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www.nexdigm.com www.skpgroup.com
January - June 2020
Investment Chronicle
INVESTMENT CHRONICLE JANUARY - JUNE 2020
2
TABLE OF CONTENTS
Deal Trends 04
Mergers and Acquisitions 05
Equity Investments 07
Private Equity Exits 10
Sector Insights 12
Sectoral Panaroma 13
Indian Terrain 14
Cross-border Transactions 15
Nexdigm (SKP) Transaction Advisory 16
Our Recent Credentials 17
Publications 18
INVESTMENT CHRONICLE JANUARY - JUNE 2020
3
FOREWORD
We are pleased to present Nexdigm (SKP) Investment Chronicle – our periodic update that focuses on the deal-making landscape in India, comprising Mergers and Acquisitions (M&A), equity investments, and exits.In this report, we look at India’s transactions arena in the first half of 2020.
Mergers and Acquisitions comprised 58% of the total USD 42 billion deal landscape in H1 2020, followed by private equity investments comprising 40%. The investment market at the beginning of FY20 was seller-friendly with attractive valuations and multiple exit routes. However, the COVID-19 pandemic made the market more cautious, with the scales tipped in favor of buyers and cash-rich companies. Private equity exits merely contributed to the total deal value in this period, as discounted valuations have prevented investors to market their investments.
As customary, the Information Technology sector took a lead in terms of deal volume. However, H1 2020 has marked 100 deals in the Healthcare sector, fuelled by an intent to work collaboratively on the prevailing pandemic. The broadening scope of telecom and technological infrastructure to facilitate remote management during the COVID-19 outbreak, as well as the announcement of the consolidation of public sector banks, creates further anticipation for deals in these value dominating sectors.
The escalated transmission of COVID-19 has led to a harsh dilemma for the capital markets causing vulnerable business risk worldwide. Stringent restrictions on travel and physical proximity have made the execution of deals challenging. The government rules are constantly changing with regards to employment, workspace safety, data privacy, and sector specific regulations. The uncertainty around business projections, discord on the valuation of companies, and diversion of cash flows to operational needs have hampered deal success. Nevertheless, the government and businesses are undertaking relentless efforts to tackle the crises and ensure long term potential of investments remain intact.
With India determined to become a ‘self reliant’ country, the government has curbed corporate tax rates and assured further changes in the ‘Make in India’ initiative, to emerge as a favorable investment destination compared to its South Asian peers. This coupled with companies exploring restructuring of businesses and supply chain due to change in geo-economic dynamics, is expected to encourage transaction opportunities in the approaching years. While deal activity could be subdued in the coming quarters on account of challenges in execution and economic slowdown, the India growth story may remain attractive for investors with a long term horizon.
Maulik DoshiSenior Executive Director Transaction Advisory
INVESTMENT CHRONICLE JANUARY - JUNE 2020
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M&A - Merger & Acquisitions EInv - Equity InvestmentsPEE - Private Equity Exits
DEAL TRENDS
Average EInv Deal Value USD 28.85
million
DEAL LANDSCAPE HIGHLIGHTS
Average M&A Deal Value
USD 82.97 million
Hot SectorInformation Technology
Top M&A Deal Value
USD 5,729.00 million
Top EInv Deal Value
USD 1,816.91 million
Top PEE Deal Value
301.97
Emerging Segment
Healthcare Technology
Top Outbound Country
United States of America
EInv CAGR (5 years)
12.00%
M&A CAGR (5 years)7.00%
USD millon
17,888
8,481
3,535
8,910
10,739
11,468
7,057
1,569
6,736
7,811
1,409
1,914
769
15,317
4,265
824
566
251
313
55
219
336
31
202
355
41
190
295
27
187
292
50
105
19
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
277
Deal Volume
Deal Value
PEEM&A EInv
12,148
INVESTMENT CHRONICLE JANUARY - JUNE 2020
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MERGERS AND ACQUISITIONS
2019 observed a cautious drift in M&A activity, basis the political uncertainty and economic slowdown. Although deal momentum was expected to improve in 2020, the initial half of the year followed stead at USD 24,227 million from 292 deals, owing to the rapid outbreak of COVID-19 worldwide. However, the average deal size increased by 1.6x in H1 2020 vs H1 2019 due to a corresponding fall in deal volume.
