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$: Private & confidential 13/06/2015 08:48BANDRA\Marketing Presentation\04 Presentation.ppt The Indian Private Equity opportunity April 2008$
Private & confidential

The Indian Private Equity opportunity

April 2008

Private & confidential2

The Indian Private Equity opportunity

• Second fastest growing major economy in the world, projected to grow at 8% p.a. until 2020

• Projected to be 2nd largest global economy by 2050• Favourable demographics, consistent policy decisions and

domestic consumption driven economy

India’s Growth

Potential

Development of Private Equity in

India

• Private equity investment in India has increased 28x fold from 2003-2007

• In 2007, US$14.2 billion of private equity transactions were completed

• Increased diversification by both industry and types of investment

Overview of ICICI Group

• One of India’s pre-eminent financial institutions• Relationships with a broad range of corporates across all sectors• One of the largest India-focused private equity funds


Overview of ICICI Group

India’s Growth Potential

Development of Private Equity

in India

Overview of ICICI Bank


One of India’s pre-eminent financial institutions

ICICI Bank Ltd

1. As at 24-March-2008.2. As at 31-December-2007.

• One of India’s largest PE firms

• AUM > US$2bn

• Completed 55+ transactions

• One of the largest private sector general insurer

• iAAA rated by ICRA

• India’s no.1 private life insurer

• AAA rated by Fitch

• One of the largest asset managers

• AUM of US$17.6 bn2

• Leading equity broking house

• Leader in fixed income market

• Largest private sector bank in India

– $22 billion market cap¹

– $94 billion of assets2

• 18 international locations

• First Indian company listed on the NYSE

• Listed in Forbes Asia’s “50 Fab Companies 2007”

• Completed India’s largest equity issuance of US$4.3 billion

ICICI Ventures ICICI LombardICICI PRU

Life Insurance

ICICI Prudential

AMC

ICICI Securities


India’s growth potential



in India



Indian economy : some statistics

• India is one of only 3 countries in the world to have built its own supercomputer

• 11 out of every 12 diamonds in the world are polished in India

• One of every 6 motorbikes in the world is manufactured in India

• 220 of the Fortune 500 companies source software from India

• India is one of only 6 countries in the world to have satellite launch capabilities

• One out of every 10 new mobile phone users in the world is an Indian

• India has the largest film industry in the world

• India has one of the largest television networks in the world, with over 300 channels and 500 million TV viewers

• 50 percent of the world’s tea is produced in IndiaSource : Economic Survey, Ministry of Agriculture, Government of India, report by investment commission of India


2nd largest economy in the world by 2050

• Indian GDP grew at an average of 14.9% p.a. in US$ terms in the 3 years to 2006. (8.6% in real terms)2

• Projected to grow at 8% p.a. in real terms until 20201

• India’s GDP (US$ terms) expected to surpass that of the US by 20501

603694

805915

1,183

1,404

1,632

2003 2004 2005 2006 2007 2008 2009

India GDP (US$ billions)2

Actual Estimate / Forecast

CAGR: 14.9%

CAGR: 17.4%

1. Source: Goldman Sachs Research “India’s Rising Growth Potential”, Jan-2007.2. Source: Goldman Sachs Economic Research.


Key growth drivers• Requirement of US$475 billion of infrastructure investments from 2007 to

2012 – 40% to be funded by private investors

• Policy initiatives to attract investments in core infrastructure projects related to power, transportation, etc

Infrastructure

Investment1

Large Population

• Large young population (46% between the age group of 20-40) driving consumption

• Underleveraged economy with consumer Loan/GDP ratio at 8% as compared to 50% plus in developed markets

• Indian consumer spending projected to grow from US$425 billion to USD$1.8 trillion by 2025

• Real estate still an under owned asset class with mortgage/GDP ratio at approximately 5% compared to 50% for developed countries

1. Source: Smith Barner Research,Goldman Sachs and planning commission2. Source: [FICCCI], Min of External Affairs., Mckinsey Report: The Bird of Gold-The Rise of India’s Consumer Market3. Source: ‘Asia Pacific IT Services Market and Forecast, 2006-2011’ report by Springboard Research4. Source : FICCI- E&Y study

Globalisation3

• Sustainable competitive advantage in outsourcing - IT/ITES projected to grow at circa 19% per annum until 2011

