India In Sight #57
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:
CAT III funds: Navigating resilience and achieving remarkable growth by IVCA
Indian tech startup funding report H1 2024 by Inc42
Indian chemical sector: Poised for bull run by Ambit Capital
Indian footwear industry report by Yes Securities
Nourishing India sustainably – Ecosystem actions for food systems transformation by BCG
Heritage Tourism as a tool for sustainable development by KPMG
KEY DEALS
Equity
TA Associates acquired c.12% stake in Vastu Housing Finance, a home loan lender, for an estimated deal value of c.$150 million in a secondary deal. The exact financial details were not disclosed. (July 11, 2024)
Brookfield Asset Management invested c.$200 million as equity in Leap Green Energy, a renewables-based power generating company. Brookfield also has an option to additionally invest c.$350 million in equity to support the company’s business growth. (July 11, 2024)
Dezerv, a domestic wealth management platform, raised c.$32 million in a funding round led by PremjiInvest and other existing investors including Elevation Capital, Matrix Partners and Accel. (July 09, 2024)
[Expected] Goldman Sachs is looking to invest c.$30-$50 million in MoEngage, a SaaS company, through a secondary transaction. (July 12, 2024)
[Expected] The Eye Foundation, a South India based eye care hospital, is looking to raise c.$100 million from private equity investors. (July 12, 2024)
Credit Deals and Issuances
Piramal Capital, a housing finance company, is looking to raise c.$400 million through the issuance of its first overseas bonds from a consortium of banks led by Deutsche Bank, Barclays, Standard Chartered, Citi, and Emirates NBD. (July 13, 2024)
Infra.Market, a construction materials platform, secured debt funding of c.$18 million via NCDs from Yubi, Raymond Limited, IKF Home Finance, and Samunnati Financial. (July 12, 2024)
Vedanta to raise c.$120 million via the issuance of debentures on a private placement basis. (July 11, 2024)
SBI raised c.$1.2 billion through the issuance of infrastructure bonds at a coupon rate of 7.4%. (July 10, 2024)
Muthoot Finance raised c.$100 million from its May bond which is due in 2028 at c.7% coupon rate. (July 10, 2024)
Edelweiss Financial Services to raise c.$25 million by issuing NCDs at 10-11% coupon rate. (July 8, 2024)
KEY FUNDS AND FUNDRAISES
Anicut Capital marked the final close of its maiden pre-IPO equity fund at c.$35 million. (July 12, 2024)
Trident Growth Partners, a domestic PE firm, launched its maiden growth stage focused private equity fund with a target corpus of c.$250 million to invest across sectors with a focus on consumer, financial services, enterprise SaaS, industrials, manufacturing and healthcare. (July 09, 2024)
Welspun One, an infra and development management platform, marked the final close for its second fund at c.$275 million. (July 08, 2024)
MARKET INSIGHTS & RESEARCH
Reports
IVCA’s report: ‘CAT III funds: Navigating resilience and achieving remarkable growth’ gives comprehensive outlooks and insights in the Indian Alternative Investment Funds (AIFs) landscape and is a must read for all LP/GPs investing in India. AIFs are increasingly playing a crucial role by efficiently allocating capital and meeting the needs of wealthy investors. The AIF industry is expected to grow at 20%+ CAGR, with Category III AIF commitments projected to reach $30 billion by 2028. Despite current reliance on supply-driven demand, this dynamic is anticipated to shift to demand-driven in the next five years. Key factors include innovative strategies in CAT III funds and regulatory support, though tax clarity remains a critical industry demand.
Inc42’s ‘Indian tech startup funding report H1 2024’ highlights that Indian startups raised $5.3 billion in H1 2024, a 2% decline from H1 2023 however the deal volume went up by 7%. Notable sectors included e-commerce and fintech, with Bengaluru being the most funded hub. Despite the slight dip, the number of mega deals (>$100 million) fell by 50%, while debt funding doubled to $576 million from the previous year. The median ticket size declined by 8% yoy to $2.8 million in 1H 2024 but surged by 87% from $1.5 million in 2H 2023. 3 new unicorns were added in the period and 90+ investors foresee 2024 as a year of recovery.