Keeping with the trend, Information Technology outnumbered other sectors in terms of deal volume. Financials, Telecommunication, and Industrials are the predominant sectors for H1 2020, bagging the big-ticket transactions, making up 70% of the total deal value. Reforms in the regulatory regime such as the reduction in tax rates and softening of compliance norms, are aimed to allure foreign investments.
The advent of the COVID-19 pandemic and the worldwide lockdown has caused operational hindrance in several industries. A short term fundamental shift in consumer behavior and supply chain could be observed. The ongoing deals have also been obstructed due to travel restrictions, shift in interpersonal interactions, and infrastructure constraints. The financial strain and ambiguity on business performance have also forced companies to re-evaluate their growth plans.
In the current ambivalent situation, companies on the brink of insolvency may consider cash consolidation through mergers to safeguard continuity. Conglomerates may also consider demergers and asset transfers for business stability. M&A activity is expected to be steered by industry consolidation, companies focused on survival, and acquisition of fairly valued stressed assets through spare cash reserves.
Total Deal Volume292
Total Deal ValueUSD 24,226.70 million
Top SectorTelecommunication
Top RegionGujarat
Top Outbound CountryUSA
Deal Buyer Target Type Value % Sought Sector
1 Facebook Inc. Jio Platforms Ltd. Inbound 5,729.00 9.99 Telecommunications
2 Groupe ADP GMR Airports Ltd. Inbound 1,507.27 49.00 Industrials
3 Adani Ports and Special Economic Zone Ltd.
Krishnapatnam Port Co. Ltd. Domestic 1,426.00 75.00 Industrials
4 State Bank of India, Axis Bank Ltd & Others Yes Bank Ltd. Domestic 1,350.00 79.68 Financials
5 Union Bank of India Ltd. Corporation Bank Ltd. Domestic 989.98 100.00 Financials
USD millon
Others
Outbound
Inbound
Domestic
9205
7226
611846
2690
2401
957689
7169
964181167
1,186
1,568 213 568
2,638
3961,191
2,243
6,356
52259
11,092
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
USD millon
INVESTMENT CHRONICLE JANUARY - JUNE 2020
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PRIME DEALS
Target: GMR Aiports
SECTOR Industrials
Buyer: Group ADP
DEAL VALUE USD 1,507.07 mn
DEAL TYPE Inbound
% SHARE 49.00%
RATIONALE Growth & Expansion
DEAL HIGHLIGHTS
Target: Krishnapatnam Port Co Ltd
SECTOR Industrials
Buyer: Adani Ports & Special Economic Zone
DEAL VALUE USD 1,426.00 mn
DEAL TYPE Domestic
% SHARE 75.00%
RATIONALE Capacity Enchancement
DEAL HIGHLIGHTS
Adani Ports and Special Economic Zone Ltd (Adani Ports) acquired a major stake in Krishnapatnam Port Co Ltd (KPCL) for USD 1.43 billion. The board of Adani Ports has approved a fundraising of $1.25 billion through dollar bonds.
However, Adani Port may consider re-negotiation of the pricing from the original deal announced in January 2020, owing to the significant change in the short to medium term economic conditions triggered by the COVID-19 outbreak and the resulting lockdown.
KPCL is the largest port in Andhra Pradesh and currently handles 54 MMT of cargo. Adani Port sees a potential to boost the cargo handled to 100 MMT within the next 7 years. This acquisition will also accelerate Adani Port’s expansion plan.
Through this deal, Adani will increase its market share in India to 27% enhancing its position on the eastern coast of the country.
ADP acquired 49% stake in GMR Airports for USD1.51 billion.
The consideration comprises USD1.37 billion towards the secondary sale of shares by GMR Infrastructure Ltd and equity infusion of USD 139.82 million in the company.
