Investment Banking Newsletter Technology November 2018 from the Director’S Desk

INVESTMENT BANKING NEWSLETTER TECHNOLOGY NOVEMBER 2018 FROM THE DIRECTOR’S DESK

Dear Reader,

Welcome to the November 2018 edition of the bi-monthly technology newsletter from Spark Capital.

Following are the key themes for this edition:

FinTech Opportunity in India

India is at the cusp of a FinTech revolution. The FinTech growth in India has been largely dominated by Digital Payments but segments such as alternate lending, robo advisory, insur-tech etc. are on the upswing. The opportunities provided by the IndiaStack and digital identity given by Aadhaar has been a tremendous push for the industry. As per various reports the Digital Payments market is estimated to reach USD 500 Bn by 2020 and Digital Lending offers a USD 1 Tn opportunity in India.

Initiatives such as UPI, Jan-Dhan and Aadhaar, present India with an underlying infrastructure core on which many FinTech firms can blossom and a lot of innovation can happen. The shared infrastructure network will drive the next wave of FinTech adoption in India because it gives the players ready and free access to a vast customer base.

Impact of FinTech on the current ecosystem of financial services

FinTech firms can reshape the financial services landscape in the country in five important ways. First, they have the ability to develop unique and innovative models of assessing credit risk. This can significantly improve the penetration of financial services for New-to-Credit (NTC) segment. Second, they have the potential to reduce costs and improve quality. As these firms are not burdened with legacy operations and expensive physical networks, hence can pass on the benefits of leaner operating models to customers by utilization of eKYC and swift customer on-boarding techniques. Third, by leveraging the vast amount of data various insight-driven solutions can be provided to customers. Fourth, there lies a vast opportunity in removing the redundancies and lowering customer acquisition costs. Fifth, the opportunity to digitally reorient the customer journey given the increasing usage of digital means of engagement between customers and financial institutions.

November 2018 – Spark Technology Newsletter 2 FROM THE DIRECTOR’S DESK

Lack of proper regulations stays as a major obstacle for FinTech in India. FinTech companies are still regulated by banking regulations. Regulators, RBI and SEBI are yet to come out with a comprehensive and separate set of guideline for the FinTech industry. Although RBI’s green signal for small finance banks and payment banks in the recent past shows openness to adapt, a lot of impediments still remain unaddressed for innovative FinTech players.

Partnership model between Banks and FinTech companies

As the macro shapes up, it turns out that most FinTech players can sustain in the long run only if they collaborate with the big banks. The banks are here to leverage the technical know-how and agile structure of the FinTech companies to bring about substantial reduction in their costs. FinTech companies can scale up at a fast pace and reach out to a wider set of audience with minimal investment.

FinTech has tremendous potential to further revolutionize the current delivery of banking solutions in India. Expansion of modern financial services to the currently deprived areas, improving efficiency and user experience, fostering of new age financial services for the consumers, would go a long way in broadening and deepening the partnership model.

As a part of this newsletter, we also wanted to bring in a direct perspective from leading industry operators in certain select segments. For this edition, we have picked RegTech and accordingly have included an interview of IDfy, an emerging regulatory technology company in our ‘Expert Speak’ section. I would like to take this opportunity to thank Mr. Ashok Hariharan, founder of IDfy for being of great help and for providing their thoughts in the interview captured later in this newsletter.

Also covered in this edition are latest trading and transaction updates across the global technology sector. I am sure the section on “From our Equities Desk” would be an interesting read.

I hope that you will find this Newsletter insightful and look forward to your feedback on this bimonthly market overview.

Vikash Kabra Director and Head – Technology, Investment Banking

November 2018 – Spark Technology Newsletter 3 WHAT’S INSIDE?

INTO THE FRAUD 05 REAL 09 DETECTION & WORLD DIGITAL KYC SOLUTIONS. COVER STORY INTERVIEW

Providing risk-free on-boarding FinTech In India: An solutions for global Opportunity majors

11 12 a Market Statistics

NEWS OVERVIEW b TECHNOLOGY RECENT TECHNOLOGY Trading Comps MARKET DEVELOPMENTS SNAPSHOT c Recent activities and Software | Tech Services | developments across the Indian Global Transactions Internet | FinTech technology landscape

FROM OUR 20 EQUITIES DESK Insights from Spark’s ANALYSIS Institutional Equities Desk

November 2018 – Spark Technology Newsletter 4 FINTECH IN INDIA: AN OPPORTUNITY

Spark fact file A Current state of FinTech in India

Investment Banking Over the last few years technology has made a significant impact on the financial services sector in India. Not only has there been development of new financial USD 6.3 Bn products but also various alternate channels of delivery have played out, and provide Total transaction an opportunity to significantly expand the reach and scope of financial services. value till date

Indian FinTech software and Transaction value in Indian USD 4.4 Bn services market FinTech market Capital raised till date USD Bn USD Bn CAGR: 14% CAGR: 22% 14 73 USD 1.9 Bn 10 M&A transaction 49 value till date

300+ Number of fund 2018 2020 2018 2020 relationships globally The boom in India’s digital payments has led to the FinTech revolution in the country. India’s FinTech landscape witnessed high growth and strong user adoption through USD 500 Mn 2016 largely by the payments sector that witnessed a boost post the demonetization of currency notes. According to a report published by BCG and Google, Digital Payments Average annual is a USD 500 Bn opportunity by 2020. Payments has been the driver of various deal closure value upcoming segments within FinTech. By overcoming various macro level gaps, FinTech for the last 3 years has emerged out as a key enabler for the masses in the country.