• Knowledge driven businesses such as design activities and KPO moving up the value chain

• Cross border M&A activities to give a more global outlook


Beneficial backdrop for growth

Source: IMD would competitiveness report to 2005

• Strong and proactive regulators – RBI/SEBI

• India complies with BIS 26 norms of best practices for supervisory criteria, country risk and convertibility

• Gross NPAs lower than those of comparable nations

The Regulatory Framework Liquid and deep financial markets

• Integrated financial markets• Increasing stability and breadth of

the public markets • Advanced settlement systems

Pro Growth Policies

• Liberal FDI policies across major sectors

• Forex reserves can be used for infrastructure projects

• Mature political economy with development as its core agenda

Government focus on reforms

• The Banking Regulation Act to be considered for amendments

• Labor and legal reforms to be taken up proactively

• External sector reforms roadmap in line with WTO agreements


Key risks

• General Elections: Populists measures may take its toll on fiscal discipline

• Continuance of the structural and fiscal reforms agenda• Adequate attention to Infrastructure to support 8% GDP growth

– requirement to develop a vibrant debt market• Adequate investments in developing talent pool to meet the

rising demand

Policy

• High Energy Prices: Oil imports constitute more than 40% of India’s total imports

• Stronger Currency: Adverse impact on exportsGlobal

• Latest figure of 5.9% is above the 4.5%-5% target of the RBI• Monsoons: Agriculture economy is exposed to this annual risk

factorInflation


Development of Private Equity in India



in India



Growth of asset class

• Number of deals increased 10 fold since 2003; value of deals increased 28 fold to US$ 14.2 billion

• Total private equity investments expected to be $20 billion by 2010

Source: Venture Intelligence

Value and Number of Number of Deals

US$14.2bln

US$7.4bln

US$0.5bln

US$2.2blnUS$1.1bln

302

146

6737

387

2003 2004 2005 2006 2007


Top Private Equity destination in Asia

Annual Growth in Private Equity Investments (1998-2007)

72%

52%

43%

24%

10%

India Australia/ NZ Greater China South Korea Japan

Australia/NZ 25%

Source: Thomson Financial, AVCJ, Venture Intelligence

• From 1998 – 2007, India was the fastest growing private equity market in Asia

• In 2007, India was the largest market for private equity investments in Asia (ex. Australia)


Uptick in ticket size in sync with valuation

Average Deal Size (2007) India – Average Deal Size

$227m

$97m

$47m$37m

Malaysia Korea India China (Incl.Hong Kong)

$11m

$22m

$15m

$25m

$47m

2003 2004 2005 2006 2007

Source: Thomson Financial, AVCJ, Venture Intelligence


Increasing diversification across industry

• Proportion of “non-Information Technology” deals has risen from 19% in 2003 to 76% in 2007

• Growth in investment into Manufacturing, Financial Services and Medical and Health

I.T. & ITES59%Financial

Svcs. 3%

Manufacturing 3%

Other35%

Financial Svcs. 1.0%

I.T. & ITES24%

Financial Svcs. 13%

Manufacturing 16%

Other33.1%

I.T. & ITES7%

Financial Svcs. 28%

Manufact. 12%

Other39%

Medical & Health 7%

Medical & Health 3%

Source: Venture Intelligence.