Earlier ,a consortium consisting of Tata group, SSG Capital and GIC Capital had signed the definitive agreement for investment in GMR Airports. However, the deal fell through due to Tata’s conflict of interest in Vistara and AirAsia India.
There will be two portions to this transaction, the first stake of 24.99% as an immediate aid to improve profitability and cash flows, and to lower its debts while the remaining 24.01% stake is subject to regulatory approvals.
In order to achieve further synergy, Group ADP has pegged earn-outs worth USD 625.70 million, which are linked to pre-agreed performance metrics along with clearance on regulations over a span of 5 years.
Together, these companies have the largest portfolio of 336.5 million passengers, this deal structure will allow both the companies to widen its scope of access to global airports, opening up new opportunities for development.
INVESTMENT CHRONICLE JANUARY - JUNE 2020
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The year 2020 anticipated positive growth for its performance in equity investments, owing to the tremendous investor confidence built in 2019, marking a prominent year in for the decade for equity investments. Contrastingly, the deal value for H1 2020 stands at USD 16,413 million, an 8% decline from H1 2019, owing to the disruption of ongoing deals caused by the strict measures against the pandemic.
The average deal size, excluding the Jio Platform deals which comprised 60% of the deal value, shrunk to USD 12.2 million from USD 28.6 million in H1 2019. Majority of the investments in 2019 took place in, e-commerce, software as a service (SAAS), fintech, consumer-tech, creating an essential trend for 2020. As COVID-19 spread resulted in a lockdown across the globe, sectors such as telecommunications, information technology and healthcare proactively accounted for ~80% of the total deal value, with an aim to minimize impediments in the new way of life.
Information technology and consumer discretionary sectors have taken the lead in terms of deal volume.Emerging asset classifications like structured deals, internet-focused deals, crowd funding, etc. are prominent amidst the lockdown facet. Private equity and venture capital were preponderant at 89% of deal value of H1 2020, evolving fundamentally over the years bringing in employment opportunities and tax proceeds. These paved the way for the country’s growth strategy towards digitalization.
The prevailing lockdown may temporarily hamper investment flows from foreign sources. However, significant dry powder available with private equities, carve in policies aimed at improving domestic funds and promotion of small businesses, could reduce the detrimental impact on deal activity.
EQUITY INVESTMENTS
USD millon
Total Deal Volume569
Total Deal ValueUSD 16,413.23 million
Top SectorTelecommunication
Top RegionGujarat
Emerging SegmentHealth Care Technology
USD millon
Others
Venture Capital & Debt
Private Equity
Public Equity
7,864
312
1,930
2,319
633
611
4,780
677
4,031
1,980
2,617
661
2,994
785
1,034
523
2,017
692
462
1,156
86
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
2,133
2,748
10,444
Deal Buyer Target Type Value % Sought Sector
1 Mubadala Investment Co.,Omicron Asia Holdings II Pte. Ltd. & Others Jio Platforms Ltd. Private
Equity 9,573.82 14.71 Telecommunications
2 Carlyle Investment Management LLC Piramal Pharma Solutions
Private Equity 490.00 20.00 Healthcare
3 Brookfield Asset Management Inc Indo Star Capital Finance
Private Equity 343.32 NA Financials
4 CPP Investment Board, Allianz Capital Partners GmbH & Others IndInfravit Trust Real
Estate 244.90 24.29 Financials
5 Carlyle Investment Management LLC SeQuent Scientific Ltd. Public Equity 209.82 74.00 Healthcare
INVESTMENT CHRONICLE JANUARY - JUNE 2020
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PRIME DEALS
Target: Piramal Pharma Solutions
SECTOR Healthcare
Buyer: Carlyle Investment Management LLC
DEAL VALUE USD 490.00 mn
DEAL TYPE Private Equity
% SHARE 20.00%
RATIONALE Growth & Expansion
Target: IndoStar Capital Finance Ltd
SECTOR Financials
Buyer: Brookfield Asset Management Inc
DEAL VALUE USD 343.32 mn
DEAL TYPE Private Equity
% SHARE NA
RATIONALE Growth acceleration
Indostar Capital Finance Ltd, an NBFC providing financial solutions to small and medium sized enterprises (SME’s), raised USD 343.32 million from the Canadian investment firm, Brookfield Asset Management, through a share purchase agreement followed by an open offer. The deal is subject to the fulfillment of certain closing requisites and regulatory approval.
The infusion of funds is critical to maintain liquidity in the light of challenges faced by the COVID-19 outbreak. The capital adequacy ratio improved to 40% from 27% post the equity infusion.
As per the agreement, Brookfield will acquire up to 40% of the NBFC, which has been approved by the Competition Commission of India (CCI) and become a co-promoter with the right to nominate up to two board members.
The management of Brookfield anticipates the retail financial services in India to continue prospering and therefore, has invested in order to support the growth of the investee’s retail business.
Carlyle, a global investment firm, has made a deal to acquire a 20% stake in Piramal Pharma through fresh equity infusion of USD 490 million, and tap into this promising company through inorganic growth. However, for short term the proceeds can be utilized to reinforce its financial position. This is in line with the Carlyle group’s recent investments in the pharmaceutical and healthcare segment.
Piramal Pharma has three major business segments i.e., pharma solutions, critical care and consumer products.
The transaction value is subject to net debt, exchange rates and certain pre-agreed closing conditions. The transaction value of USD 490 million is further dependent on the financial performance of the target in FY21. This deal is expected to complete by calendar year 2020.
DEAL HIGHLIGHTS DEAL HIGHLIGHTS
INVESTMENT CHRONICLE JANUARY - JUNE 2020
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PRIME DEALS
Within a span of three years from its launch, Jio Platforms is viral for it’s record breaking investments reaching USD 15 billion in two months, during the COVID-19 lockdown. Over 35% of the total investments of H1 2020 pertain to to Jio Platforms, endorsing its potential in building the business for the ‘next-generation’, aspiring to facilitate the vision of ‘Digital India’.
What started as Facebook’s investment of USD 5,729 million, gauged interest from other renowned investors, including General Atlantic, KKR, Vista Equity, Silver Lake, and Mubadala for a cumulative stake of 24.7% in the digital platform company. And yet, Jio still seems to be garnering further investor interest. The viability of the business model and vision, along with the management experience are the primary factors that attract investments in the uncertain economic situation.
The Reliance Jio and Facebook deal indicates several synergies, including:
• Reduction in debt for Jio, which is in line with their target of slashing debt to zero by March 2021, from the current USD 20 billion.
RELIANCE INVESTMENTS
• Jio Mart, an online grocery store, was launched in select locations post the Facebook investment in Jio. WhatsApp has a database of 400 million users in India, which can be leveraged along Jio’s customer to connect small businesses with the customer.
• Households can connect with Kirana stores through cell phones and save consumers the effort to physically go out and purchase.
• They may also explore the introduction of Cryptocurrency network along with the government.
Jio’s future plan is to be a company that provides Indian consumers access to everything, from groceries and clothes to banking, extending even to home automation through an integrated system.
The private equity investors have surplus un-allocated capital which is driving investors to Jio Platforms due to its proven execution, almost debt-free capital and regulatory advantage
In addition to the executed investments, after June 2020, further investments are expected from Google as well as private equity investors such as Qualcomm and Intel Capital. The overarching goal of these investments is to get rooted in India’s quest for digitization, and provide 5G infrastructure to tap onto the large captive market.
