Investment Opportunity in

India Advantage Fund - Series 3

A Growth Capital & Buy-Out Fund
October 2009 Private and Confidential
2
This document is being furnished to you strictly on a confidential basis. This document does not constitute an offer to sell or a
solicitation of an offer to buy the Units of the Fund described herein. Prospective Contributors and/ or investors should carefully
review the underlying Constituent documents of the Fund, before making a decision to invest. In general, investment in Units of a
Venture Capital Fund of this nature will involve significant risks. Contributors are advised to seek independent professional advice
to understand all attendant risks attached to investments in the Fund. Also, Contributors should have the financial ability and
willingness to accept the risks and lack of liquidity, which are characteristics of the investments described herein. There will be no
public market or liquidity in any other form for the membership interests in the Fund and they will not, subject to certain limited
exceptions, be transferable. In making an investment decision, investors must rely on their own examination of the documents
and the terms of the Offering to be set out in detail in a separate document, including the merits and risks involved.
3
Agenda
ICICI Venture - Overview
Past Private Equity Funds
IAF Series 3
Select Case Studies
4
ICICI Venture is Indias No. 1 Private Equity Player
*
Industry leader leading alternative asset
manager in India since 1988
Invested and exited from companies
across multiple economic cycles
Strong institutional parentage of ICICI -
among the top Indian financial brands
Successfully deployed multiple investment
strategies
Impeccable track record of managing third
party funds
Most experienced management team in
the private equity industry
Unique and inimitable portfolio of assets Access to proprietary deals
Through its established presence of two decades, ICICI Venture has pioneered the private
equity industry in India
* Winner of the Best Private Equity Firm in India award from PEI Group (UK) for 2007 and 2008
5
1988 2000 2001-2003 2004-2005 2006-2008
Pioneered PE practice in India
Concluded landmark deals like
naukri.com
A phase of
transformation and
changing gears
Shifted focus from early
to mid/late stage growth
deals and buy-outs
Concluded 1
st
LBO in India
(Infomedia)
Executed 1
st
real estate
investment in India
(Mezzequity software)
Concluded the 1
st
royalty
based structured deal in
India (DRL)
Concluded the 1st
mezzanine deal in India
(Arch Pharmalabs)
Consolidated position as
Indias leading third party
Private Equity Fund
Manager
Concluded exits of control
transactions (Ace
Refractories, Infomedia
India)
Diversified into Real Estate
and Mezzanine
Initiated exits from the
legacy and IAF Series 1
portfolio
IAF Series 2 INR 36,671 mn
IAF Real Estate INR 24,381 mn
Mezzanine Fund 1 INR 2,058 mn
IAF Series 1 INR 10,909 mn
ESEF- INR 7,300 mn
ICICI Strategic Investments
Fund INR 7,050 mn
Vecaus Funds INR 2,800 mn
ICICI Software Fund INR 270 mn
TCW/ ICICI Offshore Funds- INR 2,274 mn
ICICI Econet Funds INR 1,000 mn
ICICI Equity Fund INR 7,460 mn
ICICI Venture has grown continuously to new heights in
the last decade through multiple economic cycles
Fund Size as on June 30, 2009. For Funds that were raised part in US$
and part in INR, the US$ portion has been translated at the exchange
rate of 1 US$ = INR 47.87
6
ICICI Venture has a strong parentage and operates as
an independent institution
ICICI Venture is sponsored by ICICI Bank, the largest private sector bank in
India
One of the most respected financial services brands in India
Extensive network of strong corporate relationships
Deep multi sector knowledge pool
Access to Government, regulatory bodies and industry forums
Global standards of corporate governance
ICICI Venture is an independently run fund management company operating
with full autonomy
Arms length relationship with ICICI Bank on all dealings
No representation of ICICI Bank on investment committee
ICICI Venture has well staffed investment, business development and support
teams with over 100 resources
ICICI Venture observes international standards of corporate governance
The management company is audited by Deloitte, Haskins & Sells while
the funds are audited by Ernst & Young and Grant Thornton
Reporting and valuation norms of ICICI Venture managed funds and
portfolio companies are in line with relevant international guidelines
7
ICICI Venture has a large and experienced management
team
The investment team comprises 25 professionals with investing,
investment banking and operating experience
Cumulative investment experience of over 100 years
The team brings in a wide network of relationships with corporates
and the investment banking community
This provides access to proprietary and preferred-status deal
flow
The private equity investing team is supported by various corporate
functions including business development, capital markets, finance,
