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BFSI Sector Trends January 2018
Strictly private and confidential
Equirus Insights
Commentary on key industry trends
1
● RBI tightened its rules around bank loan defaults, seeking to push more large loan defaulters toward bankruptcy courts and abolishing half a dozen existing loan-restructuring mechanisms, in its latest bid to accelerate resolution of the bad loans problem at Indian banks.
● According to India Ratings & Research, Public sector banks may need capital of Rs 2.06 trillion for a credit growth of the 8-9% in the FY2019
● CRISIL report: Vehicle finance business of NBFCs is likely to grow at 15% till FY20
● Monetary Policy Panel Keeps Rates on Hold Citing Inflation Risks, even as it raised its inflation forecasts and reiterated a commitment to maintaining the headline inflation at close to 4 percent.
● Strong signs of revival in credit demand in the second half of the current financial year. Total loans extended by banks amounted to INR 8.6trn as on February 02, 2018, up almost 11% year-on-year, compared with a growth of 5% in the same period a year ago, according to the latest RBI data.
● ChrysCapital in advanced negotiations to invest about Rs 4bn to acquire a 26% stake in Fedbank Financial Services
● IIFL Holdings will demerge its finance, wealth and capital business into three separate entities and list them on bourses in a year- IIFL Finance (loans and mortgages); IIFL Wealth (wealth and asset management) and IIFL Securities (capital markets)
● Private Bank’s and NBFCs exploring strategic options IDFC Bank and Capital First announced merger to form a combined entity of more than INR 800bn AUM
● Public Sector Bank’s raising funds via QIP Bank of Maharashtra, Dena Bank and Vijaya Bank raised funds recently through QIP route. PNB, Union Bank, Syndicate Bank and Andhra Bank are also likely to offer shares via QIP in the coming week or so
● IPOs by Insurance and Asset Management Companies There has been recent interest in both the life Insurance and non life insurance space with the IPO of HDFC Standard Life, New India Assurance,
GIC, SBI Life Insurance, ICICI Prudential and ICICI Lombard After the listing of Reliance Nippon MF, HDFC MF and UTI MF is also likely to hit the IPO market in near term.
● Private Sector Bank’s raising funds via QIP Within Private Sector Banks; Federal Bank, Kotak Bank, DCB Bank, YES Bank and Lakshmi Vilas Bank raised funds recently through the QIP route.
Equirus Insights
Quick takeaways from events related to BFSI space
2
Trends based on deal activity
Source: Equirus Analysis
Recent Developments in BFSI Space
News Run
3
India seeing huge inflows into financial savings
India is seeing a huge surge in the net inflows into financial savings and has reached nearly INR 28 lakh crore in the last 18 months - an amount equivalent to entire GDP of countries like Thailand, ICICI Bank CEO Chanda Kochhar has said. She also said the flow into financial savings has surged significantly since the demonetisation exercise of November 2016. On the GST and other reforms undertaken in India, she said since 2014, the government has focused on several structural reforms which are strengthening the economy. The financial services sector, including banks, insurance companies and mutual funds, are the biggest beneficiaries of the formalisation of savings, she added. Economic Times, January 25, 2018
Gujarat: Six Indian and four foreign banks to set shop in GIFT City
Source: Equirus research
Industry News
4
Bank recapitalisation: 6 weak PSU banks to get INR 7,577 crore from government
The finance ministry has approved proposal for infusion of INR 7,577 crore in 6 weak public sector banks (PSBs) as part of the recapitalisation plan to bolster capital adequacy ratio. All these banks, which got capital support, are under prompt corrective action of the Reserve Bank of India. The funding comes under Indradhanus plan of the government which promised Rs 70,000 crore over period of four years ending March 2019. Business Today, January 03, 2018
Microfinance sector looks to shake off demonetisation blues by March
The microfinance sector may be in the last leg of the demonetisation-led sufferings and looks to grow double digit next quarter, captains of the industry said. The microfinance companies, which had collectively written off about INR 5,000 crore of loans in the first two quarters, are expecting sizeable recovery from these accounts, said Ratna Vishwanathan, former chief executive at Microfinance Institutions Network, the self-regulator for the sector.
Economic Times, January 18, 2018
Six Indian banks and four foreign banks are on the verge of opening offices in Gujarat’s GIFT City, a senior official said on Wednesday. GIFT city managing director and group CEO Ajay Pandey said that they expect foreign banks to start operations. He informed that 6 to 7 Indian banks are in the pipeline and four foreign banks are on the verge of opening offices this year. Currently, 11 domestic lenders including SBI, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, BoI have opened their businesses at GIFT (Gujarat International Finance Tec-City).
Economic Times, January 17, 2018
Source: Equirus research
Company News
5
Leadership changes likely in some public sector banks
The government is considering a comprehensive reshuffle of top executives at state-run lenders, days after it unveiled a reform agenda linked to its recapitalisation plan. A senior finance ministry official confirmed that managing directors and chief executives of about four public sector banks (PSBs) may be moved as their performance has not been up to scratch. This is meant to send a signal to others. Economic Times, January 29, 2018
SBI receives board approval to divest 4.40% stake in CCIL
The Executive Committee of Central Board (ECCB) in its meeting held today has accorded its approval for divestment of 22 lakh equity shares, constituting 4.40 per cent of our stake, in Clearing Corporation of India (CCIL). Economic Times, January 31, 2018
IDFC Bank, Capital First announce merger Read more at: //economictimes.indiatimes.com/articleshow/62485644.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst IDFC Bank and Capital First announced merger between the two to form a combined entity with assets under management of INR 88,000 crore, branch network of 194 and customer base of over 5 million. As per the agreement, IDFC Bank will issue 139 shares for every 10 shares of Capital First. This announcement is pursuant to IDFC Bank's stated strategy of "retailising" its business to complete their transformation from a dedicated infrastructure financier to a well-diversified universal bank, and in line with Capital First’s stated intention and strategy to convert to a universal bank.
