Private Equity Funds’ Investments in the Unlisted Market

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Private equity offers clear added value to a company. These are experts who constantly analyze businesses. As a result, they have a good insight into best practice, across diverse sectors. Private equity funds make their knowledge available to the businesses in which they participate. After all, they have every interest in ensuring those businesses succeed. They invest in a close partnership.

Funds play on their expertise  for instance in particular products or sectors  as a competitive advantage. There is a great deal of capital available today but the expertise and experience a fund combines with it, ultimately make the difference.

The majority of businesses still have little experience with private equity. In practice, it is even true that private equity players prefer actively to search for interesting investment opportunities so that they are not competing with others. Professional parties work purposefully and procedurally. A business plan is developed together with the manager/investor, linked to a term within which the expected value creation must be achieved. The management will receive an additional reward if the private equity party realises more than a minimum return during the term of the investment.

2011-2020 saw the Indian PE/VC industry come of age and into the mainstream. This decade saw PE/VC investments grow at a CAGR of 19% from a base of US$ 8.4 billion in 2010 to US$ 47.6 billion in 2020 and spread its wings across all investment classes and strategies. The cumulative value of PE/VC investments between 2011-2020 totalled US$ 232.4 billion which is more than twice the value recorded in the preceding decade. This decade also saw many structural shifts in the Indian PE/VC industry including changes in the investor mix, deal type, deal size, and sectors.

India has seen strong deal volume flow continued with a 5% year-over-year (YOY) increase despite a slowdown in the total value of investments (excluding Jio Platforms and Reliance Retail deals). Growth equity momentum was sustained with $10 billion in investments, more than in all previous years and nearly at par with 2019. From a sector standpoint, strong momentum continued in consumer tech and IT/IT-enabled services (ITES). Additionally, India-focused dry powder remained resilient at $8 billion, with the share of oversubscribed and at-target funds increasing further.

In 2020, the Indian Private Equity (PE) Landscape witnessed strong investment momentum with $62 billion in deal value and 40% from Jio Platforms and Reliance Retail deals. Investment activity was muted from March to May due to Covid-19-led uncertainty, but it recovered strongly in H2 to pre–Covid-19 levels with late-stage and buyout deals witnessing increased traction. The pandemic also led to a shift in the type of deals made, with investors focusing on alternate investment strategies such as distressed opportunistic sales and qualified institutional placements (QIPs).

India’s growing attractiveness as an investment destination for PE/VC investments has been acknowledge by global big names like Morgan Stanley, Altran Investments (now Capgemini), KKR , Sequoia Capital, Advent International and Tarrant Capital. 

Advent International is one of the largest and longest serving independent private equity partnerships. Since its founding in 1984, it have invested $56 billion in over 380 private equity investments across 42 countries. Advent Capital invested in Manjushree Technopack at a deal which values the latter at Rs. 2,300 crore. They bought their 40% stake from Kedaara Capital, which has made 10 investments since 2014 across verticals, including consumer and consumer derivatives, financial services, industrial and healthcare. Kedaara has expertise in the packaging sector with its investments in Manjushree Technopack and Parksons Packaging. Advent International has been investing in India for 11 years and the transaction is its fifth investment in India in three years and third investment in the consumer packaging sector globally in two years. 

Manjushree Technopack Limited is a thought leader in the rigid plastic packaging space today. With world class facilities and technologies, they serve every FMCG industry, vertical from dairy to liquor, food products, agro chemicals, pharma, home care and personal care.

Click on the link below to know more information about the share price, financials and our take on the share of Manjushree Technopack.

Five Star Business Finance Ltd, a lender to small businesses, said it has got $234 million (Rs 1,700 crore) from new and existing investors at a valuation of $1.4 billion (Rs 10,300 crore). The round included existing investors – led by Sequoia Capital India with participation from Norwest Venture Partners – as well as new investors led by KKR with participation from TVS Capital. According to Five Star’s 2018-19 annual report, Morgan Stanley’s NHPEA Chocolate Holdings BV holds 21.4% stake in the company. Morgan Stanley’s presence and performance is known all over whole world in different types of capital markets. TPG Asia was one of the first alternative asset management firms to establish a dedicated Asia franchise, opening an office in Shanghai in 1994. The development of its track record in Asia has provided a foundation to pursue the region’s highly attractive investing opportunities.

The share price of Five Star Business Finance in the last 6 months has almost doubled in value in the Unlisted market. Click on the link below to know more information about the share price, financials and our take on the share of Five Star Business Finance Ltd.

Aricent Technologies Holdings Ltd. provides communication software for the communications industry. The Company offers middleware, consumer and enterprise applications, network management, service provisioning, and billing mediation. Aricent Technologies (Holdings) Limited is a subsidiary of Capgemini SE which acquired Altran Technologies SAS at a global level in the first half of the calendar year 2020. Pursuant to the said acquisition, all the Altran group companies, including the Company are now a part of the Capgemini group. The Company is now a step-down subsidiary of Capgemini SE, a listed entity formed and registered under the laws of France.

Following the acquisition of Altran group, Capgemini now ranks as the undisputed world leader in Engineering and R&D services (“ER&D”) with a portfolio of high-profile clients, extensive sector expertise and in-depth understanding of industrial business processes and operational technologies.

Capgemini offers its clients an unmatched and unique value proposition to address their transformation and innovation needs and works alongside its clients, from initial concept stage through industrialisation, to invent the products and services of tomorrow and boost the value of clients’ organisation. Capgemini has been working with major players in many sectors like Automotive, Aeronautics, Space, Defence & Naval, Communications, Semiconductor & Electronics, Software & Internet, etc. and utilises its global network of world-class experts, a cost-cutting industrial supply chain, and its customised tools to deliver clients business goals in an ever more challenging environment.

The acquisition of Aricent in 2018 by the Altran group and the subsequent acquisition of Altran group, including the Company, enabled Capgemini to strengthen its competencies and solutions in digital, based on intellectual property developed by Aricent, extended over time and benefiting from a strategic positioning on emerging technologies such as artificial intelligence, cognitive systems and the Internet of Things (IoT).

The share price of Aricent Technologies in the last 6 months has almost tripled in value in the unlisted market. Click on the link below to know more information about the share price, financials and our take on the share of Aricent Technologies.

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