13 B How FinTech has impacted the ecosystem of financial services in India? No. of transactions > USD 100 Mn #1: Extending financial services for New-to-Credit (NTC) segment ~USD 1.2 Bn Current value of transactions being Over half of the population in the country lacks credit history. This has driven FinTech executed companies to formulate alternative credit decision methods using non-traditional data sources (such as social media) and powerful data analytics to price risks. MSMEs and start-ups that did not have access to formal banking solutions now have an alternative solution. The new business model of P2P or peer – to – peer lending offered by the FinTech companies can democratize the sector not serviced by banks. (Lending Club, a P2P company listed in US extended loans worth USD 33.6 Bn by end of 2017). Technology ~USD 1.9 Bn Total transaction 2W loan Business loan Home loan Auto loan Credit card value till date 61% 46% 36% 31% 25%

As per the data from CIBIL for 2017, NTC share (%) of new accounts is significantly high for Two wheeler (2W) and business loans.

Source: NASSCOM, News articles and public information November 2018 – Spark Technology Newsletter 5 FINTECH IN INDIA: AN OPPORTUNITY

Full Service, #2: eKYC and swift on-boarding of customer Mid-Market I-Bank . Investment Banking Aadhaar-enabled eKYC has offered a level of convenience which other IDs did not (VC, PE, M&A, IPO, offer. With Aadhaar data, it is possible to directly talk to the UIDAI server database QIP, PIPE) and the verification is done in real time. With the usage of Aadhaar, e-signature, biometrics and other processes the entire process of customer on-boarding has . Institutional Equities become much faster. The eKYC process eliminates requirement to photocopy multiple documents, affixing signatures and physically verifying the documents. In . Fixed Income competitive terms, physical KYC costs around INR 100 whereas eKYC costs only solutions around INR 15. . Investment Advisory With the recent verdict by the Supreme Court on restricting private companies for accessing Aadhaar for KYC there could be some challenges faced by the financial Knowledge Banking institutions. But new-age FinTech companies would be able to come up with substitutes for eKYC. . Dedicated sector teams with deep #3: Data generation which enables insight-driven solutions domain expertise . Ability to bring new With the help of FinTech tools, gathering data to understand users in a better way, ideas to the market capturing identity related details, and providing relevant services has become much easier. FinTech companies are using insights from data gathered from sources such – Manappuram as phone bills, rental and utility payments, and social media to understand and in (2007) depth analyse the financial behaviour of users, and formulate solutions – iD Fresh Food SME loans and personal loans have highest digital influence: (2014) Home Loan SME Loan 65% 61% – AasaanJobs (2015) Car Loan 56% Unbxd (2016) Personal Loan – 64% 2W Loan 54%

Note: As per a survey published in BCG Google 2018 Digital Lending report, conducted among a set of users Relationship Banking who have purchased loan in last 12 months . Over 24 clients for whom we have closed multiple transactions #4: Reduction in customer acquisition cost by employing digital means

. Consummated The development of alternative means of customer acquisition helps financial ~USD 1.5 Bn of institutions save on high costs associated with the traditional methods of customer transaction value in acquisition which require vast amount of documentation and involve lengthy repeat business processes. The high cost of frontline resources and cut-throat competition leave thin operating margins for the institutions and very little room to play. Deep Distribution WeBank, an online only bank in China with majority stake held by Tencent, provides unsecured small loans through WeChat app. Tencent Credit provides user score . Extensive reach to between 300 to 850 to Chinese nationals using WeChat. This helps in low customer over 300 funds across acquisition cost by leveraging WeChat app. – Private Equity #5: Potential to redesign customer journey for accessing routine products & services – Hedge Funds – Family Offices Customers would look for an end-to-end seamless experience and swift on-boarding process through a fresh approach rather than just have the existing processes – Sovereign Funds digitized. This can be achieved by redefining the data required and reaching out to a customer with personalized products and services. – Corporates Kotak Mahindra Bank’s 811 app acquires new to bank customers for credit card, displays customized products and captures biometric for KYC.

