:: the knav deal watcher - knavcpa.com watcher_june 2018.pdf · greenko’s fund raising of usd 450...

India Market Update for the quarter ended June 2018

:: THE KNAV DEAL WATCHER ::

© 2018 KNAV All Rights Reserved

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PREFACE

Dear Clients and Associates,

We are pleased to present to you the KNAV Deal Watcher providing the India market update for the quarter ended June 2018. This update includes an analysis of private equity/ venture capital investments and the key M&A deals in this quarter.

KEY HIGHLIGHTS/UPDATES

❑ The quarter had over 209 private equity/ venture capital investments rounding up to a value of USD 4.33 bn. Some notable deals include:

▪ Greenko’s fund raising of USD 450 mn from GIC Pte Ltd and Abu Dhabi Investment Authority &

▪ Future Retail’s fund raising of USD 250 mn from PremjiInvest.

❑ The quarter had over 102 M&A transactions rounding up to over USD 21.26 bn. The prominent deals are:

▪ Walmart acquiring Flipkart for USD 16 bn &

▪ Acquisition of L&T’s electrical and automation business by Schneider Electric SE for USD 2.1 bn.

Do share your comments and/or feedback on [email protected]

Vaibhav Manek

Vaibhav Manek

Partner- Advisory services

Suparna Dua

Suparna Dua

Partner - Investment banking

http://[email protected]/


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TABLE OF CONTENTS

Private equity / venture capital investments

Snapshot of a few deals

Mergers & acquisitions

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3

2


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Private equity/ venture capital investments


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CONSUMER INTERNETPE/ VC deals | Quarter ended June 2018

The following charts provide an analysis of the prominent sectors which have witnessed private equity/ venture capital investments in the consumer internet space in terms of number of deals and transaction value for the quarter.

Of the total 155 deals in this quarter, the highest deals werewitnessed in the finance sector (37 deals), followed bytechnology (28 deals) and healthcare (11 deals).

Of the total USD 1.52 bn invested in this quarter, the highestamount of funds were invested in the finance sector (USD 822 mn),followed by logistics (USD 221 mn) and payments (USD 134 mn).

Number of deals Transaction Value (USD mn)

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10 9

37

6

118 8

6

28

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30 27 12 34 19 10

822

32

221

1043

134

1063 32

0

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300

400

500

600

700

800

900


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BRICK & MORTARPE/ VC deals | Quarter ended June 2018

The following charts provide an analysis of the prominent sectors which have witnessed private equity/ venture capital investments in the brick and mortar space in terms of number of deals and transaction value for the quarter.

Of the total 54 deals in the quarter, the highest number ofinvestments were in finance (12 deals), followed by food &beverages (10 deals) and healthcare (5 deals).

Of the total USD 2.81 bn invested in this quarter, the highest amountof funds were invested in the power and energy (USD 655 mn),followed by healthcare (USD 433 mn) and finance (USD 418 mn).


2 2 2

12

10

54

32

34

0

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115 130

418

84

433

280

5016

655

82

283 262

0

100

200

300

400

500

600

700


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NCR Mumbai Bengaluru

Number of deals 61 53 51

Value of deals (in USD mn)

1,375 1,464 621

Hereunder, we have illustrated the top 3 cities and the respective sectors that have attracted majority of the PE/ VC deals in this quarter. NCR attracted the largest share of PE/ VC deals, followed by Mumbai and Bengaluru.

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7

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0

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Finance Food &Beverages

Healthcare

CITY WISE ANALYSISPE/ VC deals | Quarter ended June 2018

*NCR includes Delhi, Gurugram, Faridabad & Noida

15

6

3

0

2

4

6

8

10

12

14

16

Finance Technology Food &Beverages

12

7

6

0

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12

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Technology Healthcare Finance


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TOP PRIVATE EQUITY/ VENTURE CAPITAL DEALS

Investee Sector InvestorInvestment value

(USD mn)

EnergyGIC Pte Ltd and Abu Dhabi

Investment Authority 450

FinanceRattanIndia Group and Lone

Star Funds400

Healthcare Apax Partners 350

IndInfravit Trust(sponsored by L&T Infrastructure

Development Projects Ltd )

InfrastructureCanada Pension Plan

Investment Board and Allianz Capital Partners

280

Retail PremjiInvest 250

Quarter ended June 2018


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TOP PRIVATE EQUITY/ VENTURE CAPITAL DEALS

Investee Sector InvestorInvestment value

(USD mn)

Finance Actis Advisors220

(to be invested over a 5 year period)

LogisticsNaspers, DST Global and

others210

FinanceSoftBank Vision Fund, Info Edge (India) Ltd and others

200

Real EstateGanmat Pte Ltd

(investment firm managed by GIC Pte. Ltd.)