Economic Times, January 13, 2018
ChrysCapital may infuse INR 400 crore in Federal Bank’s NBFC arm
Home-grown private equity fund ChrysCapital is in advanced negotiations to invest about INR 400 crore to acquire a 26% stake in Fedbank Financial Services, a wholly-owned unit of Federal Bank, a development which signals a continuation of last year’s trend of private equity deluge into financial services companies in India. The transaction is expected to conclude within a few weeks and the proceeds will be used for the expansion of Fedbank Financial Services, people close to the deal told ET.
Economic Times, January 30, 2018
BFSI Deal Activity
YTDFY2018
6
Private Equity and M&A deals
Private equity and M&A deals in December 2017
# of deals vis-à-vis last year1 Transaction value vis-à-vis last year1 (US$mn)
7
45 54
45
34
20 17 12 14
0
10
20
30
40
50
60
FY15 FY16 FY17 YTDFY18
PE M&A
1,968
3,516
1,307
6,189
3,705
1,928
398
2,546
0
2,000
4,000
6,000
8,000
FY15 FY16 FY17 YTDFY18
PE M&A
Date Target Company Deal Type Acquirer Company Deal Size (US$mn)
13-Jan-18 Capital First M&A IDFC Bank Ltd. 1,460.0
24-Jan-18 NeoGrowth Credit Pvt. Ltd. VC Aspada Fund I, Accion Frontier Inclusion Fund LP, Leapfrog Investments Ltd. 47.0
3-Jan-18 Ess Kay Fincorp Ltd. PE Norwest Venture Partners, Baring PE, Evolvence India Advisors Inc. 32.0
13-Jan-18 Housing Development Finance Corporation Ltd. PE GIC Pvt. Ltd., Azim Premji Foundation, PI Opportunities Fund I, KKR India Advisors Pvt. Ltd., Carmignac Gestion S.A., OMERS Administration Corporation
1,743.0
1 PE and M&A deals covered have deal size of at least US$ 2.0mn. Excludes Payments space and related companies
Capital Market activity
Latest capital market deals in YTDFY18
Date Company Name Type of Issue Sub-sector Issue size (US$mn) Times Subscribed 12-Dec-17 Syndicate Bank QIP Bank 174 NA 11-Dec-17 Punjab National Bank QIP Bank 758 NA 07-Dec-17 Union Bank of India QIP Bank 303 NA 04-Dec-17 Bank Of Maharashtra QIP Bank 48 NA 30-Nov-17 Mahindra & Mahindra Financial Services QIP NBFC 160 NA 17-Nov-17 HDFC Standard Life Insurance Ltd IPO Insurance 1,317 3.8x 15-Nov-17 Edelweiss Financial Services Ltd QIP Diversified 231 NA 13-Nov-17 New India Assurance Company IPO Insurance 1,434 1.2x 9-Nov-17 Muthoot Capital services QIP NBFC 25 NA 6-Nov-17 Reliance Nippon Life Asset Management IPO Insurance 234 57.3x 18-Oct-17 MAS Financial Services IPO Diversified 70 91.2x 10-Oct-17 Dena Bank QIP Bank 61 NA 4-Oct-17 Satin Creditcare Network Ltd. QIP MFI 23 NA 3-Oct-17 General Insurance Corporation IPO Insurance 1,693 1.4x 3-Oct-17 SBI Life Insurance Company IPO Insurance 1,306 3.6x 27-Sept-17 ICICI Lombard General Insurance Company IPO Insurance 888 3.0x 5-Sep-17 Bajaj Finance Limited QIP Diversified Financial ServIces 701 NA 28-Aug-17 Vijaya Bank QIP Bank 109 NA 10-July-17 AU Small Finance Bank Ltd. IPO SFB 297 53.6x 30-June-17 Central Depository Services (India) Ltd. IPO Diversified Financial ServIces 79 119.4x 21-June-17 Federal Bank India Ltd. QIP Bank 378 NA 05-June-17 State Bank Of India QIP Bank 2,272 NA 19-May-17 Housing and Urban Development Corporation Ltd. IPO NBFC 183 79.3x 11-May-17 Kotak Mahindra Bank Ltd. QIP Bank 879 NA 24-Apr-17 DCB Bank QIP Bank 61 NA
8
Converted at 1US$ = INR 66
Latest capital market deals in YTDFY18
Capital Market activity
Capital raised and # of deals vis-à-vis last year
Segment-wise breakup of capital raised
9
2,075 1,493 2,997
13,685
12
5
11
25
-3
1
5
9
13
17
21
25
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
FY15 FY16 FY17 YTDFY18
Capital raised (US$mn) # of deals US$mn
6,873
13,685
5,043
297 185 23 183 1,081
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000
10,000 11,000 12,000 13,000 14,000 15,000
Insurance Bank SFB NBFC MFI HFC Diversified Total
Capital raised in YTDFY18 (US$mn) # of deals
1 1 10 2 6 4 US$mn 25 1
Converted at 1US$ = INR 66
Key PE and M&A deals in BFSI
10
Private equity deals
11
Date Target Deal type Buyer/ Investor Deal Value (US$mn)
10-Nov-17 Axis Bank PE American Funds Distributors, Inc., Bain Capital LLC, Life Insurance Corp. of India, The Capital Group Companies Inc. 1,784.1
8-Nov-17 Ujjivan Financial Services Ltd. PE Creador III LP 33.2
29-Aug-17 RBL Bank Ltd. PE Norges Bank Investment Management 30.9
07-Jul-17 RBL Bank Ltd. Public Equity ABG Capital, CDC Group, HDFC Life, ICICI Lombard, Multiples, Steadview 258.8
14-Apr-17 Capital Small Finance Bank Ltd. PE ICICI Prudential Life Insurance Company Ltd., HDFC Standard Life Insurance Co. Ltd., Pi Ventures Investment Trust 10.0
02-Mar-17 Fincare Business Services Ltd. (part of Fincare platform) PE
Kotak Mahindra Old Mutual Life Insurance Ltd., SIDBI Venture Capital Ltd., Leapfrog Investments Ltd., Tata Opportunities Fund, TA Associates Advisory Pvt. Ltd., Edelweiss Tokio Life Insurance Co. Ltd., ECap Equities Ltd., Jhelum Investment Fund, Tata Capital Financial Services Ltd., Religare Health Insurance Company Ltd.
