India, France push blue economy & investment partnership

Source: Economic Times, 21 December 2021

François Delattre, Secretary-General, Ministry for Europe and Foreign Affairs of France, is on an official visit to India from December 20-22. The visit comes on the heels of the Annual Defence Dialogue held on December 17 in New Delhi between Rajnath Singh, Defence Minister and Florence Parly, French Minister for Armed Forces.

Foreign Secretary, Harsh Vardhan Shringla, had bilateral talks with the Secretary-General on December 21. Both sides took stock of the bilateral relationship and discussed the potential for cooperation in sectors such as defence and security, space, cybersecurity and the digital economy, blue economy, education and people-to-people contacts, energy, health and climate change. Ambassadors of India and France joined the talks.

India’s trade with France has witnessed a steady rise in the last decade reaching USD 10.75 billion in 2020. Despite the pandemic, it is estimated that bilateral trade between the two countries in 2021 has reached USD 8.85 billion. To tap the full potential of bilateral trade and economic relations, both sides reiterated their commitment to restarting negotiations on the India-EU Free Trade Agreement.

France has emerged as a major source of FDI for India with more than 1,000 French establishments already present in India. France is the 11th largest foreign investor in India with a cumulative investment of USD 9.86 billion from April 2000 to June 2021 which represents 1.80% of the total FDI inflows into India. Most big French groups have their subsidiaries in India such as BNP Paribas, Capgemini, Airbus, Dassault, Arkema, L’Oréal, Sanofi, Total, etc. There are around 200 subsidiaries of Indian businesses established in France, which employ more than 6,000 people. Among Indian investments in France, majority are in IT services, pharmaceuticals/biotechnologies and hospitality sectors.

Reaffirming their shared commitment to a multipolar world and faith in multilateralism, the Foreign Secretary and the Secretary-General also held discussions on a number of regional and global issues of mutual interest, including cooperation in the European Union in view of the forthcoming French Presidency, Indo-Pacific, UNSC, situation in Afghanistan, among others, according to officials.

Delattre will be visiting Mumbai on December 21-22, where he will meet other Indian officials.

UAE based retail giant, Lulu Group will invest Rs. 2,000 crore in Gujarat to set up a shopping mall

Source: Economic Times, 11 December 2021

This was announced during a meeting between Bhupendra Patel, Chief Minister of Gujarat and Yusuff Ali MA in Dubai. An MOU in this regard was signed by Rajiv Kumar Gupta, additional chief secretary signed on behalf of Gujarat Government and Yusuff Ali CMD of Lulu Group.

According to the MOU, Lulu will set up a shopping mall between Ahmedabad and Gandhinagar which will create employment to more than 5,000 people. The construction is expected to start by the first quarter of 2022 and be completed in 30 months.

Government of Gujarat will facilitate Lulu Group with all necessary assistance and clearances and also depute a senior IAS official to follow up the procedures.

Apart from this, Lulu Group will also set up food processing and logistics centers in Baroda and Surat for exports.

“The government will make every effort to ensure that land and any other assistance is provided to the group so that they can begin work,” said the Chief Minister.

“Gujarat holds a very special place in my heart, this is where I first learnt the basics of business as my father had family business in Ahmedabad. So I feel very excited to invest in Gujarat and hope we can expand further in this Vibrant state,” said Ali.

The group has also recently opened Lulu Hypermarket in Bangalore, spread across 2 lakh sq ft, while Funtura is set up across 60,000 sq ft – the largest indoor entertainment zone in India.

Lulu currently operates more than 220 hypermarkets and shopping malls in the Middle East, Egypt, Indonesia, Malaysia and India. Globally, Lulu Group employs more than 57, 000 people. Lulu hypermarkets and department stores have a 32 per cent share of the retail market in Gulf Cooperation Council countries.

The group also has invested in India’s retail market with malls in Kerala and Uttar Pradesh. Group’s latest mall is slated to be opened by next week at Kerala’s capital Thiruvananthapuram while Lucknow Lulu Mall is expected to be open for shopping by march 2022.

RBI wants tax sops for Retail Direct Scheme investments, may approach govt

Source: Economic Times, 15 November 2021

The central bank is likely to approach the Centre to secure tax benefits for retail investments in sovereign securities under the Retail Direct Scheme (RDS), which takes India into an elite club of nations democratising ownership of government debt.

