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INDIA MARKET UPDATE FOR THE QUARTER ENDED MARCH 31, 2021 DEAL WATCHER

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Page 1: DEAL WATCHER - KNAV Accounting Firm

INDIA MARKET UPDATEFOR THE QUARTER ENDED MARCH 31, 2021

DEAL WATCHER

Page 2: DEAL WATCHER - KNAV Accounting Firm

2

FOREWORD

Dear Clients and Associates,

With the recent advent of the second wave of pandemic, India’s healthcare system is facing its worst nightmare as the public continues its

battle to conquer the dreaded virus. Mass vaccination and the government’s commitment to restrain from nationwide restrictions has

instilled confidence in the economic outlook with the World Bank and IMF projecting a V-shape economic recovery for India. From the

lessons learned last year, the Indian Investment landscape has adjusted well to recent challenges posed by COVID-19, with the deal

making activity continuing its robust run in the preceding quarter.

With 12 startups entering the unicorn club in 2020, the first quarter of 2021 itself saw 5 startups entering the elite club with 5-6 more

joining in the first week of April. The quarter also recorded one of the highest PE-VC exit deals in the past few years. Higher stake sales

were seen due to the exemplary performance of the stock market, with the SENSEX breaking all records. However, with the fear of the

second wave escalating, fund managers believe that inflation and taper tantrum are now a greater market risk rather than pandemic-

induced interruption.

In the quarter ended March, there were over 437 private equity investments & venture capital investments with reported values of over

US$ 11.51 bn. Bank of Baroda, Mahindra Susten and Godrej Properties walked away with a significant share (16% approx.) of the

cumulative deal value. Key deals include:

• Bank of Baroda raises a colossal sum of US$ 613 mn from local and overseas investors through a qualified institutional placement.

• Brookfield Asset Management acquisition of Mahindra Susten’s engineering, procurement and construction (EPC) business along

with 1,200 megawatts (MW) of solar assets for US$ 608 mn.

It was noticed that Internet and Technology were the most sought-after sectors for the quarter (with 130 and 86 deals respectively)

followed by Healthcare (46 deals), and Financial Services (24 deals). We expect these sectors to be resilient and gain traction.

Our Deal Watcher also covers over 208 M&A transactions with Technology and Internet leading the way and witnessing the highest

number of deals (35 deals each), followed by Energy & Environment (27 deals) and Healthcare (15 deals). Some of the prominent deals

include:

• Acquisition of Dewan Housing Finance Corporation (DHFL) by the Piramal group for US$ 4.72 bn (approx.).

• JSW Steel closed the acquisition of bankrupt Bhushan Power & Steel Ltd (BPSL) for US$ 2.61 bn (approx.). The amount will be paid to

the financial creditors of Bhushan Power & Steel Ltd towards implementation of the resolution plan for acquiring the company.

We hope that this publication will act as an augmentative read amidst efforts to figure out the evolving landscape.

Vaibhav Manek

Partner – Business Advisory Services

Page 3: DEAL WATCHER - KNAV Accounting Firm

INDEX

Sr. No. Contents Page

1 Evaluating the PE/VC Landscape 4-5

2 Private Equity and Venture Capital Deals 6-11

3 Private Equity and Venture Capital Exits 12-15

4 Evaluating the M&A Landscape 16-17

5 Mergers and Acquisitions 18-21

6 Analysis of Key Transactions for the Quarter 22-27

3

Page 4: DEAL WATCHER - KNAV Accounting Firm

EVALUATING THE PE/VC LANDSCAPE

Page 5: DEAL WATCHER - KNAV Accounting Firm

KNAV Deal Watcher | Quarter ended March 2021

The first quarter of 2021, succeeding one of the most

unconventional years in recent history, saw a splurge of

activity in the Private Equity and Venture Capital

landscape in the India. With large-scale vaccination

programmes in force, investors have been bullish on

Indian companies, pumping in funds across several

deals in the first 3 months of 2021. Positive projections

by the IMF and the World Bank ride on increased private

consumption and investment growth.

The investors' increasing endorsement of technology

driven startups in the current quarter was well-

highlighted by the fact that a combined total of US$ 1.11

billion funding was received by startup giants Zomato,

BYJUs and Dream 11.