Source: News articles and public information November 2018 – Spark Technology Newsletter 6 FINTECH IN INDIA: AN OPPORTUNITY

Select Technology C Banks and FinTech: A co-development and partnership model Transactions

Bank Own products Investments Partnerships August 2018 YONO Hitachi Payments Exclusive Advisor Mobile banking app for all Ezetap banking needs To establish a card To Mobile solutions to acceptance and payments deploy mPOS SIA platform Chatbot for customer InstaPay / OxiPay Private Equity Fund Raise service and assistance Dedicated fund Instant bill payments Established an INR 2 Bn By mCASH through BillDesk and fund for investments in Instant payment using Oxigen mobile number or email id FinTech companies

USD 22 Mn Pockets Arteria Supply chain solution on E-wallet for all the cloud and payments payment needs Signzy Fingpay AI enabled account iMobile opening August 2018 For merchants to Comprehensive mobile accept payment using banking app M-Pesa Exclusive Advisor Aadhaar & UPI Mobile money wallet To Money2World Avenues Payments with ICICI Bank Online outward remittance Provides remittance service for resident Indians assistance to customers Private Equity Fund Raise PingPay Pally Chatbot to create Multi Social platform investment portfolio payment app FreeCharge and tax saving Utility payments and Undisclosed PayGo online account opening FintechLabs Wallet solution for Analytics in digital lending gated communities Thought Factory to make decisions An innovation lab initiative Axis OK by Axis Bank Gieom December 2017 Secure mobile app for AI to improve operational banking without internet Exclusive Advisor efficiency To

Bank Own products Partnerships / Investments Majority Stake Acquisition PayZapp ToneTag Contactless digital Mobile payments and shopping app By transactions on mobile phone

EVA Taptis Technology AI based chatbot Undisclosed Biometric payments

Kotak 811 Airtel Payment Bank Mobile banking app for doing Mobile wallet and online payments November 2017 pure digital and paperless banking

Exclusive Advisor WhatsApp Banking Kotak’s Innovation Lab Platform for FinTech start-ups for Banking updates and services To innovation in digital payments via WhatsApp messenger

M-Connect plus Razorpay Payment gateway solutions 51% Acquisition Mobile banking app of Baroda Connect Blockchain communities Active member of two global A Hi-Tech convenience blockchain communities to minimize eBanking product suite ~USD 24 Mn bank fraud and maximize efficiency

November 2018 – Spark Technology Newsletter 7 FINTECH IN INDIA: AN OPPORTUNITY

Select Technology D Future trends to watch out for in this space Transactions

Innovation in financial services through technological advancements has been September 2017 growing across the value chain – from customer acquisition, product development, Advisor packaging to delivery. This has led to the development of providing services in each To segment of financial institutions offerings. However, the ability of FinTech companies to match and surpass the offerings and build consumer trust will be an interesting trend to watch out for. Rights Issue Partnerships between banks and FinTech companies are evolving from a vendor- customer relationship to that of mentor and investment by the various banks. This will help the banks by allowing early access to innovative technology that would not have been implemented otherwise. Banks must create use cases for these platforms USD 31 Mn to experiment with new and different business models by focusing on digital reorientation of their overall strategy, and digitisation of various processes.

Hence, the way forward for banks and FinTech companies is to engage as equal August 2016 partners for a bilateral growth. Exclusive Advisor To Case study: Ant Financial – from payments to a leading provider of financial services

Private Equity Fund Raise Started purely as an online payment services provider, Ant Financial (then Alipay) From assisted individuals and businesses to execute payments online in a secure manner. From just a single use case the company has grown to become a financial conglomerate with key subsidiaries as Alipay (payments), Yu’e Bao (investments), and USD 10 Mn Zhima Credit (credit bureau), which meet the financial requirements of China’s individuals and small businesses.

March 2016 Brief overview of Ant Financial in numbers*: Exclusive Advisor To Payment^ Wealth Financing Management 700 Mn 100 Mn Private Equity Fund Raise Annual active users 330 Mn Annual active users From Cumulative users

Undisclosed

Insurance Credit System December 2015 392 Mn 257 Mn Annual active users Activated users Exclusive Advisor To

Private Equity Fund Raise From

Undisclosed

Source: News articles and public information Note: *for the year ending March 31 2017, ^ for the year ending March 31 2018 November 2018 – Spark Technology Newsletter 8 EXPERT SPEAK

Select Technology Transactions FRAUD DETECTION & DIGITAL KYC SOLUTIONS. November 2015 INSIGHTS FROM EMERGING TECHNOCRAT Joint Advisor To

We interviewed Mr. Ashok Hariharan, Majority Stake Acquisition Founder and CEO of IDfy – a By company that targets to eliminate fraud and offer digital KYC solutions so that people and businesses can USD 270 Mn engage with confidence. Ashok Hariharan Founder and CEO, IDfy

November 2014 Exclusive Advisor 1. What led to the inception of IDfy? What engagements is said to be a USD 100 To does IDfy offer to its customers? Bn market. The idea for IDfy took birth at my In India, for example, a billion people previous venture Gaboli, a web doing 10 transactions a year make 70 Private Equity Fund Raise development and digital marketing billion transactions that require person From services company. We had posted a job verification. And this number will grow opening for which we received exactly exponentially as India, and the rest of the same CV from several different the developing world, move towards a USD 346 Mn sources. Being geeks, we turned to more connected and digital world. technology and wrote a web crawler code to help us identify this person. 3. Tell us more about IDfy’s technology We also realized that India is prone to June 2013 platform. fraud across use cases because of lack of Exclusive Advisor verifiable data available on individuals. IDfy has introduced a two-click To Added to this we also recognized that onboarding platform which eliminates virtual transactions are increasing and as identity theft on the get go. The process, virtual transactions increase there is a the simplest onboarding initiation, starts Leveraged Buyout need for a high speed and real-time with just two pictures from the By fraud detection platform. We believe we individual - a photo of the ID and a are the infrastructure that all P2P selfie. transactions will use in the future. In the back end, our Extraction and USD 270 Mn As one of the world’s Top 100 Verification Engine (EVE) has APIs that companies in Regulatory Technologies, detect tampering in cards, extract IDfy is keeping organizations safe information from digital images, through fraud detection and digital KYC accurately match the selfie to the card, March 2013 solutions. These solutions help and establish that it's a live selfie. All this Exclusive Advisor organizations engage and transact with in 5 seconds. only genuine people while complying To EVE’s machine learnt models detect with government norms. tampering on ID cards, extract relevant information from digital documents, run Majority Stake Acquisition API-led realtime checks across public data 2. How big is the market for Fraud sources, and use advanced ML algorithms In Detection services today? to compare the selfie to the card, and also Globally, fraud detection in people determine if the selfie is a live selfie. USD 182 Mn

