India In Sight #79
Weekly updates on Indian private markets. Featuring 'India goes Alternatives' report by Avendus.
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Key reports in this edition:
India goes alternatives: The alpha investment for maximizing alpha by Avendus
Unified Lending Interface - Changing the credit landscape in India by PWC
Investments in Real Estate 2024 by Knight Frank
Green hydrogen sector report by SBI Capital
India’s Wealth Index by 360 One Wealth
Healthcare vertical in IT sector by Motilal Oswal
How India spends: A deep dive into consumer spending behaviour by Perfios and PWC
Indian Hospitality sector report by Axis Capital
Success and succession in an AI world by PWC
KEY DEALS
Equity
Sahyadri Farms, an integrated platform for fruits and vegetables, raised c.$46 million in its Series B funding round led by responsAbility and GEF Capital Partners. Other investors include FMO, Proparco, Infocin and Korys. (December 20, 2024)
Multiples PE, an alternate asset management company, acquired a minority stake in INSTANT-XP, a tech-enabled B2B express logistics company, for c.$35 million. (December 19, 2024)
KKR acquired a minority stake in Rebel Foods, an online food delivery platform, in a secondary sale of shares at an estimated valuation of c.$750-$800 million, a steep discount of 50% vs its primary funding valuation of $1.4 billion. The exact details of the transaction were not disclosed. (December 19, 2024)
Bureau, a risk intelligence platform, raised c.$30 million in its Series B funding round led by Sorenson Capital. Other investors include PayPal Ventures, Commerce Ventures, GMO Venture Partners, Village Global, Quona Capital, and XYZ Ventures. (December 18, 2024)
Bizom, a retail intelligence platform , raised c.$12 million in round led by Pavestone, a venture capital firm, to scale innovations, strengthen delivery mechanisms, and expand key accounts of the platform. (December 18, 2024)
Sterlite Power, a power transmission company, raised c.$87 million from GEF Capital Partners and ENAM Holdings for its global products and solutions (GPS) business. (December 16, 2024)
Other Credit Deals and Issuances
Grasim Industries, the flagship company of Aditya Birla Group, is looking to raise c.$240 million through long term bonds at a coupon rate of 7.2%. (December 18, 2024)
Punjab and Sind Bank to raise c.$360 million through 10-year bonds. (December 18, 2024)
Power Grid Corporation of India is looking to raise c.$500 million through issuance of bonds on private placement basis. (December 18, 2024)
KEY FUNDS AND FUNDRAISES
Accel India, a domestic venture capital firm, has secured c.$650 million, nearing its final close. (December 21, 2024)
Athera Venture Partners, a technology-focused early-stage investor, secured a commitment of c.$110 million from HDFC AMC for its fourth fund. (December 18, 2024)
MARKET INSIGHTS & RESEARCH
Reports
Avendus’ report ‘India goes alternatives’ highlights that India's c.$400B alternative investment market is poised for significant growth, projected to exceed $2T in the next decade. HNIs and Ultra-HNIs, whose wealth is expected to double by 2027, are driving demand for alternatives, allocating around 7-8% of managed wealth to AIFs, expected to rise to 15%. Structural tailwinds include a robust regulatory framework, increasing retail participation, and rise of asset classes like private credit and real assets.
PWC’s report ‘Unified Lending Interface - Changing the credit landscape in India’ talks about ULI, a backend digital platform developed by the RBI Innovation Hub to streamline credit disbursement and improve credit accessibility for underserved sectors like agriculture and MSMEs. Featuring open APIs and data integration from multiple sources, ULI enables seamless credit assessment and interoperability for lenders, reducing processing complexity and benefiting small borrowers.
Knight Frank’s report on ‘Investments in real estate’ highlights that PE investments in Indian real estate surged 32% YoY to $4.2B (vs $3.1B in 2023), with foreign investors contributing 68%, reflecting India's economic resilience and investor confidence. AIFs are key enablers of real estate growth, raising $7.5B since 2021 to fund residential, commercial, and logistics development.
SBI Capital’s report on ‘Green hydrogen’ outlines that India's green hydrogen demand is projected to increase from 5-7 MT to 15-20 MT by 2030. The National Green Hydrogen Mission aims to achieve 5 MT of green hydrogen production annually, requiring investments of $100-120B+. While green hydrogen currently costs $3.5-5/kg vs $1-3/kg for grey hydrogen, targeted incentives like reduced GST and subsidies aim to bridge the cost gap and establish India as a global leader in this space.
360 One Wealth’s ‘The wealth index’ explores India’s changing wealth landscape with a 6x rise in billionaires over 13 years, now totaling 3,340+, making India the third-largest globally. The ultra-rich, mostly self-made entrepreneurs (61%), are expanding investments beyond traditional assets into equities (39%), real estate (20%), and alternative instruments like AIFs and REITs.
Motilal Oswal’s report on ‘Healthcare vertical: A pause in the party?’ highlights the healthcare vertical as a key growth driver for Indian IT companies. The sector benefits from structural tailwinds like increased spending on drug discovery and clinical trials. Policy changes in the US, such as potential ACA repeals and Medicaid reforms, may create temporary uncertainty for the sector’s growth trajectory.