This quarter saw as many as 5 startups attaining unicorn

status. Insurance provider "Digit", healthcare analytics

provider Innovaccer, tech-based construction reformer

Infra.Market, NBFC Five Star Business Finance and

baby products retailer FirstCry were the latest entrants in

this coveted club which has added new members on a

frequent basis since the past 1 year.

While there are still concerns about the second wave of

COVID-19 and new mutant virus strains, most Indian

corporates as well as investors have a positive view hence

any effect of these on the fund inflow is likely to be minimal.

Budget 2021 announcements such as the increase in the

FDI limit in the insurance sector from 49% to 74%, formation

of a single securities market code by 2022 and the impetus to

the fintech sector augur well for attracting PE/VC investments

in these industries.

The upcoming quarters are poised to see a disproportionate

share of investments going to technology driven companies.

Edtech, fintech, healthtech, and the electric vehicle industries

are set to witness prominent investments as the world realizes

the power of tech-driven companies to withstand economic

slowdowns.

Venture debt funding might prove to be an alternative source

of funds for cash-strapped startups due to a dearth of other

feasible modes of credit.

With PE/VC exits showing an increasing trend in this quarter,

it is expected that several PE/VC backed companies take the

IPO route in the coming months. Overall, investors have

shown a rising amount of confidence in the Indian economy

and as supply chains become shorter along with growth

projections of 12.5% for FY 2021-22 as per IMF, the

PE/VC ecosystem shows great growth potential.

5

Where is the Investment landscape heading towards?

Page 6: DEAL WATCHER - KNAV Accounting Firm

PRIVATE EQUITY/ VENTURE CAPITAL DEALS

Page 7: DEAL WATCHER - KNAV Accounting Firm

The following charts provide an analysis of the prominent PE/VC deal classifications, in terms of number of deals and

transaction values which were witnessed in the quarter.

PE/VC DEALS – DEAL CLASSIFICATIONPE / VC deals | Quarter ended March 2021

7

Out of the transactions for which values were disclosed,

the total investment in this quarter amounted close to US$

11.51 bn. The highest amount of funds were invested in

late-stage companies (US$ 6.33 bn), followed by growth

stage companies (US$ 1.25 bn), and early-stage

companies (US$ 0.75 bn).

Of the total 437 PE/VC deals in this quarter, maximum

number of deals were entered into by companies in early

stage (103 deals), followed by seed-stage companies (89

deals) and late-stage companies (86 deals).

Deal classification by count Deal classification by value (US$ mn)

2 82752

1246

3101

6327

1

69

86 89 89

103

Page 8: DEAL WATCHER - KNAV Accounting Firm

PE/VC DEALS – SECTOR WISE ANALYSIS

8

The following charts provide an analysis of the prominent sectors which have witnessed private equity/ venture capital

investments in terms of number of deals and transaction values for the quarter.

Of the total 437 PE/VC deals in this quarter, the highest

number of investments were made in Internet Sector

(130 deals) followed by Technology Sector (86 deals)

and Healthcare Sector (46 deals).

Out of the transactions for which values were disclosed, the

investment in this quarter amounted to US$ 11.51 bn. The

highest amount of funds were invested in the Financial

Services Sector (led by the investments in Magma Fincorp

amounting to US$ 467 mn) followed by the Internet Sector (led

by BYJU’s US$ 452 mn fund raise from series of investors) and

Healthcare Sector (led by ZLC Chemicals US$ 270 mn fund

raise).

Top sectors by value (US$ mn)Top sectors by number of deals

PE / VC deals | Quarter ended March 2021

647 681 693

992 1070

1411

1655

2183

11 15 18 21 24

46

86

130

Page 9: DEAL WATCHER - KNAV Accounting Firm

CITY WISE ANALYSIS

9

Mumbai Bengaluru NCR

Number of Deals 80 99 95

Transaction Value

(in US$ mn)4,354 1,858 1,261

Top sectors by number of deals city-wise

The following charts provide an analysis of the prominent sectors which have witnessed private equity/ venture capital

investments in terms of number of deals and the total transaction values for the quarter by the top cities.