USD millonDeal Timeline
22 April2020
FacebookStake: 9.99%Deal Value: 5,729.00
Silver Lake ManagementStake: 1.15%Deal Value: 753.33
3 May2020
General Atlantic Private LtdStake: 1.34%Deal Value: 877.99
17 May2020
Vista Equity Partners Management LLCStake: 2.32%Deal Value: 1,513.39
7 May2020
7 June2020
Abu Dhabi Investment CouncilStake: 1.16%Deal Value: 754.40
18 June2020
Public Investment Fund of Saudi ArabiaStake: 2.32%Deal Value: 1496.63
Mubadala Investment Co & Silver Lake ManagementStake: 2.78%Deal Value: 1,816.91
5 June2020
Omicron Asia Holdings II Pte Ltd (entity of KKR & Co)Stake: 2.32%Deal Value:1,511.86
21 May2020
13 June2020
TPG Capital Asia, L Catterton & OthersStake: 1.32%Deal Value:849.31
INVESTMENT CHRONICLE JANUARY - JUNE 2020
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Total Deal Volume69
Top SectorFinancials
Top RegionMaharashtra
Emerging SegmentThrifts & Mortgage Finance
PRIVATE EQUITY EXITS
Total Deal ValueUSD 1,389.60 million
USD millon
*Others primarily includes exit through buy-back and IPO
USD millon
Others*
Secondary Sale
M&A
Open Markets
2195
611
171
242
801
6
360
457
782
0
331
86 0
315616
0
6
1,513
148
548
160
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
Deal Seller Target Type Value % Sought Sector
1 Blackstone Advisors India Pvt. Ltd. Embassy Office Parks REIT
Open Market 301.97 8.70 Financials
2 Capital International Global Emerging Markets Private Equity Fund LP
Intas Pharmaceuticals Ltd. M&A 140.00 NA Healthcare
3 Warburg Pincus India Pvt. Ltd. Laurus Labs Ltd. Open Market 133.75 17.47 Healthcare
4 Baring India Private Equity Fund III Ltd., Baring India Private Equity Fund II Ltd.
Manappuram Finance Ltd.
Open Market 100.55 4.91 Financials
5 Carlyle Investment Management LLC Metropolis Healthcare Ltd.
Open Market 99.90 13.06 Healthcare
Notwithstanding with the pace set in the earlier years, private equity exits pronounced a tepid performance in H1 2020 at USD 1,390 million, almost halving the deal value and average deal size compared to H1 2019.
Information Technology and Financial sectors continued to outshine exit activity accounting for 57% of the total deal volume collectively. Distinctly, the healthcare and financial sector contributed 93% of the total exit deal value.
As anticipated, open market transactions dominated the exit route making up more than 82% of the exit deal value.
Uplifting the curtail, IPOs gained traction as an exit route in the initial quarter of 2020, contributing to almost 10% of the deal volume, while 2019 had observed single number exit deals through IPO’s. However, IPOs expect to undergo turmoil for the coming quarters, considering the current global market scenario affected by COVID-19.
Secondary sales failed to maintain momentum as start-up investors are unable to accumulate returns and reinforce the value on their stake due to the inability to project accurate valuations on their investments. As a result, investors are holding their positions, sanguine to sell at a higher price in the future, delaying exit until they can get the expected price for their investment.
INVESTMENT CHRONICLE JANUARY - JUNE 2020
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PRIME DEALS
Target: Embassy Office Parks REIT
SECTOR Financials
Seller: Blackstone Advisors India Pvt. Ltd.
DEAL VALUE USD 301.97 mn
DEAL TYPE Open Market
% SHARE 8.70%
RATIONALE Liquidity Enhancement
Target: Intas Pharmaceuticals Ltd.
SECTOR Healthcare
Seller: Capital International Global Emerging Markets Private Equity Fund LLP
DEAL VALUE USD 140.00 mn
DEAL TYPE M&A
% SHARE NA
RATIONALE Return on Investment
During Feb 2020, Capital International Global, sold an undisclosed portion of its stake to an existing shareholder of the company for a purchase consideration of USD 140 million, receiving a 1.3x return on investment.
During the initial quarter of 2017, Chrys Capital LLC sold 3% of their stake (from a total stake of 6%) in Intas Pharmaceuticals Ltd to Capital International Global Emerging Markets Private Equity Fund for a total consideration of USD 105.43 million.
With a post valuation of USD 3.50 billion, Intas Pharmaceuticals generates an annual revenue of over a billion dollars, marking it an eminent private-owned company in the pharma space.
Currently, Intas Pharmaceuticals is collaborating on a WHO-endorsed study in preventing and/or reducing the effects of COVID-19 using hydroxychloroquine.
Selling its stake through the most popular exit route, Blackstone Advisors India sold ~9% stake in Embassy Office Parks REIT for USD 301.97 million. The private equity firm continues to hold the largest share (46.30%) in the listed REIT. The sale is said to be in the normal course and not under any distress. This transaction displays a positive signal for the commercial real estate property despite the COVID-19 setback.
The journey of Blackstone Advisors India and Embassy Office Parks began as a joint venture in 2012, leading them to file an application with SEBI to structure as a REIT in 2016. Embassy Office Parks ‘REIT’ began in March 2017, and it was the first ‘REIT’ to get listed in March 2019.
Holding a portfolio of 33 million sq ft, it is the largest REIT in Asia, providing a return of 25% since its listing..
The aim of the transaction was to diversify into new and existing institutional investors to enhance its liquidity. Capital Group, ICICI Prudential, Normura, etc. are few of the investors to have bought from the units sold in the REIT.
DEAL HIGHLIGHTS DEAL HIGHLIGHTS
INVESTMENT CHRONICLE JANUARY - JUNE 2020
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SECTOR INSIGHTS
A
BIRD'S EYE
VIEW
Consumer Staples
M&A USD 487 million 15 Deals
EInv USD 157 million 30 Deals
PEE USD 32 million 2 Deals
Consumer Discretionary
M&A USD 576 million 42 Deals
EInv USD 1,043 million 93 Deals
PEE USD 14 million 9 Deals
Telecommunications
M&A USD 6,614 million 7 Deals
EInv USD 9,574 million 8 Deals
PEE - -
Materials
M&A USD 1,551 million 20 Deals
EInv USD 42 million 7 Deals
PEE - -
Utilites
M&A USD 1,654 million 23 Deals
EInv USD 254 million 7 Deals
PEE - 3 Deals
Industrials
M&A USD 3,922 million 44 Deals
EInv USD 325 million 25 Deals
PEE USD 2 million 8 Deals
Information Technology
M&A USD 1,329 million 73 Deals
EInv USD 2,114 million 294 Deals
PEE USD 47 million 15 Deals
Healthcare
M&A USD 1,607 million 31 Deals
EInv USD 1,524 million 62 Deals
PEE USD 463 million 7 Deals
Energy
M&A USD 65 million 2 Deals
EInv - -
PEE - -
Financials
M&A USD 6,420 million 35 Deals
EInv USD 1,381 million 43 Deals
PEE USD 833 million 25 Deals
INVESTMENT CHRONICLE JANUARY - JUNE 2020
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SECTORAL PANORAMA USD millon
Sector
H1 2018 H1 2019 H2 2019 H1 2020 Weights
Movement in Value*Value Deals Value Deals Value Deals Value Deals
H2 2019
H1 2020
Consumer Discretionary 26,911 221 4,707 225 2,724 204 1,633 144 8% 4% -40%
Consumer Staples 967 70 876 84 1,053 57 676 47 3% 2% -36%
Energy 5,878 8 1,932 6 2 3 65 2 0% 0% -
Financials 7,161 156 12,098 148 9,341 145 8,634 103 28% 20% -8%
Healthcare 1,236 78 1,984 97 1,368 104 3,594 100 4% 8% 163%
Industrials 4,329 131 5,131 127 3,728 125 4,249 77 11% 10% 14%
Information Technology 9,131 424 9,327 435 9,261 406 3,490 382 28% 8% -62%
Materials 10,911 59 7,253 40 3,344 38 1,594 27 10% 4% -52%
Telecommunications 6,781 12 27 9 2 4 16,188 15 0% 39% -
Utilities 3,046 39 2,817 34 2,400 24 1,907 33 7% 4% -21%
Total 76,351 1,198 46,152 1,205 33,223 1,110 42,030 930 100% 100% 28%
*The movement mentioned above is a comparison between H2 2019 and H1 2020 deal values.
INVESTMENT CHRONICLE JANUARY - JUNE 2020
14
Delhi
M&A USD 2,313 million 27 Deals
EInv USD 370 million 59 Deals
PEE USD 50 million 8 Deals
INDIAN TERRAIN
Haryana
M&A USD 2,011 million 15 Deals
EInv USD 668 million 58 Deals
PEE - 2 Deals
47 Deals
8 Deals
7 Deals
6 Deals
3 Deals
Top Deals
28 Deals
14 Deals
13 Deals
11 Deals
10 Deals
Top Deals
Gujarat
M&A USD 6,585 million 17 Deals
EInv USD 9,621 million 20 Deals
PEE USD 142 million 2 Deals
9 Deals
8 Deals
7 Deals
4 Deals
3 DealsTop Deals
Maharashtra
M&A USD 2,721 million 61 Deals
EInv USD 1,463 million 125 Deals
PEE USD 403 million 19 Deals
64 Deals
35 Deals
34 Deals
25 Deals
19 Deals
Top Deals
Karnataka
M&A USD 2,819 million 41 Deals
EInv USD 1,342 million 150 Deals
PEE USD 401 million 20 Deals
112 Deals
37 Deals
23 Deals
17 Deals
9 DealsTop Deals
Consumer Discretionary
IT & ITES
Healthcare
Industrials
Materials
Financials
Utilities
Consumer Staples
TOP FIVE STATES BY TRANSACTIONS (DOMESTIC + INBOUND DEALS)
INVESTMENT CHRONICLE JANUARY - JUNE 2020
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National Engineering Industries Ltd acquired Kinex Bearings
DEAL VALUE: USD 38.95 million
% SOUGHT: 100%
SECTOR: Industrials
National Engineering Industries Ltd (NEI) operating in more 30 countries, through its European subsidiary, acquired Kinex Bearings, the Slovakia-based, international bearing manufacturer.
The key interest to partner with Kinex bearings was to synergize through its complement product base, followed by skill sets and capability. This deal further enhances NEI to increase its foothold worldwide, emerging its supply chain networks to better serve their customers situated around the globe.
Mahindra & Mahindra acquired SsangYong Motor Company Ltd.
DEAL VALUE: USD 33.00 million
% SOUGHT: NA
SECTOR: Consumer Discretionary
The automobile sector has been one of the worst affected sectors amidst the COVID-19 crisis. Mahindra & Mahindra holding ~70% stake in the Korean company called SsangYong Motor Company, decided to raise USD 32.86 million through a special fund to help improve the current liquidity issues.
According to sources, the Korean government is supporting the auto company to a great extent to plow out of the cash crunch by looking for potential investors.
Proving to be a ‘high maintenance asset,’ Mahindra & Mahindra may have intentions to sell its stake in the future for a decent value based price.
Infosys Ltd acquired Outbox Systems Inc
DEAL VALUE: USD 250.00 million
% SOUGHT: 100%
SECTOR: Information Technology
Infosys acquired Outbox Systems Inc that operates a salesforce management portal called Simplus.
Founded in 2014, Outbox has been recognized for its insight in salesforce software across various sectors, allowing Infosys to thrive its digital market strategies and client base.
Together with its 2018 acquisition, ‘Fluido,’ will reinforce the company engagement to salesforce.
CROSS-BORDER TRANSACTIONS
TOP COUNTRIES BY DEAL VOLUME
KEC International acquired manufacturing facility from Gulf Jyoti International LLCDEAL VALUE: USD 13.89 million
% SOUGHT: 100%
SECTOR: Energy
KEC International now owns a transmission tower manufacturing facility in Dubai, holding an annual capacity of 50,000 metric tonnes (MT) to improve its operations in the Middle East and Africa through its strategic location, local expertise, delivery times, etc.
Prior to this deal, Gulf Jyoti International LLC had kept this plant sealed for 2 years, as its venture partner, Jyoti Structure had undergone insolvency in India.
Godrej Consumer Products acquired Canon Chemicals DEAL VALUE: USD 13.95 million
% SOUGHT: 25%
SECTOR: Consumer Staples
Already holding a 75% stake in Canon Chemicals since 2016, Godrej Group has further bought the remaining 25% stake in the company, calling it as its wholly owned subsidiary, through its step down firm ‘Godrej East Africa Holdings.’