About 20,314 accounts to own government securities have already been opened till 9 pm on Sunday after Prime Minister Narendra Modi launched the programme Friday.

Tax exemptions, people familiar with the matter told ET, have the potential to burnish the allure of the scheme. Experts believe it could also attract global fintech companies such as BondEvalue. The Singapore-based company, which runs the world’s first fractional bond exchange, is keen to enter India after the central bank launched the programme.

“If retail taxation of direct debt investments is brought in line with investing through debt funds, we should see some retail interest emerging,” said Ananth Narayan, associate professor at SP Jain Institute of Management and Research. “This could in turn attract intermediaries including global and local fintech companies. Also currently, small savings schemes offer much higher rates than GoI securities.”

Not as Successful as Equities
The Reserve Bank of India (RBI) did not respond to ET’s mailed query.

BondEvalue, regulated by the Monetary Authority of Singapore (MAS), has already reached out to local fintech companies and banks to start in Mumbai immediately after New Delhi’s formal announcement.

“We will soon be opening our first India office in Mumbai,” said Rahul Banerjee, CEO, BondEvalue. “We see massive demand from NRIs globally to invest in India. Using our digital platform, we want to allow every man’s money to be invested in government securities and government linked securities.”

Bonds globally haven’t been as successful as equities in drawing retail investors. However, countries such as Japan have funded their development using domestic retail bond markets. The US and Brazil, too, have put in dedicated efforts.

In India, fixed-income products such as small savings schemes or debt mutual funds offer better returns with similar tax structures.

Sukanya Samriddhi Yojana accounts, for instance, earn 7.6% while the Debt GILT funds offer on average 8.77% through a 10-year period, show data from Valueresearch Online. By contrast, benchmark bonds now yield 6.36%.

“Retail Direct needs awareness among senior citizens who can benefit from it,” said Vikram Dalal, CEO at Synergee Capital. “A tax break is also needed to bring parity with existing savings plans, including mutual fund debt schemes. GOI bonds can be an alternative to LIC annuity plans as retail investors can invest in the longest maturity until 2061.”

If an investor sells bonds from a demat account after holding them for more than a year, s/he will have to pay a 10% capital gain tax on investment appreciation. Moreover, the annual coupon rate is taxed as per income tax slabs. Collectively, that eats into investment returns. In the February credit policy, Governor Shaktikanta Das had suggested retail participation in government bonds. While the minimum investment is ₹10,000, the maximum a retail saver can invest is ₹2 crore per security without tax breaks.

Rs 3.9 lakh crore alcohol beverage market to grow at 6.8 pc: ICRIER

Source: Economic Times, 16 August 2021

India is one of the fastest growing alcoholic beverages markets globally with an estimated market size of 52.5 billion dollars (about Rs 3.9 lakh crore), the Indian Council for Research on International Economic Relations (ICRIER) has said.

The market is expected to grow at a CAGR of 6.8 per cent till 2023, it said. The industry contributes to around 15 lakh jobs.

ICRIER said over 70 per cent of the growth in alcoholic beverages consumption in India in the next decade will be driven by the lower middle and upper middle-income groups, and there is a growing trend towards product premiumisation.

The sector is open to foreign investments and many states offer subsidies for local manufacturing (like Maharashtra and Karnataka for wines).

From the demand side, said ICRIER, factors such as rapid urbanisation, changing consumer preferences and a sizeable and growing middle-class population with increased purchasing power have contributed towardsgrowth in demand for alcoholic beverages.

The number of people consuming alcohol increased from 21.9 crore in 2005 to 29.3 crore in 2018 and is projected to increase to 38.6 crore by 2030.

The share of the upper-middle income group in alcohol consumption has increased steadily from 7 per cent to 21 per cent and is expected to increase to 44 per cent by 2030.

Alcoholic beverages are among the top three sources of revenue earning across most states.

Yet, said ICRIER, there seems to be a lack of transparency, predictability and clarity in the tax regime to ensure that revenue earning objective is aligned with other objectives of the government like ‘Make in India’ and exports from India.

The governance and pricing models for alcoholic beverages vary widely across the states. The statesthrough their excise policies, control the entire supply chain of alcoholic beverages from manufacturing and distribution to registration and retail.