74.9
30-Sep-16 Utkarsh Micro Finance Ltd. VC
RBL Bank Ltd., Shriram Life Insurance Co. Ltd., ICICI Prudential Life Insurance Company Ltd., HDFC ERGO General Insurance Company Ltd., HDFC Standard Life Insurance Co. Ltd., Small Industries Development Bank of India, Faering Capital Pvt. Ltd., Arpwood Capital Pvt. Ltd.
59.2
29-Sep-16 Kotak Mahindra Bank Ltd. Public Equity CPP Investment Board 189.5
30-Jun-16 ICICI Bank Ltd. Public Equity Temasek Holdings Advisors India Pvt. Ltd. 18.4
Date Target Deal type Buyer/ Investor Deal Value (US$mn)
16-Oct-17 Mahindra Insurance Brokers Ltd. PE Leapfrog Financial Inclusion Fund 10.0
27-Jun-17 Easypolicy Insurance PE Unilazer Venture NA
21-Jun-16 Assets Care and Reconstruction Enterprise PE Capital Optima, IFCI Ltd., Punjab National Bank, SSG Capital Management HK Ltd. 7.4
27-May-17 ICICI Lombard General Insurance Company Ltd. PE Warburg Pincus LLC, Clermont Group, IIFL Special Opportunities Fund I 382.6
18-Feb-16 Max Financial Services Ltd. Public Equity KKR Asian Fund II LP 138.8
Insurance and ARCs2
Banks and SFBs1
1 Small Finance Banks 2 Asset Restructuring Companies
Date Target Deal type Buyer/ Investor Deal Value (US$mn)
13-Jan-18 Housing Development Finance Corporation Ltd. Public Equity GIC Pvt. Ltd., Azim Premji Foundation, PI Opportunities Fund I, KKR India Advisors
Pvt. Ltd., Carmignac Gestion S.A., OMERS Administration Corporation 1,743.0
28-Nov-17 PNB Housing Finance Ltd. PE General Atlantic Pvt. Ltd. 51.9 30-Nov-17 Arohan Financial Services Pvt. Ltd. PE Maj Invest Financial Inclusion Fund II K/S 3.4 24-Nov-17 Satin Creditcare Network Ltd. PE NMI Frontier Fund, IndusInd Bank Ltd. 22.4 30-Oct-17 Grameen Koota Financial Services Pvt. Ltd. PE Creation Investments Social Ventures Fund II 16.9 20-Sep-17 Save Solutions Pvt. Ltd. PE AGRIF Fund 6.0 11-Sep-17 Janalakshmi Financial Services Pvt. Ltd. PE Tree Line Asia, QRG Enterprises, Morgan Stanley PE, TPG Asia Buyout, Bajaj Allianz, 161.0 19-Jul-17 Annapurna Microfinance Ltd. PE Belgian Investment Company, Oikocredit, Bamboo Finance SA 9.5 8-Jul-17 Satin Creditcare Network Ltd. PE Capital First Ltd. 5.4 10-Mar-17 Can Fin Homes Ltd. Public Equity GIC Pte. Ltd. 112.9 10-Mar-17 Satin Creditcare Network Ltd. PE Asian Development Bank 9.6 03-Mar-17 Home First Finance Company India PE True North Managers LLP 100.0
22-Dec-16 Arohan Financial Services Pvt. Ltd. PE Maj Invest Holding A/S, Tano India Private Equity Fund II, Aavishkaar Venture Management Services Pvt. Ltd., Swaminathan S. Anklesaria Aiyar 22.8
13-Oct-16 Sonata Finance Pvt. Ltd. PE Proparco SA, Triodos Microfinance Fund 12.6 08-Sep-16 Ummeed Housing Finance Pvt. Ltd. VC Lok Capital Growth Fund, Anurag Vijay Bhargava 3.4 31-Aug-16 Aptus Value Housing Finance India Ltd. PE Westbridge Crossover Fund LLC, India Financial Inclusion Fund 40.2
25-Jul-16 Fusion Microfinance Pvt. Ltd. VC Oikocredit International, Belgian Investment Company for Developing Countries, Creation Investments Capital Management LLC,GAWA Capital Partners SL 24.0
Private equity deals
12
MFIs1 and HFCs2
Exchanges
Date Target Deal type Buyer/ Investor Deal Value (US$mn)
22-Nov-16 National Stock Exchange of India Ltd. PE Legatum Ventures 30.0
23-Jun-16 NCD Exchange Ltd. PE NA 8.1