human resources, investor relations, legal and risk
Many members of the team have worked together since 2000 at ICICI
Venture
8
ICICI Ventures differentiated investment approach has
given it a competitive advantage
Investment
strategy
Deal
sourcing
Deal
evaluation
Portfolio
management
Divestment
Innovative
bets in
emerging
sectors
Differentiated
strategy in
discovered
sectors
Proprietary
deal sourcing
through its
extensive
network
Disciplined
approach in a
competitive
market
Active usage
of external
expertise
Value
addition in
portfolio
companies
through
strategic and
operational
inputs
Mix of
strategies to
achieve
desired exit
valuations
Timing exits
in an
opportunistic
manner
9
in building a unique portfolio based on
fundamentally strong companies
ICICI Venture has built its portfolio systematically over the investment period
The performance of the portfolio is driven more by company performance
than by changing market dynamics
While the global economic slowdown has impacted valuations across asset
classes, the relative performance of ICICI Ventures portfolio is representative
of its strong fundamentals
ICICI Ventures India Advantage Fund Series 2s Net Asset Value (NAV) has
declined by 31% from December07 to June09 compared to
BSE Sensitive Index which has declined by 29%,
NSE Nifty which has declined by 30%,
BSE Mid Cap Index which has declined by 48% and
BSE Small Cap Index which has declined by 57%
ICICI Venture has the ability and experience to deliver superior returns in an evolving market
10
ICICI Ventures investment process is well documented
and fine tuned based on its vast experience
Deal Sourcing
Team network
ICICI Bank
Investment
Bankers
Preliminary
Evaluation
Issue of Term Sheet
Detailed Diligence
Financial
Business
Legal
Detailed Evaluation
Recommendation
for Disbursement
Disbursement linked
to fulfilling
compliance
conditions
Portfolio monitoring
Definitive
Agreement
Investment
Committee Meeting
for Exit Analysis
Approval of sale and
terms
Exit Negotiation
Negotiation on
terms of sale and
legal
documentation
Execution Process
Discussion on
deals
Mention of
rejected deals
Screening
Committee
Broad business
terms
Business model
Financials
Check conformity
with investment
objective
Pre Investment
Committee
Evaluate
transaction
attractiveness
post due diligence
Recommendation
for IC approval
Investment
Committee
11
ICICI Venture is best positioned to deliver the private
equity opportunity to investors
Large bandwidth
enables comprehensive
coverage of India private
equity opportunity
Strong support team
enables efficient
execution
Run by independent
management
Observes international
standards of corporate
governance
World class knowledge
management systems
Successful management
of multiple private
equity funds
Ability to conclude
complex deals
Demonstrated value add
to portfolio companies
Sponsored by ICICI
Bank
Ability to leverage the
brand
Established trust and
confidence of Indian
entrepreneurs
Access to proprietary
deals
Parentage
Track Record
Processes
Bandwidth Access
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Agenda
ICICI Venture - Overview
Past Private Equity Funds
IAF Series 3
Select Case Studies
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The current team at ICICI Venture has delivered
significant returns to its investors in previous funds
Econet Fund
An INR 1,000 mn fund focused on businesses based on internet
and other related technologies, raised in 2000
Realized MoC
1
: 2.3x Realized IRR
1
:16%
Emerging Sectors
Fund
L
E
G
A
C
Y
F
U
N
D
S
An INR 7,300 mn consolidation of a number of funds raised /
advised by ICICI Venture between 1997 and 2000
Realized MoC
1
: 2.4x Realized IRR
1
:26%
India Advantage
Fund (IAF) Series 1
A multi-strategy INR 10,909 mn fund with a focus on mid / late
stage growth capital, control / buy-outs, real estate, mezzanine
and structured deals, raised in 2003
Realized MoC
2
: 2.9x Realized IRR
2
:62%
1
as on March 31, 2009
2
as on June 10, 2009
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In 2001, ICICI Venture focused its bandwidth on a
portfolio of select companies from its legacy funds
Industry attractiveness
Capability of management team
Potential to add value
Likely realizable value
Criteria for creation of portfolio
Management Approach
Active management of select companies in the portfolio through available management
bandwidth to maximize returns
Returns
ICICI Venture delivered ~29% IRR
1
and 3.6x MoC
1
on the selected 23
2
companies
1
as on March 31, 2009
2
Includes 3 partial exits
15
IAF Series 1 has established several benchmarks
Snapshot
Fund Size INR 10,909 mn
Fund deployment 100%
No. of investments 21
No. of investments exited
1
15
K
e
y

h
i
g
h
l
i
g
h
t
s
1
st
leveraged buy-out
1
st
real estate investment
1
st
mezzanine financing for acquisition
1
st
secondary transaction at fund level
1
st
structured royalty based transaction
IAF Series 1, raised in 2003, is a broad
based fund with a focus on mid / late
stage growth capital, buy-outs, real
estate, mezzanine and structured deals.
