aditya birla private equity - sunrise · pdf filebharat is the youngest ceo at the aditya...

Aditya Birla Private Equity - Sunrise FundInnovation themed investments in Lifestyle, Lifeskills & Education, Lifecare & Applied Technologies

Copyright Aditya Birla Capital Advisors Private Limited 2010

Aditya Birla Private Equity

Decades of experience and know-how:

� C. INR 880 crore under management in Fund I� Cross-sector early-stage development experience� Extensive Indian and global network� Culture of entrepreneurship� Strong corporate governance� Rigorous financial discipline and controls

+

Investment team:Sunrise sector specialists

Richly experienced, multi-functional team:� Deep experience of team members across

sunrise sectors over the last two decades� Track record of 11 exits in past careers with

average IRR @58% p.a. over 3-5 years� Attained superior returns through commercial

and operational inputs to sunrise sector deals

Aditya Birla Capital Advisors:Proprietary deals and mature insights

Innovation themed investments in Sunrise SectorsLifestyle, Lifeskills & Education, Lifecare & Applied Technologies


Copyright Aditya Birla Capital Advisors Private Limited 2010 2 of 16

Aditya Birla Private Equity - Sunrise Fund:Compelling Investment Opportunity in Key Sunrise Sectors

� Innovation themed growth capital investments within sunrise sectors: Lifestyle, Lifeskills &Education, Lifecare and Applied Technologies

� Placed strongly to build a portfolio of winners through careful deal selection backed by strongmonitoring and hands on value addition as required

� Focus on proprietary deal flow to generate high alpha returns: developed a ready databaseof 60 plus companies which have undergone preliminary evaluation by the team

Executive Summary

� Unique Investment Proposition− Early cycle mover in sunrise sectors to target public market beating IRR, commensurate with higher risk

− Sunrise sector companies focused on Lifestyle, Lifeskills & Education, Lifecare and Applied Technologies

� Fund Details for Investors− Target Returns: Pre-Tax IRR @30% p.a. (Not Guaranteed)

− Investments over 2.5 years & Exits between 3.5 – 6 years (+ 1 year extension, investment manager’s discretion)

− Hurdle Rate: 10% p.a., compounded

− Upfront Load: 2.25% (fixed)



− Upfront Load: 2.25% (fixed)

− Management Fee: 2% p.a. + Applicable Taxes

− Carried Interest: 20% (With Catch-Up)

� Investment characteristics− Focus on sizeable sunrise sectors with innovation as a super theme

− Based on proven venture investing and exit credentials of senior team in similar sectors

− Portfolio Companies: Revenues about INR 25 crore, nearing break-even/ profitable, in the year of investment

− Portfolio Companies: Professionally managed, adaptive companies

− Individual Portfolio Investment ticket size: INR 25-50 crore

Aditya Birla Private Equity – Sunrise FundFeatures Snapshot

The Fund Aditya Birla Private Equity - Sunrise Fund (ABPE-SF)

Sponsor Commitment 10% of the Fund Corpus; up to INR 50 crore

Investment Manager Aditya Birla Capital Advisors Private Limited

Target Return/ IRR Pre-Tax 30% p.a. (Not Guaranteed)

Term of the Fund 2.5 years for investments + further 3.5 years for exits (+1 year extension at discretion of IM)

Minimum Commitment *� Non institutional investors: INR 0.10 crores� Institutional investors: INR 2.00 crores

Hurdle Rate 10% IRR p.a., Compounded



2.25% (fixed); Subscriptions after 1st close charged 1% per month (i.e. fewer units allotted for the same commitment amount)

Carried Interest @20% of the Pre-Tax returns (With Catch-Up)

Distribution net of all taxes as applicable

Hurdle Rate 10% IRR p.a., Compounded

Draw Down Schedule

Institutions: Initial 10% (subsequent calls, as per requirements)Non institutional investors: Initial 100% (INR 0.10 crore)

Initial 20%; mini Rs.7.5 lakh (INR 0.15-0.45 crore) *Initial 10% (INR 0.50 crore & above) *

Management Fee 2% p.a. of the Committed Capital + applicable taxes;1st year fee in advance and charged quarterly from 2nd year

Distribution of Returns

Operating Expenditure(Total at fund level)

OPEX charged to the Fund on actual basis and capped at 0.30% p.a. of Committed Capital. Besides, a fixed sum of INR 200,000 p.a. charged to the Fund towards Trusteeship Fee

Upfront Load (one-time)

Performance Linked Fee

* Commitments will be accepted in increments of INR 5 Lakh up to INR 50 lakh; and in increments of INR 25 lakh thereafter

Innovation themed Investments in Sunrise SectorsLifestyle, Lifeskills & Education, Lifecare and Applied Technologies

Innovation themedinvestments in sunrise

sectors poised to deliver 22% revenue CAGR

Lifestyle20% CAGR to 2015

Lifeskills & Education22% CAGR to 2015

Wellness & Beauty

Media, Entertainment & Leisure

Education Delivery Channels

Learning Solutions

Value Added Processed Foods



22% revenue CAGRtill 2015 Lifecare

25% CAGRto 2015

Applied Technologies25% CAGRto 2015

R&D, CRAMS

Specialty Devices

Specialty Care

Pharma Retail

Cleantech

Mobile VAS

Intellectual Property applications

Automation

Selecting innovation themed Sunrise SectorsGenerating superior IRR by targeting exceptional early growth stories

� Overweight on sectors with the following characteristics:

− Growing annually @20% plus, i.e. 2.5x-3x GDP growth in India

− Driven by aspirations of the prospering mass population to improve overall quality of life

− Supported by the benefits of higher disposable incomes and improving infrastructure

− Have a higher percentage of passionate and visionary professional management

− Have currently a relatively lower share of wallet and limited number of organized vendors

� Proprietary deal flow



� Proprietary deal flow

− Based on the Investment team’s extensive business network in overweight sectors: 60 high qualityearly stage proposals received over the last 12 months, a large proportion through direct networks

� Experienced investment team to complement disruptive busi ness models andvisionary managements by:

− Providing proactive inputs on macro strategy, operations and business development areas

− Ensuring focused execution of business plans by aligning people, process and technology

− Maximizing Fund IRR through timing and selection of appropriate mode from multiple exit options

Investment Super ThemeInnovation in sunrise sectors

� Globally, cutting-edge innovation focuses on delivering t he following objectives:– Improving quality of lifecare

– Improving quality of lifestyle

– Improving skills

– Improving the environment and obtaining sustainable sources of energy

� In India, c. INR 610,000 crores market in above sectors is set to grow at > 20% p.a. till 2015and fulfill ALL the selection criteria

Lifecare, INR

39,500 crCAGR till 2015



Applied

Technologies,

INR 153,000 cr

Lifeskills &

Education, INR

70,900 cr

Lifestyle, INR

232,800 cr

39,500 cr

25%

22%20%

25%

Applied

Technologies

Lifeskills &

Education

Lifestyle Lifecare

CAGR till 2015

Investment RationaleEarly exposure to innovation in sunrise areas potentially yields exceptional returns

Illustrations demonstrating historical evidence for succ ess of similar investment strategy

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� INR 100 invested in a fast growing pharma company in � INR 100 invested in a small unlisted education



� INR 100 invested in a mobile network provider in 1998

yielded INR 640 for its venture capital investor in 2005� INR 100 invested in a fast food chain in 2009 yielded

INR 880 in 2010 for its venture capital investor

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2002 yielded INR 600 in 2006 for its private equity investor� INR 100 invested in a small unlisted education

solutions provider in 2006 is currently worth INR 3,525

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Practice Leadership

Bharat is the youngest CEO at the Aditya Birla Group and is fou nder of Aditya Birla Private Equity