31-Mar-16 National Stock Exchange of India Ltd. PE ChrysCapital Investment Advisors India Pvt. Ltd., Life Insurance Corp. of India, Ward Ferry Management Ltd., ICICI Lombard General Insurance Company Ltd. 194.3
1 Micro Finance Companies 2 Housing Finance Companies
Private equity deals
13
NBFCs1
Date Target Deal type Buyer/ Investor Deal Value (US$mn) 24-Jan-18 NeoGrowth Credit Pvt. Ltd. VC Aspada Fund I, Accion Frontier Inclusion Fund LP, Leapfrog Investments Ltd. 47.0
3-Jan-18 Ess Kay Fincorp Ltd. PE Norwest Venture Partners, Baring PE, Evolvence India Advisors Inc. 32.0
12-Oct-17 Thirumeni Finance Pvt. Ltd. PE Michael and Susan Dell Foundation 3.0
9-Oct-17 Satya Microcapital Ltd. PE Dia Vikas Capital Pvt. Ltd. 2.4
22-Sep-17 Shiksha Financial Services India Pvt. Ltd. PE Michael and Susan Dell Foundation 2.5 2-Sep-17 Finova Capital Pvt. Ltd. PE Sequoia Capital India V Ltd. 2.5
9-Aug-17 Five Star Business Finance Ltd. PE Morgan Stanley PE Asia, Matrix Partners, Sequoia, Norwest Venture Partners 52.2
29-Jun-17 Aditya Birla Capital Ltd. PE PI Opportunities Fund I 109.0 22-Mar-17 IFMR Holdings Pvt. Ltd. PE Leapfrog Investments Ltd., ACCION Gateway Fund 24.2
22-Mar-17 Incred Management and Technology Services Pvt. Ltd. VC Paragon Partners Growth Fund I 3.8
07-Feb-17 IIFL Holdings Ltd. Public Equity Fairfax India Holdings Corporation 75.4
28-Dec-16 Hinduja Leyland Finance Ltd. PE Everstone Capital Partners II LLC 5.2
11-Nov-16 Capital First Ltd. Public Equity GIC Pte. Ltd. 51.1
21-Oct-16 Shriram City Union Finance Ltd. Public Equity India Whizdom Fund 6.0
13-Oct-16 Aye Finance Pvt. Ltd. VC LGT Impact Ventures, ACCION Technical Advisors India, SAIF Partners India V Ltd. 10.5 23-Sep-16 Kogta Financial India Ltd. VC IIFL Seed Ventures Fund I 3.9 15-Sep-16 Hero FinCorp Ltd. PE ChrysCapital Investment Advisors India Pvt. Ltd., Credit Suisse Group AG 104.7 01-Sep-16 Indian School Finance Company Pvt. Ltd. VC Gray Ghost Ventures, Gray Matters Capital Inc. 6.0
22-Aug-16 Incred Management and Technology Services Pvt. Ltd. VC Alpha Capital Advisors Pvt. Ltd., IDFC Private Equity Fund IV, Ranjan Ramdas Pai,
Gaurav Dalmia, Anshuman Jain 75.0
10-Jun-16 Five Star Business Finance Ltd. PE Morgan Stanley Private Equity Asia 17.1 29-Mar-16 Jain Sons Finlease Ltd. VC Triodos Investment Management BV, India Impact Economy Innovation Fund 7.6
1 Non-Banking Finance Companies
Private equity deals
14
Financial Technologies
Date Target Deal type Buyer/ Investor Deal Value (US$mn)
13-Oct-17 ETechAces Marketing and Consulting (Policybazaar) PE Info Edge, Tiger Global Management, Temasek,, True North Managers, IDG
Ventures, Wellington Management, PremjiInvest 79.0
10-Aug-17 Zen Lefin Pvt. Ltd. VC Sequoia Capital, Creation Investments, Saif Partners, Ribbit Capital 45.7
28-June-17 Bestdealfinance.com Pvt. Ltd. VC Kalaari Capital Partners 3.0
31-Jul-17 One Mobikwik Systems Pvt. Ltd. VC Bajaj Finance Ltd. 35.00
1-Jul-17 Innoviti Payment Solutions Pvt. Ltd. PE Catamaran Investments Pvt. Ltd., Bessemer Venture Partners LP, The SBI FMO Fund 18.6
29-Jun-17 Paradime Technologies Pvt. Ltd. VC Sequoia Capital India V Ltd., KAE Capital Fund II 3.2
27-June-17 EQX Analytics (Stasheasy) VC Snow Leopard Ventures, Growx Venture, Alto Partners 5.0
22-Jun-17 Loantap Financial Technologies Pvt. Ltd. VC KAE Capital Management Pvt. Ltd., India Quotient Fund II, IFMR Capital Finance Pvt. Ltd., MAS Financial Services Ltd., Muthoot Finance Ltd.