November 2018 – Spark Technology Newsletter 9 EXPERT SPEAK

Select Technology EVE enables organizations to conduct like Philippines and Indonesia. We see Transactions digital KYC and prevent money international expansion into developing laundering keeping them safe from fraud economies as another growth driver for as well as non-compliance with us. July 2012 regulatory norms. Exclusive Advisor 6. Please provide details on current scale To 4. Why do you think that the government of operations and key clients. will not enter the territory being addressed Currently, we are processing a million Select Institutional Buyers by you? transactions per day making us one of Fraud detection is a deep technology the largest players in the world in this Secondary Stake Acquisition challenge that requires aggregating data space. from multiple sources. Not all of these Telecom has emerged as a major sources or data is available to industry vertical for us driven by its USD 38 Mn Governments. growth rate coupled with strict Further, democratic governments are regulatory norms around KYC. We are less likely to be in the business of working with the top telcos in India. April 2011 profiling their citizens. Banking, Financials Services, and Exclusive Advisor The recent Supreme Court judgement on Insurance (BFSI) is a key vertical for us. To Aadhaar-based eKYC and the Sri Krishna The fast-growing Fintech space has Commission report shows that privacy is leveraged our technology capabilities considered to be a fundamental right of well due to their need for fast, accurate, Majority Stake Acquisition the individual. The Government’s and low cost people authentication. in involvement in this space can be HDFC Bank, ICICI Prudential, IIFL, construed to be a threat to privacy. EarlySalary, PaySense. The on-demand economy, sharing USD 19 Mn economy, P2P exchanges, and online 5. Where do you see growth coming for communities are rapidly growing in India. IDfy in the future? People authentication and verification Three areas are fueling our growth. are critical to the survival of these May 2010 businesses. We are witnessing rapid 1. Deeper fraud detection: We are growth in these emerging industries with Exclusive Advisor constantly creating more fraud detection clients like Ola, AirBnB, Swiggy, and Big To capabilities that are allowing us to detect Basket. new-age and emerging fraud as well as fraud that previously went undetected. Majority Stake Acquisition Identifying and highlighting these risks is In making us more valuable to clients thereby increasing our average revenue per client. USD 44 Mn 2. Expanding fraud detection use cases: The use cases of fraud we are detecting are continuously expanding and now encompass specific requirements of October 2009 industries such as Telecom, Sharing Exclusive Advisor Economy, and P2P transactions. Greater To relevance across a broader set of industries is also driving our growth. 3. International Expansion: We are Sale of Blue Alley seeing that emerging economies have To similar characteristics and complexities as India when it comes to availability and accessibility of individual data. We are USD 14 Mn already seeing client traction in countries

November 2018 – Spark Technology Newsletter 10 LATEST NEWS AND ANNOUNCEMENTS

Select Technology Oyo, SoftBank backed hospitality chain, is growing faster in China than in its home market, India. Transactions Internet Currently Oyo manages 1,80,000 rooms in China Oyo accelerates its whereas, in India and South Asia, the company October 2009 pace of expansion in manages about 149,000 rooms. Exclusive Advisor China The average occupancy has also seen a jump in the To range of 25% to 60%. The company is now valued at Entering into the lion’s den.. USD 5.5 Bn after its last funding in September by SoftBank. Majority Stake Acquisition The Indian government is set to roll-out 1 Mn Wi-Fi Internet In hotspots as a part of its “Bharat Wi-Fi program.” These hotspots will be owned and operated by India to get 1 Mn telecom service providers, internet service providers, Wi-Fi spots by Dec USD 11 Mn and virtual network provider. 2019 Besides, the government also made announcement in which it released 605 MHz of spectrum in the 5-GHz Improving national digital October 2008 band for wireless. infrastructure Exclusive Advisor Nokia and BSNL has partnered to create an efficient To 5G ecosystem in India and leverage 4G LTE Telecom technology to enable greater operational efficiency at Nokia's Chennai plant and prepare it for the 5G era Majority Stake Acquisition India preparing for with smart manufacturing. In the 5G era Separately, on the opening day of India Mobile 5G not very far… Congress (IMC), Jio together with Ericsson demonstrated drones with facial recognition and cars USD 10 Mn powered by 5G technology.