147

Finance Temasek Holdings 147



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Mergers & acquisitions


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M&AQuarter ended June 2018

The following charts provide an analysis of the prominent sectors which have witnessed M&A transactions in terms of number ofdeals and transaction value for the quarter.

.

In the quarter, there were 102 M&A deals of which manufacturingsector bagged the highest number of deals (15 deals), followed bytechnology (11 deals) and finance (10 deals).

Of the total USD 21.26 bn invested in this quarter, the highestamount of funds were invested in the e-tail sector (USD 16 bn),followed by manufacturing (USD 2.75 bn) and power & energy (USD476 mn).


310 173 81

16000

227 293

2750

476 181 371

0

2000

4000

6000

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10000

12000

14000

16000

18000

54

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10

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15

4 4

11

0

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• There are several reasons for companies to venture into inorganic growth strategies. We have analysed the major reasons cited by thecompanies for having an M&A transaction and the same are graphically illustrated above.

• Product/ service portfolio enhancement was the most cited reason, with 34 out of the 102 deals (i.e. 33% of the deals) justifying thesame. Some notable deals citing this reason were :- Whirlpool India Ltd acquires 49% stake in kitchen equipment maker Elica PB India Pvt. Ltd for USD 24.2 mn.- Precision Camshafts Ltd acquires 52% stake in Emoss Mobile Systems BV for USD 8.65 mn.

• Competitive advantage (22 deals) were the second most frequently used justification for the deals. Some of the notable deals citingthis reason were:- Reliance Industries acquires Rhea Retail Pvt. Ltd for USD 30 mn.- Essel Group acquires majority stake in LKP Finance Ltd for USD 23 mn.

Reason for M&A dealsQuarter ended June 2018

6

7

22

34

8

13

4

0 5 10 15 20 25 30 35 40

As an investment

Backward/ forward integration

Competitive advantage

Product/ service portfolio enhancement

Restructuring strategy

Strategic entry

Technology Access


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TOP M&A DEALS

Target Acquirer SectorTransaction value

(USD mn)

E-tail 16,000

Manufacturing 2,100

Technology 330

Pelangi Prestasi Sdn Bhd

Manufacturing 310

Energy 300


Sabah Forest Industries


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TOP M&A DEALS

Target Acquirer SectorTransaction value

(USD mn)

Marine Infrastructure Developer Private Limited

Infrastructure 284

Automobile 201

Education180

(to be invested over a 3 year period)

Energy 176

Professional service 175


Ports and Special Economic Zone Ltd

Indian solar power unit UK Climate Investments


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Analysis of a few transactions


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Deal analysis | Walmart acquires Flipkart for USD 16 bn

• Walmart acquired 77% stake in Flipkart for a whopping USD 16 bn at a

valuation of over USD 20.8 bn including USD 2 bn for new equity funding,

making this the world's biggest e-commerce deal and the largest buyout by a

US company in India. The remaining stake will be held by the existing

investors- Binny Bansal, Tencent Holdings and Microsoft.

• Deep discounts have been the main bait in the e-commerce segment and

Flipkart has absorbed billions of dollars of investors’ money in the past to

rapidly grow its business. Walmart's investment will give Flipkart not just

additional funds to fight Amazon but also arm it with a formidable ally with

extensive experience in retailing, logistics and supply chain management.

• Walmart has been active in globalizing its business and building its own

technology platform through a string of acquisitions like Jet.com, Bonobos,

Shoebuy and Parcel Inc., although the same did not strengthen its online

presence. Walmart’s entry into India and Amazon’s retaliation to this will

revolutionize Indian retail with low prices and a vast variety of consumer

goods offerings.


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Deal analysis | Walmart acquires Flipkart for USD 16 bn

• As Flipkart is expected to generate losses for at least the next few years,

Walmart’s investment is clearly an investment for the future and when

viewed in tandem with the recently announced sale of a majority stake in

Asda, a British supermarket retail acquired by Walmart in 1999, this deal is

indicative of Walmart's long-standing strategy of shifting resources into

higher growth potential markets and segments.

• There are certain threats that this deal brings for the Indian players. The

online sellers on Flipkart fear that Walmart might bring in its own private

labels at competitive prices to the Indian consumers via Flipkart which will

wipe off the online seller from the market.

• Sachin Bansal will exit the business completely and Binny Bansal will take up

the role of Chairman while Flipkart’s CEO Kalyan Krishnamurthy will continue

as a part of the company post the deal.

• This deal illustrates how Indian start ups can start from scratch, take billions

of dollars of investment and give massive exits to their investors. Softbank,

Tiger Global and Naspers which owned 23.6%, 20.5% and 14.6% stake in

Flipkart will, through this deal exit completely, making windfall gains.

• With this deal, India will now have Walmart, Amazon and Paytm Mall as

the key players to compete in the Indian e-commerce market.


