India In Sight #64
India In Sight #64
Weekly updates on Indian private markets.
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Key reports in this edition:
State of the Fintech Union 2024 by BCG
The corporate wave: Reshaping India’s hospital industry by Centrum
Building bridges for the next decade of finance by BCG
2024 India data centre outlook by JLL
Hurun India rich list 2024 by Hurun
Personal finance management facilitated by account aggregators by Sahamati
India’s agriculture- higher reward for the right act by Dolat Capital
KEY DEALS
Equity
Blue Tokai, a coffee and bakery chain of restaurant, raised c.$35 million in a Series C funding round led by Verlinvest. Other investor include Anicut Capital and A91 Partners. (August 31, 2024)
Zepto, an online grocery delivery and quick commerce app, raised c.$340 million in a funding round led by General Catalyst, for an estimated valuation of c.$5 billion (40% up from its last funding round over a month ago). (August 30, 2024)
Agrim Wholesale, an on-demand B2B platform, raised c.$17 million in a Series B funding round led by Asia Impact, an impact investment firm. (August 30, 2024)
Clean Electric, an energy storage solutions startup, raised c.$6 million from Info Edge and Pi Ventures. Other investors include Kalaari Capital, Angel investors Panjak Chaddah, Amit Kumar, Rama Advisors, and Lok Capital. (August 30, 2024)
Yubi, a fintech unicorn and lending platform, raised c.$30 million in an equity from Gaurav Kumar, its founder & CEO. (August 26, 2024)
Credit Deals and Issuances
Axis Bank and Indian Bank are looking to raise c.$1 billion through issuance of infrastructure bonds. (August 30, 2024)
NTPC, a power generation company, is looking to raise c.$1.4 billion through issuance of NCDs on a private placement basis. (August 30, 2024)
SBI raised c.$900 million through issuance of Basel III compliant tier 2 bonds at a coupon rate of 7.4%. (August 28, 2024)
Canara Bank raised c.$360 million through issuance of additional tier-1 (AT-1) bonds at a coupon rate of c.$8.2%. (August 28, 2024)
Adani Enterprises, a flagship company of the Adani Group, is looking to launch c.$100 million public issue of bonds. (August 28, 2024)
Bank of Baroda raised c.$600 million through issuance of long term infrastructure bonds at 7.3% coupon rate. (August 27, 2024)
KEY FUNDS AND FUNDRAISES
Whiteboard Capital, an early-stage venture capital firm marked the final close of its second fund with a corpus of c.$36 million. (August 28, 2024)
MARKET INSIGHTS & RESEARCH
Reports
BCG’s report ‘State of the Fintech Union 2024’ highlights that the Indian fintech ecosystem, valued at c.$100 billion, has 2-3x growth potential, with opportunities particularly in Tier 2 cities and a focus on profitability. India continues to be among the top 3 Fintech destinations; ecosystem growth across the pyramid with 3.5x Minicorns, 3x Unicorns & Soonicorns in 4 years. As fintechs prepare for IPOs, challenges in cybersecurity, compliance, and governance are critical, with an emphasis on building resilient, tech-led infrastructures. The industry's future involves balancing innovation with risk management, highlighting the importance of long-term sustainable business practices.
Centrum’s report ‘The corporate wave: Reshaping India’s hospital industry’ tells us that the Indian healthcare delivery market is poised for robust growth, expected to achieve a 10-12% CAGR from FY24 to FY28, reaching approximately c.$120 billion. Private sector contributions, particularly in tertiary and quaternary care, are set to increase, with the share of treatments by private players rising from 62% in FY17 to around 73% by FY27. Medical value tourism (MVT) plays a crucial role, with India's healthcare sector becoming a preferred destination for international patients. The report also emphasizes the expansion plans of major hospital chains, particularly in Tier 2 and 3 cities.
BCG’s report ‘Building bridges for the next decade of finance’ talks about the ‘six bridges’ that India needs to build to further strengthen its financial sector: 1) Bridge to future ready technology; 2) Bridge between incumbents and fintechs; 3) Bridge to Internationalization and reaching global BFSI SaaS market; 4) Bridge to capital access driven by PE/VC interest and initiatives; 5) Bridge to regulation, compliance and risk management; 6) Bridge to greener future ($100-150 billion gap in climate financing in India)
JLL’s report on ‘2024 India data centre outlook’ highlights the rapid growth in the sector, driven by the increasing demands of Artificial Intelligence (AI). India's Data Centre capacity is expected to surge from 854 MW in 2023 to 1,645 MW by 2026, with a projected 24% CAGR. Significant investments of $5.7 billion are anticipated to meet the growing demand, positioning India as a potential global data hub. The AI market in India is also expected to grow from $7-9 billion in 2023 to $17-22 billion by 2027, further fueling the expansion of data centers.
‘Hurun India rich list 2024’ tracks the richest people in India and has surpassed 1,500 entrants for the first time, with a total of 1,539 individuals. Gautam Adani tops the list with a wealth of c.$140 billion, reflecting a 95% increase. The cumulative wealth of the list has grown by 46%, with the number of billionaires rising to 334. The list also highlights the growing prominence of self-made entrepreneurs, with 65% being self-made, and significant wealth creation in sectors like Industrial Products, Pharmaceuticals, and Real Estate. The youngest entrant is 21-year-old Kaivalya Vohra of Zepto.
Sahamati report on ‘Personal finance management facilitated by account aggregators’ highlights the rapid growth and adoption of the account aggregator (AA) framework in India. The AA ecosystem encompasses 155 Financial Information Providers (FIPs) and 447 Financial Information Users (FIUs), with over 88 million successful consent-based data-sharing transactions. Personal Finance Management has emerged as a significant use case, with 6.5 million customers using AA-enabled PFM tools by March 2024, driven by cross-sectoral data availability and enhanced technical capabilities. The report also underscores the potential for AAs to democratize advisory services, particularly for retail investors, and improve financial inclusion.