Xiaomi has shipped around 12 Mn smartphones December 2007 which was 27.3% of the total 43 Mn phones Tech Products shipments in Q3. Likewise, the smartphone market in Exclusive Advisor India registered a 9.1% YoY growth during the same Xiaomi smartphone To period. market leader in Q3 The company has also announced the local manufacturing for its Mi LED TVs. The new facility in …27.3% market share in Minority Stake Acquisition Andhra Pradesh will have production capacity of 1 India in Q3 By lakh TVs per month by Q1 2019.

According to Kaspersky Lab, India ranks 12th in cyber USD 9 Mn Internet Security attacks. About a third of country’s internet users were subjected to cyber attacks during the India ranks 12th in July-September period this year. August 2006 cyber attacks The share of malicious incidents caused by malware Exclusive Advisor Prone to cyber threats? hosted in India was 0.68%, that is more than 6 Mn incidents in the period July-September 2018. To

Select Buyers A total of 1,200 new Tech start-ups were added in Start- ups Private Placement 2018. This is a significant improvement over the last year when only 1,000 start-ups were added, marking In 1,200 new Tech a 29% YoY decline. start-ups emerged in Likewise, the investments has increased by 2018 108% YoY to $4.2bn. USD 36 Mn …includes 8 new unicorns

Source: News articles November 2018 – Spark Technology Newsletter 11 SOFTWARE MARKET SNAPSHOT

Select Non-Tech A Stock Price Performance Transactions 280 October 2018 230 Advisor 180 To 130 80

Private Equity Fund Raise By Diversified Infrastructure Security SaaS BI & Analytics Vertical NASDAQ ~USD 40 Mn

B % Returns October 2018 1 year 3 years* BRLM Diversified 11% 18% For Infrastructure 35% 34% Security 19% 19% IPO SaaS 37% 32% BI & Analytics 36% 22% Vertical 9% 15% NASDAQ 11% 14% ~USD 230 Mn C Trading Comparables August 2018 EV/Revenue CY18E EV/EBITDA CY18E Exclusive Advisor Diversified 4.5 x 12.2 x To Infrastructure 4.1 x 20.9 x

Security 4.6 x 23.7 x IPO SaaS 6.4 x 44.4 x

BI & Analytics 3.6 x 21.4 x

~USD 170 Mn Vertical 4.2 x 15.7 x

Revenue Growth % EBITDA Margin CY18E August 2018 (CY18E/CY17) 1% Exclusive Advisor Diversified 42% To Infrastructure 15% 29%

Security 11% 16% Private Equity Fund Raise SaaS 23% From 14% BI & Analytics 16% 15% Undisclosed Vertical 14% 24%

Source: Bloomberg as on 31st October 2018, All companies calendarised to December year end. Multiples represent median of companies in sub-sector. November 2018 – Spark Technology Newsletter 12 List of companies included in sub-sector detailed in annexure. Stock price performance within each sub sector has been weighted for market cap * Annualized return SOFTWARE MARKET SNAPSHOT

Select Non-Tech A Select M&A Transactions Transactions Global (excl. India): 74 deals, ~USD 91 Bn India: 7 deals, ~USD 34 Mn (across 1 deal) August 2018 TV EV/ ACQUIRER TARGET DESCRIPTION (USD Mn) Rev Exclusive Advisor Global To Developer of cloud-based open source, enterprise information 36,000 10.8x technology services Private Equity Fund Raise Developer of multi-cloud By 8,300 - management software

Provider of a software 7,500 25.0x USD 100 Mn development platform Provider of an enterprise-ready open and connected data 5,200 15.6x June 2018 platform Advisor Developer of marketing To engagement and automation 4,750 12.4x platforms India Provider of mobile engagement Exit 34 - and communication services From

USD 30 Mn B Select Financing Transactions Global (excl. India): 25 deals, ~USD 4 Bn India: 19 deals, ~USD 68 Mn (across 13 deals) May 2018 TV EV/ INVESTOR TARGET DESCRIPTION (USD Mn) Rev Exclusive Advisor Global To Operator of a cloud computing 2,100 - company Provider of supply chain Acquisition management and payment 500 - By solution technology Provider of mining/production of cryptocurrencies and block-chain 200 - Undisclosed technologies Developer of a data analytics 75 - software Developer of a content May 2018 75 - intelligence platform Exclusive Advisor Enables AI in autonomous vehicles, consumer devices to 65 - To industrial robots India Cloud based platform that combines dental practice and 16 - Qualified Institutions patient engagement Placement Develops customer experience 9 USD 18 Mn management software

Source: VentureIntelligence, PitchBook TV – Transaction Value; TV rounded-off; Multiples rounded-off to one decimal; Global deals (excl. India) under consideration have TV >USD 10 Mn November 2018 – Spark Technology Newsletter 13 TECH SERVICES MARKET SNAPSHOT

Select Non-Tech A Stock Price Performance Transactions 230

May 2018 180 Exclusive Advisor 130 To 80

Private Equity Fund Raise Consulting HR Services Large Cap IT From Mid Cap IT Healthcare IT Diversified BPO CRM BPO NASDAQ NIFTY IT Undisclosed

