India In Sight #69
Weekly updates on Indian private markets. Featuring 'Private capital in India 2024' report by IVCA x Preqin
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.
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Key reports in this edition:
Private capital in India 2024 by IVCA x Preqin
Series A landscape in India report by Venture Intelligence
Insuring the future: Addressing emerging risks in the Indian insurance sector by PWC
Indian Equity Insights 2024 by ASK Capital
Unified Data Highways: Next frontier of Digital Public Infrastructure by JICA x BCG
KEY DEALS
Equity
Mstack Chemicals, a specialty chemical manufacturing platform, raised c.$40 million in a Series A funding round led by Lightspeed Venture Partners and Alpha Wave Global, to expand its operations. (October 04, 2024)
[Expected] QBurst, a Kerala-based global IT services firm, to raise capital by stake sale at an estimated valuation of c.$300 million from Multiples PE and other funds. (October 03, 2024)
[Expected] CK Birla Healthcare, the healthcare arm of CK Birla Group, is looking to raise c.$150 million by selling its minority stake to domestic and global funds. (October 03, 2024)
Other Credit Deals and Issuances
Piramal Finance raised c.$150 million from international bond market at 7% coupon rate; the issue was oversubscribed by 3.5 times. (October 05, 2024)
Biocon Biologics, a biopharmaceutical company, refinanced its c.$1.1 billion debt through issuance of USD bonds at a coupon rate of c.7%. (October 03, 2024)
Axis Bank is looking to raise c.$360 million through issuance of tier-1 (AT-1) bonds at c.7.5% coupon rate. (October 03, 2024)
Reliance Infrastructure is looking to raise c.$350 million through issuance of foreign currency convertible bonds (FCCBs) to VFSI Holdings, an affiliate of Varde. (October 02, 2024)
Waycool, an agriculture supply chain firm, raised c.$12 million in debt financing from Grand Anicut, a bridge financing fund led by Anicut Capital. (October 01, 2024)
KEY FUNDS AND FUNDRAISES
Blackstone launched its third Asia-focused PE fund with an target corpus of c.$10 billion, with a focus on investing in India. (October 03, 2024)
ValuAble Partners, a domestic venture debt firm, marked the first close of its maiden fund at c.$25 million. The fund has a target corpus of c.$100 million. (October 01, 2024)
MARKET INSIGHTS & RESEARCH
Reports
IVCA’s report on ‘Private capital in India 2024’ outlines that private capital AUM has tripled over the past decade, reaching c.$125 billion by 2023. VC AUM has grown by 8x from $5.5 billion in 2010 to $44.8 billion by 2023 (36% of total private capital AUM vs 14% in 2010). India's PE and VC markets remain resilient, with deal value steady and exit markets performing better than other APAC regions. PE deals rose from 141 in 2022 to 153 in 2023 with c.$13.5 billion in value.
Venture Intelligence’s report on ‘Series A landscape in India’ highlights that in 2023, 127 companies raised Series A funding, a 45% drop from 232 in 2022. Over 80% of Series A investments were in tech (even split of B2B and B2C). The most active investor from 2019-2023 was Peak XV Partners, backing 88 companies, while Accel India led in 2023 with 12 investments.
PWC’s report on ‘Indian insurance sector’ highlights that the industry is set to become the 6th largest insurance market globally by 2034, with premiums growing at 7%+ CAGR. Growth is driven by technology integration, increasing consumer awareness, regulatory support and schemes like ‘Insurance for All by 2047’. Challenges like low insurance penetration (3.8% of GDP covered) persist.
ASK Capital’s report on ‘Indian Equity Insights’ shares that India's digital transformation, driven by India Stack, UPI and 5G, is set to create a $1 trillion digital economy by 2028. Digital payments have surged by 50% from 2017 to 2023, with daily transactions reaching c.370 million in 2023. Retail digital payments are expected to account for 90% of transactions by 2027.
