The Indian Private Equity opportunity

April 2008
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The Indian Private Equity opportunity

Overview of ICICI Group Indias Growth Potential One of Indias pre-eminent financial institutions Relationships with a broad range of corporates across all sectors One of the largest India-focused private equity funds Second fastest growing major economy in the world, projected to grow at 8% p.a. until 2020 Projected to be 2nd largest global economy by 2050 Favourable demographics, consistent policy decisions and domestic consumption driven economy

Development of Private Equity in India

Private equity investment in India has increased 28x fold from 2003-2007 In 2007, US$14.2 billion of private equity transactions were completed Increased diversification by both industry and types of investment

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Overview of ICICI Group

Overview of ICICI Bank

Development of Private Equity in India

Indias Growth Potential

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One of Indias pre-eminent financial institutions

ICICI Bank Ltd
Largest private sector bank in India $22 billion market cap $94 billion of assets2 First Indian company listed on the NYSE Listed in Forbes Asias 50 Fab Companies 2007 Completed Indias largest equity issuance of US$4.3 billion

18 international locations

ICICI Ventures
One of Indias largest PE firms AUM > US$2bn Completed 55+ transactions

ICICI Lombard
One of the largest private sector general insurer iAAA rated by ICRA

ICICI PRU Life Insurance

Indias no.1 private life insurer AAA rated by Fitch

ICICI Prudential AMC

One of the largest asset managers AUM of US$17.6 bn2

ICICI Securities
Leading equity broking house Leader in fixed income market

1. As at 24-March-2008. 2. As at 31-December-2007.

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Indias growth potential

Overview of ICICI Bank

Development of Private Equity in India

Indias Growth Potential

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Indian economy : some statistics

India is one of only 3 countries in the world to have built its own supercomputer 11 out of every 12 diamonds in the world are polished in India One of every 6 motorbikes in the world is manufactured in India 220 of the Fortune 500 companies source software from India India is one of only 6 countries in the world to have satellite launch capabilities One out of every 10 new mobile phone users in the world is an Indian India has the largest film industry in the world India has one of the largest television networks in the world, with over 300 channels and 500 million TV viewers 50 percent of the worlds tea is produced in India

Source : Economic Survey, Ministry of Agriculture, Government of India, report by investment commission of India

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2nd largest economy in the world by 2050

India GDP (US$ billions)2
Actual Estimate / Forecast CAGR: CAGR: .9%
, 69 05 9 5 , 0

. %
,6 2

60

200

200

2005

2006

200

200

2009

Indian GDP grew at an average of 14.9% p.a. in US$ terms in the 3 years to 2006. (8.6% in real terms)2 Projected to grow at 8% p.a. in real terms until 20201 Indias GDP (US$ terms) expected to surpass that of the US by 20501

. Source: Goldman Sachs Research Indias Rising Growth Potential, Jan-200 . 2. Source: Goldman Sachs Economic Research.

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Key growth drivers

Requirement of US$475 billion of infrastructure investments from 2007 to 2012

Infrastructure Investment1

40% to be funded by private investors

Policy initiatives to attract investments in core infrastructure projects related to power, transportation, etc Large young population (46% between the age group of 20-40) driving consumption Underleveraged economy with consumer Loan/GDP ratio at 8% as compared to 50% plus in developed markets Indian consumer spending projected to grow from US$425 billion to USD$1.8 trillion by 2025 Real estate still an under owned asset class with mortgage/GDP ratio at approximately 5% compared to 50% for developed countries Sustainable competitive advantage in outsourcing - IT/ITES projected to grow at circa 19% per annum until 2011 Knowledge driven businesses such as design activities and KPO moving up the value chain Cross border M&A activities to give a more global outlook

Large Population

Globalisation3

1. Source: Smith Barner Research,Goldman Sachs and planning commission 2. Source: [FICCCI], Min of External Affairs., Mckinsey Report: The Bird of Gold-The Rise of Indias Consumer Market 3. Source: Asia Pacific IT Services Market and Forecast, 200 -2011 report by Springboard Research 4. Source : FICCI- E&Y study