4.0
14-Jun-17 MWYN Tech Pvt. Ltd. VC Sequoia Capital, NEA , Prime Venture Partners 12.3
30-May-17 Niyogin Fintech Ltd. PE Ward Ferry Management Ltd., Alchemy Capital Management , Alchemy India Long Term Fund Ltd., Vikasa India EIF I
36.3
23-May-17 Acko Technology and Services Pvt. Ltd. VC Saif Partners, Accel, Catamaran Investments Pvt. Ltd.,Kris Gopalakrishnan, Scuba Rae Telidevara, Rajeev Gupta, Atul Nishar, Nagavara Ramarao Narayana Murthy,
30.0
31-Mar-17 Aeries Financial Technologies Pvt. Ltd. VC Florintree India Advantage Fund, Mathew Cyriac 3.9
20-Feb-17 Creditmantri Finserve Pvt. Ltd. VC Elevar Advisors Pvt. Ltd., IDG Ventures India Fund II LLC, Newid Capital, Accion Frontier Inclusion Fund LP
7.6
31-Jan-17 Centrumdirect Ltd. PE Jacob Ballas Capital India Pvt. Ltd., NYLIM Jacob Ballas India Fund III LLC 19.1
Others
Date Target Deal type Buyer/ Investor Deal Value (US$mn) 14-Dec-17 Religare Enterprises Ltd. PE Bay Capital Partners Ltd. ~2.0 16-Aug-17 Reliance Nippon Life AMC PE IIFL Special Opportunities Fund 60.8 4-Aug-17 Karvy Computershare Ltd. PE General Atlantic 240 31-Dec-16 Aavishkaar-Intellecap Holdings PE Shell Foundation, Triodos Microfinance Fund 25.0
M&A deals
15
Banks Deals across segment in BFSI space1
1 Includes only financial services aggregators and fintech lending companies
Date Type Target Buyer/ Investor M&A type Deal Value (US$ mn)
13-Jan-18 NBFC Capital First IDFC Bank Ltd. Domestic 1,460.0
16-Dec-17 Diversified Fullerton Securities and Wealth Advisors Ltd. BlueBlood Ventures Ltd. Domestic 35.1
08-Nov-17 NBFC Swadhaar FinServe Pvt. Ltd. RBL Bank Ltd. Domestic NA
17-Aug-17 Diversified Goldman Securities Pvt. Ltd. Ebix Software India Pvt. Ltd. Domestic 7.4
17-Aug-17 Insurance CignaTTK Health Insurance Company Cigna Croporation Inbound 17.6
7-Jul-17 Insurance IFFCO Tokio General Insurance Tokio Marine Asia Pvt Ltd. Domestic 389.8
30-Jun-17 Exchange Clearing Corporation of India Kotak Mahindra Mutual Life Domestic 11.6
29-Jun-17 Credit Rating CARE Ratings Ltd. Crisil Ltd. Domestic 66.0
23-May-17 Fintech ItzCash Card Ltd. Ebix Inc. Inbound 120.0
10-May-17 Fintech Kreditech Holding PayU Corporate Domestic 120.5
27-Apr-17 Insurance Kotak Mahindra Old Mutual Life Insurance Kotak Mahindra Bank Domestic 201
07-Apr-17 Diversified Indiabulls Ventures Ltd. Clermont Consultants CH SA Inbound 103.8
22-Mar-17 Diversified Transunion CIBIL Ltd. TransUnion LLC Inbound 29.2
20-Oct-16 HFC India Home Loan Ltd. JM Financial Ltd. Domestic 2.0
29-Sep-16 Diversified Transunion CIBIL Ltd. TransUnion LLC Inbound 12.0
16-Sep-16 ARC Assets Care and Reconstruction Enterprise Ltd. Axis Bank Ltd. Domestic 3.4
12-Sep-16 Exchanges National Stock Exchange of India Ltd. NA Inbound 50.4
02-Sep-16 NBFC Swadhaar FinServe Pvt. Ltd. RBL Bank Ltd. Domestic 3.6
29-Jul-16 NBFC Fino Paytech Ltd. Bharat Petroleum Corp, ICICI Lombard, ICICI Prudential Domestic 59.6
14-Jul-16 Diversified Terrapin 3 Acquisition Corporation Yatra Online Inc. Outbound 115.0
30-Jun-16 NBFC Xchange Leasing India Pvt. Ltd. Uber Technologies Inc. Inbound 29.8
21-Jun-16 Insurance Star Union Dai-ichi Life Insurance Co. Ltd. Dai-ichi Life Insurance Company Ltd. Inbound 80.0
50
100
150
200
250
300
350
400
450
Oct-14 Dec-14 Mar-15 May-15 Aug-15 Nov-15 Jan-16 Apr-16 Jul-16 Sep-16 Dec-16 Feb-17 May-17 Aug-17 Oct-17 Jan-18
Indices movement vis-à-vis Sensex
Micro-Finance: Best performing BFSI segment since December 2014 and has outperformed other segments as well as broader markets
Indices movement vis-a-vis Sensex
HFC
16
Companies considered for various index segments are as under: For indexes, the company classification is same as mentioned in the subsequent slides covering trading comparable
Public Banks
Bank Nifty SFB
NBFC
IFCs
Diversified
Sensex
MFI
Private Banks
Source: Bloomberg
Nifty
Public Sector Banks
Trading Comparables
17
Company
Networth FY17