PE / VC deals | Quarter ended March 2021

2 2 2 46

17

22

37BENG AL URU

3 3 4

79

1011

21

M UM BAI

3 3 4 4 6 7

13

32NCR

Page 10: DEAL WATCHER - KNAV Accounting Firm

TOP PE/VC DEALS

10

Investee Sector Investor

Investment

Value

(US$ mn)

Deal Highlights

BankingICICI Prudential, Aditya Birla Sun Life,

Societe Generale, Nippon Life, LIC,

SBI Life Insurance, BNP Paribas

613

Bulge-bracket local and overseas investors invested

INR 4,500 crores through a qualified institutional

placement. Approximately 55 crore shares were

allotted at the issue price of INR 81.70 per share.

Energy and

EnvironmentBrookfield 608

Mahindra Susten’s engineering, procurement

and construction (EPC) business along with 1,200

megawatts (MW) of solar assets is to be sold to

Brookfield Asset Management Inc at an enterprise value

of around INR 4500 crores. An exclusivity agreement has

been signed in this regard.

Real Estate

Invesco Oppenheimer, GIC

Singapore, Monetary Authority of

Singapore, Goldman Sachs, Baron

Fund

511

Godrej Properties raises INR 3,750 crores via qualified

institutional placement to expand business and buy

land parcels. Approximately 2.58 crore shares were

allotted at the issue price of INR 1450 per share.

Financial

ServicesPoonawala Family Office, Sanjay

Chamria, Mayank Poddar471

Magma Fincorp raised INR 3,456 crores by issuing

preference equity shares to Adar Poonawalla-controlled

entity, Rising Sun Holdings Pvt Ltd and two members

from the promoter group in exchange for a 60%, 2.34%

and 2.34% stake, respectively.

Internet

MC Global, B Capital, XN Exponent

Holdings, Arison Holdings, TCDS,

Baron Fund, Baron Global, Tiga

Investments

460Edtech leader Byju’s has raised close to US$ 460 mn in

its ongoing Series F round led by MC Global Edtech

Investment Holdings LP.

Quarter ended March 2021

Page 11: DEAL WATCHER - KNAV Accounting Firm

Investor

LetsVentureRedcliffe Lifescience, Prescinto

Technologies, Knoctowl Technologies

Sequoia Capital 13+Five Star Business Finance, Zetwerk

Manufacturing, Dreamplug Technologies

Accel India 12+Hella Infra, Ally Technologies, Studypad,

Zolve, Pactora, Vcomply Technologies

Titan Capital 12+Venwiz Technologies, Reallearning,

Coverplan, Epione Healthcare

12+

Notable Investments Deals

11

15+

100X.VC

Vested Finance, Prescinto Technologies,

Oktober6, Giggle Galaxy

10+Micro Degree, Dr Jackfruit, Burncal

Healthcare, Caregrades Technologies

Inflection Point Ventures 11+Vested Finance, Prescinto Technologies,

Mothersense Technologies, Mindler

Quarter ended March 2021

Venture Catalysts

PE/ VC ACTIVITY MONITOR

Page 12: DEAL WATCHER - KNAV Accounting Firm

PRIVATE EQUITY/ VENTURE CAPITAL EXITS

Page 13: DEAL WATCHER - KNAV Accounting Firm

13

PE/VC EXITS – DEAL CLASSIFICATION PE/VC Exits | Quarter ended March 2021

The following charts provide an analysis of the prominent PE/VC exit deal classifications, in terms of number of deals

and transaction value, which were witnessed in the quarter.

Deal classification analysis by count Deal classification analysis by value (US$ mn)

Out of the transactions for which exit values were disclosed,

the exit deals in this quarter amounted to US$ 4.95 bn. The

highest value for exits were earned via Mergers and

Acquisitions transactions (US$ 2.54 bn), followed by Funding

transactions (US$ 1.05 bn), Secondary Sales deals (US$ 0.9

bn) and IPO transactions (US$ 0.83 bn).

Of the 51 PE/VC exit deals in this quarter, maximum

number of deals were executed via Secondary Sales

deals (18 deals), followed by Mergers/Acquisitions

deals (9 deals), Bulk/Block deals (8 deals), Funding

and IPO transactions (7 deals each).

Secondary Trade Sale, 18

Merger/ Acquisition, 9

Bulk / Block , 8

Funding, 7

Initial Public Offering, 7

Buyout, 2

Merger/ Acquisition,

2538

Funding, 1046

Secondary Trade Sale,

900

Initial Public Offering, 833

Buyout, 270

Bulk / Block, 241

Page 14: DEAL WATCHER - KNAV Accounting Firm

14

PE/VC EXITS – SECTOR WISE ANALYSIS PE/VC Exits | Quarter ended March 2021

The following charts provide an analysis of the prominent sectors which have witnessed private equity/ venture capital

exits in terms of number of deals and transaction values for the quarter.

