A Message from

Hormazd Charna

Founder & CEO

Amidst the slowdown of the pandemic in the region, we leave behind an eventful month and look forward to the next. I am pleased to announce that MergerDomo has partnered with the Federation of Indian Micro and Small & Medium Enterprises (FISME). FISME is an NGO representing the progressive face of SMEs/MSMEs. This partnership will strengthen our SME vertical, providing the Indian MSMEs with improved market access and a collaborative environment for networking and technological upgradations, therefore creating and fostering a sustainable ecosystem for them.

Diabetic superfoods startup Keeros and digital wellness startup AyuRythm, two of our registered members, have successfully acquired funding through MergerDomo, which also provides them with analyst support for deal preparation and execution. It has been a fulfilling experience to assist budding Startups, be it to raise funds, to help them become investment-ready to best attract investors or to get them the right consultant support throughout their funding journey.

With several deals in the pipeline for funding and scale-ups in the coming months, the future looks promising. We also see steady growth in M&As, with businesses being keen to explore this growth aspect. MergerDomo is optimistic about an increase in M&A activities in the coming year.

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MergerDomo’s Thought Corner

Presenting MergerDomo’s Thought Corner, where our team of analysts presents their opinions and views on the most significant developments relating to Business & Finance.

Cashing into the IPO Rush

Raising capital via Initial Public Offerings (IPO) is gaining momentum among Small & Medium Enterprises (SMEs). Even though SMEs have traditionally chosen debt financing or closely held equity financing, SME IPOs are still not as active in the current year, but we expect that to turn around soon.

An IPO being a form of equity financing, allows a business to overcome the shortfalls of debt financing and at the same time reap the fruits of equity. Possible reasons for SMEs having shied away from IPOs include but are not limited to: lack of experience, inadequate preparedness and limited reach.

An IPO, being a sale of new shares to the public, allows raising of capital, an exit for existing shareholders, wider recognition and unlocking the true value of a company. Market regulator SEBI has relaxed public listing requirements for SMEs, making it far easier than before to go public. It is now possible to participate in an IPO with lenient terms of track record, corporate governance norms, reporting requirements and lower post issue paid-up capital.

SME IPOs are here to stay. With more awareness and a conducive environment, things are looking bright for SME IPOs.

Expert’s Opinion Corner

Dr. Manoj Mishra

CEO, CxO, Growth Consultant Angel Investor with over 10 Portfolio Companies

This month we have Dr. Manoj Mishra, our Auto & Auto ancillary Industry expert, who comes with over 3 decades of experience in the Auto & Auto ancillary sector. Dr. Mishra, an experienced angel investor, shares his thoughts on the Indian Auto sector.

Q. How can Indian auto manufacturers better compete with their Global Counterparts? Do you see them replicating the success of their Japanese and Korean Counterparts here?

Dr. Manoj Mishra: Old generation Indian automotive manufacturers like Hindustan Motors and Premium Auto lost out to Maruti and Hyundai due to low tech products, product quality, service and price. In the new age competition, MUL (Maruti), HMI (Hyundai) and even KMI (KIA Motors) are establishing themselves very well due to their product quality, price, service and countrywide distribution. Additionally, they are all catering to the entire demographic of the country, taking into consideration geography, income class, age groups, Male/Female etc. They have also cracked the code of large Indian family sizes, the aspirational product appeal of a car and products at multiple price points with high tech globally competitive products.

Indian OEMs like Tata and Mahindra are also fighting the battle well. Mahindra has been widely successful in the higher-end SUV space (8 to 25 lac price range) and Semi-Urban /rugged niche vehicles like Bolero and Scorpio but they are losing out on the cars segment. Tata, post Jaguar’s involvement in product design and technology infusion, seems to have cracked the code with multiple product launches in different price segments and is having a very good countrywide distribution and service. It is also doing very well in Electric Vehicles. Their products are very contemporary in style and technology. They are evolving fast and may do well. They, however, need to build scale to reach optimum levels of success. A Car being an aspirational product, fighting solely on price may not be successful, it would merely be a repeat of the Nano fiasco. It is the winning combination of multiple products that cater to all segments, price, quality, style, options and features that will govern the race.

Q: With Ford following in the footsteps of Chevrolet to exit it's India operations, why do you think most American companies fail to succeed in India?

Dr. Manoj Mishra: Success of the automotive market in India or anywhere is a function of scale, product technology, features, options and distribution/service country wide. Ford, Chevrolet and even many European counterparts like Fiat and Peugeot lost out on the above points. Bringing the right product at the right time and at the right price for various customer segments was a challenge for all these OEMs. They kept a thin product range and did not expand their range and scale. There were attempts on a Ford tie-up with Mahindra but this did not result in any improvement. The first attempt failed due to a low product range and in the second attempt of a Mahindra-Ford Joint Venture, it did not click due to there being no strong management team to steer the Joint venture in the absence of veteran Pawan Goenka. The Mahindra team was also, at the same time, struggling to make its own mark and maintain market share for its own products. Mahindra has also burnt its fingers with SsangYong, Korea and may not like to repeat the past by managing struggling entities but improve its own market share.

Q: Demand for Electric Vehicles has been rising exponentially in India. How are traditional auto ancillary units aiming to adapt to this change and how well equipped are they to do the same?

Dr. Manoj Mishra: Electric Vehicles have started growing in a few vehicle segments due to government incentives, especially in the 2-wheeler and 3-Wheeler segments. There is still a long way to go for cars and more for personal vehicles. Green shoots are visible in the ride-sharing segments as the running km and availability of dedicated charging stations for rental companies make the operational economics more viable. Still, for commercial vehicles and personal cars, it would take over 5 years for 2 and 3-Wheeler sales to become 10% to 15% in the next 5 years.

Those auto ancillaries which are engaged in Internal combustion engine and Transmission parts have realised this and are frantically diversifying to electric vehicle products like motor, reduction gearbox and mechatronics parts to protect their business; many other products like BMS, controllers, sensors and actuators are also going to be of big use in not only electric vehicles but also in advanced vehicle features like ADAS, Electronic fuel Ignition, Emission sensors, IOT and telematics solution, safety and comfort functions like anti-collision, rain detection, lane departure control, drowsiness control etc. The need for ECU's and micromotors is also increasing.

Electric vehicles and ICE will co-exist for the next 20 years with the share of market shifting gradually towards Electric vehicles till it becomes price competitive and their servicing, charging points, range, speed and other features are made ubiquitous. India needs Tesla within a range of Rs 5 to 15 lac for mass adoption and the same goes for the 2-Wheeler segment - a 2-Wheeler costing Rs 1 to 1.5 lacs with ill equipped charging infrastructure and without government subsidies, may not be a case for mass proliferation.

Q: Is the PLI (Production Linked Incentive) scheme enough to help accelerate growth for the Auto & Auto Ancillary sector, since it has been hit hard by rising input costs, raw material shortages, logistics problems, lockdowns etc, or should the government do more?

Dr. Manoj Mishra: The PLI scheme, recently announced by the government in mid-September ’21, offers a Rs.26,000 Crore incentive package for the automotive and drone sector. It is a step in the right direction from the perspective of promoting new technology and carbon reduction. It supports Hydrogen and Fuel cells, Hybrid fuels, Cell chemistry, Vehicles Exhaust treatment, EV and Electronification through Battery, ECU, BMS and Chips manufacturing as well as many other advanced products. The promotion of these high-end and advanced technologies are good initiatives to protect and prepare India for the future. The government has offered investment incentives and has championed the vehicle and component manufacturers.

The covid-hit auto sector, which struggled for around 2 years, has again been struck with a global shortage of semi-conductor chips, a situation which is going to last for another 12 to 18 months before it revives completely. In light of this, the industry was expecting some relief measures so that companies might invest in and prepare for challenges of EV, Safety, Emission and technological advancement but no relief has been offered on these fronts. The investment sentiments are low due to the above challenges and the government needs to rethink and add some more frills to its existing offerings so that companies can combat these challenges prepare for the near and long term future.

“August 2021 sees 38 PE-VC exits worth $7.3 billion driven by a global bull rally caused by the easy liquidity and shifting capital allocations of the West from China to India”

Key Industry Highlights

Infrastructure  

KEC International acquires Spur Infrastructure for ₹62 crores -

KEC International Ltd., an RPG Group Company, has entered into a definitive agreement to acquire 100% equity in Spur Infrastructure Private Limited for an enterprise value of Rs. 62 crores.

Source: mint

Tata Realty & Infra acquires TRIL IT4 Private Ltd -

Tata has acquired the entire equity share held by Actis TREIT in TRIL IT4 Pvt. Ltd, in an all-cash deal. TRIL IT4 is a roughly 0.8 million sq. ft. completed I.T. building leased to tenants largely from the technology & BFSI sectors.

Software Technology

Freshworks makes stellar debut on Nasdaq for IPO, market cap crosses $12 billion -

The company has priced its US initial public offering (IPO) well above the target range to raise $1.03 billion, setting its value at $10.13 billion as hybrid work has increased the demand for its products.

