Download - Sunrise Fund Pitchbook 1110v1
Copyright Aditya Birla Capital Advisors Private Limited 2010
Aditya Birla Private Equity
Aditya Birla Private Equity - Sunrise Fund
Innovation themed investments in Lifestyle, Lifeskills & Education, Lifecare & Applied Technologies
Aditya Birla Private Equity
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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
Aditya Birla Private Equity - Sunrise Fund:
Compelling Investment Opportunity in Key Sunrise Sectors
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
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 strong
monitoring and hands on value addition as required
Focus on proprietary deal flow to generate high alpha returns: developed a ready database
of 60 plus companies which have undergone preliminary evaluation by the team
Aditya Birla Capital Advisors:
Proprietary deals and mature insights
Innovation themed investments in Sunrise SectorsLifestyle, Lifeskills & Education, Lifecare & Applied Technologies
Aditya Birla Private Equity
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Executive Summary
INR 350 crore Fund + Greenshoe option and upsizing
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)
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
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Aditya Birla Private Equity – Sunrise FundFeatures Snapshot
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
The Fund Aditya Birla Private Equity - Sunrise Fund (ABPE-SF)
Target Fund Corpus INR 350 crore (with Greenshoe and upsizing at the option of the Investment Manager)
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
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 ExpenditureOPEX 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
Aditya Birla Private Equity
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Innovation themed Investments in Sunrise SectorsLifestyle, Lifeskills & Education, Lifecare and Applied Technologies
Innovation themed
investments in sunrise
sectors poised to deliver
22% revenue CAGR
till 2015
Lifestyle20% CAGR
to 2015
Lifeskills &
Education22% CAGR
to 2015
Lifecare25% CAGR
to 2015
Applied
Technologies25% CAGR
to 2015
Wellness & Beauty
Media, Entertainment & Leisure
Education Delivery Channels
Learning Solutions
R&D, CRAMS
Specialty Devices
Specialty Care
Pharma Retail
Value Added Processed Foods
Cleantech
Mobile VAS
Intellectual Property applications
Automation
Aditya Birla Private Equity
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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
Based on the Investment team‟s extensive business network in overweight sectors: 60 high quality
early stage proposals received over the last 12 months, a large proportion through direct networks
Experienced investment team to complement disruptive business models and
visionary 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
Aditya Birla Private Equity
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Investment Super ThemeInnovation in sunrise sectors
Globally, cutting-edge innovation focuses on delivering the 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 2015
and fulfill ALL the selection criteria
Applied
Technologies,INR 153,000 cr
Lifeskills &
Education, INR 70,900 cr
Lifestyle, INR
232,800 cr
Lifecare, INR 39,500 cr
25%22%
20%
25%
Applied Technologies
Lifeskills & Education
Lifestyle Lifecare
CAGR till 2015
Aditya Birla Private Equity
Copyright Aditya Birla Capital Advisors Private Limited 2010 8 of 16
Investment RationaleEarly exposure to innovation in sunrise areas potentially yields exceptional returns
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
• Illustrations demonstrating historical evidence for success of similar investment strategy
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Aditya Birla Private Equity
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Practice Leadership
Bharat is the youngest CEO at the Aditya Birla Group and is founder 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-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 & expert 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 hadco-authored book on „Project Finance‟ for the ICAI
Bharat Banka
Aditya Birla Private Equity
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Over 18 years of experience in entrepreneurship,equity research, principal investing and consultingwith firms like Accenture, Bank of America & DLJ, inIndia & Europe. He was previously partner withcorporate finance firm Europa Partners LLP in Londonand combines deep operational, entrepreneurial andcorporate finance backgrounds with senior levelexperience working alongside international privateequity firms. Shamik also made successful principalinvestments in early stage ventures and holds aMasters in Finance from the London Business School– UK, an MBA from XLRI - Jamshedpur, India and aBachelors in Science with Honors in Physics from theUniversity of Delhi.
Key Senior Team Members
Over 22 years of experience in private equity,business strategy, entrepreneurship andmanagement consultancy; of which the last 12were spent leading Indian private equity firm IIML,sponsored by IL&FS, large Indian financial house.Has an in-depth understanding of the full life-cycleof private equity investment management acrossdiverse sectors and an exceptional track record ofmanaging growth investments through to exit,often guiding portfolio companies throughdirectorship to the board. He is a CharteredAccountant from the ICAI and a Bachelor inCommerce from the University of Mumbai.
Over 14 years of experience in private equity
advisory and consulting in India and the US.
Was formerly an Associate Partner with the global
management consulting firm Kurt Salmon
Associates, where he jointly led development of
their practice in India. Brings a strong background
in strategic consulting for leading global and Indian
lifestyle and consumer-facing companies. Holds a
Master‟s degree in Engineering and Management,
and a Bachelor‟s degree in Industrial and Systems
Engineering, both from Stanford University.
Rahul Shah
Investment Director
Shamik Moitra
General Principal
Mehul Maroo
General Principal
Over 25 years of varied experience in accounting,financial control, tax management & operationalrisk control, legal and compliance, and optimizationof IT and administration resources; of which the last 16in the financial services industry, with firms like UBSand ABN AMRO Equities. Has extensive experience indirecting Finance & Accounting, treasury and riskmanagement functions for financial institutions.Sandeep is a Chartered Accountant from the ICAI andholds a Bachelor of Commerce degree from theUniversity of Mumbai.
Sandeep Bhat
CFO and
Head of
Compliance
Aditya Birla Private Equity
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Successful Track Record of Generating Superior IRR11 exits with an average 58% annual IRR, in the past careers of the team
Sunrise sectors: Team competence
- Build on the Sponsors‟ 100+ years operating
experience and reach in Education (schools)
and Healthcare (hospitals)
Sunrise sectors: Build on group‟s reach
- 11 exits with 58% 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+
deals already evaluated for the sunrise fund
Company Name Sector/Business
Total Cash
Outflow
Total Cash
Inflow incl.
Div IRR
Manner of
Divestment
(US$ mn) (US$ mn) (%)
TECHNOLOGY
Mro-Tek Ltd Internet Access Products 0.5 1.0 31.5 IPO
Future SoftwareTelecom Software - Telecom
2.0 6.2 91.0 Strategic Sale
Equipment Vendors
Sasken Communication
Technologies Ltd Telecom Software - Telecom3.8 7.0 64.3 IPO
Equipment Vendors
Active Hotels LtdInternet software - Online
hotel reservation system7.0 62.0 72.5 Strategic Sale
CONSUMER
Shoppers Stop Ltd Retailing 3.4 12.6 23.4 IPO
Godrej Beverages & Foods Consumer Goods 24.8 38 53.6 Strategic Sale
Far Pavilions Tours and Travels
Pvt Ltd
Leisure, Hotels and Travel
Services3.0 5.5 34.0 Strategic Sale
Indian August Tours & Travels
Pvt Ltd
Leisure, Hotels and Travel
Services2.4 14.0 140.0 Strategic Sale
ITES
Secova eServices Ltd BPO 2.0 3 19.3 Trade Sale
MEDIA & ENTERTAINMENT
Indiagames Ltd Gaming 0.3 4.7 71.9 Strategic Sale
DQ Entertainment LTd Media-- 2D & 3D Animation 1.0 3.3 33.7
IPO ON AIM
Ex.
57.7Average IRR (%)
Data depicted in the table above pertain to the experience of individual team members prior to joining Aditya Birla Private Equity
Aditya Birla Private Equity
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Performance of maiden ABPE – Fund IMarquee investments made by ABPE in the previous Fund
Size of
Investment
(INR Crs)
Duration of
InvestmentExit 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.
50 3 -4 years
Public issue
or sale to 3rd
party
CARE
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 and grading services
across sectors and in line with best
internationally accepted practices.
65 3 years
Public issue
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 3 years
Public issue
or sale to 3rd
party
Company Description
Aditya Birla Private Equity
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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
A Private Professional University
The company runs a private university focused on higher education in professional disciplines such as engineering, medicine and management. It is looking to expand into new regions within India
3 yearsPublic issue or 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 the country. Its poised for rapid growth based on new partnerships and outsourcing arrangements.
3-4 years Sale to 3rd party
A chain of regional general hospitals
The company runs a successful chain of hospitals in its region and is looking to expand into new geographies. It has tied up with reputed international private hospitals for technology and cutting edge care practices
3-4 yearsPublic issue or sale to 3rd party
Theme Company Description
Aditya Birla Private Equity
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Deal Flow for ABPE – Sunrise FundIllustrative Transactions (*eventual deals by Fund might differ from these)
Duration of Investment
Exit Route
LifestyleA chain of business
and family hotels
The company operated medium to luxury
branded hotels under management contract
as well as self owned properties. It is looking
to expand further in fast growing tier 2
business centres
3 yearsPublic issue or
sale to 3rd party
A company
managing a portfolio
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
Theme Company Description
Aditya Birla Private Equity
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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
- 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
Aditya Birla Private Equity
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Key Contacts
Website: www.adityabirla-pe.com
Aditya Birla Capital Advisors Private LimitedOne Indiabulls Centre, Tower 1, Level 18, Senapati Bapat Marg, Mumbai 400013, India
1110v1.0
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 to
participate 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, or
made 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 distributed
to 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 without
notice.
Statements in this „Presentation‟ describing the Company‟s objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of the
applicable 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 the
Company‟s operations include global and Indian demand-supply conditions, finished goods prices, feed stock availability and prices, cyclical demand and pricing in the Company‟s
principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors
such 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 risk
and 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 for
any direct or consequential loss arising from any use of this publication or its contents.
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
Mob: +91 97022 88252 Mob: +91 97020 47383