Over 20 year of strategy, principal investing, M&A, post-merger integration, capital markets & CXO-level experience.As Founding CEO, he led the initiative to set ABPE practice, build the team and raise $200m in its maiden domesticfund in trying environment of 2009. In his earlier role as Head of Group Finance at the Aditya Birla Group, he playeda pivotal role in expanding the Group through complex M&A and organic means. Earlier he worked with the IndianJV of J P Morgan with ICICI, where he was responsible for primary capital markets and corporate advisory, leadingPSU practice. He is Fellow Chartered Accountant, Cost Accountant, Company Secretary and Bachelor of Commerce

Career highlights� Formation of India’s 5

thlargest mobile company, Idea Cellular, through merger of Birla AT&T and Tata,

acquiring RPG Cell and Escotel, providing exit to JV Partners Tata and Cingular, US $ 1 billion sale pre-IPOand US$ 550 million IPO, creating a US$ 5 billion company and creating 2.5x value in less than 2 years

� Creation of India’s largest $7 billion cement company by acquiring L&T Cement in a complex deal, re-

Bharat Banka



� Creation of India’s largest $7 billion cement company by acquiring L&T Cement in a complex deal, re-branding and consolidation of L&T Cement with Grasim Cement to form UltraTech Cement

� Establishing $6 billion non-ferrous giant Hindalco by merging Birla Copper & INDAL with Hindalco andraising finance in excess of $2 billion in innovative structures

� Formation of US$ 2 billion Aditya Birla Nuvo by merging Indian Rayon, Fertilizer & Financial Services� Private Equity investments into Anupam Industries, a leading material handling equipment player, into CARE,

the second largest credit rating agency in India, into V-Mart Retail, the fastest growing value retail store chain inNorth & West India; and into BSE, India’s premier stock exchange

� Active member of Indian Angel Network, Mentor Square & exper t panel of “Hottest Startups (NEN)”,mentoring entrepreneurs. A Member of National Committee on Capital Markets, Confederation of Indian Industry(CII). He is a member of the Boards at a leading materials handling equipment company and a fast growingapparel company, He is also on the Advisory Councils of an upcoming healthcare solutions company and aunique social media platform.

� Accolades: Recipient of “Professional Achiever – Finance Sector” Award from ICAI, 2008� Publications: Writes his column ‘Bankanomics’ in Network 18 business magazine ‘The Entrepreneur’ and had

co-authored book on ‘Project Finance’ for the ICAI

Key Senior Team Members

Over 22 years of experience in private equity, business stra tegy, entrepreneurship and management consultancy;of which the last 12 were spent leading Indian private equity firm IIML, sponsored by IL&FS, large Indian financial house.Has an in-depth understanding of the full life-cycle of private equity investment management across diverse sectors andan exceptional track record of managing growth investments through to exit, often guiding portfolio companies throughdirectorship to the board. He is a Chartered Accountant from the ICAI and a Bachelor in Commerce from the University ofMumbai.

Rahul ShahInvestment Director



22 years of experience of which 20 years in Venture Capital/ P rivate Equity in India. Over the last two decades Amithas invested, managed and/ or exited from 22 Companies across various sectors and stages while he worked at funds likeJardine Fleming Electra, Actis, Gujarat Venture Finance and Milestone Religare. He has worked on full life cycle ofInvestments in several of his transactions and has seen three economic cycles in his investing Career. He has served onBoards of many portfolio Companies and guided them for rapid growth, transparent conduct, value enhancement andultimately unlocking value. He is a MBA from IIM, Lucknow and mechanical engineer from NIT, Surat.