ICRIER said there are frequent and ad-hoc changes in these policies, creating uncertainty and preventing manufacturers/distillers to plan their investment.

Hence there is need for adopting clear and predictable policies, develop data-driven models and technology interventions.

The government should focus on phased tariff and other duties reduction and Indian companies should beencouraged to export to improve the trade balance. Duty reduction for intermediate products can enhancevalue addition in India and boost domestic manufacturing potential.

This can help India in bringing in more investments into the sector, encourage innovation, improve ease of doing business, increase domestic manufacturing capabilities and enhance exports, said ICRIER.

Tata Motors seeks to raise $1 billion for new EV biz, values it at $7 billion

Source: Hindustantimes, 13 August 2021

Tata Motors, which got shareholders’ approval to separate its passenger vehicle business in March, is in the process of transferring the EV portfolio into a step-down arm in which the proposed investment will be raised.

Tata Motors Ltd, India’s largest vehicle maker, is in talks with bulge bracket buyout funds to raise as much as $1 billion for its new electric vehicles (EV) division, valuing the business at nearly $7 billion, two people directly aware of the discussions said.

Tata Motors, which got shareholders’ approval to separate its passenger vehicle business in March, is in the process of transferring the EV portfolio into a step-down arm in which the proposed investment will be raised.

“The talks are at an early stage, and several global PE firms, including Blackstone Group, TPG Capital and KKR & Co., have been approached,” one of the two people said seeking anonymity. “The company is also in the process of hiring an adviser and is in talks with several global investment banks,” the first person added.

Tata Motors’ focus on EVs also comes amid pressure from investors to back environmentally sustainable businesses.

Tata Motors chairman N. Chandrasekaran announced the funding plan for the EV unit in June at the company’s 76th annual general meeting, where he also announced plans to launch 10 EV models by 2025.

Tata Motors is in the process of hiving off the passenger vehicle business, including the EV division, to a new entity, valuing the business at ₹9,417 crore. According to ratings firm Crisil, the domestic passenger vehicle business, with its marginal presence and high capex needs, has been a drag on the firm. However, the business has been turning around with models such as Tiago, Nexon and Harrier gaining traction. PV sales rose 33% in the nine months through December 2020 from a year ago, helping the company lift its market share to 7.8%. Tata Motors is also exploring the possibility of inducting a strategic partner for new product development.

“The valuation being sought for the EV unit is relatively high, but the firm plans to add a new line of business and products in the division, which it feels, justifies the valuation,” said the second person.

A spokesperson for Tata Motors declined to comment, and so did spokespeople for Blackstone, TPG and KKR.

Indian UHNIs to invest up to $30 billion in country’s tech startups by 2025: Report

Source: Retail Economic Times, 18 June, 2021

NEW DELHI: Indian UHNIs (ultra high net worth individuals) are expected to invest up to $30 billion in tech startups in the country by 2025, reflecting the growing investment opportunity for home-grown tech ventures, a report by 256 Network and Praxis Global Alliance said.

The report titled, ‘Turning Ideas to Gold’, also noted that India could add 95 new tech unicorns to its 56-strong unicorn pool by the same time period.

“India is expected to have approximately 10,000 UHNIs, which will include business leaders, celebrities, NRIs, and digital entrepreneurs with a cumulative wealth of $700 billion by 2024.

“Family offices are being set up as full-service private wealth management services to cater to one, or a small clutch of these ultra-high-net-worth individuals,” the report said.

The report defines UHNIs as those having net worth of more than $30 million.

Currently, India has about 140-plus family offices catering to Indian UHNIs and heavily investing in the Indian startup space, it added. They have been pro-actively involved in over 50 such deals every year since 2015.

Speaking about the opportunity for Indian family offices investing in technology companies, Kris Gopalakrishnan, the co-founder of Infosys and promoter of Pratithi Family Office, said: “Investments in innovative startups have emerged as a lucrative alternate asset class when compared to traditional investments like equity, debt, commodities, and real estate.”

However, it is difficult to get exposure to high-growth portfolios that use innovations to solve real challenges and build large companies in a relatively short period of time, he added.

“Backing such companies requires deep expertise, strong networks, patience, and sufficient capital. Funds run by professionals provide that opportunity to Indian Family Offices and UHNIs,” he said.