Ambit’s report on Indian chemical sector marks that Indian chemical sector experienced a remarkable growth period from FY17-22, with a 48% CAGR (vs NIFTY's 14%). Key drivers included favourable global demand, Chinese capacity shutdowns, increased competitiveness, and enhanced R&D. Valuations peaked with forward PE multiples rising from 10x in 2013 to 46x in 2017. Recently, the sector faced some issues due to global destocking, rising feedstock prices, and higher freight costs, dropping valuations slightly. However, signs of a turnaround are emerging, driven by low inventory, deflated raw material prices, and improving global demand, suggesting potential strong growth ahead.
Yes Securities’ report on the Indian Footwear industry highlights that India is the world's second-largest footwear producer and generates c.2.6 billion pairs annually, however its per capita consumption is only 1.9 pairs compared to the global average of 3.2 pairs. The industry is expected to grow at 8-10% CAGR until FY30, benefiting from rising incomes, branded product preference, and technological advances. The adoption of BIS norms is expected to enhance quality and reduce imports. The Sports & Athleisure (S&A) segment is projected to grow at 15% CAGR, with the mid and premium categories growing at 10% CAGR. The organized segment is expected to expand to 38-40% of the market, driven by consumer preference for branded products.
BCG’s report ‘Nourishing India sustainably – Ecosystem actions for food systems transformation’ outlines that India's food systems are rapidly evolving due to megatrends in production and consumption. By 2030, 50% of households are expected to earn over $6K annually, up by 21% from current levels. driving a shift toward packaged foods and increased fruit and vegetable consumption. Rising affluence has already led to an increase in processed food consumption, from 21% of urban household food expenditure in 2011 to 27% in 2022. To sustainably meet these changing demands, the industry must address key challenges such as scaling agricultural productivity, fostering climate-resilient practices, and reducing food loss.
KPMG’s report ‘Heritage Tourism as a tool for sustainable development’ emphasizes the collective responsibility of sustainable tourism, with heritage tourism as a key driver. It highlights India's vast opportunities in heritage tourism due to its history and culture. The report suggests that leveraging this potential can boost economic growth, improve market demand, and enhance the quality and international acceptability of Indian products through the adoption of BIS norms. The focus on sustainable practices, digital infrastructure, and community-based tourism models aims to ensure the long-term viability and resilience of the tourism sector, balancing economic, environmental, and social goals.
Articles
The National Bank for Agriculture and Rural Development (NABARD) is launching a c.$90-100 million 'Agri-SURE' fund to support start-ups and rural enterprises in the agricultural sector. The fund will provide support through investments in sector-specific, sector-agnostic, and debt Alternative Investment Funds (AIFs) and direct equity support to start-ups. Read more. [Paywall]
Foreign banks have become the largest investors in India's sovereign bond market, purchasing over $6 billion in debt since June. Optimism about India's economy, boosted by-election results and potential rate cuts, has attracted inflows from global banks like Deutsche Bank and HSBC. Read more.
India's fiscal deficit target for FY25 is set at 5.1% of GDP, with further aim to reduce it to 4.5% by FY26. The government’s economic policy focuses on job creation, MSME credit, vocational programs, food processing, public debt sustainability, land reform, the rural economy, green finance, and political capital. Key areas include services exports and the domestic food supply chain. Read more.
KPIs
RBI Deputy Governor highlighted India's potential to become the world's second-largest economy by 2031 and the largest by 2060, emphasizing the country's inherent strengths. Key areas of focus include labour productivity, infrastructure development, manufacturing sector contribution to GDP, and sustainable economic practices.
As per ‘SBICAPS daily digest’ it rate cuts might not surely happen in the near future, with the June 2024 CPI projected at 5% due to rising food prices. AMFI proposed tax benefits for debt MFs in the upcoming budget, while India plans to double its airports to 300 by 2047.
India generated 46.7 million jobs in FY 2023-24, bringing the total to 643.3 million, with an employment growth rate of 6% compared to 3.2% the previous year, according to provisional productivity numbers released by the Reserve Bank of India. The RBI's report highlights significant employment growth in the country's rapidly expanding economy.
WEEKLY MARKET UPDATE (w/c July 08, 2024)
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