India In Sight #56
India In Sight #56
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:
Indian investors vying for an ‘Alternative’ flavor by Avendus
Investing in India’s energy future: A just transition challenge by Amundi
Indian startup funding report H1 2024 by Entrackr
How India eats? (food service sector report) by Bain
Real estate developers’ sentiment survey 2024 and India office snapshot Q2 2024 by Colliers
Budget 2024-25 Expectations and Monthly research compendium (multi-sector report) by ICRA
KEY DEALS
Equity
Arya. ag, an agritech startup, raised c.$30 million from Asia Impact, Quona Capital and other existing investors at a valuation of c.$325 million. (July 04, 2024)
OYO, a hotel and hospitality chain unicorn, raised c.$50 million from InCred Wealth at an estimated valuation of c.$2.8 billion. (July 03, 2024)
Matter Motor, an EV tech and energy storage firm, raised c.$35 million in a Series B round led by Helena, a US-based venture capital firm. Other investors include Capital 2B, Japan Airlines & Translink Innovation Fund, Saad Bahwan Investment (SB Invest), and other institutional investors and family offices. (July 03, 2024)
KKR acquired a majority stake in Baby Memorial Hospital, a Kerala-based hospital, for an estimated deal value of c.$240 million. The exact financial details were not disclosed. (July 01, 2024)
Nxt-Infra Trust, an infra-investment trust backed by Actis, raised c.$182 million from multiple domestic institutional investors to repay its debt. (July 01, 2024)
Purplle, an online beauty and personal care products retailer, raised c.$120 million from ADIA, a sovereign wealth fund, in a secondary transaction. (July 01, 2024)
Inventia Healthcare, a domestic pharmaceuticals company, raised funds from Platinum Equity, a US based buyout fund, at an estimated valuation of c.$300 million. The exact financial details were not disclosed. (July 01, 2024)
[Expected] Felix Pharmaceuticals, a veterinary pharma company, is looking to raise c.$50-$80 million in a Series D round for expansion and to provide exit to existing investors. (July 03, 2024)
Credit Deals and Issuances
Biocon Biologics, a biopharmaceutical company, is looking to raise c.$540 million through the issuance of bonds to refinance its debt. (July 05, 2024)
Infopark Properties, a real estate development company, to raise c.$100 million from IFC in a senior secured loan facility for developing the 25-acre IT park and special economic zone in Chennai. Tata Realty, the real estate arm of the Tata Group owns c.51% stake, and CPPIB owns the rest 49% stake. (July 01, 2024)
KEY FUNDS AND FUNDRAISES
Apis Partners, a UK-based private equity firm, has secured a commitment of c.$20 million from Norfund, a Norwegian investment fund, for its third Asia and Africa focused fund with a target corpus of c.$500 million. (July 05, 2024)
Suzuki Motors, a Japanese automaker, launched Next Bharat Ventures, a social impact fund, with a target corpus of c.$40 million to invest in startups in agriculture, financial inclusion, rural supply chains, and rural mobility in India. (July 04, 2024)
Siguler Guff, a US-based multi-strategy private equity firm, has raised c.$110 million for its emerging markets focused fund which has a target corpus of c.$300 million. The PE firm will be investing in emerging markets and has a mandate to invest in India. (July 02, 2024)
Missed our latest Monthly Roundup (June 2024) for deals and fundraises?
MARKET INSIGHTS & RESEARCH
Reports
Avendus note on ‘Indian investors vying for an ‘Alternative’ flavor’ shares that India's economic growth has led to a new class of wealthy individuals seeking tailored investment solutions. Alternative Investment Funds (AIFs) have become increasingly popular, with total commitments reaching $135+ billion as of March 2024, reflecting a 32% CAGR over five years. CAT II funds dominate with 80% of commitments, followed by CAT III at 13% and CAT I at 7%. While CAT II funds remain the largest, CAT III funds have shown the highest growth rate at c.80% yoy, indicating rising investor interest.
