January was dominated by investments in start-ups which contributed to 52% of total investment volumes
Private equity (PE) investors announced deals worth $983 million in January, a 23 per cent rise in value terms over last year, driven by big ticket transactions, says a Grant Thornton report.
According to the assurance, tax and advisory firm, in January, there were 84 PE deals worth $983 million, against 81 such transactions worth $796 million in January 2017.
“Private equity deals recorded 4 per cent increase in deal volumes and 23 per cent increase in deal value in January 2018 as compared to January 2017,” said Pankaj Chopda Director at Grant Thornton India LLP.
January was dominated by investments in start-ups which contributed to 52 per cent of total investment volumes. On the other hand, energy & natural resources and real estate sectors witnessed big-ticket PE investment over $100 million together capturing 39 per cent of total PE deal values.
Altico Capital’s investment of $195 million across five realty projects in Hyderabad and Pune was the top PE deal in January.
Other major transactions include Canada Pension Plan Investment Board’s 6 per cent stake acquisition in ReNew Power Ventures for $144 million and Warburg Pincus and SAIF Partners’ $50 million investment in Rivigo Services.
Going forward, the PE deal outlook looks bullish especially for the start-up sector.
“Increasing customer penetration in online transactions and increasing solutions to simplify online transactions offered by start-ups will attract interest in start-ups engaged in retail, fintech, foodtech, on demand services and travel and logistics,” Chopda said.
“Government reforms such as RERA, focus on cleantech and on increasing digital financial transactions will drive the momentum in banking and financial, real estate and energy and natural resources.
India-specific strategies by global and already present PE firms and funds raised by new players will act as catalyst for PE transactions,” he added.
Weeks after the Reserve Bank of India issued its third warning against the crypto currency trading, the Finance Ministry today said that virtual currencies are not legal tender and such currencies have no protection. It said the virtual currencies (VCs) including Bitcoin don’t have any intrinsic value and are not backed by any kind of assets. “The price of Bitcoin and other VCs therefore is entirely a matter of mere speculation resulting in spurt and volatility in their prices,” the Ministry said in a statement.
The Ministry also said that there was a real and heightened risk of investment bubble of the type seen in ponzi schemes which can result in sudden and prolonged crash exposing investors, especially retail consumers losing their hard-earned money. “Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes,” the statement said.
The Ministry also explained the vulnerabilities in investing in digital currencies. It said the virtual currencies are stored in digital/electronic format, making them vulnerable to hacking, loss of password, malware attack which may also result in permanent loss of money. “As transactions of VCs are encrypted they are also likely being used to carry out illegal and subversive activities, such as, terror-funding, smuggling, drug trafficking and other money-laundering Acts,” the Ministry said.
The Finance Ministry today reiterated that the government or the RBI has not authorised any Virtual Currencies as a medium of exchange. It also made it clear that the government or any other regulator in India has not given license to any agency for working as exchange. It said: “Virtual currencies are not backed by government fiat. These are also not legal tender. Hence, VCs are not currencies. These are also being described as ‘Coins’. There is however no physical attribute to these coins. Therefore, VC are neither currencies nor coins.”
This may be the first official warning from the government, the Central Bank on three different occasion cautioned the users, holders and traders about the potential financial, operational, legal, customer protection and security related risks that they were exposing themselves to by investing in Virtual Currency including Bitcoin. Earlier this month, the RBI clarified that it has not given any licence/ authorization to any entity/ company to operate or deal with Bitcoin or any virtual currency.
Today, the government also made it clear that VCs are not legal tender and such VCs do not have any regulatory permission or protection in India. The investors and other participants therefore deal with such currency entirely at their risk.
The Indian government and RBI are not the only ones to caution investors against crypto currency. Leading financial analysts and economist have also raised red flag against it. Business magnet Warren Buffett called it a ‘real bubble’. Garrick Hileman, a research fellow at the University of Cambridge’s Judge Business School, earlier said: “What’s happening right now has nothing to do with Bitcoin’s functionality as a currency – this is pure mania that’s taken hold.”
Union minister for shipping Nitin Gadkari on Tuesday announced that the government has identified five major ports — Mumbai, Mormugao, Mangalore, Chennai and Cochin — to boost cruise tourism in India.
While the number of Indians who took a cruise in 2016-17 was 2 lakh, the number could go up to 40 lakh, according to a report prepared by consultants Bermelo & Ajamil jointly with Ernst & Young. Of this, 80% or 32 lakh passengers are expected to take cruises from the Mumbai port alone.
However, Gadkari added that the cruise tourism industry is facing challenges on many issues and that he would make a representation to the finance ministry to waive the goods and services tax (GST), levied at 5% currently on all cruise ships, as well as establish a zero income tax regime.
While the largest cruise line operator, Carnival PLC, is looking to increase the number of cruise liners in India, David Dingle, the company’s chairman told FE that the country must create a domestic cruising tax regime competitive with tax regimes elsewhere in the world.
