India In Sight #63
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.
Introducing India In Sight Library 🚀
Indian private markets and alternative assets focused live repository featuring a collection of 600+ research reports and articles from 250+ global asset managers and experts across 5 categories and 50+ sub-categories for an efficient, fast and seamless research experience. Click here to get your access today!
Search, screen, filter, and save - all at one spot! Subscribe to India In Sight Library. Your one-stop access for the best perspectives and research on Indian private markets! No need to spend hours searching for reports anymore.
Subscribe to receive the newsletter every week in your inbox! Stay informed, stay ahead!
Key reports in this edition:
Private Equity-Venture Capital in financial services & fintech by RBI
Data centres: Powering digital India by Avendus
The D2C revolution: How Indian brands are redefining retail by Entrackr
Shining light on green energy by Nuvama
Future of Indian insurance – a story of promise, innovation and collaboration by PWC
Shaping India’s AVGC landscape by Grant Thornton
Reports on Tech Services and Transport Stack by BCG
KEY DEALS
Equity
Axio, a digital fintech platform, raised c.$20 million in fresh equity funding from Amazon Smbhav Venture Fund, an India-focused investment vehicle of Amazon. (August 23, 2024)
DMI Finance, a non-banking lending arm of DMI Group, raised c.$330 million in equity from MUFG Bank, taking MUFG’s overall investment in DMI Finance to c.$560 million. (August 22, 2024)
Opkey, a testing automation platform, raised c.$47 million in a Series B funding round led by PeakSpan Capital, a US-based growth equity firm. Other investors include UST Global, Vertica, Verticle and YouNest. (August 22, 2024)
Hangyo Ice Creams, a South India-based ice cream brand, raised c.$25 million from Faering Capital. (August 22, 2024)
Bluestone, a jewellery retailer, raised c.$100 million in a pre-IPO funding round through primary and secondary sales of shares at an estimated valuation of c.$970 million. The investors include Peak XV Partners, Prosus, Steadview Capital, Think Investments, Pratithi Investments, and the family office of Infosys cofounder Kris Gopalakrishnan. (August 22, 2024)
[Exit] Warburg Pincus’ affiliate PE firm to sell c.2.4% stake in Kalyan Jewellers, an Indian chain of jewellery showrooms, for c.$155 million to the promoter of Kalyan Jewellers. (August 21, 2024)
[Exit] KKR’s affiliate PE firm Esoteric, to sell a c.17% stake in India Grid Trust, a power sector infrastructure investment trust, for c.$215 million. (August 21, 2024)
Livpure, a manufacturer of water purifiers, raised c.$28 million in fresh funding from M&G Investments and Ncubate Capital Partners for its expansion and product development. (August 21, 2024)
Continuum Energy, a renewable energy company, raised c.$150 million in equity from Just Climate, a UK based climate investment firm, for the deployment of wind-solar hybrid generation and storage projects across India. (August 20, 2024)
[Expected] Eruditus, a higher education and upskilling platform, is looking to raise c.$150 million from private investors. (August 25, 2024)
[Expected] The promoters of Sahajanand Medical Technologies (SMT), a cardiac stent maker company, are looking to sell a stake for an estimated value of c.$480 million. Morgan Stanley PE Asia and Samara Capital collectively own 49% of the company while Kotak Pre IPO Opportunities Fund holds 6% and the remaining 45% is held by the promoters. (August 20, 2024)
[Expected] Shriram Finance, an auto-focused non-bank lender, is looking to raise c.$600 million for financing electric vehicles. The company is discussing financing options with climate-focused private equity funds. (August 19, 2024)
Credit Deals and Issuances
Multiple banks looking to raise c.$2.5 billion through the issuance of bonds in debt markets. SBI is looking to raise $600-1,200 million, while Bank of Baroda and Canara Bank to raise c.$600 million and c.$480 million respectively. (August 21, 2024)
KEY FUNDS AND FUNDRAISES
Titan Capital, a VC firm founded by Snapdeal founders, raised c.$25 million for its Winners Fund, that will make follow-on investments in its seed-stage portfolio companies. (August 21, 2024)
Chiratae Ventures, a homegrown VC firm launched Chiratae Sonic, the third cohort of its flagship seed investment programme. In the last two editions of Sonic, Chiratae Ventures invested c.$25 million in 20 companies at the seed and pre-Series A stages. (August 21, 2024)
Volt VC, a micro venture capital firm, launched its maiden fund with a target corpus of c.$5 million to invest in consumer-centric startups at the pre-seed stage across various sectors. (August 21, 2024)
Ankur Capital, an early-stage VC firm, secured a commitment from BII and Catherine T. Macarthur Foundation for its third fund with a target corpus of c.$150 million. The exact financial details were not disclosed. (August 20, 2024)
MARKET INSIGHTS & RESEARCH
Reports
RBI’s report on ‘Private Equity-Venture Capital in financial services & fintech’ highlights that India's BFSI sector attracted c.$31 billion in investments between 2020 and H1 2024, with fintech accounting for 54% of the total. Of this NBFCs attracted c.$10+ billion across 162 deals, followed by payments-related companies (c.$5+ billion across 113 deals). H1 2024 saw 76 BFSI deals worth c.$2.8 billion and 52 fintech deals c.$460 million, both reflecting a downturn compared to H1 2023. The largest BFSI investment was Warburg Pincus' c.$560 million buyout of Shriram Housing Finance, while fintech's biggest deal was Fibe's c.$90 million investment.
The second edition of Avendus’ report on ‘Data centres: Powering digital India’ highlights India's data centre industry could double to reach 2GW by 2026 (CAGR of 26%), driven by digitalization, data localization, AI adoption and $7 billion of investment. The industry is set to add 3 GW of capacity over the next decade, requiring $25 billion in capex. Key markets like Mumbai and Chennai account for over 50% of DC capacity, with Mumbai alone expected to add 35% of total new capacity by 2028. AI and 5G are projected to further boost demand while falling rentals in the hyperscale model shift focus towards enterprise solutions and edge data centres.
Entrackr’s report ‘The D2C revolution: How Indian brands are redefining retail’ outlines that India's D2C market is witnessing rapid growth, projected to reach $61+ billion by FY27, with a CAGR of 35%+. Since 2021, Indian D2C startups have secured over $5 billion across 520 deals, with notable brands like Lenskart ($1.1+ billion), Licious ($580+ million), The Good Glamm Group ($220 million), Boat ($165+ million), Healthkart ($135 million). In FY23, 177 D2C brands generated $4 billion in revenue, though only 24 were profitable. Key sectors include Apparel (28%), Personal Care (20%), and Food & Beverages (18% of revenue).
Nuvama’s report ‘Shining light on green energy’ highlights the dramatic price reductions in the new energy sector, with polysilicon/solar module prices down 49% y-o-y in August 2024 and lithium-ion battery prices falling 14% in CY23. India's solar power capacity saw a significant addition of 6,200+ MW in March 2024, contributing to the country's goal of reaching 280GW by 2030. The report also notes that the cost of green hydrogen (GH2) is projected to halve to $1.6/kg by 2030, driven by input price reductions and government incentives. The report dives deep into new energy sector highlighting areas like PLI schemes and impact, various goals and strategies across multiple energy types like solar, hydrogen, green hydrogen etc.
PWC’s report on ‘Future of Indian insurance – a story of promise, innovation and collaboration’ shares that India’s insurance sector is undergoing rapid growth and is projected to reach a market size of $280 billion by 2025 at a robust 12-15% CAGR. IRDAI's Vision 2047 aims for "Insurance for All" by enhancing the insurance ecosystem, promoting innovation, and ensuring coverage for every citizen and enterprise. The key focus areas include tailoring insurance products to diverse customer needs, improving grievance redressal, simplifying operations, aligning regulations, and encouraging innovation. 400 million individuals (31%) lack health insurance as challenges continue in rural India, where only 22% have life insurance versus 73% in urban areas. East India lags in financial protection, with lower insurance adoption and security levels, highlighting the need for region-specific strategies to boost coverage and financial inclusion.
Grant Thornton & CII’s report on ‘Shaping India’s AVGC landscape’ explores the evolving AVGC-XR (Animation, VFX, Gaming, Comics & Extended Reality) sector in India, highlighting its significant economic and cultural impact. AVGC accounts for over 20% of India's Media & Entertainment revenue, with the potential to generate 2 million jobs in the next 8-10 years. By fostering innovation, building advanced infrastructure, and supporting local content creation, India is poised to capture 5% of the global market, positioning itself as a leader in animation, gaming, and VFX, attracting global collaborations and productions. Key challenges include skill development, infrastructure investment, and global integration.
BCG’s report on ‘Tech Services: Movers and shakers of today and future bets’ highlights that the IT services industry, traditionally known for modest growth, has experienced pivotal innovations every decade, from the digital revolution in the early 2000s to cloud-native platforms in the mid-2010s, and now advancements driven by Gen-AI and Large Language Models (LLMs). New industry leaders are leveraging Engineering R&D, full-cycle development, and AI-driven strategies to outpace traditional giants. This report highlights their success metrics and provides actionable insights for businesses to thrive in this rapidly evolving landscape.