Dhruv Sehra, founder of 256 Network, said many family offices prefer to keep their portfolios wedded to conventional asset classes like stocks, real estate, and gold, and do not benefit from the healthy returns generated by VC investments.

“This is because the risk-reward payoff for such investments is not well structured for potential investors. 256 Network aims to bridge this gap through this report,” he added.

256 Network is a peer-built network of decision-makers investing in the global alternatives market.

Sunil Kant Munjal, chairman of Hero Enterprises, said the pandemic has seen the rise of a new entrepreneurial class that is savvier.

“Several startups are launching India-specific solutions while repeat founders are targeting bolder issues. Many are unlocking value through private markets and I am heartened to see multi-generational entrepreneurs viewing this space as a vehicle to create wealth,” he added.

Madhur Singhal, managing partner and CEO of Praxis Global Alliance, said private wealth in India is burgeoning and UHNIs are increasingly turning to venture capital and the private equity ecosystem as an asset class.

“Incumbents, digital entrepreneurs, celebrities, and NRIs are setting up family offices and investing in the Indian startup ecosystem which has generated 14 new unicorns in 2021 so far.

Tabreed, IFC to invest $400 mn for cooling infra in India, Southeast Asia

Source: Business Standard, Mar 03, 2021

Mumbai: UAE’s National Central Cooling Company or Tabreed, and International Finance Corporation (IFC) on Wednesday announced plans to invest USD 400 in India and South-East Asian countries to build cooling service infrastructure.

Tabreed and IFC, a member of the World Bank Group, have formed a joint venture to establish a district energy investment platform in Singapore, as per an official statement.

The JV will invest in district cooling, trigeneration and cooling as a service offering with a primary focus on India followed by other South-East Asian countries, it said.

“Platform to target USD 400 million in capital deployment in India and other South-East Asian countries,” the statement said, without specifying the exact allocation to the countries.

Tabreed has ongoing development activities in India and the platform will build on the same after the establishment of its wholly-owned subsidiary to install energy-efficient end to end cooling as a service offering through an outsourced utility model for real estate developments, new urban masterplans and ongoing redevelopments across target cities.

The government India Cooling Action Plan’ forecasts an eight-fold increase in demand through to 2038 and the commercial real estate sector alone estimated to add 100 million refrigeration tons in capacity during this period, it said.

The cooling as a service market is at a relatively embryonic stage in India and real estate developers make their own individual and varied cooling technology choices, funding Capex from their balance sheets to thereafter work with a fragmented ecosystem of service providers leaving significant headroom, the statement said. “The size and dynamism of India and other South-East Asian countries will keep them at the heart of the global energy system with all roads to a successful global clean energy transition going via India,” Tabreed’s chief executive Bader Saeed Al Lamki said.

PE/VC sector saw investments worth $47.6 billion in 2020

Source: The Hindu Business Line, Jan 28, 2021

Mumbai: The private equity and venture capital (PE/VC) sector recorded investments worth $47.6 billion across 921 deals in 2020, almost at par with the previous year, led by fund-raising by Reliance Group entities. Exits stood at $6 billion across 151 deals with open market exits accounting for 40 per cent of all deals by value.

Had it not been for the PE investments of $17.3 billion in Reliance Group firms, the year under review would have been 36 per cent lower than 2019. In terms of volume, number of deals in 2020 declined by 11 per cent compared to last year (921 deals in 2020 Vs 1,030 deals in 2019), according to a report by Indian Private Equity & Venture Capital Association and EY.

“PE/VC investment activity capped off a tumultuous 2020 on a high, closing out with over $7.1 billion of investments in December, making it the second-highest monthly total in 2020. While the Jio Platforms’ and Reliance Retail’s fund-raising juggernaut rolled on in May-June and September-November respectively, seemingly unaffected by the pandemic, Indian PE-VC investment activity ground to monthly average of less than $1.2 billion during March-June, the lowest ever in the past six years,” Vivek Soni, Partner and National Leader Private Equity Services at EY, said.

“July saw almost $4.1 billion of PE/VC investments (non-RIL entities) and as India continued to fare better than expected on both health and economic parameters, monthly PE/VC investment activity strengthened month-on-month,” he added.

Large deals (greater than $100 million) fell from 109 in 2019 to 66 (excluding RIL Group deals) largely due to the tepid deal-making for one-third of the year.

