Tag: private equity

Deal street in FY25: Experts analyse the key trends in India’s financial landscape

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As we step into a fresh financial year, it’s imperative to reflect on the significant transformations that have unfolded on the deal street in the preceding year. Understanding these shifts is crucial to navigating the intricate landscape of mergers and acquisitions (M&A), investments, initial public offerings (IPOs), and fundraising activities in the upcoming fiscal period.

One of the notable trends observed in the past year is the facilitation of easy exits for investors through large block deals. This development has instilled a sense of confidence among private equity investors and is expected to influence deal dynamics in the foreseeable future.

Speaking to CNBC-TV18, Debasish Purohit of Bank of America identifies several mega trends sweeping through India Inc. These include a substantial infrastructural capital expenditure (capex) drive, propelled by an impending energy transition. This trajectory is expected to witness significant investments in roads, airports, and sustainable infrastructure projects, fostering asset creation and investment opportunities.

Additionally, the formalisation of the economy from unorganised to organised sectors emerges as a key trend, benefitting consumers through better price discovery and enhancing efficiency for manufacturers.

The digital revolution and financial inclusion initiatives further contribute to easier access to financial services and improved credit decisioning processes.

Read Here | After weak 2023, Grant Thornton Bharat says deal street will be busy in 2024

Additionally, Purohit added that the most important trend is the pivotal shift India is undergoing from a largely services-led economy into a manufacturing base. So these are multi-decadal trends, which are here to stay and will drive the bulk of deal activities.

Vivek Gupta of Deloitte underscored the evolving significance of India’s domestic consumption market, which is attracting increasing attention from corporates and private equity investors.

Geopolitical stability, particularly the potential return of the incumbent government, is poised to catalyse intense decision-making processes, influencing deal-making activities in the foreseeable future.

Watch this video for more.

Also Read | Will 2024 continue to see block deals and IPO frenzy? Experts weigh in

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Baring’s Rahul Bhasin expects Indian IT services to retain global dominance despite AI disruption

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Rahul Bhasin, Managing Partner, Baring Private Equity Partners  believes Indian information technology (IT) services companies will continue to retain their global dominance despite the challenges posed by artificial intelligence (AI).

However,  he says, “They (the industry) will go through a transition time…there is an inflection point and a state of flux, which the industry will go through. And I think there will be revenue uncertainty and business model uncertainty for a while.”

Currently, a bulk of the work earlier being done by Indian IT companies is getting automated due to AI. This shift, Bhasin believes, will necessitate transitions in business models within the IT industry, especially for large IT service companies.

While technology and software will stay the world’s fastest growing industry, eating up all other industries, “what people may have missed is that it will also eat itself up .”

Read Here | WEF 2024: Gita Gopinath says AI could impact 30% of jobs in India

Bhasin says while Baring will still prefer the tech theme, it will pick business models depending on evolving market trends.

In addition to the technology sector, Bhasin discussed the outlook for consumer and industrial sectors. While he acknowledged the soundness of consumer businesses with promising growth trajectories, he cautioned against their current expensive valuations.

Regarding the industrial sector, Bhasin noted the absence of a significant capital expenditure (capex) cycle since approximately 2011. He suggested a potential turnaround, citing increasing activity in real estate, hotels, hospitals, and malls. With government support for infrastructure investments, Bhasin anticipated a positive impact across the value chain.

Talking about PE firms exiting via block deals, IPOs, Bhasin said, “Private equity industry is time bound. So any investment made, you will see divestments. Now, that mode of divestment keeps evolving and keeps changing, depending on market conditions. Sometimes it’s strategic, sometimes it’s M&A, sometimes it’s via buyback and sometimes it’s through the listed markets in the public markets.”

Also Read | 2023 witnesses record-breaking block deals, private equity & venture capital stole the spotlight

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

NIIF invests $25 million in a Bengaluru investor that backs RenewBuy and Capital Small Finance Bank

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The seven-year-old Amicus Capital, which invested early in companies like the insurance aggregator RenewBuy and microfinancier Capital Small Finance Bank, has raised another ₹207 crore (about $25 million) from the National Investment and Infrastructure Fund (NIIF).

The Bengaluru-based private equity firm currently has $259 million worth of assets under management across two funds. Capital Small Finance Bank was listed at an 8% discount to its IPO price on February 14.

The latest fundraising will take Amicus’ second closer to its target of $200 million, which will be invested in growth-stage companies from speciality manufacturing, technology and business services to healthcare and financial services, a press statement said.

“Including NIIF’s commitment, our second fund has raised $171 million (about ₹1,415 crore) as of today,”  Mahesh Parasuraman, the co-founder and partner at Amicus Capital, said. This investment from NIIF will come from the $100 million fund of funds set up in 2021.

The state-initiated NIIF, which has committed over $4.9 billion in investments through four funds, has bet on at least 50 companies in the private markets. NIIF is also backed by the Asian Infrastructure Investment Bank (AIIB) and the Asian Development Bank (ADB), among others.

Some of NIIF’s investments include a new airport in Andhra Pradesh and a highway from Jammu to Udhampur, among others.