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Beneficial backdrop for growth

The Regulatory Framework

Liquid and deep financial markets Integrated financial markets Increasing stability and breadth of the public markets Advanced settlement systems

Strong and proactive regulators RBI/SEBI India complies with BIS 26 norms of best practices for supervisory criteria, country risk and convertibility Gross NPAs lower than those of comparable nations Pro Growth Policies

Government focus on reforms

Liberal FDI policies across major sectors Forex reserves can be used for infrastructure projects Mature political economy with development as its core agenda

The Banking Regulation Act to be considered for amendments Labor and legal reforms to be taken up proactively External sector reforms roadmap in line with WTO agreements

Source: IMD would competitiveness report to 2005

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Key risks
General Elections: Populists measures may take its toll on fiscal discipline Continuance of the structural and fiscal reforms agenda Adequate attention to Infrastructure to support 8% GDP growth requirement to develop a vibrant debt market Adequate investments in developing talent pool to meet the rising demand

Policy

Global

High Energy Prices: Oil imports constitute more than 40% of Indias total imports Stronger Currency: Adverse impact on exports

Inflation

Latest figure of 5.9% is above the 4.5%-5% target of the RBI Monsoons: Agriculture economy is exposed to this annual risk factor

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Development of Private Equity in India

Overview of ICICI Bank

Development of Private Equity in India

Indias Growth Potential

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Growth of asset class

Value and Number of Number of Deals

bln

bln

S S bln S bln

bln

Number of deals increased 10 fold since 2003; value of deals increased 28 fold to US$ 14.2 billion Total private equity investments expected to be $20 billion by 2010

Source: Venture Intelligence

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Top Private Equity destination in Asia

Annual Growth in Private Equity Investments (1 8-2007)

72 2

2 10

India

Australia

Greater hina

outh Korea

apan

From 1998 2007, India was the fastest growing private equity market in Asia Australia Z 2 In 2007, India was the largest market for private equity investments in Asia (ex. Australia)

ource: Thomson Financial, AV

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, Venture Intelligence

Uptick in ticket size in sync with valuation

Average Deal Size (2007) India Average Deal Size
$47m

$227m

$2 m $22m

$ 7m $ $47m $37m m

Malaysia

Korea

India

hina (Incl ong Kong)

2003

2004

200

200

2007

Source: Thomson Financial, AV J, Venture Intelligence

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Increasing diversification across industry

2003 2007

Other 35%

Other 33.1% I.T. & ITES 5 %

I.T. & ITES 24%

I.T. & ITES 7% Manufact. 12% I.T. & ITES 31% Other 3 % Financial Svcs. 1.0%

Manufacturing 0.1%

Source: Venture Intelligence.

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Value of Deals

Other 8%

Medical & Health 3% Energy & Contr. 11%

Financial Svcs. 28%

Manufacturing 3%

Number of Deals

Financial Svcs. 3%

Manufacturing 1 % Energy & Contr. 8% Financial Svcs. 13%

Medical & Health 7%

Proportion of nonInformation Technology deals has risen from 19% in 2003 to 76% in 2007 Growth in investment into Manufacturing, Financial Services and Medical and Health

Growth Across Segments

2003 2007
Other 4% Buy Out 2% VC 24% PIPE 1 %

Buy Out 5% PIPE 11%

Number of Deals
Growth/ Expansion 37%

VC 47%

Buy Out 1 %

Other 14% VC 28% Buy Out 5%

Value of Deals
PIPE 3 % Growth/ Expansion 1 %

PIPE 30%

1. Includes infrastructure Source: Venture Intelligence

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Growth/ Expansion 51%

Most significant investment currently in growth / expansion segments PIPE deals form a significant portion

VC 4% Growth/ Expansion 48%

Evolving exit routes

Other Other

Other

IPOs

IPOs

IPOs

Transaction value of PE exits Number of IPO exits

$ . bn

$ . bn

$1. bn

1 Warburg Pincus from Bharti Tele

1 CVC from Suzlon energy

Largest Exits

By Actis, CVC from Daksh eservices

1. Source : Venture Intelligence

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Key differences to Western private equity model

