Fairval

Notes on Indian equities, sectors and economy

Archive for the ‘Uncategorized’ Category

VC/PE deal space continues to see slowdown

Posted by fairval on December 14, 2016

Amount of investment in Indian VC/PE (and angel) space continues to see slowdown. This is from data for Jan-Nov’16 (Source: http://www.indiabusinessreports.com)

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YTD amount is just over USD8B, down 38% over last year, while deal count is down as well.

The decline is sharpest in internet based businesses, where investment is this year is just about a third of last year.

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Is it a real business, or is it a Po*#x*

Posted by fairval on October 13, 2016

As part of our transaction advisory work, we do considerable work in pharma / healthcare space. We also have our own angel platform which invests solely in pharma / heatlhcare startups. In this, we have several HNIs who are business owners from the same space – pharma / healthcare.

In other words, we regularly meet and talk to people operating in this space. Often these meetings come about when we are representing a client from healthcare industry, and on its behalf are talking to either a fund or HNI for funding.

In the last one month, in 3 separate meetings, we got asked roughly the same thing (about our clients) – is it a real business, or is it a P*#$@+?  No reflection on the clients, but is there something not quite right with this company they want to compare it with? From being the toast of the startup world, why are several people seemingly bad mouthing it?

We have no idea of whats going on with this company, but lets see if this becomes one of these standard questions one must ask a startup – are you a real business, or a P*#$@+?

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Article in The HinduBusinessline – Unit Economics explained

Posted by fairval on September 23, 2016

Lately, have been writing a monthly piece for The Hindu Business Like. The latest article was on key metrics an investor should check when evaluating an ecommerce startup.

6 questions for e-com start-ups

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Deals slowdown strikes again in May’16

Posted by fairval on June 8, 2016

2016 so for continues to see less VC/PE activity compared to 2016. Reported investments fell again in May. YTD amount is down 22%

 

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What’s a basic angel portfolio?

Posted by fairval on May 30, 2016

While writing on this blog has been suffering due to various issues, have just started a small series on Angel Investing in Hindu Businessline.

The first one deals with – what should be a min folio an angel investor must aim for.

Angel investors must aim for at least 8-10 deals

 

Angel investing has taken off in India in a big way in recent months. In early 2014, on an average, around 10 angel deals would be reported a month. From the second half of 2014, the angel space has seen a rising trend. The monthly deal count crossed 30 in August 2015, and has remained in the 30-40 range since then; an increase of about three times in a year.

The spurt in news flows on start-up investing seems to have caught the attention of the average high networth individual (HNI). For every HNI who is already an angel investor, there may be five new investors actively considering this asset class…..(click link above for full article)

 

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VC/PE investments for 2015 close at ~USD 14B

Posted by fairval on January 12, 2016

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Eight years after 2007, when India Inc absorbed ~USD18B of VC/PE investment, the sector once again saw robust activity in the year gone by. Total VC/PE investment hit almost USD14B, the second best year in the history of VC/PE investments in India.

In contrast, in 2014, total reported investment was ~USD9B, from 381 deals. Total reported deals were 556, around 178 did not report amount of investment. In 2015, total deals reported were 881, of which 300 did not disclose amount invested.

These numbers may not necessarily match with figures from some other sources, we have noticed some other numbers which are larger than India Business Reports’ number. The reason could be people are counting within VC/PE  numbers, deals which aren’t exactly what we would call a VC or a PE deal. For example, we don’t see how a strategic investment qualifies as venture capital. Or an investment in a company outside India, even though the source of money could be from India.

 

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Want to start on your own?

Posted by fairval on March 21, 2014

A good slide to look at for those wanting to go entrepreneur, on the wrong side of the age profile (picked up from a frn who posted this on facebook)

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Ajay Piramal voices concerns on AAP

Posted by fairval on January 24, 2014

I have rarely read Ajay Piramal’s comments, let alone negative. In a rare media interaction, he seems to echo what we wrote about AAP’s impact on the Indian power sector.

“Look at what they are doing to the power sector for instance. They are reducing all the prices of power due to which power rates in two other states have come down . This is not what we want. What we want is really good supply of power. We want power availability all over the country. See the situations of the discoms, they are in such huge losses,” he says.

 

 

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Asian Paints: Chartspeak

Posted by fairval on January 22, 2014

There was a time when A Paints used to quote at 18-20x, at a clear discount to FMCG majors. Lately it moved into the same orbit: 35-40x PE. Now there is some negative sentiment. Goldman just put a sell. This chart from their report is self explanatory. Even several FMCG majors have the same issue: slowing sales and very high PEs

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V-Guard’s 9mFY14 results: Severe durable demand slowdown?

Posted by fairval on January 21, 2014

V-Guard, the emerging consumer durable company from Kerala, has shown a sharp drop in sales in Q3 from its core South India market. Revenue is down 8% for Q3FY14 from South India. This compares to 10% growth from the same states in 1HFY14.

The drop in sales could be partly a management call. The company says it has reduced debtors by 15 days; implying it has acted tough on weak distributors. But that can only explain part of the slowdown. It is likely there is lot of unsold inventory in its channels in South India. In other states, where it is still in the process of rolling out its products, it is easier to show growth.

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V-Guard is an emerging consumer durables company. So far, it is into small items. It made its name initially with a voltage stabiliser (hence V-Gaurd) in the Southern markets. In the last 4-5 years, it has tried to go national in distribution, and has also added other small durables like UPSs, pumps, water heaters and fans, kitchenware like mixers, induction cooktops and so on.

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