Perfios and PWC’s report on ‘How India spends: A deep dive into consumer spending behaviour’ analyzes the spending behavior of 3M tech-savvy Indian consumers to understand consumption patterns across obligatory (39%), discretionary (29%), and necessity (32%) expenses. Key findings highlight increasing digital payments majorly via UPI and rising credit needs linked to income levels.
Axis Capital’s report on ‘Indian Hospitality sector’ outlines that the sector is experiencing a strong upcycle, with demand growth projected at 12% CAGR outpacing supply growth at 9% CAGR during FY24-27. Revenue for the sector is expected to grow at 18% CAGR, with EBITDA margins improving. Key drivers include rising disposable incomes, increased leisure travel, and growing community activities.
PWC’s report on ‘Success and succession in an AI world’ highlights the pivotal role of GenAI in transforming family businesses, with 73% of leaders recognizing its potential. However, only 7% of family businesses have implemented AI, reflecting hesitation despite AI's promise for innovation, efficiency, and growth.
KPMG’s report on ‘State of impact reporting in India’ is a survey on impact reporting that analyzed CSR projects by Nifty 250 companies in India. Out of 114 eligible companies, 91 disclosed impact assessment details in their annual reports. The study revealed only 35% considered diverse stakeholder groups, while 94% disclosed the frameworks used. It highlights the evolution of CSR in India.
Articles
Early-stage startups captured investor attention in 2024, with 40 funds collectively raising over c.$2B. Among notable developments, Kedaara Capital closed India’s largest PE fund at $1.7B, while the government launched c.$90M AgriSURE Fund to support agritech startups. The fintech sector accounted for 15.6% of total fund launches, followed by consumer-focused funds at 12.8%. [Paywall] Read more.
The Indian startup ecosystem has seen significant evolution, with 2023 marking a notable year for exits despite a slowdown in dealmaking. Exit values rose 15% to $29 billion, with volumes increasing from 210 to 340. Public market sales, primarily block trades, accounted for half of the exit value, reflecting a shift in strategies for PE and VC firms. Read more.
India's space sector is on a rapid growth trajectory, with the space economy expected to grow by 3x over the next decade. Private companies are increasingly participating in space exploration, and India aims to establish its own space station by 2035. Additionally, untapped space, marine, and Himalayan resources are set to contribute significantly to economic growth. Read more.
India's VC landscape is undergoing a reset. While $2.5B was raised in 2024, total investments reached $10.9B, reflecting a cautious approach. Senior executive churn is reshaping established firms, and smaller funds are driving early-stage investments as global players scale back. This shift marks a recalibration from the 2021 investment boom, influencing deal flow and strategies. Read more.
Indian startups secured slightly more funding in 2024 vs 2023, but the ecosystem remained sluggish with fewer deals closed. New unicorns emerged, while some existing ones faced valuation corrections. The IPO market gained momentum, with companies going public, albeit at reduced valuations. Read more.
Experts have urged India’s AIF industry to adopt an accredited investor model, aligning with global standards. This approach would limit participation to qualified investors, enabling lighter regulations and fostering a stronger market. Additionally, increasing the pool of accredited investors could help lower operational costs, enhancing the industry’s efficiency. Read more.
India witnessed remarkable wealth growth in 2024, with billionaires’ net worth rising significantly. The luxury real estate market thrived, attracting both domestic and international investments. Wealthy individuals prioritized investments in equity, debt, and real estate, with PMS delivering strong returns. Philanthropy and ESG-focused investments also gained momentum. Read more.
Over a decade of Make in India, it has attracted significant foreign investments, spurred infrastructure development, and advanced self-reliance, particularly in defense and electronics manufacturing. The initiative has redefined India’s economic strategy. As it moves into its next phase, success will hinge on sustainability, technology adoption, and continued reforms to build a globally competitive and resilient manufacturing ecosystem. Read more.
India’s AI revolution hinges on developing a skilled and diverse talent pool through innovative learning models and industry-academia collaborations. Addressing the shortage of skilled professionals requires targeted training programs, inclusive recruitment, and tailored education initiatives. Read more.
KPIs
India’s private sector growth hit a four-month high in December, with the composite PMI reaching 60.7, driven by strong demand in services and manufacturing alongside record job creation. Easing inflation and a positive outlook indicate sustained growth into 2025.
India's wholesale inflation eased to 1.89% in November, down from 2.36% in October, with a notable drop in food inflation to 8.29% from 11.59%. Retail inflation also declined to 5.48%, aided by a good monsoon and bumper crops that helped lower vegetable prices.
FMCG companies raised prices on essentials like tea, edible oil, and soap by 5-20%, citing increased commodity costs and higher import duties. This is the largest price hike in a year, raising concerns among analysts about its potential impact on consumer demand.
Advance tax collections for Q3 rose 16.8% to c.$38 billion, pointing to a potential economic recovery following a recent slowdown. Total collections for the fiscal year reached c.$90 billion, up 20% YoY. Economists view this growth as a sign of recovery from the previous quarter’s 5.4% GDP growth.
WEEKLY MARKET UPDATE (w/c December 16, 2024)
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