B % Returns

March 2018 1 year 3 years* Consulting 39% 23% Exclusive Advisor HR Services 22% 18% To Large Cap IT 1% 8% Mid Cap IT 51% 18% Healthcare IT 4% 11% Private Equity Fund Raise Diversified BPO 7% 7% From CRM BPO -18% 4% NASDAQ 11% 14% NIFTY IT 20% 5% Undisclosed C Trading Comparables

January 2018 PE CY18E EV/EBITDA CY18E Exclusive Advisor Consulting 19.8 x 12.2 x To HR Services 24.8 x 16.5 x Large Cap IT 14.4 x 9.7 x Private Equity Fund Raise Mid Cap IT 18.6 x 12.8 x By Healthcare IT 33.8 x 14.8 x Diversified BPO 16.4 x 11.5 x ~USD 16 Mn CRM BPO 11.9 x 7.3 x Revenue Growth % EBITDA Margin CY18E December 2017 (CY18E/CY17) Advisor Consulting 7% 11% To HR Services 7% 23% Large Cap IT 8% 23% 16% Private Equity Fund Raise Mid Cap IT 17% From 28% Healthcare IT 13% 16% Diversified BPO 9% ~USD 32 Mn 10% CRM BPO 6%

Source: Bloomberg as on 31st October 2018, All companies calendarised to December year end. Multiples represent median of companies in sub-sector. November 2018 – Spark Technology Newsletter 14 List of companies included in sub-sector detailed in annexure. Stock price performance within each sub sector has been weighted for market cap * Annualized return TECH SERVICES MARKET SNAPSHOT

Select Non-Tech A Select M&A Transactions Transactions Global (excl. India): 27 deals, ~USD 19 Bn India: 9 deals, ~USD 1 Bn (across 4 deals) December 2017 TV EV/ Advisor ACQUIRER TARGET DESCRIPTION (USD Mn) EBITDA To Global Provider of claims processing and productivity management 6,700 - Private Equity Fund Raise technology services From Provider of information technology and knowledge 3,570 13.4x processing services ~USD 10 Mn Provider of customer and information management 2,630 9.3x products and services Provider of IT services offering November 2017 services like data analytics and 1,600 13.4x Advisor other support services To India Provides CMS, Industry Specific Solutions and Shared Services for 1,000 - various industries Private Equity Fund Raise From Provides end-to-end services for 13 - semiconductor industry ~USD 15 Mn

B Select Financing Transactions October 2017 Global (excl. India): 6 deals, ~USD 135 Mn India: 1 deal Book Running Lead Manger To TV EV/ INVESTOR TARGET DESCRIPTION (USD Mn) EBITDA Global IPO Provides services to combat 39 - modern cyberthreats

Developer of an online marketing 30 - ~USD 74 Mn platform

Provider of digital marketing 25 - July 2017 services Exclusive Advisor Provider of digital marketing 21 - To services

Private Equity Fund Raise From

~USD 52 Mn

Select Non-Tech A Stock Price Performance Transactions 330 March 2017 280 230 Exclusive Advisor 180 To 130 80

Private Equity Fund Raise From Search / Online Advertising Internet Content Internet Commerce Gaming USD 100 Mn Social Media & News Platform NASDAQ

B % Returns March 2017 Exclusive Advisor 1 year 3 years* Search / Online Advertising 17% 21% To Internet Content 21% 24% Internet Commerce 19% 34% Gaming -18% 23% Private Equity Fund Raise Social Media & News Platform -12% 15% From NASDAQ 11% 14%

USD 32 Mn C Trading Comparables EV/Revenue CY18E EV/EBITDA CY18E January 2017 Search/Online 1.5 x 15.4 x Co-Book Running Advertising Lead Manger Internet To 2.7 x 15.7 x Content Internet 2.4 x 12.9 x IPO Commerce Gaming 2.6 x 11.8 x

Social Media & 4.0 x 14.5 x ~USD 183 Mn News Platform Revenue Growth % EBITDA Margin CY18E (CY18E/CY17) November 2016 Search/Online 25% 31% Exclusive Advisor Advertising To Internet 19% 22% Content Internet 17% 17% Private Equity Fund Raise Commerce From Gaming 6% 26% Social Media & 26% 29% USD 64 Mn News Platform

Source: Bloomberg as on 31st October 2018, All companies calendarised to December year end. Multiples represent median of companies in sub-sector. November 2018 – Spark Technology Newsletter 16 List of companies included in sub-sector detailed in annexure. Stock price performance within each sub sector has been weighted for market cap * Annualized return INTERNET MARKET SNAPSHOT

Select Non-Tech A Select M&A Transactions Transactions Global (excl. India): 17 deals, ~USD 4.3 Bn India: 14 deals, ~USD 20 Mn (across 3 deals) June 2016 TV EV/ Exclusive Advisor ACQUIRER TARGET DESCRIPTION (USD Mn) Rev To Global Operator of a multi-platform 933 5.0x digital marketplace Private Equity Fund Raise Provider of research-based From 708 4.2x education services Developer of massively 425 - USD 32 Mn multiplayer online (MMO) games Operates as an online gaming 314 - company India May 2016 Aggregates caterers and 18 - Exclusive Advisor restaurants for office canteens Designs and develops digital To 1 - content mobile applications