Amundi’s report on ‘Investing in India’s energy future: a just transition challenge’ highlights that India is undergoing significant growth, with a notable focus on its energy transition due to its large scale and impact on the economy and environment. As the third-largest CO2 emitter, India relies heavily on fossil fuels but aims to reach Net Zero emissions by 2070, investing in renewable energy and green sectors. The share of non-fossil based capacity in the electricity generation mix is set to grow from 42% to 66% by 2031–32, with solar and wind energy leading the way. SEBI has enhanced ESG regulations to support this transition, emphasizing the need for inclusive and just practices. Despite these efforts, coal remains a major energy source, posing challenges that require global cooperation and investment to overcome.
Entrackr’s ‘Indian startup funding report H1 2024’ outlines that the Indian startup ecosystem is recovering, with c.$7 billion raised in H1 2024, up from c.$6 billion in H1 2023 but below the $20 billion of H1 2022. This includes significant growth and late-stage deals, fewer layoffs, and new unicorns like Perfios and Krutrim AI. The rise is driven by large funding rounds for companies like Zepto, Flipkart, PharmEasy, and Lenskart.
Bain’s report ‘How India eats’ provides insights into the Indian food services industry, valued at $66+ billion in 2023, is growing at 10-12% CAGR, driven by expanding customer base and increasing consumption occasions. Key consumer trends include self-indulgence, demand for premium dining experiences, digitization of the customer journey, and the rise of international cuisines with local flavors. The report explores these trends and their impact on the future growth opportunities for restaurants in India.
Colliers ‘Real estate developers’ sentiment survey 2024’ conducted in April-May 2024 across tier I and II cities in India indicates optimism among developers about sustained housing demand. Key findings include increased buyer enquiries and engagement in 2023 (53%), expectations of rising housing prices in 2024 (52%), growing NRI demand (80%), and c.50% of the developers desire for cost reductions through tax rationalization or lower interest rates. [Paywall]
Colliers ‘India office snapshot Q2 2024’ report highlights that driven by robust business confidence, the office market in Q2 2024 saw 15.8 million sq ft of office leasing across the top 6 cities, a 16% increase qoq. Key highlights include over 20% leasing growth in 4 cities, Mumbai doubling its leasing to 3.5 million sq ft vs Q2 2023, and balanced vacancy levels. This strong performance suggests office space demand will exceed 50 million sq ft for the third consecutive year in 2024. [Paywall]
ICRA’s ‘Monthly Research Compendium’ offers a summary of research reports across sectors like chemicals, climate, port & logistics, structured finance, metals, telecom etc.
KPMG’s report ‘Money mules: FinCrime’s trojan horse unveiled’ provides insights and guidelines to curb digital frauds. RBI Governor met with MDs and CEOs of public and select private sector banks, urging increased efforts against 'mule accounts' and enhanced customer awareness to curb digital frauds. Money mules, resembling a modern-day Trojan horse, obscure illegal funds' origins, complicating financial crime detection and posing significant compliance challenges for financial institutions. Effective AML programs and remedial actions are essential to mitigate the risks associated with mule operations.
Union Budget 2024-2025
ICRA’s report on ‘Budget 2024-25 Expectations’ highlights that India’s revenue receipts are expected to increase by c.$14 billion in the FY2025 Revised Budget vs Interim Budget Estimate (IBE), with a modest rise in revenue expenditure focused on the rural economy. The fiscal deficit target is likely to be set at 4.9-5.0% of GDP, down from the IBE of 5.1%, while maintaining the capex target of $133 billion. This could reduce net market borrowings significantly, positively affecting yields and demand for government securities due to their inclusion in the JP Morgan Government Bond Index.
Union Budget will be announced in late July, focusing on key economic indicators such as India's 7.8% GDP growth in Q4FY24 and 8.2% for the full fiscal year FY24. The policies announced will be crucial as India aims to sustain its status as the world's fastest-growing advanced economy amid concerns over consumption expenditure growth. Read about the key macro indicators here.