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• Renewable energy major Greenko Group acquires Orange RenewablePower Pvt. Ltd for an equity value of USD 300 mn from AT Capital.

• Orange Renewables is focused on developing, constructing and operatingrenewable energy projects in the field of wind and solar energy acrossIndia with presence in Andhra Pradesh, Tamil Nadu, Karnataka,Maharashtra, Gujarat, Madhya Pradesh, and Rajasthan.

• Greenko will take over approximately 907 MW of operational solar andwind projects from Orange Renewables and over 500 MW assets underdevelopment which in turn will increase its energy operational capacityby 1 GW to 4.2 GW making it the second largest in India after ReNewPower Ventures Pvt. Ltd.

• Greenko has been treading the path of inorganic growth like itscompetitors ReNew Power and Tata Power. Further the industry isexpected to witness consolidation in the future leaving the industry onlywith a few big players.

Deal analysis | Greenko acquires Orange Renewable Power


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• Online food delivery platform Swiggy has successfully raised USD210 mn in its Series G round of funding from Naspers, CoatueManagement, Meituan Dianping and DST Global.

• With these funds, the company plans to widen its offerings, ramp upits supply chain network, expand to new markets and scale itsheadcount in the technology function.

• It is one of the fastest internet companies to join the much-celebrated unicorn club (with a valuation of USD 1.3 bn) in underfour years since its inception (less than half the time taken by rivalZomato to attain that tag).

PolicyBazaar debuts in the unicorn club

• PolicyBazaar by raising USD 200 mn of capital in a fresh round offunding led by Softbank Vision Fund and InfoEdge joined the eliteclub.

• These funds will be used to grow the lending, investment and insurance business along with new initiatives such as health-tech and international expansion.

Deal analysis | New entrants in the prestigious unicorn club


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Deal analysis | New entrants in the prestigious unicorn club

The Indian Unicorn Club*

*(Valuation in USD bn as per their respective latest funding rounds)

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1.1

1.1

1.3

1.4

1.6

7

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20.8


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Contact us


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Mumbai

Vaibhav Manek

E: [email protected]

Tel: +91 22 6164 4800

New Delhi

Monish Chatrath


Tel: +91 11 4106 9400

Atlanta

Atul Deshmukh


Tel: +1 678 584 1200

Amsterdam

Dr Henk Burke


Tel: +312 066 44 054

Geneva

Claude Rey


Tel: +41 24 466 77 27

London

Amanjit Singh


Tel: +44 20 3617 6200

Lyon

Martine Chabert


Tel: +33 478 182 694

Singapore

Wayne Soo


Tel: +65 6846 8376

Toronto

Harshad Parekh


Tel: +1 416 229 1411

Hyderabad

Dayaniwas Sharma


Tel: +91 40 2324 0700

Contact us

Kolkata

Anand Chatrath


Tel: +91-33-2248-4667/6810/6798/4575


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KNAV refers to one or more of KNAV International Limited (KNAV International); a not-for profit, non-practicing, non-trading corporationincorporated in Georgia; USA and its association of member firms, each of which is a legally separate and independent entity.

KNAV International is a charter umbrella organization that does not provide services to clients. Services of audit, tax, valuation, risk andbusiness advisory are delivered by KNAV's independent member firms in respective global jurisdictions. All member firms of KNAV in India andNorth America are member firms of Allinial Global.

Website - www.knavcpa.com

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If you want to know more about KNAV or its services please contact Mr. Vaibhav Manek at [email protected]. We will be glad tohear from you.

Suggestions/Feedback

For suggestions/feedback on this newsletter please contact Ms. Suparna Dua at [email protected]

Editorial credits

Deals Snapshot Editorial Board: KNAV Business Advisory Services Team, Mumbai

The source of our data is our market research, publicly available reports and press items, and independent databases. While KNAV has madereasonable endeavors to ensure that the information provided in this newsletter is accurate and up to date as at the time of issue, KNAV shallnot be liable for any errors, inaccuracies or delays in the information, nor for any actions taken in reliance thereon, nor does it endorse anyviews or opinions. KNAV disclaims all warranty, express or implied, as to the accuracy or completeness of any of the content provided, or as tothe fitness of the content for any purpose to the extent permitted by law. The content herein is not appropriate for the purposes of making adecision to carry out a transaction or trade and does not provide any form of advice (investment, tax, legal) amounting to investment advice, normake any recommendations or solicitations regarding particular financial instruments, investments or products, including the buying or selling ofsecurities. KNAV has not undertaken any liability or obligation relating to the purchase or sale of securities for or by any person in connectionwith this document.

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:: the knav deal watcher - knavcpa.com watcher_june 2018.pdf · greenko’s fund raising of usd 450...

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