Majority Stake Acquisition By

USD 28 Mn B Select Financing Transactions

Global (excl. India): 13 deals, ~USD 876 Mn January 2016 India: 34 deals, ~USD 2.2 Bn (across 29 deals) Exclusive Advisor TV EV/ To INVESTOR TARGET DESCRIPTION (USD Mn) Rev Global Operator of a pop culture Structured Capital Raise entertainment community 317 - From designed for sharing videos Start-up selling health insurance 300 - to senior citizens USD 30 Mn Operator of an online property 146 - portal India Sep 2015 Onwards Aggregator of budget hotels 1,000 - Exclusive Advisor To Operates B2B trade platform, designed specifically for SME in 225 - Select Institutional Buyers India Operates restaurants search and Secondary Stake Acquisition 210 - In discovery website and app Helps communicate with friends, 100 - share jokes, and avail daily news USD 403 Mn

Select Non-Tech A Stock Price Performance Transactions 230

May 2015 180 Exclusive Advisor 130

To 80

Private Equity Fund Raise

From Payments Banking & Lending Technology Information Processors / Credit Bureaus Investment Services, Software and Technology Financial Data, Content, & Analytics Insurance & Banking Tech USD 43 Mn NASDAQ

B % Returns April 2015 1 year 3 years* Exclusive Advisor Payments 21% 15% To Banking & Lending Technology 26% 22% Information Processors / Credit Bureaus 9% 10% Investment Services, Software and Technology 22% 17% Structured Capital Raise Financial Data, Content, & Analytics 17% 18% Insurance & Banking Tech 30% 21% From NASDAQ 11% 14%

USD 60 Mn C Trading Comparables

EV/Revenue CY18E EV/EBITDA CY18E January 2015 Exclusive Advisor Payments 4.0 x 13.0 x To Banking & Lending Tech Information Processors / 5.6 x 19.0 x Credit Bureaus 4.3 x 12.8 x Minority Stake Acquisition Investment Services, In Software and Tech 3.5 x 13.3 x Financial Data, Content, & Analytics 6.9 x 16.8 x USD 20 Mn Insurance & Banking Tech 3.6 x 22.4 x Revenue Growth % EBITDA Margin CY18E May & Nov 2014 (CY18E/CY17) Exclusive Advisor Payments 9% 29% Banking & Lending Tech To 12% 27% Information Processors / Credit Bureaus 3% 33% Private Equity Fund Raise Investment Services, From Software and Tech 7% 27% Financial Data, Content, & Analytics 9% 43% USD 68 Mn Insurance & Banking Tech 17% 11%

Source: Bloomberg as on 31st October 2018, All companies calendarised to December year end. Multiples represent median of companies in sub-sector. November 2018 – Spark Technology Newsletter 18 List of companies included in sub-sector detailed in annexure. Stock price performance within each sub sector has been weighted for market cap * Annualized return FINTECH MARKET SNAPSHOT

Select Non-Tech A Select M&A Transactions Transactions Global (excl. India): 10 deals, ~USD 21 Bn India: 5 deals, ~USD 32 Mn (across 3 deals) September 2014 TV EV/ Exclusive Advisor ACQUIRER TARGET DESCRIPTION (USD Mn) Rev To Global Developer of financial data and 17,000 3.2x risk analytics tools Minority Stake Acquisition Developer of web and mobile 2,200 13.3x By based payment applications Provider of mobile and digital payments systems for consumers 690 - Undisclosed and businesses Provider of a SaaS-based 390 - investment management platform Developer of mobile and tablet Undisclosed 220 - August 2014 banking platform Advisor Developer of mission-critical system for exchange trading, To 190 0.5x clearing and risk management services. India QIP Provides Wealth Management, Custody, and Compliance 28 - solutions USD 42 Mn B Select Financing Transactions

Global (excl. India): 4 deals, ~USD 232 Mn August 2014 India: 9 deals, ~USD 158 Mn

Book Running Lead Manger TV EV/ To INVESTOR TARGET DESCRIPTION (USD Mn) Rev Global Developer of digital payments QIP and digital finance platforms in 175 - the Philippines Provider of digital financial Undisclosed 24 - transaction services USD 65 Mn India Provider of wealth technology 30 - platform Kissht is a credit-led payment July 2014 30 - solutions company Exclusive Advisor SlicePay makes credit accessible To to the fast-growing, unbanked 15 - millennials in India Operates an online platform that Investment provides quick personal loans for 5 - In salaried employees

USD 83 Mn

Source: VentureIntelligence, PitchBook TV – Transaction Value; TV rounded-off; Multiples rounded-off to one decimal; November 2018 – Spark Technology Newsletter 19 Global deals (excl. India) under consideration have TV >USD 10 Mn * Includes other investors FROM OUR EQUITIES DESK