Canon Chemicals, merely more than a decade year old company, is into the manufacture and distribution of home care products such as lotions, air fresheners, detergents, etc.
Godrej Group’s interest in Canon Chemicals has contributed to its revenue by a commendable amount.
DEAL VOLUME: 6 Deals
DEAL VALUE: USD 326 mn
TOP SECTOR: Information Technology
DEAL VOLUME: 2 Deals
DEAL VALUE: USD 0.27 mn
TOP SECTOR: Information Technology
DEAL VOLUME: 3 Deals
DEAL VALUE: - 4.8 mn
TOP SECTOR: Industrials
INVESTMENT CHRONICLE JANUARY - JUNE 2020
16
NEXDIGM (SKP) TRANSACTION ADVISORY
Set and Define the Objective
PartnerIdentification
Initial Handshake
Valuation Binding Term Sheet
Due Diligence
Final NegotiationPost Acquisition Integration
Transaction Closure
Regulatory Clearances
Definitive Agreement
Transaction Structuring
Since inception, our founders have emphasized on professional standards and personalized service; and we continue to reflect this progressive mind-set by offering customized solutions to our clients across diverse industries with quality, integrity and respect.
Stemming from our client’s needs, we provide services that address all the aspects relevant to a business right from conceptualization to implementation and operations.
INVESTMENT CHRONICLE JANUARY - JUNE 2020
OUR RECENT CREDENTIALS
17
Retail ApparelFinancial advisory in accordance withRBI regulations for the fourth largestretail apparel group in the world aiming to expand their presence in India through their subsidiary.
FurnitureFinancial Advisory for a leadingAlternate Asset Manager in relationto reporting on its investment in anIndian online furniture and home décor solution provider.
Food ProcessingFinancial and Tax due diligence of anIndian manufacturer of spices for aUSD 3 billion Japanese group looking to meet its sourcing requirements through India.
ElectronicsVendor support in relation to carve out and buy-side diligence of the profit-making business units in the Indian subsidiary of a leading global electronics repair and service provider.
E-commerceFinancial advisory and support on purchase price allocation for the acquisition of a Singapore based online marketplace along with its subsidiaries in Malaysia, Vietnam & Myanmar.
Fleet ManagementProvided economic advisory supportand prepared an economic assessment report for an alleged abuse of dominant position and predatory pricing by a leading taxi aggregator in India.
Medical DeviceFinancial and Tax due diligence of anIndian importer of cardiovascular andneurovascular products for a Frenchmanufacturer eying for forwardintegration in India.
Telecom OperatorsEconomic advisory on Submission ofa competition assessment report for aForm II filing about a proposed USD 20 billion merger between leading telecom operators in India. The transaction was unconditionally cleared by the CCI.
FinTechFinancial advisory for a FinTech start-up focusing on innovative lending to the Small & Medium Enterprises using a dynamic co-lending model.
LogisticsFinancial advisory to a leading French logistics company determining the value derived from its Indian assets, as part of its logistics arm transfer to a Swiss company.
Online GamingFinancial and Tax due diligence foran large Indian sports entertainmentventure on a company engaged inOnline Rummy cards gaming platform.
AutomotiveFinancial advisory in relation to valuation of stock options granted by a pioneer in manufacturing automotive components and subsidiary of a publicly traded Indian conglomerate, for financial reporting.
INVESTMENT CHRONICLE JANUARY - JUNE 2020
18
PUBLICATIONS
April – June 2019 January – March 2019
July – September 2019
ACKNOWLEDGMENTHarshal Choudhary
Saloni Master
Ruchita Rathor
Haeli Doshi
INVESTMENT CHRONICLE
January – December 2019
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Disclaimer: Nexdigm (SKP)’s Investment Chronicle summarises the list of deals announced based on information available in the public domain and the VCCEdge database. For our
analysis, we have referred to information from media reports, the Department of Industrial Policy and Promotion (DIPP), the Reserve Bank of India (RBI) and other government sources.
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