“In principle, the cruise industry will not come to a part of the world where it has to pay GST on the ticket price and on the sales made on board. We will not bring our ships here in any significant numbers all the while that cruising attracts any GST,” he said. Moreover, Dingle added that international cruise companies have to have the right to repatriate their profits through double tax treaties.
Carnival PLC sold 181,000 cruises in India in 2016, registering a compounded annual growth rate of 31%.
Current estimates are that over 120,000 Indians book a cruise each year with over 90% of them travelling to Singapore to board a cruise liner. To cater to this growing market, the Indian government wants to increase the number of cruise liners that come to India, eliminating the need for cruise seekers to fly abroad to board a ship.
The Indian coastline saw 150 cruise ship visits in 2016 and the government is aiming to increase this to about 955 in the next few years.
PE, Venture Capital flows up 155% in May to $ 3 billion; SoftBank – Paytm deal tops
Private equity and venture capital (PE/VC) investments have recorded the highest monthly investments in the past 10 years at $3.1 billion in May 2017. For the third consecutive month in a year, the investment flow crossed the $2-billion mark.
The financial services sector topped the table on account of the $1.4-billion investment by Softbank in Paytm. This deal accounted 46 per cent of aggregate deal value for the month.
According to Ernst & Young (EY) data, the month recorded a 264 per cent increase in terms of value and 23 per cent in volume over May 2016. PE/VCs have invested $3,064 million across 55 deal in May this year as against $843 million across 45 deals in May 2016.
There were five deals of more than $100 million aggregating to $2.3 billion, accounting for 75 per cent of the aggregate deal value in May 2017.
Another important deal during the month was the $500-million investment by Canada Pension Plan Investment Board (CPPIB) in Indospace (a real estate platform for industrial and logistics parks) for a majority stake, thus taking the investments by Canadian pension funds in 2017 close to $2 billion.
Mayank Rastogi, partner and leader for PE, EY said that Indian PE/VC market has significantly matured over time. Five to seven years ago, the classic growth capital was the only meaningful capital pool available with limitations such as investment horizon and return expectations, and could not have suited some specific situations.
There are a variety of capital pools available ranging from angel/VC to buyout funds, family offices, pensions and sovereigns, corporate funds, debt funds, sector-focused funds providing solutions that address specific needs. This is one of the key drivers for continuing buoyancy in the PE/VC investments in India despite slow growth capital investing.
Financial services ($1.6 billion across 11 deals) emerged as the most active sector on account of the Paytm-Softbank deal, the largest deal in the financial services sector till date. The real estate sector bagged four deals worth $709 million, followed by e-commerce sector’s six deals worth $211 million in terms of activity.
May 2017 recorded $1 billion in exits and was the second consecutive month with more than $1 billion in exits.
The strong buyout trend established over the past two years continued into 2017 with $2 billion invested across 18 deals till date.
Between January and May, there was a significant increase of over 60 per cent compared to 2016 and over 100 per cent compared to 2015, both, in terms of value and volume.
Debt deals recorded the biggest monthly volume since 2014 with $377 million recorded across 12 deals.
Given the buoyancy in the public markets, open market deals emerged as the preferred mode of exit, accounting for 36 per cent of exits by value and 50 per cent by volume, similar to the trend seen in the previous month.
Till date, open market exits have accounted for 49 per cent of the total value of exits in 2017 compared to 25 per cent for the whole of 2016. May 2017 recorded $90 million in fund raise, a decline of 82 per cent and 76 per cent as compared to May 2016 and April 2017 respectively. The plans for fund raise announced during the month stood at $908 million.
There was one PE-backed initial public offering (IPO) in May 2017 (S Chand, a publishing company, primarily in the education space), which saw Everstone exiting a 13.9 per cent stake for $48 million. Till May 2017, PE-backed IPO tally stands at four compared to eight during the same period in 2016.
Financial services emerged as the leading sector with exits worth $466 million across six deals followed by the healthcare sector with exits worth $260 million across three deals.
By Prakash Kumar, CEO, GSTN and Upender Gupta, Commissioner (GST Policy), Ministry of Finance
There is an excitement in the country about GST. People want to understand the process of GST. Through this article, we present some points about the process of filing returns.
Every trader will have to file returns once a month and pay tax. The input credits of taxes that have been paid on purchases will be automatic and will be available to every trader. The whole process of filing returns is online. If accounts are kept in the Excel sheet provided by GSTN, then the same account will automatically be converted into returns with the help of an offline tool every month.
If a trader sells all his merchandise only to retail customers, then the returns of such a trader will be very simple – the summary of rate-wise turnover will be shown. If a trader avails of the composition scheme and has a turnover of less than Rs.50 lakh, such a trader will not have to file returns every month, but every three months, showing the total turnover.
Traders selling business-to-business merchandise must give specific details for each sale invoice in their returns. When a trader’s sales details are entered into the form of returns on the GST website by the 10th of the month, the complete details of purchases made by his buyers will be seen in his GSTR-2 (GST Online Account). That means it will auto-populate.
With the purchasing buyer clicking okay, after looking at these details, the merchant’s GSTR-3 return will appear in the computer itself. The GSTN system will auto prepare and show the merchant’s tax liability and the complete details of the input tax credit, along with net tax liability. The trader would be required to deposit the difference between tax liability and input tax credit. Taxes must be deposited online or in the bank.
