Aditya Birla Private Equity - Sunrise Fund

Innovation themed investments in Lifestyle, Lifeskills & Education, Lifecare & Applied Technologies

Aditya Birla Private Equity

Copyright Aditya Birla Capital Advisors Private Limited 2010

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

Aditya Birla Capital Advisors: Investment team:

Proprietary deals and mature insights Sunrise sector specialists

Decades of experience and know-how: Richly experienced, multi-functional team:

 C. INR 880 crore under management in Fund I  Deep experience of team members across

+
 Cross-sector early-stage development experience sunrise sectors over the last two decades
 Extensive Indian and global network  Track record of 11 exits in past careers with
 Culture of entrepreneurship average IRR @58% p.a. over 3-5 years
 Strong corporate governance  Attained superior returns through commercial
 Rigorous financial discipline and controls and operational inputs to sunrise sector deals

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 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

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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

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Aditya Birla Private Equity – Sunrise Fund
Features Snapshot

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)

 Non institutional investors: INR 0.10 crores

Minimum Commitment *
 Institutional investors: INR 2.00 crores

Hurdle Rate 10% IRR p.a., Compounded

Institutions: Initial 10% (subsequent calls, as per requirements)
Draw Down Schedule 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
Upfront Load (one-time) 2.25% (fixed); Subscriptions after 1st close charged 1% per month (i.e. fewer units allotted for
the same commitment amount)
Distribution of Returns Distribution net of all taxes as applicable
OPEX charged to the Fund on actual basis and capped at 0.30% p.a. of Committed Capital.
Operating Expenditure
Besides, a fixed sum of INR 200,000 p.a. charged to the Fund towards Trusteeship Fee
Performance Linked Fee Carried Interest @20% of the Pre-Tax returns (With Catch-Up)
* 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 Sectors
Lifestyle, Lifeskills & Education, Lifecare and Applied Technologies

Wellness & Beauty

Lifestyle
20% CAGR Media, Entertainment & Leisure
to 2015
Value Added Processed Foods

Lifeskills &
Education Delivery Channels
Innovation themed Education
investments in sunrise 22% CAGR Learning Solutions
to 2015
sectors poised to deliver
22% revenue CAGR R&D, CRAMS
till 2015 Lifecare Specialty Devices
25% CAGR
to 2015 Specialty Care
Pharma Retail

Cleantech
Applied
Mobile VAS
Technologies
25% CAGR Intellectual Property applications
to 2015
Automation

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Selecting innovation themed Sunrise Sectors
Generating 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

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Investment Super Theme
Innovation 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

Lifecare, INR
39,500 cr CAGR till 2015
Applied 25% 25%
Technologies, 22%
INR 153,000 cr 20%

Lifestyle, INR
232,800 cr

Lifeskills &
Applied Lifeskills & Lifestyle Lifecare
Education, INR
70,900 cr Technologies Education

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Investment Rationale
Early exposure to innovation in sunrise areas potentially yields exceptional returns

• Illustrations demonstrating historical evidence for success 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
2002 yielded INR 600 in 2006 for its private equity investor solutions provider in 2006 is currently worth INR 3,525
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 INR 100 invested in a mobile network provider in 1998  INR 100 invested in a fast food chain in 2009 yielded
yielded INR 640 for its venture capital investor in 2005 INR 880 in 2010 for its venture capital investor

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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 domestic
fund in trying environment of 2009. In his earlier role as Head of Group Finance at the Aditya Birla Group, he played
a pivotal role in expanding the Group through complex M&A and organic means. Earlier he worked with the Indian
JV of J P Morgan with ICICI, where he was responsible for primary capital markets and corporate advisory, leading
PSU practice. He is Fellow Chartered Accountant, Cost Accountant, Company Secretary and Bachelor of Commerce
Bharat Banka

Career highlights
th
 Formation of India’s 5 largest 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-IPO
and 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 and
raising 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 in
North & 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 growing
apparel company, He is also on the Advisory Councils of an upcoming healthcare solutions company and a
unique 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

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Key Senior Team Members
Over 22 years of experience in private equity,
business strategy, 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 and an exceptional track record of
Rahul Shah
managing growth investments through to exit,
Investment Director often guiding portfolio companies through
directorship to the board. He is a Chartered
Accountant from the ICAI and a Bachelor in
Commerce 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
Mehul Maroo
General Principal
Master‟s degree in Engineering and Management,
and a Bachelor‟s degree in Industrial and Systems
Engineering, both from Stanford University.
Aditya Birla Private Equity
Copyright Aditya Birla Capital Advisors Private Limited 2010
Over 18 years of experience in entrepreneurship,
equity research, principal investing and consulting
with firms like Accenture, Bank of America & DLJ, in
India & Europe. He was previously partner with
corporate finance firm Europa Partners LLP in London
and combines deep operational, entrepreneurial and
corporate finance backgrounds with senior level
experience working alongside international private
Shamik Moitra
equity firms. Shamik also made successful principal
General Principal investments in early stage ventures and holds a
Masters in Finance from the London Business School
– UK, an MBA from XLRI - Jamshedpur, India and a
Bachelors in Science with Honors in Physics from the
University of Delhi.
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 financial services 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 from the ICAI and
Sandeep Bhat
holds a Bachelor of Commerce degree from the
CFO and
Head of University of Mumbai.
Compliance
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 Successful Track Record of Generating Superior IRR
11 exits with an average 58% annual IRR, in the past careers of the team

