PE fund multiples to raise $1 billion for resurgent India

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India-focused funds together raised about $3.1 billion in 2017, according to Preqin data.

Multiples Alternate Asset Management, the private equity fund founded by former ICICI Venture CEO Renuka Ramnath, is set to raise as much as $1billion in what could be one of the largest capital-raising plans by a domestic asset manager.

The programme, which is expected to start in February, will target pension funds, sovereign wealth funds and university endowments in North America, Europe, the Middle East and South East Asia, two people with knowledge of the matter said.

The proposed fund will be equivalent to almost one-third of the capital raised by 29 India-focused private equity and venture capital funds in 2017.

The fund is being launched with appetite for long-term capital after a relative lull of almost a decade. Big-ticket asset owners such as pension and sovereign funds have started putting in money since last year, especially after Moody’s Investors Service upgraded India’s sovereign rating outlook, which lifted sentiment towards one of the fastest-growing economies.

Multiples raised its first fund of $400 million in 2011 and its second fund of $750 million in 2016. It has delivered an average internal rate of return (IRR) of 30% to investors, sources said.

The average net IRR of India-focused funds was 14% over the past 10 years, according to London-based data tracker Preqin, compared with the median net IRR of 11.9% across all Asia-based private equity funds of all vintages.

“Yes, we have already started discussions with our existing limited partners and are looking to start marketing roadshows from Febru-ary. We expect the first close by mid of this year and a final close by December,” said one of the two people.

Founded in 2009 by Ramnath, former managing director and CEO of ICICI Venture, the private equity arm of the country’s biggest private lender, ICICI Bank, Multiples manages close to $1billion assets, its website showed. It counts Canada Pension Plan Investment Board and other North American pension money managers and university endowments as its largest limited partners or investors.

These investors have already committed to the fresh fundraising. Some of the investments by Multiples include Arvind, Cholamandalam Investment & Finance, Indian Energy Exchange and RBL. Last January, the firm sold its 14% stake in India’s largest movie hall chain PVR to rival private equity fund Warburg Pincus for Rs 820 crore, making a return on more than three times on its four-year-old investment, in constant currency terms.

India-focused funds together raised about $3.1 billion in 2017, according to Preqin data. This is more than double the money raised by 18 asset managers in 2016. Last year, former Temasek India head Manish Kejriwal’s Kedaara Capital raised about $750 million for its second fund, while IDFC Alternatives raised $350 million.

PE fundraising slowed soon after the Lehman crisis with asset managers struggling to get out of their investments as valuations were rearranged, said the head of a large US fund in India. “The Moody’s upgrade and related strength seen in the economy and continued strong sentiment are expected to keep the India story intact,” he added.

Source:Economic Times

 

PE investments jump 55% to all-time high of $24 bn across 591 deals in 2017

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Flipkart received India’s largest ever PE investment of $2.5 billion in a single round from Softbank

Private equity firms invested $23.8 billion across 591 deals in 2017, making it the biggest year for PE investments in India, says a report.

According to deal tracker Venture Intelligence, the investment value is 39 per cent higher than the previous high of $17.1 billion (recorded in 2015) and 55 per cent higher than $15.4 billion invested during 2016. In terms of number of deals the year 2017 saw 21 per cent less activity as compared to 2016 (731 deals), indicating large number of big-ticket transactions.

“The year witnessed 31 investment deals with size greater than USD 200 million, aggregating to $15.4 billion or 65 per cent of the total investments,” the report said. These figures include venture capital investments, but exclude PE investments in real estate.

In terms of industries, IT/ ITeS companies accounted for 45 per cent of the value pie attracting $10.7 billion worth investments across 325 transactions.

Flipkart received India’s largest ever PE investment of $2.5 billion in a single round from Softbank and another $1.4 billion from strategic investors Tencent, eBay and Microsoft. Softbank also invested $1.4 billion in mobile wallet and payments firm One97 Communications, which owns the Paytm brand. BFSI (Banking, Financial Services and Insurance) companies continued to enjoy the second spot attracting $4.40 billion across 61 transactions.

The sector was led by Bain Capital’s $1.04 billion investment in Axis Bank — the largest ever single investment in the sector — and Warburg Pincus’ $384 million pre-IPO investment in ICICI Lombard General Insurance.

On the back of its two mega bets (Flipkart and Paytm), Softbank emerged as the largest investor during the year with investments totaling over $4 billion (including a $250 million investment in Oyo Rooms).

Other top investors include Canadian pension fund CPPIB with $2 billion investments across five companies; while Warburg Pincus invested $1.6 billion across nine companies, and KKR invested about $680 million.

China’s Tencent emerged as a significant strategic investor in the Indian Internet and mobile sector with investment of $1.1 billion across home grown leaders like Flipkart, Ola, Byjus Classes and Practo.