Amitvikram SharmaInvestment Director

Over 18 years of experience in entrepreneurship, equity res earch, principal investing and consulting with firmslike Accenture, Bank of America & DLJ, in India & Europe. He was previously partner with corporate finance firmEuropa Partners LLP in London and combines deep operational, entrepreneurial and corporate finance backgroundswith senior level experience working alongside international private equity firms. Shamik also made successful principalinvestments in early stage ventures and holds a Masters in Finance from the London Business School – UK, an MBAfrom XLRI - Jamshedpur, India and a Bachelors in Science with Honors in Physics from the University of Delhi.

Key Senior Team Members

Over 14 years of experience in private equity advisory and co nsulting in India and the US. Was formerly anAssociate Partner with the global management consulting firm Kurt Salmon Associates, where he jointly leddevelopment of their practice in India. Brings a strong background in strategic consulting for leading global and Indianlifestyle and consumer-facing companies. Holds a Master’s degree in Engineering and Management, and a Bachelor’s

Shamik MoitraGeneral Principal



lifestyle and consumer-facing companies. Holds a Master’s degree in Engineering and Management, and a Bachelor’sdegree in Industrial and Systems Engineering, both from Stanford University.

Mehul MarooGeneral Principal

Over 25 years of varied experience in accounting, financial control, tax management & operational risk control,legal and compliance , and optimization of IT and administration resources; of which the last 16 in the financialservices industry, with firms like UBS and ABN AMRO Equities. Has extensive experience in directing Finance &Accounting, treasury and risk management functions for financial institutions. Sandeep is a Chartered Accountant fromthe ICAI and holds a Bachelor of Commerce degree from the University of Mumbai.

Sandeep BhatCFO and Head of Compliance

Successful Track Record of Generating Superior IRR16 exits with an average 56% annual IRR, in the past careers of the team

Sunrise sectors: Team competence

- 16 exits with 56% IRR p.a. underline

senior team members proven credentials

in overweight sectors

- Investing track record from start up to exit

- Direct entrepreneurial experience

- Largely proprietary deal origination with 60+



- Build on the Sponsors’ 100+ years operating

experience and reach in Education (schools)

and Healthcare (hospitals)

Sunrise sectors: Build on group’s reach

- Largely proprietary deal origination with 60+

deals already evaluated for the sunrise fund

Data depicted in the table above pertain to the experience of individual team members prior to joining Aditya Birla Private Equity

Performance of maiden ABPE – Fund IMarquee investments made by ABPE in the previous Fund

Size of Investment(INR Crs)

Exit Route

Anupam Industries

India's leading manufacturer of EOT cranes; Now has a technical collaboration with Mitsubishi Heavy Industries. Anupam has a demonstrated track record of profitable growth and has a solid order book and prospects.

50Public issue or sale to 3rd party

Promoted by major banks and financial institutions, CARE is India's second largest credit analysis and research institution. Formed in 1993, CARE specializes in providing credit rating 65

Public issue or sale to 3rd

Company Description



CAREFormed in 1993, CARE specializes in providing credit rating and grading services across sectors and in line with best internationally accepted practices.

65 or sale to 3rd party

Bombay Stock Exchange

India's oldest and second largest stock exchange. Following changes in leadership and a dynamic program of business growth, the company is poised to improve its market share and consolidate its historical strengths

21

Public issue or sale to 3rd party

GEI Industries62.5 Market SaleQuality supplier of heat exchangers and air cooled

condensers, commanding over 40% market share within its product categories. Operates in high growth sectors of the economy like power, natural gas and oil refining segment.

Deal Flow for ABPE – Sunrise FundIllustrative Transactions (*eventual deals by Fund might differ from these)

Duration of Investment Exit Route

Lifeskills and Education

An Education Technology company

The company delivers interactive whiteboard based learning solutions for the K12 segment. It has an extensive library of lessons and audio visual tools across all subjects. It has been growing at a high double digit rate and is poised to accelerate further

3-4 years Sale to 3rd party

LifecareA Specialty Critical Care Company

The company delivers diagnosis and technology intensive care for critical illnesses. It has an asset light model based on acquiring outsourced departments within existing, successful regional hospitals across 3-4 years Sale to 3rd party

Theme Company Description



Lifecare Care Company existing, successful regional hospitals across the country. Its poised for rapid growth based on new partnerships and outsourcing arrangements.