Top sectors by number of deals Top sectors by exit value (US$ mn)

Of the 51 PE/VC exit deals in this quarter, the highest

number of exits were in Internet Sector (7 deals)

followed by Consumer Durables Sector, Healthcare and

Materials Sector (6 deals each).

Out of the transactions for which values were disclosed, the

exits in this quarter amounted to US$ 4.95 bn. The highest

exit values were recorded in Education Sector (US$ 986 mn)

followed by Consumer Durables & Apparel Sector (US$ 825

mn) and Logistics & Transportation Sector (US$ 751 mn).

Education

Consumer Durables

Logistics & Transportation

Telecom & Media

Healthcare

Financial Services

Materials

986

825

751

626

578

474

207

Internet

Consumer Durables

Healthcare

Materials

Financial Services

Capital Goods

Telecom & Media

7

6

6

6

5

4

4

Page 15: DEAL WATCHER - KNAV Accounting Firm

15

TOP PE/VC EXITSPE/VC Exits | Quarter ended March 2021

Target Sector Sellers Exit Type

Exit

value

(US$ mn)

Deal highlights

EducationBlackstone

Advisors India, The

Chaudhry Family

Mergers/

Acquisitions1,000

EdTech Unicorn Byju's billion-dollar deal facilitated the

exit for the world's largest PE firm, Blackstone.

Blackstone has walked away with 2x returns in one and a

half years since 2019 when it acquired a 39.3% stake in

Aakash Educational Services for US$ 500 mn.

Logistics and

TransportationDVS Raju and

Family

Mergers/

Acquisitions498

DVS Raju and Family sold its 58.1% stake in

Gangavaram Port Limited to Adani Ports and SEZ. The

promoters sold around 30 crores shares at INR 120 per

share for an overall consideration of INR 3604 crores.

Telecom &

MediaWarburg Pincus

Secondary

Sales422

Warburg Pincus sold a 20% stake in Bharti Telemedia

Ltd to Bharti Airtel. It purchased the stake for around

US$ 350 mn in December 2017, thereby earning an

Internal Rate of Return of approximately 14.5 to 15.5%.

The PE firm is to receive INR 1037.8 crores in cash and

equity shares for the remainder.

Consumer

Durables &

Apparel

Elevation Capital

(SAIF Partners),

Vertex Venture

Holdings,

MegaDelta

Capital

Funding 310

FirstCry's early backers Elevation Capital, Vertex Venture

Holdings and MegaDelta Capital have exited FirstCry.

However, it has raised a large round led by US-based

private equity investor TPG Growth, PremjiInvest and

ChrysCapital. The deal is said to have been struck at a

valuation of approximately US$ 2 bn.

Healthcare

Parikh Family,

Morgan Stanley

Private Equity

Asia

Buyout 275

Founder- Promoters Parikh Family and Morgan Stanley

PE Asia sold their stakes to PE firm Advent International.

Morgan Stanley acquired a 20% stake in 2016 for INR 150

crores and sold it for approximately INR 390 crores

effectively earning an IRR of roughly 27%.

Page 16: DEAL WATCHER - KNAV Accounting Firm

EVALUATING THE M&A LANDSCAPE

Page 17: DEAL WATCHER - KNAV Accounting Firm

What does 2021 hold for the M&A landscape?

As the Indian economy saw a V-shaped recovery in

the aftermath of the COVID 19 pandemic, we assess

the M&A landscape in India and what can be

expected in the coming year.

On the emerging markets front, India stood in the top five,

both in the most acquisitive and the most

targeted countries’ list in early 2021.

Considerable traction has been witnessed

in transactional volumes in the spheres of

internet, technology, pharma and healthcare products,

building materials and electronic and

auto components manufacturing. EdTech and media

startups also recorded a high number of mergers and

acquisitions in this quarter.

As the M&A area looks to make a recovery, the

sale of distressed assets are likely to increase,

especially as disinvestment from non-core businesses go

up. The new budget signals the government’s intent to

continue divestment in important public sector entities,

with the potential sales of Air India and

Bharat Petroleum. The government’s focus on renewable

energy will also invite much needed investments in that

sector.