 

Source: Business Standard

Public investors make big bucks on D-Street even after PE exits

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Private equity investors make big money in IPO exits. This is well known. But what is less known is that retail and other investors have also been making decent money after the exits. The largest IPO exits in the last three years made 1-14 times returns for private equity firms. But after listing, retail, HNIs and institutional investors have gained 9-156% in these firms, thanks to a strong stock market, data from Venture Intelligence show.

If the market rises further, the gains will only increase and private equity-like, super sized returns may still be possible. Investment bankers attribute this to the rising interest in equity market as well as strong fundamentals. “Stocks being valued attractively and appetite for IPOs have helped these companies,“ said Dharmesh Mehta, MD, Axis Capital. Financial stocks have obviously beaten the rest with RBL Bank surging 156% since listing in August 2016 followed by Ujjivan Financial Services with a gain of 87%.

Other gainers include Dr Lal PathLabs which has jumped 76% and Dilip Buildcon which has moved up 71%. In FY17, PE firms sold their complete stakes in 14 IPOs, as compared to 16 in FY16 and seven in FY15. According to Ajay Saraf, executive director, ICICI Securities, a PE exit augurs well for investors as the company could be expected to have better corporate governance and better fundamentals.

PE firms usually enter into sectors that have potential to do well and this gives comfort to investors while buying these stocks, said Saraf. “The PE exit trend is likely to gain further momentum going ahead,“ added Saraf.

Source:  http://economictimes.indiatimes.com/articleshow/58157676.cms

Demonetisation: Amidst cash chaos Fintech startup Capital Float opens its coffers for small merchants

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Advertisement The fintech startups has partnered with Point of Sale (PoS) card machine vendors to provide merchants quick and easy access to loans. (Reuters)

Amidst cash chaos and consequent surge in digital payment due to government’s demonetisation drive, a Bangalore based digital lending firm for small and medium enterprises (SMEs), Capital Float has decided to offer quick and easy loans to small merchants.

The fintech startups has partnered with Point of Sale (PoS) card machine vendors to provide merchants quick and easy access to loans.

Under this offer, any merchant who is using the services of vendors like Mswipe, Petpooja, ICICI Merchant Services, MRL Postnet, Bijlipay and Pine Labs for transations would be eligible for upto 200% finance on sales from their card machines. The merchant would be able to repay the loan as nominal percentage of their daily card settlements.

Capital Float, a Non-Banking Financial Company (NBFC) has a product called ‘Merchant Cash Advance’ which is targeted towards any merchant that accepts cards payment in exchange of the goods and services. The company underwrites such borrowers according to their monthly card sales and offers loans up to twice the amount of their average monthly card sales.

With the increase in card transactions due to demonetisation, company is expecting a surge for its Merchant Cash Advance offering. According to company officials, with the increase in card transactions, now more number of merchants will qualify under the loan criteria and also avail larger loan amounts as compared to the past.

Source: http://www.financialexpress.com/industry/demonetisation-amidst-cash-chaos-fintech-startup-capital-float-opens-its-coffers-for-small-merchants/458261/

Fund mop-ups via IPOs in 2016 three-fold higher than a year ago

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Money raised through public issues in 2016 so far is three fold higher compared to the same period in 2015. As many as 21 companies have debuted on the bourses so far raising Rs 19,379.09 crore, an increase of around 205% compared to last year when 15 companies raised Rs 6,346.02 crore, data compiled from Prime Data base shows. During the same period in 2014, four companies raised Rs 4,029 crore.

 

Of the issues that hit the primary markets in 2016, the Rs 6,000-crore initial public offering (IPO) of ICICI Prudential Life Insurance, a subsidiary of ICICI Bank, was the biggest. This is followed by the issue of small finance bank, Equitas Holdings which raised around Rs 2,000 crore. Punjab National Bank’s (PNB) subsidiary firm, PNB Housing Finance will hit the primary market on Oct 25,the company is expected to raise Rs 3,000 crore in a price band of Rs 750 – Rs 775.

 

According to data compiled from the website of Securities and Exchange Board of India (Sebi), draft documents of as many as 10 companies are under process of receiving the market regulator’s approval for their public issues. Among the companies whose issues are yet to receive Sebi’s approval include Aster DM Healthcare, Avenue Supermarts, Security &Intelligence Services (India) and Continental Warehousing Corporation. The IPOs of these companies are expected between Rs 1,000 and Rs 2,000 crore.

 

On the other hand, as many as 15 companies have received Sebi’s approval for their public issues which are expected to raise around Rs 4,800 crore. Of the issues, the Rs 1,000 crore IPO of pharma company Laurus Labs is the biggest issue followed by real estate firm Paranjape Schemes whose issue is expected to raise Rs 600 crore.

Source: http://www.financialexpress.com/markets/indian-markets/fund-mop-ups-via-ipos-in-2016-three-fold-higher-than-a-year-ago/428823/

IPO fund-raising in India highest since 2011

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Fund raising through initial public offerings (IPOs) has crossed $2.9 billion in 2016 and another $2.9 billion is to be raised through these offerings this year, according to a research report by Baker & McKenzie.