Dolat Capital’s report on ‘India’s agriculture- higher reward for the right act’ provides a comprehensive overview of India's agriculture sector, emphasizing the need for policy reforms and infrastructure improvements to drive sustainable growth. Agriculture employs 42% of the workforce and contributes 14-16% to the country's GVA. Challenges include low productivity and reliance on weather patterns, and suggests that effective policies and governance, similar to the successful model in Madhya Pradesh, could lead to significant improvements in agricultural output and rural prosperity. However there is need for digital and technological advancements to modernize the sector.
Pahle India Foundation’s report on ‘Assessing the net impact of e-commerce on employment and consumer welfare in India’ highlights E-commerce contributed to 8% of total retail sales in 2022 and is growing at a 25%+ CAGR between 2018 and 2030. E-commerce has become a significant driver of employment, with online vendors employing 54% more people than offline vendors. E-commerce has led to the creation of new job roles and the adoption of technology, with 71% of vendors in Tier 3 cities seeing an increase in sales after shifting online. Consumer welfare has improved, driven primarily by convenience and healthy competition.
PWC report on ‘Cybersecurity for connected vehicles’ outlines that smart vehicles have evolved into complex, interconnected systems with numerous electronic controls and autonomous features. While these advancements enhance functionality, they also increase vulnerability to cyberattacks, prompting the development of global and regional cybersecurity standards. In India, new standards and advanced features like real-time traffic updates, vehicle telematics, and fleet management systems are transforming the mobility ecosystem and supply chain operations.
RBI Innovation Hub’s whitepaper on ‘Securing the Indian banking sector from quantum attacks’ emphasizes that the Indian banking sector, reliant on classical cryptographic algorithms, faces a significant threat from quantum computing, which could break these security measures. To protect sensitive financial data, banks must transition to post-quantum cryptography (PQC) algorithms designed to resist quantum attacks, ensuring continued security and trust. This proactive shift is essential to mitigate potential future vulnerabilities.
Articles
As large investors become cautious in the current tech funding environment, micro venture capital (VC) firms and founder-led funds are increasingly dominating the early-stage investment landscape in India. Recently, two new micro-VCs were launched, focusing on pre-seed stage investments. Over the past five years, 224 early-stage investment funds have been established in India, highlighting a significant shift towards institutionalizing pre-seed capital. Read more.
RBI highlights the importance of responsible lending to foster consumer trust and protection in digital lending, particularly with the increasing use of AI/ML models in credit assessment. Banks must prioritize governance and financial literacy as digital lending is projected to exceed $1 trillion by 2030. Read more. [Paywall]
Large deals, exceeding $100 million, are steadily returning to the Indian startup ecosystem after a one-and-a-half-year lull. Startups like Zepto, Meesho, and Rapido have secured significant funding in 2024, with Zepto leading the pack, preparing to close $1 billion in just two months as quick commerce attracts strong investor interest. Read more.
After an initial surge during the pandemic, the microsavings sector has seen a sharp decline in funding, struggling with low-revenue models and increasing losses. As younger consumers shift towards higher-return investments like stocks, microsavings platforms face challenges in staying relevant and attracting investment, with 2024 witnessing minimal funding compared to previous years. Read more. [Paywall]
Indian fintech startups have grown by 500% over the past decade, attracting over $31 billion in investments. The government's policy changes, such as abolishing the Angel Tax and implementing the Digital Personal Data Protection Act, aim to further boost the sector, which is projected to become a $2+ trillion market by 2030. Read more. [Paywall]
RBI is concerned about banks' asset-liability management as consumer behavior shifts towards diversified investments like mutual funds, challenging traditional banking models. Despite recent reports of deposit growth outpacing credit growth, Indian banks must innovate to compete with emerging digital platforms and retain market share as younger consumers gravitate towards alternative financial products. Read more. [Paywall]
India has the potential to become a global education hub due to its rich cultural heritage, strong educational infrastructure, and young talent pool. Despite some renowned institutions, India's global rankings need improvement. With increasing international student enrollment and the National Education Policy 2020 focusing on higher education reform and internationalization, India is poised to enhance its global educational standing. The paper discusses strategies to leverage India's strengths and address challenges to achieve this vision. Read more.
The fifth edition of the recently concluded Global Fintech Fest in Mumbai reflects a more cautious and thoughtful mood among Indian fintech founders. Discussions focused on building sustainable businesses for the long term, moving away from the previous focus on fast money, high valuations, and rapid growth. Read more. [Paywall]
KPIs
The Indian central government's fiscal deficit for the first four months of the financial year reached 17.2% of the annual target, down significantly from 33.9% in the previous year. Stronger revenue collection and reduced spending have positioned the government to achieve its fiscal deficit goal of 4.9% of GDP for 2024-25.
The Reserve Bank of India reported that the all-India House Price Index slowed to 3.3% in the June quarter of 2024-25, compared to 5.1% in the same period last year. Data from 10 major cities revealed diverse annual HPI growth, ranging from 8.9% in Kolkata to a decline of 1.7% in Delhi.
Fitch has reaffirmed India's long-term 'BBB-' rating with a stable outlook, highlighting strong medium-term growth prospects and solid external finances Fitch projects GDP growth of 7.2% for FY25 and 6.5% for FY26, driven by public infrastructure investments, though job creation remains a concern.
Private consumption has shown signs of recovery, with capital formation and real estate investments maintaining healthy growth. The construction sector's GVA increased by 10.5% year-on-year, and improving private consumption is expected to further boost GDP growth in the coming period. [Paywall]
WEEKLY MARKET UPDATE (w/c August 26, 2024)
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