India’s fast-growing position as a manufacturing alternative

to China will also drive companies to enter M&A deals

here.

Another industry that could witness major growth

is the electric vehicle’s market as the

government incentivizes it’s manufacture and sales.

However, a proposed change in Income Tax as per

the Finance Act 2021 will have implications on the

M&A transactions in India. They will now need to consider

the deemed fair value as consideration and a seller will

have to pay tax on the deemed fair value of the capital

assets, even if the actual consideration is lower. This rule

is already applicable on transactions involving real estate

and unlisted shares, and now aims to cover slump sales

too. This amendment is presently awaiting the

President’s approval.

In 2020, several businesses realized the importance

of robust and technologically sound business models.

Due to this, India saw high number of collaborations

and partnerships. Consolidation is expected to be a major

driver for M&A activity in 2021, possibly driving the

emergence of larger Indian corporations in years to

come.

The gradual global roll-out of COVID-19 vaccines, as

well as a focused approach of the policymakers, seem to

have boosted optimism in the first quarter. The trend is

likely to continue ahead, further boosting deal activity.

KNAV Deal Watcher | Quarter ended March 2021

17

Page 18: DEAL WATCHER - KNAV Accounting Firm

MERGERS & ACQUISITIONS

Page 19: DEAL WATCHER - KNAV Accounting Firm

MERGERS & ACQUISITIONSM&A Deals| Quarter ended March 2021

19

The following charts provide an analysis of the prominent sectors which have witnessed merger and acquisition

investments in terms of number of deals and transaction value for the quarter ended March 2021.

Out of the transactions, for which values were publicly

disclosed, the merger and acquisition investments for the

quarter amounted to US$ 15.20 bn. The largest deal values

were witnessed by the Financial Services Sector (US$ 5.03

bn), followed by Materials Sector (US$ 2.83 bn) and

Corporate Services Sector (US$ 1.43 bn).

Top sectors by number of deals Top sectors by value (US$ mn)

Of the total 208 merger and acquisition deals in the quarter

ended March 2021, the highest deals were witnessed in the

Internet and Technology Sector (35 deals each) followed by

Energy & Environment Sector (27 deals), and Healthcare

Sector (15 deals).

333593

9871340 1367 1425

2830

5029

9 911

13 15

27

35 35

Page 20: DEAL WATCHER - KNAV Accounting Firm

20

▪ Merger and acquisition transactions are spread domestically

and internationally. Within international transactions, deals may

involve flow of money into India (Inbound) or flow of money out

of India (Outbound). Analysis of these deal types have been

graphically represented. All other M&A deals have been

classified as Others.

▪ Domestic deals were the most common, with 132 out of the 208

deals (i.e. 63.46% of the deals, with total value of US$ 7.88 bn).

Marquee outbound deal included:

I. JSW Steel’s acquisition of Bhushan Power and Steel

through IBC route.

▪ This was followed by Inbound deals constituting 29 out of the

208 deals (i.e. 13.94% of the deals, having total value of US$

0.38 bn).

▪ There were also only 14 Outbound deals with a total deal value

of US$ 1.51 bn. Marquee outbound deal included:

I. Wipro’s acquisition of UK based consultancy firm

CAPCO for about US$ 1.4 bn.

▪ Other M&A deals constituted 33 out of 208 deals (i.e. 15.87% of

the deals, having total value of US$ 5.43 bn). Marquee deal for

this quarter included:

I. Piramal Group’s acquisition of DHFL for about US$ 4.72

bn (approx.).

Analysis of M&A deal types by number of deals

Analysis of M&A deal types by value (US$ mn)

M&A DEAL TYPESQuarter ended March 2021

Domestic, 132

Others, 33

Inbound, 29

Outbound, 14

Domestic, 7883Others, 5428

Outbound, 1506

Inbound, 383

Page 21: DEAL WATCHER - KNAV Accounting Firm

TOP M&A DEALSQuarter ended March 2021

21

Target Acquirer/s Sector

Deal

value

(US$ mn)

Deal highlights

Financial Services 4,724

The RBI cleared the INR 34,250 crores acquisition of

Dewan Housing Finance Corporation (DHFL) by the

Piramal group. Piramal plans to merge DHFL with its

financial services business as soon as NCLT approves

the transaction.