Infra sector hit

Consequently, while most sectors, barring the ones mentioned above witnessed declines in PE/VC investments, infrastructure sector investments declined the most, from $13.8 billion in 2019 to $5 billion in 2020. PE/VC exits too saw a significant decline of 46 per cent from 2019 levels, reaching a five-year low as pandemic induced lockdowns and the resulting disruptions roiled asset prices, forcing PE/VC investors to postpone stake sales to better times.

One of the biggest reasons for the relative decline in PE/VC investments in 2020 is the under-performance of the infrastructure and real estate sectors, which attracted the highest PE/VC investment in 2019, at $20 billion, accounting for 42 per cent of all PE/VC investments in 2019. In 2020, these sectors have received only $10.2 billion in investments, accounting for just 21 per cent of total PE/VC investments.

As a result, there has been a sharp decline in buyout activity as well, which has recorded a decline of 28 per cent in terms of value and 30 per cent in terms of volume. Infrastructure and real estate sectors accounted for 71 per cent of all buyouts by value in 2019 which has dropped to 61 per cent in 2020.

Exits

In 2020, exits fell by 46 per cent in value terms ($6 billion vs $11.1 billion in 2019) and is the lowest value in six years. In terms of volume, exits declined by 4 per cent compared to 2019 (151 deals in 2020 vs 157 deals in 2019). The decline was mainly due to fewer large deals. Exits via open market were the highest at $2.4 billion (67 deals) in 2020, 47 per cent fell compared to 2019. Exits via initial public offerings (IPOs) were second in line with $1.2 billion recorded across nine IPOs ($247 million across eight IPOs in 2019), which includes the $1 billion SBI Cards partial exit by Carlyle.

Japan’s Kirin to invest $30 million in maker of Indian craft beer Bira

Source: Business Standard, Jan 04, 2021

NEW DELHI/TOKYO (Reuters) – Japan’s beer maker Kirin Holdings will invest $30 million in New Delhi-based B9 Beverages, the companies said on Monday, as it seeks to secure a spot in India’s growing craft beer market amid falling sales at home.

The Japanese brewer will acquire a stake of under 10% in B9, the maker of India’s popular craft beer Bira, a Kirin spokesman and Bira CEO Ankur Jain told Reuters. They declined to give further financial details.

B9 had been in talks with international brewers – including Kirin – and other investors to sell a stake of up to 20% in the company, Reuters reported in August.

The investment would allow Bira, which has posted losses in recent years and has been hit by the COVID-19 pandemic, to break even in the 2022 fiscal year which starts in April 2021, Jain said.

“The companies will be exploring business synergies,” Jain said, adding that the investment would allow Bira to accelerate plans to launch its products in Japan later this year.

He expected the deal to be closed over “the next few days”.

While Bira, launched in 2015, is one of the smallest players in India’s broader beer industry, its craft beer offerings have become increasingly popular in recent years. Bira says it has a 5-10% share of the beer market in cities such as New Delhi, Mumbai and Bengaluru.

Kirin meanwhile has historically shown interest in independent breweries and owns a minority stake in New York’s Brooklyn Brewery.

But its M&A record overseas has been patchy, with the Japanese firm selling its unprofitable Brazilian unit in 2017 to Heineken after losing market share.

Its entry into Myanmar in 2015 has also come under scrutiny amid a probe into its local partner’s connections to the military. Data provider PitchBook estimates Bira was valued at $210 million in 2018. U.S.-based Sequoia Capital holds a roughly 45% stake in the company, while CEO Jain and his family own around 30%.

FDI in non-life insurance sector slips marginally to Rs 509 cr in FY20

Source: Financial Express, Dec 01, 2020

Foreign direct investment (FDI) in the general insurance sector slipped marginally to Rs 509.07 crore in FY 2019-20 from the previous year, latest data by the General Insurance Council (GIC) showed.

In FY2018-19, FDI in the non-life insurance space was recorded at Rs 516.61 crore.

Since the opening up of the insurance market in 2000, the non-life sector attracted a total FDI of Rs 4,721.68 crore as on March 2020. It was Rs 4,212.61 crore at the end of March 2019.

There are 33 general insurance players, including four public sector insurers, six standalone health insurers and two state-owned specialised companies — Export Credit Guarantee Corporation of India and Agriculture Insurance Company of India Limited (AIC). Read the rest of this entry »