Private market investments are those that aren’t traded on any public exchanges.

ALSO WATCH: The Rise of India’s Private Equity and Credit Market

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Big Deal | Investors emphasise India’s investment potential amidst global challenges

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Indian Venture and Alternate Capital Association (IVCA) Summit, held in New Delhi, has drawn attention to India’s promising investment landscape. Leading investors, Rahul Bhasin, Managing Partner at Baring Pvt Equity Partners, and Jayanta Basu, Managing Partner at CX Partners, shared their insights on the investment outlook for India during an interview with CNBC-TV18’s Nisha Poddar.

Rahul Bhasin, in discussing the current investment sentiment in India, expressed his optimism, stating, “If you look at all the drivers of economic growth, productivity, the adoption of technology, and returns, India is in a real sweet spot.” He emphasised that, even in the face of potential challenges like rising energy prices, India remains well-positioned.

Bhasin attributed this strength to the country’s robust digital infrastructure, which enhances governance and payment systems, ultimately boosting the efficiency and productivity of the economy.

Read Here | Financing and high credit costs among biggest issues faced by SMEs in India, says FICCI report

Jayanta Basu chimed in on the topic of funding for startups, noting a shift in investor behaviour. He observed, “Investors have become more discerning about where they put their money. They’re no longer swayed solely by valuations or pyramid schemes. Instead, they are focusing on solid business models, and this trend is evident across various sectors.” This change reflects a more sustainable and measured approach to investment in India’s burgeoning startup ecosystem.

When discussing buyout opportunities in the Indian market, Basu pointed out that matured businesses are attracting significant interest. “Buyout funds are highly active,” he stated, “and they are pouring substantial capital into acquiring and consolidating companies across sectors.” This trend is visible in IT and healthcare, where companies are being rolled up and combined to create greater value. Entrepreneurs are also recognising the potential in this buyout strategy, signalling a promising outlook for India’s investment landscape.

For full interview, watch accompanying video

Also Read | InsuranceDekho weathers the winter with fundraise of more than $200 million in 2023

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

PE deals: Five deals in five months take total tally to $1.34 billion so far in 2023

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With Warburg Pincus acquiring a controlling stake in Vistaar Finance, the value of a complete buyout by private equity (PE) firms for the year so far has touched $1.34 billion in 2023.

The latest transaction has taken the number of PE deals for the first five months of the year to five, against six such deals during the same period last year. According to data from Grant Thornton Bharat, the average deal size for the year so far stood at $268 million, against $784 million for the same period last year.

Some of the other key deals in this vein include Advent’s purchase of 50.1 percent in Suven Life Sciences from the Jasti family for $770 million and Brookfield Asset Management’s purchase of a 51 percent stake in Cleanmax Enviro Energy Solutions for $305 million.

*Till May 29
Source: Grant Thornton Bharat

Warburg Pincus on Monday acquired around 90 percent equity stake in Vistaar Finance, for $250 million, through a combination of primary and secondary shares. Former ICICI Bank executive Avijit Saha, who is also a co-investor alongside Warburg Pincus will be joining the company as chief executive officer (CEO).

Also Read: Varun Beverages is now India’s fourth-largest FMCG firm after crossing Britannia’s market cap

The last two years have been unprecedented for PE investors with each year witnessing about $5.6 billion worth of investment. According to data from Grant Thornton Bharat, India attracted PE investments to the tune of $25.3 billion since 2019 with companies from healthcare, energy, IT, and real estate dominating the space.

However, the overall trend over the last few years suggests a slowdown in such deals. While the year 2019 had 27 deals worth $ 9.4 billion, it reduced to 17 deals worth 3.4 billion in 2020. The number further came down to 15 in 2021 and 11 in 2022.

As far as the value of investments is concerned, investments made by three PE firms — Brookfield Asset Management Inc, British Columbia Investment Management Corp and GIC— for acquiring Reliance Jio lnfratel in 2019 topped the list. The three together had spent as much as $3.7 billion to acquire a 100 percent stake. That was followed by a little over $2 billion invested by Blackstone to acquire 55.3 percent of Mphasis in 2021.

Also Read: Twitter faces lawsuit as PR firm claims unpaid bills following Musk’s buyout

While pharma, healthcare, and biotech had seen as many as 12 deals since the beginning of 2019, Energy and natural resources came close second with 10 such deals. The real estate space occupied the third spot with 10 deals as high-grade rental-generating assets attracted foreign investors in a big way post-pandemic.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Here is India’s prescription to ending the funding winter

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The high-level panel appointed by the Union finance ministry submitted its report on December 19 to the government and recommended ways to remove regulatory friction and accelerate venture capital (VC) and private equity (PE) investments in India, sources privy to the developments told CNBC-TV18.

The panel was headed by former Sebi chairman M Damodaran. The report, which is under examination by the Department of Economic Affairs, has recommended a slew of direct tax recommendations for the upcoming Union Budget and asked that the government support the capital needs of startups in a volatile environment, said people familiar with the matter.