Metals & Mining 2,615

JSW Steel closed the acquisition of bankrupt Bhushan

Power & Steel Ltd (BPSL). It has paid INR 19,350 crores to

the financial creditors of Bhushan Power & Steel Ltd

towards implementation of the resolution plan for acquiring

the company.

Corporate Services 1,425

Wipro announces the acquisition of Capco for US$ 1.45

bn. Company has US$ 1 bn funding line through a one-

year overseas loan for this acquisition. Through the

acquisition of UK-based Capco, Wipro appears to be

focused on strengthening its BFSI capabilities.

Internet 1,284

Tata Group acquires 68% stake in online grocery startup

BigBasket for about INR 9,500 crores. Tata's stake

translates into an enterprise value of INR 13,500 crores for

BigBasket.

Education 1000

Ed-tech platform Byju’s has acquired test preparation

firm Aakash Institute in a deal valued at almost US$ 1bn.

Byju’s will pay a mix of cash and stocks to close the deal.

This transaction will create one of the largest educational

group in India.

Page 22: DEAL WATCHER - KNAV Accounting Firm

ANALYSIS OF KEY TRANSACTIONS

Page 23: DEAL WATCHER - KNAV Accounting Firm

Sources: Economic Times, Business Today, VC Circle, CNBC

Rising Sun Holdings acquires controlling stake in NBFC

Magma Fincorp

23

INR 3206 cr

INR 125 cr

Mayank Poddar

Sanjay Chamria

INR125 cr

60% stake

2.34% stake

2.34% stake

▪ Owned by the CEO of Serum Institute of India, Adar Poonawalla,Rising Sun Holdings Pvt Ltd (RSHPL) acquired a controlling stake of60% in Mumbai based NBFC, Magma Fincorp through a preferentialshare issue.

▪ As part of the transaction, 45.80 crores shares were allotted toRSHPL for INR 3,206 crores at INR 70 per share and 3.57 croresshares, collectively were allotted to Sanjay Chamria, the ManagingDirector of Magma Fincorp and Mayank Poddar, the ChairmanEmeritus of Magma Fincorp for INR 125 crores each.

▪ This made the entire deal worth INR 3,456 crores and the net worthof the company increased over INR 6,300 crores.

▪ Post the capital infusion, RSHPL is classified as promoter of thecompany, along with the existing promoter group. Magma Fincorpand its subsidiaries are rebranded under the Poonawalla Financegroup along with simultaneous consolidation of existing services ofthe Poonawalla Finance group.

▪ The entire deal received the clearance of the CompetitionCommission of India (CCI) on 12th April 2021.

▪ RSHPL has nominated Poonawalla as the chairman of the Boardand Abhay Bhutada, current MD and CEO of Poonawalla Finance,as the MD of the new entity.

▪ This acquisition will enable RSHPL to leverage synergies in thefinancial lending space through diversifying its operations in areaswhere Magma Fincorp is present, namely, commercial finance, agri-finance, SME finance, mortgage finance, general insurance businesswith focus on rural and semi urban sectors.

▪ In addition, Magma Fincorp offers a customer base of over 5mn across 298 branches in 21 states.

Deal Rationale

SME

Finance

Diversification into

Commercial

Finance

General

Insurance

Agri

Finance

Mortgage

Finance

• Customer base of 5,000,000+

• 298 Branches

• 21 States

Page 24: DEAL WATCHER - KNAV Accounting Firm

Transaction Value: INR 19,350 crore through a mix

of equity, convertible instruments and loans.

BPSL was brought to NCLT for insolvency in

July 2017.

The resolution plan offered by JSW Steel means

a haircut of about 60% for the creditors.

With this

acquisition,

JSW Steel

becomes

the largest

steelmaker

in India.

This

acquisition

gives JSW

Steel a

strong

foothold in

Eastern

India.

Source: VCCircle, Live Mint, Business Standard

9825

7355

5275

4018

3497

CLA

IM

(IN

RIN

CR

OR

ES

)

TOP FINANCIAL CREDITORS

JSW Steel acquires Bhushan Power & Steel

▪ Bhushan Power and Steel Limited (BPSL) has been bought by JSWSteel for US$ 2.7 bn (INR 19,350 crores), the largest acquisition in thehistory of JSW Steel. This acquisition was done through JSW’s whollyowned subsidiary, Piombino Steel Limited (PSL).