India's gross tax revenue (GTR) for 2023-24 grew by 13.5%, surpassing earlier expectations, which will provide a stronger base for projecting tax revenues in the upcoming fiscal year. Read more.
Articles
Private equity investment in the Indian real estate sector reached $1.7 billion in 1H 2024, marking a 42% yoy increase. However, Q2 2024 saw investments of $1.1 billion, consistent with the figures from the previous year. Read more.
The Indian warehousing sector is experiencing rapid growth driven by a large consumer base, expanding 3PL operations, and increasing manufacturing activity. Government policies and infrastructure initiatives are boosting the sector. Investments in robotics, automation, and upgraded infrastructure are enhancing operational efficiency. Tier II and III cities are seeing significant growth in warehousing demand, supported by e-commerce expansion and improved logistics networks. Grade A warehousing and ESG standards adoption are becoming crucial, while the manufacturing sector's contribution to warehousing absorption is on the rise. Read more.
In 1H 2024, the Indian fintech sector experienced a significant c.60% decline in funding, raising c.$800 million compared to c.$1.9 billion in H1 2023. The period saw two funding rounds exceeding $100 million, notably Avanse's $120 million Series C and Credit Saison's $144 million Series D rounds. Read more.
In 2024, Indian companies raised $1.8 billion through new shares in IPOs, representing 45% of the total $4 billion raised so far. This marks the highest proportion of fresh capital raised since 2015, reflecting a resurgence in private capital expenditure for financing capital assets or retiring existing debts. Read more.
The RBI is partnering with ASEAN nations on "Project Nexus," which aims to establish a platform enabling instant cross-border retail payments by interlinking fast payment systems, including UPI. India joins Malaysia, Philippines, Singapore, and Thailand as founding members, with aspirations to expand globally by 2026. This initiative aims to boost efficiency and reduce costs associated with international transactions. Read more.
HSBC note on ‘Renewables’ outlines that India's economy, bolstered by resilient growth in sectors like technology, credit, consumer spending, and services, is attracting investors despite global uncertainties. The renewable energy sector, driven by aggressive clean energy targets and supported by government policies, presents significant opportunities for bond investors. However, challenges such as infrastructure limitations and equipment supply volatility remain. The government's focus on eliminating risks and supporting renewable projects is expected to enhance investment appeal in this sector.
Peak XV Partners is looking to invest c.$2 billion for investment in AI startups. Rajan Anandan (MD) emphasizes the abundance of available capital and encourages more startups to enter the AI space, highlighting diverse applications in healthcare, retail, agriculture, financial services, and enterprise customer support. Read more.
KPIs
India's economy demonstrated a strong performance in the first quarter, driven by increased manufacturing activity, robust GST collections, a record-high Sensex, rising passenger car sales, and new export orders from international markets, according to industry experts and economic indicators.
Gujarat saw a significant rise in FDI to $7.3 billion in 2023-24, marking a 55% increase, positioning it second after Maharashtra. The growth is attributed to strategic policies, focused development efforts, semiconductor plants, and through financial incentives and business-friendly initiatives, which have bolstered Gujarat's infrastructure and business environment.
The revenues of India's top 18 states, comprising 90% of the gross state domestic product, are expected to increase by 8-10% in the current fiscal year, driven by robust GST collections and central fund devolution, according to a CRISIL Ratings report. This growth follows a 7% increase in revenues recorded last year.
An analysis of data reveals that GST has significantly boosted revenue buoyancy for both the central and state governments. States have experienced a 3 pps increase in their own tax revenue ratio compared to the pre-GST period. Experts suggest that GST 2.0 should prioritize further rate rationalization and the removal of restrictions on input tax credits to enhance effectiveness.
WEEKLY MARKET UPDATE (w/c July 05, 2024)
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