Mcap (US$mn) (US$mn) PAT (US$mn) P/E P/B ROAE % ROA % State Bank of India 37,504 33,969 38 NM 1.1x 0.1% 0.0% Bank of Baroda 5,797 6,736 284 20.4x 0.9x 4.2% 0.3% Punjab National Bank 5,030 6,873 96 52.3x 0.7x 1.4% 0.1% IDBI Bank Ltd 2,874 3,638 (784) NM 0.8x NM (1.4%) Canara Bank 2,868 5,425 212 13.5x 0.5x 4.0% 0.2% Indian Bank 2,590 2,727 227 11.4x 1.0x 8.6% 0.7% Bank of India 2,459 5,260 (230) NM 0.5x NM (0.2%) Central Bank of India 2,124 2,848 (385) NM 0.7x NM (0.8%) Union Bank of India 1,603 3,771 90 17.9x 0.4x 2.4% 0.1% Vijaya Bank 1,011 1,275 117 8.6x 0.8x 9.5% 0.5% Syndicate Bank 1,003 2,458 81 12.4x 0.4x 3.4% 0.2% Indian Overseas Bank 932 2,150 (534) NM 0.4x NM (1.3%) UCO Bank 838 1,995 (289) NM 0.4x NM (0.8%) Allahabad Bank 676 2,352 (44) NM 0.3x NM (0.1%) Andhra Bank 641 1,778 27 23.5x 0.4x 1.6% 0.1% Corp Bank 612 1,994 88 6.9x 0.3x 4.7% 0.2% Jammu & Kashmir Bank Ltd/The 607 888 (255) NM 0.7x NM (2.0%) Oriental Bank of Commerce 565 2,209 (171) NM 0.3x NM (0.4%) Bank of Maharashtra 406 1,168 (212) NM 0.3x NM (0.8%) Dena Bank 388 1,202 (135) NM 0.3x NM (0.7%) United Bank of India 368 1,211 34 10.7x 0.3x 3.1% 0.2% Punjab & Sind Bank 255 961 31 8.1x 0.3x 3.3% 0.2%
Mean 16.8x 0.5x 3.9% (0.3%)
Median 12.4x 0.4x 3.4% 0.0%
Source: Bloomberg
Private Sector Banks
Trading Comparables
18
Source: Bloomberg
Company Networth FY17
Mcap (US$mn) (US$mn) PAT (US$mn) P/E P/B ROAE % ROA % HDFC Bank Ltd 76,185 14,353 2,385 31.9x 5.3x 18.4% 1.7%
Standard Chartered PLC 38,184 45,481 270 NM 0.8x NA NA
ICICI Bank Ltd 32,995 16,360 1,593 20.7x 2.0x 10.3% 1.0%
Kotak Mahindra Bank Ltd 30,921 6,019 772 40.0x 5.1x 13.8% 1.8%
Axis Bank Ltd 21,833 8,816 618 35.3x 2.5x 7.2% 0.6%
IndusInd Bank Ltd 15,760 3,228 448 35.1x 4.9x 15.0% 1.6%
Yes Bank Ltd 11,577 3,446 522 22.2x 3.4x 18.7% 1.6%
RBL Bank Ltd 3,137 678 70 45.0x 4.6x 12.2% 0.9%
Federal Bank Ltd 2,911 1,400 136 21.5x 2.1x 10.2% 0.8%
IDFC Bank Ltd 2,825 2,295 159 17.7x 1.2x 7.2% 0.9%
City Union Bank Ltd 1,733 558 79 22.0x 3.1x 15.2% 1.4%
Karur Vysya Bank Ltd/The 1,272 787 95 13.4x 1.6x 12.6% 1.0%
Karnataka Bank Ltd/The 797 804 71 11.3x 1.0x 10.2% 0.7%
DCB Bank Ltd 798 345 31 25.6x 2.3x 10.0% 0.8%
South Indian Bank Ltd/The 768 758 61 12.5x 1.0x 9.0% 0.5%
Lakshmi Vilas Bank Ltd/The 491 334 40 12.3x 1.5x 13.1% 0.7%
Dhanlaxmi Bank Ltd 98 102 2 50.7x 1.0x 2.1% 0.1%
Mean 26.1x 2.6x 11.6% 1.0% Median 22.1x 2.1x 11.2% 0.9%
Trading Comparables
Diversified Financials - NBFC/WM/Cap. Mkt.
Infrastructure Finance Institutions
Company
Networth FY17
Mcap (US$mn) (US$mn) PAT (US$mn) P/E P/B ROAE % ROA % IIFL Holdings Ltd 3,867 685 107 36.0x 5.6x 17.7% 2.4% Edelweiss Financial Services Ltd 3,772 677 95 39.6x 5.6x 15.2% 1.5% Motilal Oswal Financial Services Ltd 2,597 279 56 46.1x 9.3x 22.3% 5.3% JM Financial Ltd 2,046 521 74 27.8x 3.9x 15.1% 3.4% Reliance Capital Ltd 1,907 2,398 170 11.2x 0.8x 7.4% 1.5% Centrum Capital Ltd 427 52 5 91.0x 8.2x 9.2% 2.9% Geojit Financial Services Ltd 357 80 9 40.8x 4.5x 11.2% 7.3% Religare Enterprises Ltd 160 431 (27) NM 0.4x NM (0.7%)
Mean 41.8x 4.8x 14.0% 3.0%
Median 39.6x 5.0x 15.1% 2.7%
Company Networth FY17
Mcap (US$mn) (US$mn) PAT (US$mn) P/E P/B ROAE % ROA % Power Finance Corp Ltd 4,482 5,762 350 12.8x 0.8x 6.5% 0.9% Rural Electrification Corp Ltd 4,416 5,265 987 4.5x 0.8x 20.2% 3.0% IDFC Ltd 1,296 1,692 109 11.9x 0.8x 6.7% 0.7% Srei Infrastructure Finance Ltd 653 667 38 17.2x 1.0x 6.2% 0.8% IFCI Ltd 602 1,116 (59) NM 0.5x NM (1.0%) PTC India Financial Services Ltd 331 378 54 6.1x 0.9x 16.6% 3.5% Tourism Finance Corp of India Ltd 198 87 11 18.0x 2.3x 13.2% 4.3% Mean 11.7x 1.0x 11.6% 1.7% Median 12.3x 0.8x 9.9% 0.9%
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Source: Bloomberg
NBFCs
Source: Bloomberg
Trading Comparables
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Company
Networth FY17
Mcap (US$mn) (US$mn) PAT (US$mn) P/E P/B ROAE % ROA % Bajaj Finance Ltd 15,075 1,501 287 52.5x 10.0x 21.6% 3.3% Shriram Transport Finance Co Ltd 4,836 1,772 198 24.4x 2.7x 11.8% 1.8% L&T Finance Holdings Ltd 4,730 1,424 163 29.0x 3.3x 11.9% 1.5% Mahindra & Mahindra Financial Services Ltd 4,394 1,088 80 54.9x 4.0x 7.6% 1.0% Cholamandalam Investment and Finance Co Ltd 3,402 676 112 30.2x 5.0x 18.0% 2.5% Sundaram Finance Ltd 2,908 753 107 27.2x 3.9x 15.2% 2.3% Muthoot Finance Ltd 2,569 1,022 188 13.7x 2.5x 19.7% 4.0% Shriram City Union Finance Ltd 2,101 811 90 23.2x 2.6x 11.8% 2.4% Manappuram Finance Ltd 1,439 526 118 12.2x 2.7x 24.7% 5.4% Capital First Ltd 1,063 360 37 28.5x 3.0x 11.9% 1.5% Magma Fincorp Ltd 623 340 3 NM 1.8x 0.9% 0.1% Capri Global Capital Ltd 297 181 9 32.7x 1.6x 5.1% 3.5% Capital Trust Ltd/India 122 34 6 20.7x 3.5x 19.9% 8.8%