▪ A sum of INR 8,614 crore in PSL was arranged through a mix of equity,optionally convertible instruments and debt. Apart from this, INR 8,550crores was raised as equity and convertible instruments and INR 2,186crores was raised as short-term borrowings through a Special PurposeVehicle (SPV). This SPV will be merged with BPSL, so the majorportion of debt will reflect only on the balance sheet of BPSL, and it willhave to service it on its own.

▪ BPSL had defaulted on INR 48,000 crores outstanding debt andwas brought to NCLT by its creditors for resolution under Insolvency& Bankruptcy Code guidelines in July 2017. JSW Steel's resolution planfor BPSL was approved by the National Company Law Tribunal inSeptember 2019 & National Company Law Appellate Tribunal inFebruary 2020.

▪ However, the case was stuck in courts as the Enforcement Directoratehad attached BPSL's properties, due to pending investigations intofraud and money laundering allegations against the former promoters ofthe bankrupt BPSL. Earlier this March, JSW Steel had reached anagreement with BPSL's lenders that they would refund the amount tothe company in case of an adverse ruling against it by the SupremeCourt, where the BPSL case is being heard.

▪ JSW Steel had outbid two rivals—Tata Steel Ltd and the UK’s LibertyHouse Group—to acquire BPSL.

▪ With this acquisition, JSW Steel will get an integrated steel unitwith liquid steel capacity of more than 2.5 mn tonnes per annumin Jharsuguda (Odisha), making it the biggest steelmaker in India. It willalso take over two downstream facilities based in Kolkataand Chandigarh. The acquisition will help the JSW Group toestablish its presence in flat steel business in the Eastern region ofIndia.

24

Page 25: DEAL WATCHER - KNAV Accounting Firm

Source: Business Insider, VCCircle, TechCrunch

MC Global Edtech

Investment

Holdings LPOthers

US$ 224 mn US$77 mn US$159 mn

Series F Funding

US$ 400 mn Stocks

US$ 600 mn Cash

Blackstone Group, JC Chaudhry, Akash Chaudhry to

be minority shareholders in Byju’s

Synergies Created:

Foray into Hybrid Model of Education –

Physical Classrooms + Online Learning

Value additive services to 2,50,000+

students of AESL

BYJU’s high ticket spree

▪ In the biggest deal in the EdTech sector so far, the country’s

most valued online education firm, Byju’s acquired Blackstone

Group-backed Aakash Educational Services (AESL) for about

US$ 1 bn cash and stock deal. The acquisition will extend Byju’s

footprint into the offline segment.

▪ Post the deal, Blackstone Group and AESL founders JC

Chaudhry and Aakash Chaudhry will become minority

shareholders in Byju’s. AESL will, however, continue to function

independently.

▪ Byju’s buyout of AESL is also among the largest acquisitions by

an Indian startup. It is planning to integrate Aakash’s expertise in

test preparation with its content and tech capabilities and will

make further investment once the integration is done.

▪ Beside investing in AESL, BYJU’s raised US$ 460 mn as part ofits ongoing Series F round, led by MC Global EdTechInvestment Holdings LP and participation from Facebook co-founder Eduardo Saverin’s B Capital, among other investors.

▪ The investment values the Bengaluru-based company at a littleover US$ 13 bn. This is the first investment in Byju’s this year,after the company raised over US$ 1 bn in 2020, fueled by theCovid-19 pandemic which caused a surge in online learning.

▪ Following this tranche, the collective holding of the promoters’group, which includes Byju Raveendran and family, has beendiluted to 26.09%. BYJU’s plans to use these process to fund itsacquisition of AESL and rival startup Toppr.

▪ The company became the second highest-valued Indianstartup, trailing only digital payments giant Paytm.

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Source: VCCircle, Livemint, Hindustan Times, Business Standard

Approves takeover

More than 94% of lenders to DHFL voted

in favor of Piramal’s resolution plan

Piramal to merge DHFL as soon as NCLT

approves the plan by investing INR 10,000

Cr in the merged entity

The acquisition would give stable cash flow

and diversify Piramal’s loan book

Deal Rationale

Lenders to get INR 34,250 Cr including

INR 14,700 in upfront cash

Piramal Group receives RBI nod for DHFL Acquisition

• Ajay Piramal led Piramal Group has received the approval fromthe Reserve Bank of India to move forward with its acquisition ofDewan Housing Finance Corporation Limited. through the IBCprocess.