Total Cash
Total Cash Inflow incl. Manner of
Company Name Sector/Business Outflow Div IRR Divestment Sunrise sectors: Team competence
(US$ mn) (US$ mn) (%)
TECHNOLOGY
Mro-Tek Ltd Internet Access Products 0.5 1.0 31.5 IPO
- 11 exits with 58% IRR p.a. underline
Future Software 2.0 6.2 91.0 Strategic Sale
Telecom Software - Telecom
Equipment Vendors senior team members proven credentials
Sasken Communication
3.8 7.0 64.3 IPO
Technologies Ltd Telecom Software - Telecom in overweight sectors
Equipment Vendors
Internet software - Online - Investing track record from start up to exit
Active Hotels Ltd 7.0 62.0 72.5 Strategic Sale
hotel reservation system

CONSUMER
- Direct entrepreneurial experience
Shoppers Stop Ltd Retailing 3.4 12.6 23.4 IPO
- Largely proprietary deal origination with 60+
Godrej Beverages & Foods Consumer Goods 24.8 38 53.6 Strategic Sale
Far Pavilions Tours and Travels Leisure, Hotels and Travel
3.0 5.5 34.0 Strategic Sale
deals already evaluated for the sunrise fund
Pvt Ltd Services
Indian August Tours & Travels Leisure, Hotels and Travel
2.4 14.0 140.0 Strategic Sale
Pvt Ltd Services

ITES Sunrise sectors: Build on group‟s reach

Secova eServices Ltd BPO 2.0 3 19.3 Trade Sale

MEDIA & ENTERTAINMENT

- Build on the Sponsors‟ 100+ years operating
Indiagames Ltd Gaming 0.3 4.7 71.9 Strategic Sale
IPO ON AIM experience and reach in Education (schools)
DQ Entertainment LTd Media-- 2D & 3D Animation 1.0 3.3 33.7 Ex.
Average IRR (%) 57.7 and Healthcare (hospitals)
Data depicted in the table above pertain to the experience of individual team members prior to joining Aditya Birla Private Equity

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

Size of
Company Duration of
Description Investment Exit Route
Investment
(INR Crs)
India's leading manufacturer of EOT cranes;
now has a technical collaboration with Mitsubishi
Public issue
Heavy Industries. Anupam has a
Anupam 50 3 -4 years or sale to 3rd
Industries demonstrated track record of profitable
party
growth and has a solid order book and
prospects.

Promoted by major banks and financial

institutions, CARE is India's second largest
credit analysis and research institution. Public issue
CARE Formed in 1993, CARE specializes in 65 3 years or sale to 3rd
providing credit rating and grading services party
across sectors and in line with best
internationally accepted practices.

India's oldest and second largest stock

exchange. Following changes in leadership
Public issue
Bombay Stock and a dynamic program of business growth,
21 3 years or sale to 3rd
Exchange the company is poised to improve its
party
market share and consolidate its historical
strengths

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

Theme Company Description Duration of Exit Route

Investment
The company delivers interactive whiteboard
based learning solutions for the K12
An Education segment. It has an extensive library of
Lifeskills and Technology lessons and audio visual tools across all 3-4 years Sale to 3rd party
Education company subjects. It has been growing at a high
double digit rate and is poised to accelerate
further
The company runs a private university
A Private focused on higher education in professional
Public issue or
Professional disciplines such as engineering, medicine and 3 years
sale to 3rd party
University management. It is looking to expand into
new regions within India

The company delivers diagnosis and

technology intensive care for critical
illnesses. It has an asset light model based on
A Specialty Critical acquiring outsourced departments within
Lifecare 3-4 years Sale to 3rd party
Care Company existing, successful regional hospitals across
the country. Its poised for rapid growth
based on new partnerships and outsourcing
arrangements.
The company runs a successful chain of
hospitals in its region and is looking to
A chain of regional expand into new geographies. It has tied up Public issue or
3-4 years
general hospitals with reputed international private hospitals sale to 3rd party
for technology and cutting edge care
practices

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

Theme Duration of
Company Description Exit Route
Investment
The company operated medium to luxury
branded hotels under management contract
A chain of business Public issue or
Lifestyle as well as self owned properties. It is looking 3 years
and family hotels sale to 3rd party
to expand further in fast growing tier 2
business centres

A company The company specializes in managing a chain

Public issue or
managing a portfolio of EBOs for a portfolio of brands. It is looking 3 years
sale to 3rd party
of brands to expand its footprint in new regions

The company has a powerful IP based

aggregation tool which connects hotels and
A global travel
transport companies with travelers through
Applied search engine 3 years Sale to 3rd party
a community search engine. It has already
Technology provider
acquired a significant market share and is
rapidly expanding its global footprint

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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

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 Key Contacts

Aditya Birla Capital Advisors Private Limited

One 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
Mob: +91 97022 88252 Mob: +91 97020 47383

rahul.d.shah@adityabirla.com shamik.moitra@adityabirla.com sandeep.bhat@adityabirla.com

Website: www.adityabirla-pe.com
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.
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