PWC’s report on ‘Transforming customer experience’ outlines that India's rising disposable income ($26 billion in FY 2023-24) presents significant opportunities for consumer businesses, driving a shift toward digital customer experience (CX) management. The CXM outsourcing market in India is growing at a 14% CAGR, fueled by sectors like e-commerce, BFSI, and travel, with increasing investments in enhancing customer engagement and long-term service delivery through digital channels.
‘KPMG 2024 India CEO outlook’ shares that 80% of Indian CEOs express confidence in global economic growth over the next three years. Indian CEOs are prioritizing innovation, with 70% increasing investments in generative AI and focusing on M&A for future growth. Cybersecurity, talent shortages, internal operational and reputational risks remain significant concerns.
JICA & BCG’s report on ‘Unified data highways’ highlights that UDH aims to simplify daily life by enabling seamless data sharing across services such as loans, healthcare, education, and transportation, all through secure digital infrastructure. Built on Digital Public Infrastructure (DPI), UDH connects fragmented data systems to create an open, interoperable ecosystem. UDH can unlock economic value of $3-4 trillion in emerging nations annually by 2030 (5-6% of their GDP).
Articles
Entrackr’s report on ‘Indian startups - Q3 2024’ outlines that Indian startups raised c.$4 billion across 352 deals in Q3 2024, slightly below Q2. This includes 85 growth and late-stage deals totaling $3.3 billion, and 207 early-stage deals worth c.$750+ million. Fintech was the top segment, with 61 startups raising over $1 billion. Three new unicorns—Ather, Rapido, and Moneyview—emerged in Q3.
India's primary market saw significant growth in the first half of FY 2024-25, with 40 companies raising c.$6 billion through mainboard IPOs, nearly doubling the c.$3 billion raised during the same period in FY 2023-24, reflecting a 95% increase in fundraising activity. Read more.
Priority sector loans, intended to boost competition and lower interest rates for underserved borrowers, have instead become a source of profitability for banks. Contrary to the RBI's expectations, interest rates remain high for borrowers at the bottom of the pyramid, leading to social implications. Read more.
A recent Inc42 survey found that 92% of investors are optimistic about India's semiconductor ambitions, with 63% willing to fund IP-focused chip startups and 58% open to funding semiconductor design services. Funding for Indian semiconductor startups surged 100% y-o-y to $3.4 billion in Q3 2024. Read more. [Paywall]
Some Indian fund managers and angel investors believe that the unicorn era might be over and the focus should shift from valuations to value creation. They feel validated for prioritizing sustainable growth over inflated valuations, as smaller IPOs gain traction, signaling a broader shift from vanity metrics to real value in the startup ecosystem. Read more. [Paywall]
KPIs
The RBI is expected to shift its monetary stance to 'neutral' from 'withdrawal of accommodation' this month, with rate cuts likely starting in December. This move is driven by factors such as slowing economic activity, low core inflation, fiscal tightening, and a weak Q1 GDP growth and Fed rate cuts.
India's per capita income is expected to nearly double in five years, rising from $2,730 to c.$4,700+, despite a challenging global environment. The coming decades are expected to bring significant improvements in living standards for Indians.
India's service sector growth dropped to a 10-month low in September, with the PMI dropping to 57.7 from 60.9 in August. Despite the slowdown, the sector remains in expansion mode. Companies continue hiring amid rising costs, though they passed fewer of these costs onto clients.
High economic growth boosted the credit profiles of India companies in the first half of FY25. The improved credit ratio was mainly driven by government infrastructure investments and strong private consumption. Private sector capital expenditure is expected to rise, esp. in sectors such as oil, gas, steel, cement etc.
Passenger vehicle, two-wheeler, and commercial vehicle sales fell by c.9% y-o-y in September due to weak consumer sentiment and heavy rainfall. This is the first overall decline this fiscal year.
WEEKLY MARKET UPDATE (w/c September 30, 2024)
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