The fund has performed exceedingly
well across multiple investment / exit
strategies and has already returned
~154% to its investors
MoC
2
IRR
2
Total realized exits 2.9x 62%
Full Exits 2.4x 57%
Partial Exits 6.4x 79%
1
Includes 5 partial exits
2
as on June 10, 2009
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IAF Series 1s performance has increased investor
confidence in us
We promised and we delivered!
Fund will take atleast 4 to 5 years to return
first cash flow
Returned capital and profit over the hurdle
rate by the 4th year
Target is to achieve 25-30% IRR
Achieved realized IRR of 62% as on June
10, 2009
Focus on private investments, primarily
growth / minority deals
Followed multiple investment strategies
and created extraordinary value for
investors
High level of corporate governance with an
independent IC & Supervisory Board
Held 32 IC meetings & 15 Supervisory
board meetings
Transparent sharing of information and
reporting of high standards
No audit remark or minor deviation from
fund documents
Fund returns / exit to investors will be on
divestment of portfolio assets
Provided liquidity through three secondary
transactions to marquee investors (Coller
Capital, LGT)
17
IAF Series 2, raised in 2006, is a multi-sector growth
capital and buy-out fund
K
e
y

h
i
g
h
l
i
g
h
t
s Snapshot
Fund Size INR 36,671 mn
1
No. of investments 21
2
No. of exits 2
3
1
st
Clinical Research Organization Roll up in
India
1
st
healthcare Roll up in India
1
st
investment in a cross-border transaction
IAF Series 2, raised in 2006, is a multi sector growth capital and
buy-out fund
We have built a portfolio around our articulated investment themes
of domestic consumption demand, outsourcing demand and
infrastructure driven growth
1
as on June 30, 2009
2
Includes investment in subsidiary of 1 existing portfolio company
3
includes 1 partial exit
18
IAF Series 2 has a well-diversified portfolio built around
the articulated investment themes
Outsourcing
21%
Domestic
Consumption
47%
Infrastructure related
32%
Ener gy
18%
Fi nanc i al
Ser v i c es
22%
Heal t hc ar e
17%
Li f e Sc i enc es
8%
M et al s
3%
Ret ai l
8%
Ser v i c es
6%
M anuf act ur i ng
12%
M ed i a &
Ent er t ai nment
4 %
Sector-wise Investment Mix Thesis-wise Investment Mix
1
1
Does not include investment in Perlecan Pharma
19
IAF Series 2 Portfolio as of June 30, 2009
Sr. No. Company Type of Deal Commitment (INR mn)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Arch Pharmalabs Limited Control 1,502
HDFC Bank Limited
1
Growth 1,841
Electrotherm (India) Limited Growth 821
Geometric Limited Growth 455
Home Solutions Retail (India) Private Limited Growth 1,440
I-Ven Medicare India Private Limited Control 2,421
Kalpataru Power Transmission Limited
2
Growth 1,124
Karvy Stock Broking Limited Control 2,624
Mahindra Retail Private Limited Growth 784
Mahindra Gears & Transmissions Private Limited Growth 200
Metalcastello Control 1,340
Perlecan Pharma Private Limited
3
Control 510
PVR Limited Growth 306
PVR Pictures Limited Growth 600
Rubamin Limited Growth 700
Sainik Mining & Allied Services Limited
4
Growth 3,667
Shriram City Union Finance
5
Growth 1,452
Swiss Biosciences Control 2,040
Tebma Shipyards Limited Control 1,664
Tops Securities Limited Growth 1,150
26,641 Grand Total
1
ICICI Venture had invested in Centurion Bank of Punjab which has merged with HDFC
Bank in April, 2008. Includes Rs 905 mn divested till date
2
Includes investment in JMC Projects, a construction company subsidiary
3
Has been fully exited
4
Includes option to additionally invest through warrants
5
Includes option to additionally invest through warrants
20
IAF Series 2 has deployed unique strategies to deliver
superior returns
Investment in
emerging sectors /
investment themes
Centurion Bank of Punjab Sainik Mining
Kalpataru Power
Transmission
Shriram City Union