3-4 years Sale to 3rd party

A company managing a port-folio of brands

The company specializes in managing a chain of EBOs for a portfolio of brands. It is looking to expand its footprint in new regions

3 yearsPublic issue or sale to 3rd party

Applied Technology

A global travel search engine provider

The company has a powerful IP based aggregation tool which connects hotels and transport companies with travelers through a community search engine. It has already acquired a significant market share and is rapidly expanding its global footprint

3 years Sale to 3rd party

Lifestyle

Risks associated with the Fund and Mitigation

Risks

- With a good probability of high IRR, there is an equal risk of losing entire investment in some of the portfolio companies

- The overall portfolio and underlying investments will remain largely illiquid till the eventual exit

- The prospects of an IPO of portfolio companies in this Fund are likely to be more muted compared with late-stage investments

- With the focus on disruptive business models, investments may be with first-time unproven entrepreneurs/ management

besides products/ offerings of portfolio companies might have muted precedents of success

- Investment exits in specific cases may exceed 3 years with an extended holding period

- Limited prospects of negotiating collateral securities to securitize against capital loss



- Limited prospects of negotiating collateral securities to securitize against capital loss

- Investors must seek expert advise from competent advisors on percentage of their Net Worth to be allocated to this Fund

Mitigation

- The Fund expects to be diversified and balanced across a judicious mix of early stage assets across overweight sectors

⁻ Investment team’s track record of investing and entrepreneurial experience may:

• Help filling the management gaps while keeping the promoters on track to achieving business milestones

• Help mentoring the portfolio companies to retain focus to achieve profitability and scales of operation

• Keep an eye on timing and selecting an appropriate mode of exit out of multiple options

Key Contacts

Aditya Birla Capital Advisors Private LimitedOne Indiabulls Centre, Tower 1, Level 18, Senapati Bapat Marg, Mumbai 400013, India

Mr. Rahul Shah Mr. Shamik Moitra Mr. Sandeep Bhat

Investment Director General Principal Chief Finance & Compliance Officer

Tel: +91-22-4356-7403 Tel: +91-22-4356-7404 Tel: +91-22-4356-7401

[email protected] [email protected] [email protected]



Website: www.adityabirla-pe.com

1110v2.0

Cautionary Statement

This ‘Presentation’ is for informational purposes only and does not constitute an offer to sell the shares of Aditya Birla Capital Advisors Private Limited (the “Company”) or an offer toparticipate in the funds proposed to be managed by it. This information profile has been provided to its recipient upon the express understanding that the information contained herein, ormade available in connection with any further investigation, is strictly confidential and is intended for the exclusive use of its recipient. It shall not be photocopied, reproduced or distributedto others at any time. This document is neither a prospectus nor an invitation to subscribe to the shares of the Company. Nothing in this document is intended to constitute legal, tax,securities or investment advice, or opinion regarding the appropriateness of any investment, or a solicitation for any product or service. The information herein is subject to change withoutnotice.

Statements in this ‘Presentation’ describing the Company’s objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of theapplicable securities laws and regulations. Actual results could differ materially from those expressed or implied in this ‘Presentation’. Important factors that could make a difference to theCompany’s operations include global and Indian demand-supply conditions, finished goods prices, feed stock availability and prices, cyclical demand and pricing in the Company’sprincipal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factorssuch as litigation and labour negotiations The information including facts and figures have been derived from public sources and should be relied upon by the reader at his or her own riskand the Company, its directors or officers assume no responsibility, expressed or implied, for the completeness or accuracy of the information contained or views expressed herein or forany direct or consequential loss arising from any use of this publication or its contents.

aditya birla private equity - sunrise · pdf filebharat is the youngest ceo at the aditya...

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