Limited use of leverage Most Indian banks unwilling to provide cash flow based financing Ability to achieve attractive returns without gearing Limited buy-out activity Many companies are family owned Shareholders reluctant to give up a control of their fast-growing companies Focus on making minority investments (10-20%) by providing growth/ expansion capital Typically provides private equity investors with board seats and veto / blocking rights Significant PIPE activity in the Indian Private Equity market

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Current dilemma facing investors

Current PE Market Very rapid expansion in number of India-focused funds Risen from 8 in 1995, to 300+ in 2007 Large number of first time funds ~15 India-dedicated private equity funds with at least one fund vintage Investor Dilemma Evaluating managers without track records

Selecting funds from a broad universe Gaining access to the best funds

Rationale for Fund of Funds Product

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Disclaimer
This document and the information contained herein are strictly confidential and are meant solely for the selected recipient to whom it has been specifically made available. This document may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Bank. This document is given only by way of information and is subject to change without notice. The information provided herein is not an offer or solicitation for any application or subscription for any products or services and is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person's nationality, residence or otherwise) be contrary to law or regulation or would subject ICICI Bank, or its affiliates to any licensing, registration or other legal requirements. THE INFORMATION CONTAINED IN THIS DOCUMENT IS NOT INTENDED TO NOR SHOULD IT BE CONSTRUED TO REPRESENT THAT ICICI BANK PROVIDES ANY PRODUCTS OR SERVICES IN ANY JURISDICTION WHERE IT IS NOT LICENSED OR REGISTERED OR AUTHORISED TO DO SO. ICICI Bank or are not acting as your advisor or in a fiduciary capacity in respect of the contents of this document, and accepts no liability nor responsibility whatsoever with respect to the use of this document or its contents. Nothing in this document is intended to constitute legal, regulatory, tax, securities, or investment advice, or an opinion regarding the appropriateness of any investment, or a solicitation of any type. The contents in this document are intended for general information purposes only and should not be acted upon without first obtaining specific legal, tax, and investment advice from a licensed professional concerning your own situation and any specific investment questions you may have before entering into any financial transaction The financial or other projections etc. set out in this document have been prepared based upon projections that have been determined in good faith and from sources deemed reliable. There can be no assurance that such projections will be accurate. ICICI Bank does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. The information in this document reflects prevailing conditions and our views as of this date, all of which are expressed without any responsibility on our part and are subject to change. In preparing this document, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us or which was otherwise reviewed by us. Past performance cannot be a guide to future performance. No reliance may be placed for any purpose whatsoever on the information contained in this document or on its completeness. The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may change materially. Any investment in any fund/securities etc referred or alluded to in this presentation should be solely on the basis of the fund's/ securities Offering Memorandum and the relevant issuing entitys constitutional documents. Accordingly, this document should not form the basis of, and should not be relied upon in connection with, any subsequent investment in the fund/ security. To the extent that any statements are made in this document in relation to the fund/ security, they are qualified in their entirety by the terms of the Offering Memorandum and other related constitutive documents pertaining to the fund/ security, which must be reviewed prior to making any decision to invest in the fund/ security. This document does not constitute an offer to sell or a solicitation of an offer to sell any securities to any person in any jurisdiction. ICICI Bank, its affiliates and any of their licensers, directors, employees, or agents shall not be held liable for any direct, indirect, incidental, special, or consequential damages arising out of the use of information contained herein. Potential investors should request for relevant product information before making any investment decisions as this document does not, and is not, a document that relates to any investment product. The above mentioned is not a complete list of the risks and disclosures and other important disclosures may be involved in availing of the products and services described herein. The use of this document is subject to the terms and conditions specified herein and the users shall be deemed to have read, understood and consented to these terms and conditions.

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Thank You

Amit Ratanpal email:amit.ratanpal@icicibank.com Mobile: +91-9820039025

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