:: the knav deal watcher - knavcpa.com watcher_june 2018.pdf · greenko’s fund raising of usd 450...
TRANSCRIPT
© 2018 KNAV All Rights Reserved
2
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
© 2018 KNAV All Rights Reserved
3
TABLE OF CONTENTS
Private equity / venture capital investments
Snapshot of a few deals
Mergers & acquisitions
1
3
2
© 2018 KNAV All Rights Reserved
5
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)
5
10 9
37
6
118 8
6
28
4
0
5
10
15
20
25
30
35
40
30 27 12 34 19 10
822
32
221
1043
134
1063 32
0
100
200
300
400
500
600
700
800
900
© 2018 KNAV All Rights Reserved
6
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).
Number of deals Transaction Value (USD mn)
2 2 2
12
10
54
32
34
0
2
4
6
8
10
12
14
115 130
418
84
433
280
5016
655
82
283 262
0
100
200
300
400
500
600
700
© 2018 KNAV All Rights Reserved
7
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.
17
7
5
0
2
4
6
8
10
12
14
16
18
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
2
4
6
8
10
12
14
Technology Healthcare Finance
© 2018 KNAV All Rights Reserved
8
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
© 2018 KNAV All Rights Reserved
9
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
Quarter ended June 2018
© 2018 KNAV All Rights Reserved
11
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).
Number of deals Transaction Value (USD mn)
310 173 81
16000
227 293
2750
476 181 371
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
54
5
10
4
15
4 4
11
0
2
4
6
8
10
12
14
16
© 2018 KNAV All Rights Reserved
12
• 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
© 2018 KNAV All Rights Reserved
13
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
Quarter ended June 2018
Sabah Forest Industries
© 2018 KNAV All Rights Reserved
14
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
Quarter ended June 2018
Ports and Special Economic Zone Ltd
Indian solar power unit UK Climate Investments
© 2018 KNAV All Rights Reserved
16
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.
© 2018 KNAV All Rights Reserved
17
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.
© 2018 KNAV All Rights Reserved
18
• 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
© 2018 KNAV All Rights Reserved
19
• 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
© 2018 KNAV All Rights Reserved
20
Deal analysis | New entrants in the prestigious unicorn club
The Indian Unicorn Club*
*(Valuation in USD bn as per their respective latest funding rounds)
1
1
1
1.1
1.1
1.3
1.4
1.6
7
10
20.8
© 2018 KNAV All Rights Reserved
22
Mumbai
Vaibhav Manek
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
© 2018 KNAV All Rights Reserved
23
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
Reach us
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.
This newsletter is intended only for the individuals addressed. The information contained in this newsletter is privileged, confidential, and maybe protected from disclosure; please be aware that any other use, printing, copying, disclosure or dissemination of this communication may besubject to legal restriction or sanction. Copyright and any other intellectual property rights in its contents are the sole property of KNAV.
CANADA | FRANCE | INDIA | NETHERLANDS | SINGAPORE | SWITZERLAND | USA | UK
About KNAV & credits