TMT-focused banking major China TH Capital sets its sights on India
A number of boutique Chinese investment banks, over the course of 2019, have been making overtures to Indian startups. However, the entry of TH Capital, which has raised $17 billion in capital for its clients from primary markets, into one of the world’s most vibrant ecosystems will be the first instance of a major financial advisory firm looking to actively source deals from India.
“It’s (India) a new market for us, and we have been here only for the last three quarters or so. There are multiple companies that we are working with in India, helping them get term sheets. We are targeting capital raises of about $50-$100 million at this point,” Wallace Guo, co-founder and managing partner at TH Capital, told ET in an exclusive chat.
The firm currently has about five analysts based in China, but who are tracking various sectors in India, and is looking to hire local talent to scout for deals.
The sell-side-focused financial advisory firm will be jostling for clients in India with the likes of global majors Goldman Sachs, Morgan Stanley and Citibank, and domestic powerhouse Avendus Capital, along with a host of boutique shops.
The Beijing-based investment bank came into spotlight in 2019 after it advised Bengaluru-headquartered regional language social networking platform ShareChat close a $100 million financing round, which was led by Twitter and private equity firm TrustBridge Partners.
“We work strictly as exclusive financial advisors. We don’t work with other firms, as we don’t see that as a very efficient process. We know the business, and we know the founders. We ask the right questions, and the founders trust us to interpret their needs,” Guo said.
The development comes even as private equity and venture capital investments in calendar year 2019 touched record highs, with transactions, excluding real estate, touching $37 billion, according to data collated by research firm Venture Intelligence.
As many as 74 high-value deals worth $100 million or more were clocked in the year, accounting for 74% of the total value in the period, the research note said.
Of these, there were five $1 billion-plus investments, and 40 were larger than $200 million each, Venture Intelligence data shows. The year gave rise to nine new unicorns in the India startup world—Delhivery, Dream11, BigBasket, Rivigo, Druva Software, Icertis, CitiusTech, Ola Electric and Lenskart.
While there is a slowdown in transitional activity anticipated in 2020, driven by global macroeconomic headwinds, Guo, who set up TH Capital with Lingjing Song and Wenqin Hu in 2012, believes this is the best time to enter the country, build partnership and raise capital for clients.
Separately, Chinese investments in India’s startup ecosystem were also reported to have risen to $3.9 billion in 2019, up from $2.02 billion in the previous year.
“This is a large enough market that we just could not ignore… Of course, we know all the investors. We will try and get them the best deals in the market,” Guo said.
TH Capital, which raised equity financing of about $6 billion last year, according to Guo, and has projected raising $5 billion for its clients in the upcoming fiscal, counts Nasdaq-listed ecommerce company Pinduoduo, used car platform Chehaoduo, Nasdaq-listed automotive transaction services platform Cango and online marketplace for cosmetic procedures SoYoung International among its clientele.
Given its focus on late-stage deals, the investment bank will look to leverage its existing relationships with private equity majors, such as Warburg Pincus and bulge-bracket investors, such as Carlyle Group, to raise capital for clients in India.
“Most of these investors have largely invested in a lot of asset-heavy business, but they are now learning from their Chinese counterparts. So, if they want to shift their focus to new economy, perhaps that’s where we can help,” Guo said.