• DHFL was one of the earliest financial companies to enterbankruptcy. It was admitted by NCLT in November 2019 for a defaultof over INR 87,000 crores.

• The Committee of Creditors (CoC) voted in favour (94% votes) of theresolution plan submitted by Piramal Capital and Housing Finance,overlooking rival and American asset management companyOaktree Capital after the two engaged in a bidding war lasting fourrounds.

• The INR 34,250 crore Piramal plan that was finally approvedincluded an upfront cash component of INR 14,700 crores includingcash on DHFL’s balance sheet, and a deferred component payablethrough non-convertible debentures of INR 19,550 crores. The StateBank of India-led CoC is now in the process of filing the plan to theNational Company Law Tribunal.

• Piramal plans to merge DHFL with its wholly ownedsubsidiary Piramal Capital & Housing Finance Limited, its financialservices business as soon as the National Company Law Tribunal(NCLT) approves the transaction, thus adding 4,500 employees tothe group and investing INR 10,000 crore of Piramal Capital’s equityin the merged entity.

• This acquisition facilitates the diversification of Piramal group's loanbook and is a step towards the demerger of the group’s financialservices and pharma businesses in future.

• Piramal Capital & Housing Finance Ltd. now aims to sell its biggest-ever bond, by seeking bids for as much as INR 3,000 crores (US$414 mn) of notes and will use the money to partly fund thetakeover of DHFL.

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Page 27: DEAL WATCHER - KNAV Accounting Firm

Source: VCCircle, Economic Times, Crunchbase, Inc 42

THE DEAL

Total funding received US$ 315 mn

Valuation after funding US$ 2.1 bn

Who is entering? Who is exiting?

03

01

02

Primary + Secondary

components

FirstCry roars with entry of TPG Growth led consortium

▪ Online first-baby products retailer, FirstCry has raised US$ 315 mn in around led by US based private equity investor TPG Growth and thehomegrown Premji Invest and Chrys Capital in a combination of primaryand secondary components at a valuation of US$ 2 - 2.1 bn. Thisdevelopment has doubled the Softbank backed venture’s valuation inless than 24 months.

▪ All the 3 new investors have pumped in about US$100 mn each coupled with a small primary component of US$ 13 mn asper regulatory filings.

▪ This deal also marks the exit of 3 early investors - Elevation Capital(formerly SAIF Partners), Vertex Ventures and Mega Delta CapitalAdvisors. All the 3 incoming partners have considerable consumer andretail investing experience having backed a diverse host of venturessuch as Nykaa, Book My Show, Dream 11 and Myntra.

▪ Brain Bees Solutions Private Limited, the company whichoperates FirstCry, did not disclose the use of its newly raised capitalin regulatory filings but it has plans to expand its presence in the MiddleEast and set-up shops in new markets such as Oman and SaudiArabia. FirstCry currently operates more than 300 stores in 125 citiesand sells more than 2 lakh kid products.

▪ This round offering comes amid a promising performanceby FirstCry for the year ended 2020, where it clocked a 68% increasein revenue, from INR 535 crores in FY2019 to INR 897 crores andan 83% drop in net losses from INR 933 crores in FY2019 to INR191 crores in FY2020.

▪ Apart from being a baby products retailer, FirstCry also ventured intothe pre-primary education segment in 2019 by acquiring Oi Playschooland rebranding it as FirstCry Intelliots in a co-generic acquisition model.

▪ Competing with corporate big shots like Procter & Gamble, Unilever,Kimberly Clark, Johnson & Johnson and Nestle, FirstCry is in a highgrowth market and this funding will help it consolidate its investor baseahead of a potential IPO in the next 18 to 24 months.

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CONTACT US

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Harshad Parekh

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+1 416 229 1411

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Vaibhav Manek

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+91 22 6164 4803

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Shishir Lagu

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+91 9819013046

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Amanjit Singh

[email protected]

+44 20 3617 6200

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+31 (0)334347200

SINGAPORE

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Boon Kiat Wong

[email protected]

+65 93889878

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