Around 22 companies are waiting to tap the markets bringing the year-end estimated total deal value to $ 5.8 billion, more than double last year’s $2.18 billion from 71 listings, and also the highest since 2011, the report said.

The report further said that 16 companies are in the pipeline to be listed domestically in 2017, raising as much as $5.86 billion, including Vodafone’s highly anticipated $3 billion IPO, which could potentially surpass the state-run Coal India’s IPO in 2010 to become India’s biggest IPO.

The report said the momentum in India’s IPO market continues to build, boosted by the central government’s push to ease of doing business in India.

The report added that Goods & Services Tax (GST) Bill which will take effect on 1 April 2017 will have a positive effect on the market.

“The GST Bill will not only bring about the immediate benefit of widening the country’s tax base and improving the revenue productivity of domestic indirect taxes, but more importantly, it sends the message to the people of India and the rest of the world that the Indian government is committed to the country’s economic reform, further bolstering India’s attractiveness as an investment destination,” said Ashok Lalwani, head of Baker & McKenzie’s India Practice.

The report said dual listing on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) of India accounted for 98.8% of Indian companies’ listings by value in 2016 year to date, raising a total of $ 2.9 billion from 19 IPOs, including ICICI Prudential Life Insurance’s $909 million IPO, which is the country’s biggest IPO this year.

A total of 33 companies are expected to dual list on both the BSE and the NSE by the end of 2016, raising a total of $4.62 billion. Improved business confidence is also driving Indian companies to look at growth and market expansion opportunities overseas by way of cross-border IPOs, the report said.

Among the 22 IPOs in the 2016 pipeline is Strand Life Sciences’ listing on NASDAQ, which if it goes ahead, will be India’s first cross-border IPO since early 2015 when Videocon d2h got listed, the report added.

Source: http://www.financialexpress.com/industry/companies/ipo-fund-raising-in-india-highest-since-2011/415830/

Banks on takeover drive of defaulting companies

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Banks are taking over companies under the strategic debt restructuring (SDR) scheme and forcing defaulters to sell assets.

On November 30, banks announced the conversion of Rs 15,000 crore of Gammon India’s loans into equity. On the same day, they informed Hyderabad-based road developer IVRCL that they were converting Rs 7,500 crore of loans into equity.

On Thursday, Electrosteel Steels said its board of directors would meet on December 8 to take on record an SDR package. The Kolkata-based Electrosteel Steels owes banks Rs  9,500 crore.

Banks have also invoked SDR against Lanco Teesta Hydro Power, VISA Steel, Jyoti Structures, Monnet Ispat and Energy.

The SDR scheme was cleared by the Reserve Bank of India in June. The scheme was introduced because banks felt the corporate debt restructuring (CDR) scheme failed to help them recover their money. The CDR cell had approved restructuring loans worth Rs 4 lakh crore till March this year. Under the SDR scheme, banks convert loans into equity and can change the management of the company.

“Banks are not in a mood to listen to borrowers. That is why we are selling our assets in India and abroad to avoid the SDR scheme,” said the promoter of a large corporate group who did not wish to be named. With SDR as a stick,  banks have also put defaulters on notice that if they are unable repay loans by selling assets then they will do it for them. This has expedited the sale of assets by many debt-laden groups.

Banks on takeover drive of defaulting companies

Essar Steel announced on November 8 it had appointed SBI Caps and ICICI Securities to sell stakes in the company. This was apart from its own plans to sell assets worth Rs 11,200 crore by March 2016.  “The promoters will infuse another Rs 1,500 crore into the company in 2015-16,” Firdose Vandrevala, executive vice-chairman, Essar Steel, had said in a recent interview.

Soon after selling its two telecom circles to Idea Cellular, Videocon Industries said it would sell telecom assets, including spectrum, worth Rs 14,000 crore to bring down its Rs  39,000 crore net debt.

The Anil Ambani-owned Reliance Infrastructure said it would sell its cement assets and 11 road projects to cut its  Rs 25,000 crore debt. On Friday, another Ambani company Reliance Communications announced its plans to sell its telecom tower company to private equity firms, Tillman Global and TPG to reduce its debt.   Hyderabad based GMR and GVK are also taking steps to raise funds. On Friday, GMR announced that it is raising $300 million by way of a foreign currency convertible bond.  Similarly, GVK is planning to get an investor for its airport arm. Most debt-heavy companies have been battered on the stock exchanges as investors fear asset sales will pull down future sales and profits.

Banks have also been aggressive with Vijay Mallya, chairman of the UB Group who defaulted on Rs  7,000 crore of loans taken by Kingfisher Airlines and have declared him as a defaulter.

Source: http://www.business-standard.com/article/finance/with-sdr-teeth-banks-move-to-take-over-defaulting-firms-115120400289_1.html