Mean 29.1x 3.6x 13.9% 2.9%
Median 27.8x 3.0x 11.9% 2.4%
Small Finance Banks
Company Networth FY17
Mcap (US$mn) (US$mn) PAT (US$mn) P/E P/B ROAE % ROA %
AU Small Finance Bank Ltd 2,634 158 132 20.0x 8.4x 56.0% 10.5%
Equitas Holdings Ltd/India 782 210 25 31.4x 2.2x 8.9% 2.0% Ujjivan Financial Services Ltd 681 187 32 21.0x 2.5x 14.1% 2.9% Mean 24.1x 4.4x 26.3% 5.1% Median 21.0x 2.5x 14.1% 2.9%
Source: Bloomberg
Housing Finance Companies
Micro Finance Companies
Trading Comparables
Company Networth FY17
Mcap (US$mn) (US$mn) PAT (US$mn) P/E P/B ROAE % ROA % Housing Development Finance Corp Ltd 45,582 9,393 1,728 26.4x 4.9x 19.9% 2.5% Indiabulls Housing Finance Ltd 8,741 1,896 455 19.2x 4.6x 25.5% 3.2% LIC Housing Finance Ltd 4,152 1,745 304 13.7x 2.4x 19.1% 1.4% PNB Housing Finance Ltd 3,149 872 82 38.4x 3.6x 13.6% 1.4% GRUH Finance Ltd 2,982 174 46 64.3x 17.1x 30.4% 2.4% Dewan Housing Finance Corp Ltd 2,693 1,209 439 6.1x 2.2x 42.8% 3.5% Can Fin Homes Ltd 1,069 168 37 29.1x 6.3x 24.1% 1.9% Repco Home Finance Ltd 545 180 29 18.6x 3.0x 17.8% 2.2% GIC Housing Finance Ltd 347 131 23 15.0x 2.6x 18.8% 1.7% Mean 25.6x 5.2x 23.5% 2.3% Median 19.2x 3.6x 19.9% 2.2%
Company Networth FY17
Mcap (US$mn) (US$mn) PAT (US$mn) P/E P/B ROAE % ROA % Bharat Financial Inclusion Ltd 2,198 383 45 48.5x 5.7x 15.1% 3.3% Satin Creditcare Network Ltd 342 104 4 87.9x 3.3x 5.0% 0.6% Mean 68.2x 4.5x 10.1% 2.0% Median 68.2x 4.5x 10.1% 2.0%
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Equirus Group
BFSI Credentials
22
BFSI credentials
NBFC’s and Banks
Experience of transactions across all segments of Financial Services
23
DCB Bank
Advisors for stake acquisition in Annapurna Microfinance
March 2016
Electronica Finance Pvt. Ltd.
Sale of SME Portfolio
August 2017 & March 2017
INR 270mn
ESAF Microfinance & Investments Pvt. Ltd.
Portfolio Sale of Micro finance to Bank of India
March 2017
Kogta Financial (India) Ltd.
Term Loan Financing & PE funding by IIFL
March 2017 & October 2016
Acquisition of M3 Global Finance & subsequent fund raising in
M3 Global Finance
February 2017 & August 2016
Equitas Holdings Ltd.
Block transactions for sale of stake by Caspian Impact Investment
April 2017
Niyogin Fintech Ltd.
Preferential allotment of INR 2,350mn
May 2017
MAS Financial Services Ltd.
Direct Assignment of Asset Based Portfolio
June 2017, December & August 2016
Altico Capital India Pvt. Ltd.
Fund raise &Term Loan Raising
Sept & June 2017
Manapuram Finance
Sale of CV portfolio to Bank of India
July 2017
Bank of Maharashtra Ltd.
QIP of INR 3,135mn
December 2017 Lead Manager to the Issue
Chokhani Securities Pvt. Ltd. (CSL)
Advisor for Acquisition & Open Offer of CSL plus Fund raising in CSL
December 2017
Syndicate Bank Limited
QIP of INR 11,508mn
Lead Manager to the Issue December 2017
Arohan Financial Services Pvt. Ltd.
Secondary stake sale of Caspian’s in the Company
July 2017
Ujjivan Financial Services
Block deal transaction for sale of stake by Caspian Impact
Investment
January 2018
BFSI credentials (Cont’d)
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Exchanges Asset Management
NMCE
Equity Placement to Bajaj Holdings and Investment Ltd.
October 2010
L&T Finance Ltd.
Acquisition of DBS Cholamandalam Asset Management Ltd.
September 2009
Brokerages
Way2Wealth
Acquisition of Techno Shares & Stocks
October 2011
Sharekhan
Equity Placement to Barings, CVCI, IDFC & Others
February 2008
L&T Finance Holdings Ltd.
Co-Bookrunning Lead Manager for IPO
August 2011
NBFC’s and Banks (Cont’d)
Suryoday
Sole Advisor for Debt Financing
June 2015
L&T Finance Holdings
Acquisition of Family Credit from Societe Generale
December 2012
Magma Fincorp Ltd.
Direct Assignment of Vehicle Loan Portfolio
June, April & February 2015
L&T Finance Holdings Ltd.
Lead Brokers for issuance of Non-Convertible Debentures
August 2009
Reliance Capital
Sole Advisor for Direct Assignment of Loan against
Property Portfolio
June 2015
Payments
Prizm Payment Services
Investment by Sequoia Capital
April 2013
DCB Bank
Follow on Preferential allotment to Tano Capital, TVS Capital &
Wolfensohn
November and March 2012
Karvy Financial Services Ltd.