Finance
Karvy Stock Broking TOPS Securities
Partnerships with
established
business houses
Home Solutions Swiss Biosciences
Metalcastello Mahindra Retail
Increased focus on
control
transactions
Arch Pharmalabs Perlecan Pharma
I-Ven Medicare Swiss Biosciences
Metalcastello Tebma Shipyards
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Agenda
ICICI Venture - Overview
Past Private Equity Funds
IAF Series 3
Select Case Studies
22
IAF Series 3 will be a sector agnostic fund to tap mid-
market opportunities in India
A Growth Capital & Buy-out fund to capitalize on the India opportunity
Investment in growth and control / buy-out
transactions in Indian companies
Investment range: INR 750 INR 2,500 mn
Sweet Spot between INR 1,000 INR 1,500 mn
Invest in 17 20 companies
Deal Type
Deal Size
Control / Buy-
outs
Growth
Capital
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Control / Buy-outs will span across sectors to take
advantage of the unique opportunities in India
Our past experience
Key Themes for Series 3
Key Drivers
Our Strengths
Credibility as a buyer with a strong
Indian identity
Leveraging the ICICI brand
Financing capabilities
Successful record of working with
management teams
Proven track record of exits
Business Restructuring
Financial reengineering
Shareholder restructuring
Fragmented white spaces
Control / buy-out of non-core assets
Control / buy-outs of public listed
entities and taking them private
Controlling stakes with current
management / promoters
Roll-ups
VA Tech WABAG
Ace Refractories
Tebma Shipyard
I-Ven Medicare
Control / buy-outs and management partnerships across sectors
24
Growth capital investments provide the opportunity to
exploit ICICI Ventures inherent strengths
Our past experience
Key Themes for Series 3
Key Drivers
Our Strengths
Identifying sectors ahead of the curve
Deep understanding of sectors to
exploit growth opportunities
Helping companies in inorganic
growth opportunities
A decade of distinctive performance
Significant capital requirement for mid
cap companies / first generation
entrepreneurs
Under penetrated, unorganized
markets providing significant growth
possibilities
Sunrise sectors
Expansion Capital for growth plans
Focus Sectors: Healthcare, Financial
services, Consumer Goods & Services,
Logistics, Education, Cleantech, etc
PVR
Sainik Mining
Metropolis
Growth capital funding across sectors
25
ICICI Venture has always scaled up with the market and
is uniquely positioned to exploit the opportunity
Aligning with market trends
Increased deal sizes in line with the
changing market
Partnering with established corporate
houses to build new businesses
Differentiated strategy
Continuously taking innovative bets ahead
of the market
Marquee transactions in discovered sectors
Deployment of capital in sunrise sectors
Enhanced management team
Addition of business development
professionals and sector experts
Addition of deep operating experience to
increase ability to add value to control
transactions
Experience in managing mid/large
companies
Evolved to handle companies of various
sizes
Demonstrated capability to take mid size
companies through the complete
investment cycle
26
Identify and invest in emerging sectors ahead of the market
Address discovered sectors through differentiated investment strategy
Focus on proprietary deal sourcing
1
2
3
ICICI Ventures investment themes for Series 3 seek to
reinforce its inherent strengths and unique approach
Nurture entrepreneurs & management teams to build value
Focus on control transactions; build-on proven track record of value addition
4
5
ICICI Venture will address opportunities while maintaining investment discipline
27
India Advantage Fund Series 3 - Key Terms
Fund Size INR 25,000 mn with a Green Shoe option of INR 15,000 mn
Investment period 5 years from First Closing
Life of the fund (incl.