Number of Deals

2003 2007

I.T. & ITES31%

Manufacturing 0.1%

Other68%Value of

Deals

Energy & Contr. 8%

Energy & Contr. 11%


Growth Across Segments

Number of Deals

Value of Deals

2003 2007

• Most significant investment currently in growth / expansion segments

• PIPE deals form a significant portion

1. Includes infrastructureSource: Venture Intelligence

Buy Out 5%

VC 47%

Growth/ Expansion

37%

PIPE 11%Buy Out 2%

VC 24%

Growth/ Expansion 51%

PIPE 19%

Buy Out 16%

VC 28%

Growth/ Expansion

19%

PIPE 36%

Buy Out 5%

VC 4%

Growth/ Expansion

48%

PIPE 30%

Other¹ 4%

Other¹ 14%


Evolving exit routes

1. Source : Venture Intelligence

4137

64

2005 2006 2007

IPOs IPOs IPOs

Other¹ Other¹

Other¹

Transaction value of PE

exits

Number of IPO exits

$3.3bn $0.5bn $1.5bn

17 19 16

Largest ExitsBy Actis, CVC from Daksh e-

services

Warburg Pincus from Bharti Tele

CVC from Suzlon energy


Key differences to “Western” private equity model

• Limited use of leverage

– Most Indian banks unwilling to provide “cash flow based” financing

– Ability to achieve attractive returns without gearing

• Limited buy-out activity

– Many companies are family owned

– Shareholders reluctant to give up a control of their fast-growing companies

• Focus on making minority investments (10-20%) by providing growth/ expansion capital

– Typically provides private equity investors with board seats and veto / blocking rights

– Significant PIPE activity in the Indian Private Equity market


Current dilemma facing investors

• Very rapid expansion in number of India-focused funds

– Risen from 8 in 1995, to 300+ in 2007

Current PE Market…

• Large number of “first time” funds

– ~15 India-dedicated private equity funds with at least one fund vintage

• Evaluating managers without track records

• Gaining access to the best funds

• Selecting funds from a broad universe

Rationale for Fund of Funds Product

…Investor Dilemma


DisclaimerThis document and the information contained herein are strictly confidential and are meant solely for the selected recipient to whom it has been specifically made available. This document may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Bank.

This document is given only by way of information and is subject to change without notice. The information provided herein is not an offer or solicitation for any application or subscription for any products or services and is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person's nationality, residence or otherwise) be contrary to law or regulation or would subject ICICI Bank, or its affiliates to any licensing, registration or other legal requirements. THE INFORMATION CONTAINED IN THIS DOCUMENT IS NOT INTENDED TO NOR SHOULD IT BE CONSTRUED TO REPRESENT THAT ICICI BANK PROVIDES ANY PRODUCTS OR SERVICES IN ANY JURISDICTION WHERE IT IS NOT LICENSED OR REGISTERED OR AUTHORISED TO DO SO.

ICICI Bank or are not acting as your advisor or in a fiduciary capacity in respect of the contents of this document, and accepts no liability nor responsibility whatsoever with respect to the use of this document or its contents. Nothing in this document is intended to constitute legal, regulatory, tax, securities, or investment advice, or an opinion regarding the appropriateness of any investment, or a solicitation of any type. The contents in this document are intended for general information purposes only and should not be acted upon without first obtaining specific legal, tax, and investment advice from a licensed professional concerning your own situation and any specific investment questions you may have before entering into any financial transaction

The financial or other projections etc. set out in this document have been prepared based upon projections that have been determined in good faith and from sources deemed reliable. There can be no assurance that such projections will be accurate. ICICI Bank does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. The information in this document reflects prevailing conditions and our views as of this date, all of which are expressed without any responsibility on our part and are subject to change. In preparing this document, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us or which was otherwise reviewed by us. Past performance cannot be a guide to future performance. No reliance may be placed for any purpose whatsoever on the information contained in this document or on its completeness. The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may change materially.

Any investment in any fund/securities etc referred or alluded to in this presentation should be solely on the basis of the fund's/ securities’ Offering Memorandum and the relevant issuing entity’s constitutional documents. Accordingly, this document should not form the basis of, and should not be relied upon in connection with, any subsequent investment in the fund/ security. To the extent that any statements are made in this document in relation to the fund/ security, they are qualified in their entirety by the terms of the Offering Memorandum and other related constitutive documents pertaining to the fund/ security, which must be reviewed prior to making any decision to invest in the fund/ security.

This document does not constitute an offer to sell or a solicitation of an offer to sell any securities to any person in any jurisdiction.

ICICI Bank, its affiliates and any of their licensers, directors, employees, or agents shall not be held liable for any direct, indirect, incidental, special, or consequential damages arising out of the use of information contained herein. Potential investors should request for relevant product information before making any investment decisions as this document does not, and is not, a document that relates to any investment product.

The above mentioned is not a complete list of the risks and disclosures and other important disclosures may be involved in availing of the products and services described herein.

The use of this document is subject to the terms and conditions specified herein and the users shall be deemed to have read, understood and consented to these terms and conditions.


Thank You

Amit Ratanpal

email:[email protected]

Mobile: +91-9820039025

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