Kotak Mahindra Bank to acquire 9.9% stake in KFin Technologies -

Kotak Mahindra Bank Limited has agreed to acquire 9.9% stake in KFin Technologies, a leading investor and issuer servicing platform, at an investment of ₹310 crore.

Source: mint

PayU to buy out BillDesk for $4.7 billion -

This will be PayU’s most expensive acquisition till date. Together, the two expect to create a financial ecosystem handling 4 billion transactions annually - four times PayU’s current level in India.

Oyo likely to file for IPO next week -

The IPO, tentatively pegged at between $1 billion and $1.2 billion, will consist of a fresh issue of shares and an offer for sale (OFS) from existing shareholders. Oyo, in which SoftBank owns a 46 per cent stake and is one of its biggest bets, has endured months of layoffs, cost-cuts and losses during the global health crisis.

Consumer Goods/Media

Zee and Sony to merge businesses, create $2 billion media powerhouse -

The promoters of Sony Pictures Networks India Private Ltd will pump capital into the entity to ensure that it has a cash balance of $ 1.575 bn. The merger of Zee and Sony India will give the promoters of Sony India a 52.93% stake in the merged entity.

Shapoorji Pallonji Group sells Eureka Forbes to Advent in Rs 4,400-crore deal -

Under a Rs 4,400-crore deal, the PE firm will acquire a controlling stake of 72.56% in the business. The sale will help Shapoorji Pallonji Group pare its debt, which currently stands at Rs 10,900 crore, as it intends to focus on its core businesses of construction and real estate.

GlobalBees acquires home care brand The Better Home -

This is the first acquisition for GlobalBees since raising $150Million in July. GlobalBees, with this deal, could look at taking The Better Home to international markets.

Source: mint

Deal Watch - We Make Deals Happen

Sector
Deal Type
Description
Deal Size
(INR Cr)
Link
Auto & Auto Ancillary
Buyside Acquisition
An Automotive ancillary entity from India is looking for strategic investment opportunities in India, South Africa, Europe and USA
50-150
Technology Software
Buyside
A Multi Billion dollar conglomerate is looking to acquire an AI embedded technology software company in India
25-75
IT/ICT
Sellout
Information and Communications Technology-ICT (Computer Software) entity from India is looking to sellout
160-200
Industrial Goods
Sellout
A leading plastic component manufacturer in Tamil Nadu is looking to sellout
70-71
Product Licensing
An Automotive 2W Electric vehicle complete solution entity from South Korea is looking for licensing Product Technology

Deal

Sector Auto & Auto Ancillary
Deal Type Buyside Acquisition
Description An Automotive ancillary entity from India is looking for strategic investment opportunities in India, South Africa, Europe and USA
Deal Size (INR Cr) 50-150
View Deal

Deal

Sector Technology Software
Deal Type Buyside
Description A Multi Billion dollar conglomerate is looking to acquire an AI embedded technology software company in India
Deal Size (INR Cr) 25-75
View Deal

Deal

Sector IT/ICT
Deal Type Sellout
Description Information and Communications Technology-ICT (Computer Software) entity from India is looking to sellout
Deal Size (INR Cr) 160-200
View Deal

Deal

Sector Industrial Goods
Deal Type Sellout
Description A leading plastic component manufacturer in Tamil Nadu is looking to sellout
Deal Size (INR Cr) 70-71
View Deal

Deal

Sector Product Licensing
Description An Automotive 2W Electric vehicle complete solution entity from South Korea is looking for licensing Product Technology
View Deal

Meet the Team

Our Investment Banking & SME Team

Sunny Garg

Associate Vice President - Corporates/SMEs

Sunny is working as Associate Vice President - Corporates/SMEs in the SMEs / Investment Banking division of MergerDomo. He manages consulting, M&A, debt and equity syndication deals for SME clients along with investor relations.

Taran Bedi

Sr. Associate

Taran Bedi is a Senior Associate in the Investment Banking division of MergerDomo. He helps investment bankers by finding the right counterparties for their clients.

Aditya Chowdhary

Analyst

Aditya is our Analyst in the investment banking division of MergerDomo handling Deal Sourcing, Consulting, Investment bankers & PE relationships.

Editorial Team

Gaurav K Punjabi

Vice President - Sales (Startups) & Marketing

Aditya Chowdhary

Analyst

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What is MergerDomo?

MergerDomo is a Technology-based Investment Banking marketplace, your one stop-shop to prepare, source and execute deals by finding the right counter party. Inspired by a Majordomo, the chief steward of a large household acting on behalf of the owner, we aim to assist Corporates/SME’s through their organic & inorganic journeys by connecting them with Financial Investors, Investment Bankers & Non-Financial Consultants.