In its report, the six-member committee has asked the government to treat carried interest as capital gains and requested tax at the investor’s end. Currently, fund managers are burdened with Goods and Services Tax (GST) on carried interest as imposed by the government, according to multiple people familiar with the development.

Also Read: UP CM Yogi Adityanath’s pitch to investors: Crime and riots are down in the state

Further, it said the fund management services provided to foreign investors should be treated as a deemed export and foreign investors should not be asked to pay 18 percent GST on availing service of domestic fund managers, sources in the know told CNBC-TV18.

The panel looked at the requirements of global funds and held consultations with the Department of Economic Affairs, the Department for Promotion of Industry and Internal Trade, the Reserve Bank of India, and the Securities and Exchange Board of India (Sebi), sources close to the development said.

Last September, the Union finance ministry had set up a high-level panel to look into issues being faced by venture capital and private equity investors. Union Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2022-23, had announced the setting up of the expert committee to examine and suggest appropriate measures related to venture capital and private equity.

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The other members of the panel are G Mahalingam, former member Sebi, D P Nagendra Kumar former member CBIC, Ashish Verma former Principal Commissioner Income Tax, Poonam Gupta DG National Council of Applied Economic Research, and P R Acharya, Director Arun Jaitley National Institute of Financial Management.

Gopal Srinivasan, chairman of TVS Capital Funds Ltd said the carried interest is actually capital gains and the industry is asking for clarity. He said the goal is to scale up the industry and hopefully, other changes the sector is asking for will also come around.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Objective is to see how to make life easier for people investing in India: M Damodaran

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The finance ministry had recently set up a committee under former Sebi chairman M Damodaran to look at ways to scale up private equity and venture capital investments in India. This also comes at a time when we are seeing large-scale layoffs across startups in the country.

Speaking exclusively to CNBC-TV18 at the launch of industry body FICCI’s Model Risk Code, the former Sebi chairperson spoke about ways to scale up PE and VC investments in India, lessons from layoffs in startups, and regulatory changes needed for ease of doing business.

On the need for parity in taxation, Damodaran said, “We have got inputs from a large number of people, the committee itself has considerable expertise drawn from the resources. We are looking at all of this, our objective is to see how to make life a little easier for people that are actually investing in India. This is certainly one of the asks that the committee has received and is addressing.”

Read Here: Third party validation in future with rapid adoption of digitisation, tech: Sebi chief

On ease of doing business, he said India needs to check whether the context of certain laws and regulations have changed since the laws were introduced.

He said, “Certainly you got to look at all the existing regulations and laws and see whether there are any among them that are past their sell-by date, lost relevance. Because you write laws and regulations in a context, has the context changed? Of course, at the back of all of this, we got to keep in mind the fact that India needs to see a lot of investment coming from outside of India. So how are you going to make it a little easier? That’s exactly what we are addressing.”

Talking about lessons from layoffs in startups Damodaran said companies need to do scenario analysis, and scenario planning.

He said, “In good times you obviously think these will continue forever. There will be challenges that come in from outside, challenges from outside your company when I say outside within the ecosystem, but outside your company, and you got to see how you address those.”

He added that if one doesn’t plan for a bad day, and thinks that the sun will shine throughout, clearly then the business model has weaknesses. Every company should have fallback options instead of addressing problems when they show up.

Also Read: Layoffs: Credit Suisse to cut 9,000 jobs, projects $1.6 billion loss in fourth quarter

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IRDAI proposes regulations for investments in insurance firms — check details

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The Insurance Regulatory and Development Authority (IRDAI) has released draft regulations for investments in insurance and reinsurance companies. The regulator has mentioned different proposals for promoters and investors. It has also proposed exit rules.

Draft proposal for promoters

According to this, 5-year lock-in will be available for promoters intending to start a business. They will not be able to promote more than one life, general insurer, health insurer and reinsurance company. The minimum shareholding of promoter shall be maintained above 50 percent of paid-up equity capital, the regulator proposed.

It must be noted that anyone with more than 10 percent is classified as a promoter.

IRDAI Releases Draft Regulations For Investments In #Insurance & #Reinsurance Cos #IRDAI Draft Proposes Regulatory Framework For
▪️Starting Insurance/Reinsurance Cos
▪️Promoter/Investor Lock-in
▪️Private Equity Invsts In #Insurance Cos@CNBCTV18Live

— Yash Jain (@YashJain88) October 14, 2022

Draft proposal for investors

Investment will be restricted to not more than 2 life, general, health and reinsurer company.

ALSO READ | Insurance regulator asks general insurers to offer long-term policies

Draft proposal conditions for investments by private equity

As per the proposal, they should have completed 10 years of operation. The funds raised by the PE should be $500mn or more and investible funds available with the PE fund should not be under $100 mn.

They should have invested in financial sector in India or in other jurisdictions. There should be no mention of mandatory SPV route for PE investment in insurance companies.

On annual fee, the draft said an insurer who has been granted a Certificate of Registration under relevant sections of the Act shall pay, an annual fee for every financial year to the Authority before January 31 of the preceding financial year.

ALSO READ | IRDAI chief gives tips to make Indian insurance market largest

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow