. The ownership and rights of the content belong to the original creators.
This post and the information presented are intended for informational purposes only. The views expressed herein are the author’s alone and do not constitute an offer to sell, or a recommendation to purchase, or a solicitation of an offer to buy, any security, nor a recommendation for any investment product or service. While certain information contained herein has been obtained from sources believed to be reliable, neither the author nor any of his employers or their affiliates have independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author and affiliated persons and companies assume no liability for this information and no obligation to update the information or analysis contained herein in the future.