investment period)
7 years, extendable by 2 years
Management fee 2% p.a. of capital commitment
Preferred rate 10% IRR
Carried interest 20% of total profits
Target return 25% IRR
Legal Advisor Nishith Desai Associates
28
Agenda
ICICI Venture - Overview
Past Private Equity Funds
IAF Series 3
Select Case Studies
29
Infomedia 18 Limited
Transaction Overview
Description Buy-out
Sector Media
Date of investment September 2003
Fund Exposure IAF Series 1 - INR 482 mn
Instrument Equity
Current Stake 22.3%
Investment Status The investment has been partially exited at an MoC of 5.1x and an IRR of 50%
Infomedia India is Indias no. 1 Yellow Pages and largest niche magazine publisher
At the time of investment, it was a cash rich, zero debt company with stable cash flows
The deal was the first leveraged buy-out in India by a private equity player
Post acquisition, ICICI Venture appointed a new CEO, diversified into publishing BPO,
introduced performance linked incentives, etc.
The Fund has completed two partial exits
7% stake sale to Fidelity in early 2005 for INR 296 mn
40% stake sale to TV18 in Dec 2007 for INR 1,316 mn
Cost of investment exited is INR 313 mn
30
Nagarjuna Construction Company Limited
Transaction Overview
Description Growth Capital
Sector Infrastructure services
Date of investment December 2004
Fund Exposure IAF Series 1 - INR 612 mn
Instrument Equity
Stake 13.8%
Investment status The investment has been fully exited at an MoC of 6.3x and an IRR of 149%
Nagarjuna Construction is one of Indias leading infrastructure construction companies
It has a well diversified business portfolio with projects across verticals
It has a strong presence in the lucrative BOT segment and is well positioned with
strengthened balance sheet to capitalise on governments thrust on infrastructure
investments
ICICI Venture identified the sector early and proactively approached the company for a
potential investment and post investment worked with the company to enhance its capital
market profile
Over the holding period, the company increased operating margin by changing project mix
The Fund exited the investment in the capital market in FY 2007
31
PVR Limited
Transaction Overview
Description Growth Capital
Sector Entertainment
Date of investment March 2003 (equity) and September 2005 (preference)
Fund Exposure IAF Series 1 - INR 475 mn
Instrument Equity + Preference Shares
Stake 47%
Investment status The investment has been fully exited at an MoC of 4.3x and an IRR of 83%
PVR is Indias first and largest multiplex chain
Beginning its operations with 4 screens at a single cinema in 1997, PVR has expanded
across the country
ICICI Venture participated in the multiplex revolution and enabled transformation of
the cinema exhibition sector in India through an investment in the leader in this space
ICICI Venture helped institutionalize systems for project viability analysis, employee
performance management, etc. and also leveraged its position to enable PVR to get
rights for cinema projects in key real estate developments
Post the IPO in 2005, the Fund has systematically exited its entire investment in the
company
1
32
RFCL
Transaction Overview
Description Buy-out
Sector Life Sciences
Date of investment December 2005
Fund Exposure INR 456 mn
Instrument Equity
Current Stake 78%, post dilution
The deal involved a buy-out of Ranbaxys allied businesses which comprised three
divisions Rankem (laboratory chemicals), Vetnex (animal healthcare) and Diagnova
(diagnostics)
ICICI Venture has been instrumental in leading a number of strategic business
initiatives including acquisitions, shift towards own manufacturing and improvement
in margins
In April 2007, GLG Partners invested US$ 20 mn in RFCL for a 11.6% stake
In June 2009, ICICI Venture entered into an agreement for the sale of Vetnex with
Pfizer, the largest healthcare company in the world
This transaction executed in depressed economic climate shall result in an MoC of
8.0x on the apportioned investment in Vetnex (INR 235 mn)