BCG’s report on ‘Transport stack’ highlights the transformative role of Digital Public Infrastructure (DPI) and Digital Public Goods (DPGs) in fostering innovation, inclusion, and effective governance. Focusing on Delhi's transport challenges, it emphasizes the need for integrated mobility solutions through initiatives like the Transport Stack. This approach aims to streamline public transportation by leveraging data, enabling seamless multi-modal travel, and promoting sustainability through electric buses and last-mile connectivity. The goal is to enhance the commuter experience and support smart urban development.
Articles
India continues to see sustained private equity interest, particularly in the energy, technology, healthcare, and financial sectors. Promoters are increasingly willing to sell majority stakes. PE firms are placing greater emphasis on due diligence, risk assessment, and ESG factors, leading to more diversified portfolios and innovative investments. A survey conducted across 280 PE/VC transactions over 30 months indicates that 22% of deals were over $1 billion, whereas 41% of deals were over $200 million. 14% of deals were investments in majority stakes while about 86% were investments in minority stakes. Read more. [Paywall]
India's space sector has seen c.$13 billion in investment over the past decade, contributing $60 billion to the GDP through direct, indirect, and induced benefits. Estimated revenues of India's space sector have increased from $3.8 billion in 2014 to $6.3 billion in 2023. The sector has also generated 4.7 million jobs and directly employs 96K people in both public and private sectors. India is the eighth-largest space nation globally and has experienced rapid growth in space-related startups. India aims to commission the Indian space station by 2035 and land Indian astronauts on the Moon by 2040. Read more.
BNY Mellon’s note on ‘India Rising’ outlines that India is poised to be the world's fastest-growing economy in 2023 and 2024, surpassing China. Rapid development, especially in manufacturing, infrastructure, and finance, is driven by government initiatives under Prime Minister Modi. Despite challenges like corruption and inequality, India's rising middle class, expanding industries like life insurance and premium consumer goods, and global supply chain integration present significant opportunities for growth, as evidenced by the optimism of domestic and global businesses.
Global investors have invested c.$7 billion into India's debt market since May, driven by the country's economic resilience and the prospect of interest rate cuts. This inflow, double that of Indonesia, reflects India's growing appeal amid global market volatility. Despite officials' efforts to temper enthusiasm, Indian bonds, recently added to JPMorgan's index, are among the best-performing in Asia. India's favourable macroeconomic and monetary policy positions further enhance its attractiveness to offshore investors. Read more.
India is exploring a plan to allow select foreign investors to raise capital in rupees for investments in strategically important countries, aimed at expanding the global use of the Indian currency. This initiative follows Finance Minister's announcement to simplify foreign and overseas investment rules. Legislative changes to the Foreign Exchange Management Act (FEMA) will be necessary for implementation. Read more.
SEBI has issued a consultative paper proposing faster rights issues with flexibility for selective allotments, delivering on its promise to streamline fundraising for listed entities. Rights issues, qualified institutional placements, and preferential allotments are key methods being enhanced to improve follow-on fundraising processes. Read more.
A comparison of active and passive investment strategies reveals that active flexicap funds have demonstrated more consistent outperformance than their large-cap counterparts. Flexicap funds, benefiting from adaptability across market conditions, achieved a 73% outperformance rate against their benchmark in June 2024. In contrast, active large-cap funds have shown fluctuating results, with 75% outperforming in June 2024 after periods of weaker performance. Given this, a balanced strategy may be optimal—favouring passive investments for largecaps and active management for flexicap funds. Read more.
KPIs
India's private sector must boost innovation and productivity to help the country reach a $55 trillion economy by 2047. Key areas of focus include increasing R&D spending, improving credit access for SMEs, and implementing state-level reforms, while also addressing challenges such as climate change and geopolitical issues.
India's manufacturing sector, accounting for 17% of GDP, is now the sixth-largest globally. Recent reforms have opened up investment opportunities across multiple sectors, with key initiatives in defence, such as Make in India and the Defence Procurement Procedure, aimed at modernizing the armed forces, reducing imports, and boosting exports.
Foreign direct inflows to India rose by 26.4% to $22.4 billion in April-June, marking the fastest growth in nearly five quarters amid a global increase in cross-border investments. Despite a prior decline in FDI over the last two financial years, gross inflows had increased by 23% in the previous quarter. RBI data showed a 37.6% rise in inflows in June, though slower than the 49% growth seen in May.
WEEKLY MARKET UPDATE (w/c August 19, 2024)
Check out India In Sight Library. An Indian private markets and alternative assets focused live repository featuring a collection of 600+ research reports and articles from 250+ sources across 5 categories and 50+ sub-categories. Get your access now!
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.