Term Loan Financing
September, July & March 2015
Banks and NBFCs (Cont’d)
Au Financiers (India) Ltd.
Direct Assignment of MSME Portfolio
November 2015
Fullteron India Ltd.
Direct Assignment of Loan against Property Portfolio to
State Bank of India
December 2015
BFSI Companies under coverage
BFSI credentials (Cont’d)
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Company Name Latest
Coverage Date Rating Target Price CMP
25-Oct-17 Reduce 554 481
8-Nov-17 Add 171 179
17-Oct-17 Add 200 195
30-Oct-17 Reduce 135 146
16-Oct-17 Long 142 108
24-Oct-17 Add 2,000 1,858
29-Oct-17 Long 343 314
13-Oct-17 Add 1,840 1,648
Company Name Latest
Coverage Date Rating Target Price CMP
15-Nov-17 Add 131 122
29-Oct-17 Reduce 185 172
4-Nov-17 Long 187 125
9-Nov-17 Long 230 162
11-Oct-17 Long 34 31
2-Nov-17 Reduce 315 406
26-Oct-17 Long 395 317
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A focused Lifecycle Banking approach
Unlisted
High Growth Maturity
Reve
nue
Size
August, 2009 : Lead brokers for issuance of Non-convertible Debentures
September, 2009 : Acquisition of DBS Cholamandalam Asset Management
October, 2012 : Acquisition of Family Credit from Societe Generale.
Listed
PE Syndication
Mergers & Acquisitions ● Domestic ● Cross Border
Capital Markets ● Fund Raising ● Buy-back; delisting
Institutional Equities ● Research ● Trading
Transactions for L&T Finance Holdings/ Subsidiaries
Acquisition of DBS Cholamandalam Asset Management Ltd.
Multiple structured debt transactions financed by L&T Finance/ L&T Infra Finance
Lead brokers for the 1st NCD issue by L&T Finance
Transactions for L&T Finance Holdings/Subsidiaries
Lead Manager for INR 15,250mn IPO
Acquisition of Family Credit from Societe Generale
Walking the talk with L&T Finance
July, 2011 : Co-book running lead manager for proposed IPO
Equirus follows an integrated approach and Institutional Equities/ Capital Markets teams work seamlessly to ensure transaction success
Highly experienced BFSI focused team
27
Top management attention throughout the transaction supported by seasoned execution team
Nirav has over 12 years of experience in the IBanking, Capital Markets and Banking. Prior to Equirus, he has been associated with Centrum Capital, Karvy & HDFC Bank. He is CFA from ICFAI University and Commerce graduate from N. M. College, Mumbai
Nirav Shah Vice President
Ashim has over 17 years of experience in structuring and raising Debt funds for various corporates in India. He has worked with companies like VSICL, PINC and Mata Securities in the past. He is Commerce Graduate from Delhi Univ. and PGDBM from IILM Delhi
Ashim Ranu Director
He has over 9 years of experience across Project Financing, PE & Equity Research verticals in the Infrastructure and allied sector. Prior to Equirus, he worked with L&T Infra Finance on Project Financing & PE. He is a B. Com and law graduate with PG diploma from IIM Indore
Devam Modi Director
Donald has more than 20+ years of experience in Investment banking. Prior to Equirus he has been associated with HDFC Bank as Head of Equity Capital Markets, Investment Banking division. He had held key positions at IIFL, Kotak, CLSA and JM Financial. Donald is an alumnus of IIM, Ahmedabad
Donald D'Souza Managing Director
Dinesh has over 5 yrs experience in Corporate and Investment Banking. He has prior work experience with IDBI Capital and Exim Bank. He is an MBA from Bharathidasan Institute of Management(BIM),Trichy and a B.E. from PSG College of Technology, Coimbatore
Dinesh Rathinam Senior Associate
Rohan has 6+ years of experience in sell-side equity research and Banking. He has prior work experience with Yes Bank, ICICI bank and quant Capital. He is alumni of XLRI, Jamshedpur and has completed his Engineering from DA-IICT.
Rohan Mandora Research Analyst
Viral has 3+ years of experience in Investment Banking. He has prior work experience with IDFC Ltd. and Anand Rathi Advisors Ltd. He is an MBA from Rutgers Business School, USA and a B.Sc. from Purdue University, USA.
Viral Kagrana Associate
Contact Equirus
Disclaimer:
This presentation has been prepared by Equirus Capital Pvt. Ltd. (Equirus) for restricted distribution. No representation or warranty, either expressed or implied, is made nor responsibility of any kind is accepted by Equirus Group company, its directors or employees either as to the accuracy or completeness of any information stated in this document. Neither Equirus nor any of its affiliates and/or their directors, officers, employees shall in any way be responsible or liable for any losses or damages whatsoever which any person may suffer or incur as a result of acting or otherwise relying upon anything stated or inferred in or omitted from this presentation.
Opinions and projections found in this presentation reflect our opinion as of the presentation date and are subject to change without notice. This presentation is neither intended nor should be considered as an offer or solicitation, or as the basis for any contract, for purchase of any security, loan or other financial instrument.
28
Name: Ashim Ranu Email: [email protected]
Name: Nirav Shah Email: [email protected]
Name: Donald D'Souza Email: [email protected]
Equirus Securities Pvt. Ltd. Equirus Capital Pvt. Ltd.
Ahmedabad Hyderabad Mumbai
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Magnet Corporate Park,
Near Zydus Hospital, B/H Intas,
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Tel: +91-79-6190-9595
Fax: +91-79-6190-9560
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Tel: +91-40-4433-4064 / 91
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Tel: +91-22-4332-0600
Fax: +91-22-4332-0601