After this, the trader will have to submit the final return made by computer by clicking on GSTR-3 and submitting it by the 20th of the month. There is an arrangement in business-to-business transactions which we call the input tax credit reversal, which is to return the input tax credit taken. A lot of people have expressed concern about this, but if you understand the whole process, then you would fully support it.
If the trader from whom you buy goods has shown that transaction in his return by the 10th of the month, you will get input tax credit. Suppose the person selling the goods does not put that invoice in his returns, even then you will get an opportunity to show it in your GSTR-2 return by the 15th of the month, and by doing so, you will get full input tax credit.
After that, you have to contact the businessman (the supplier) and explain that he must show that transaction in his return so that there is no reversal of the input tax credit received in the next month. You will get 30 days for this and if even then the merchant who sells the merchandise does not accept this transaction and does not show it in his return, then the input tax credit tax that you got would be reversed in your returns next month.
It is the duty of every businessman to deal with such traders who have deposited the tax with the government after collecting the tax from you.On the basis of the default of each merchant, they will be given a compliance rating, which will be visible to all other traders so that you do not do business with frequent defaulters.
Home service startup UrbanClap has raised Rs.20 Crore of debt funding from California-Based Trifecta Capital through Non-Convertible Debentures.
A Non – Convertible debenture or NCD do not have the option of conversion into shares and on maturity, the principal amount along with accumulated interest is paid to the holder of the instrument. There are two types of NCDs-secured and unsecured.
Previously, UrbanClap raised an undisclosed amount funding from Ratan TATA in December 2015. The total equity funding from UrbanClap is about $36.6 Millions. The startup investors base include SAIF Capitals, Rohit Bhansal, Accel Partners, Bessemer Venture Capital and others.
The startup has also acquired similar startups like GoodServices and Mumbai-Based HandyHome.
The Delhi-Based startup was founded in October 2014 by Varun Khaitan, Raghav Chandra and Abhiraj Bhal. UrbanClap is the simplest way to hire trusted services. The startup helps their customers to find the right service professionals for activities important house works. Their vision is to use technology and smart processes to structure the highly unorganised services market in India and emerging markets.
Trifecta Capital is an early stage technology fund that invests in the best start-ups. Current portfolio companies include Equipment Share, Second Spectrum, Moltin and others. Trifecta Capital is a top quartile Silicon Valley-based seed fund. The venture capitalist is industry agnostic and look to support companies starting at seed stage but continue our support until IPO.
Commenting on the funding Rahul Khanna, managing partner at Trifecta Capital, said: “We are very focused on identifying category leaders. The venture debt firm has so far committed Rs 300 crore to 21 startups in the last 18 months through its Trifecta Venture Debt Fund I, the target corpus for which is Rs 500 crore.”
The venture debt firm has invested in several startups such as BigBasket, Rivigo and Urban Ladder.
India’s internet economy is slated to double to $250 billion and the number of 4G-enabled devices is envisaged to jump six times to 550 million by calender 2020
India’s internet economy is slated to double to $250 billion and the number of 4G-enabled devices is envisaged to jump six times to 550 million by calender 2020, says a joint study by the Boston Consulting Group (BCG) and The Indus Entrepreneurs (TiE).
Total number of mobile internet users, the study says, is likely to nearly double to 650 million by 2020, and per user data consumption levels are estimated to grow 10-to-14 times to as much as 7-to-10 GBs a month from a current level of 700 MB per month per user.
The BCG-TiE study expects the growth of the country’s internet economy to be propelled by e-commerce and financial services, with the share of digital transactions likely to more than double to nearly 30-40% by 2020.
But the study cautions that the number of high-speed internet users in India continues to remain “limited to only 56%” of the total number of mobile internet users. This is since a sizeable chunk of such users continue to use feature phones, and are accordingly, constrained by device capability and internet speed.
As a result, “average data consumption per user (in India) continues to be low at less than 1 GB data/month, vis-à-vis developing economies like Indonesia and Brazil (at 2-to-3 GB/month) and developed economies like Japan and US (at 9-to-11 GB/month)”.
According to the BCG-TiE study, a combination of low fixed-line broadband coverage, a high proportion of feature phones among mobile handsets in use and high data prices have been key contributing factors behind low internet consumption in the county so far.
Nevertheless, the study expects high-speed mobile internet adoption levels to surge in the country from current the 56% to 85% of total the mobile internet base by 2020 as Indians are increasingly doing more than just calling on their handsets. “One in every four, accesses internet on their mobile phones, summing to 391 million internet users, which for perspective is bigger the population of US,” said BCG and TiE in their joint study.
Furthermore, the country’s devices ecosystem, it said, is leapfrogging by 2-3 years, and the emergence of 4G enabled feature phones is expected to give a fillip to high-speed internet access, going forward.
So much so, the study suggests that 3G smartphones are likely to get phased out by 2018, and be entirely replaced by 4G smartphones inundating the market.