Institutional Equities Key updates from Spark’s Equities Team Highlights 244 Stocks under coverage 2QFY19 Recap: IT / Internet / Flexi Staffing / Education USD 1.2 Tn Total market cap of IT Service/Engineering companies stocks under Moderate revenue growth in US$ terms post cross currency headwinds – coverage The sequential revenue growth in US$ terms for our IT coverage portfolio stood at a decent 2.3% in 2QFY19 despite the currency headwinds. The revenues from U.S INR 260 Bn region grew 2.9% qoq, while revenues from Europe and RoW* regions grew by 1.1% Total cash market qoq and 2.2% qoq, respectively. The US$ revenue growth is primarily led by growth volume in H1FY18 in Retail & CPG^ (4.6% qoq) and BFSI (2.8% qoq) verticals, while Energy & Utilities grew 2.0% qoq. 350+ Number of fund Higher operating margins in the absence of visa costs and depreciation of INR relationships against USD – The EBITDA margins have expanded sequentially for ~88% of our IT globally stock portfolio in the absence of visa costs and tailwinds from depreciation of INR against USD. The utilization rates improved sequentially across the board during “Go-to” broker Q2FY19. We believe the utilization rates would remain at the levels witnessed during for stocks in the Q2 or improve marginally over the next few quarters. Despite net employee mid-market space additions, the employee productivity (revenue per employee) declined sequentially for ~71% of our IT portfolio. We expect the employee productivity to improve going forward led by moderation in headcount addition.

Internet/Education companies Hiring in IT vertical (30% of recruitment revenues) witnessed revival after being under pressure for the past one year. We continue to remain positive on Info Edge, as the billings for Naukri.com grew 26% yoy in 2QFY19 vs. 15% yoy in 1QFY19. We also expect 99acres to deliver strong revenue growth led by favourable regulatory environment, while Zomato is likely to bridge the gap between itself and Swiggy further in FY19E. We maintain our negative view on Just Dial, as we expect the revenue growth to moderate in FY20E. In our Education coverage, we continue to 5th position in 2017 maintain our positive outlook on NIIT Limited and Navneet Education, and expect All India research these companies to perform better in FY19 vs. FY18. team Flexi staffing companies

The volumes of India security services business for SIS grew ~12% yoy in Q2 post witnessing decline in headcount over the last two quarters. The revenue growth and Technology margins moderated for Australia business declined sequentially, as 1QFY19 had positive one-off effect from Commonwealth games. We expect the volume growth 24 to revert back to normalcy from in 2HFY19. The operating margins for Quesscorp in Stocks under general staffing segment remained flat in Q2, although the revenue growth during coverage 1HFY19 stood strong at ~37% yoy. We believe the strong revenue growth over the past 4 quarters is driven entirely by growth in volumes and came at the expense of ~USD 190 Bn lower price points, thus impacting margins. TeamLease, however, witnessed Total market cap improvement in margins for general staffing segment (up ~20bps in Q2) post of Stocks under contracting over the past two quarters, led by operating leverage, as the mark-up per coverage associate remained flat during Q2. We expect revenue growth momentum to continue for flexi staffing coverage in H2 with onset of festive season, and expect the growth to be driven by volumes.

Source: SPARK Research *RoW: Rest of the world November 2018 – Spark Technology Newsletter 20 ^CPG: Consumer Packaged Goods ANNEXURE

LIST OF COMPANIES

Software Tech Services

Diversified SaaS BI & Analytics Consulting Mid Cap IT Alphabet Inc Salesforce.com Inc Splunk Inc FTI Consulting Inc EPAM Systems Inc Microsoft Corp Workday Inc Teradata Corp Exponent Inc Luxoft Holding Inc Oracle Corp ServiceNow Inc Fair Isaac Corp Navigant Consulting Inc Mphasis Ltd IBM Veeva Systems Inc Tableau Software Inc Huron Consulting Group Syntel Inc SAP SE Ultimate Software Group Verint Systems Inc Inc Globant SA Infrastructure Shopify Inc MicroStrategy Inc ICF International Inc Mindtree Ltd VMware Inc LogMeIn Inc Hortonworks Inc CBIZ Inc Virtusa Corp Red Hat Inc Aspen Technology Inc Gridsum Holding Inc Hackett Group Inc/The Hexaware Technologies ServiceNow Inc j2 Global Inc Attunity Ltd Resources Connection Inc Ltd CA Inc Blackbaud Inc Datawatch Corp GP Strategies Corp Persistent Systems Ltd Citrix Systems Inc Paycom Software Inc Vertical CRA International Inc Perficient Inc F5 Networks Inc RealPage Inc Cerner Corp Franklin Covey Co Cyient Ltd Splunk Inc Zendesk Inc Constellation Software HR Services Larsen & Toubro Infotech Ltd Atlassian Corp PLC Cornerstone OnDemand SS&C Technologies Automatic Data Processing Inc Inc L&T Technology Services Micro Focus Veeva Systems Inc Ltd HubSpot Inc Paychex Inc LogMeIn Inc athenahealth Inc KPIT Technologies Ltd Box Inc TriNet Group Inc NetScout Systems Inc Guidewire Software Inc Rolta India Ltd RingCentral Inc Insperity Inc Software AG Blackbaud Inc HCIT New Relic Inc Barrett Business Services Nutanix Inc CoreLogic Inc Inc IQVIA Holdings Inc Paylocity Holding Corp CommVault Systems Inc Ellie Mae Inc Large Cap IT athenahealth Inc 2U Inc Pure Storage Inc Medidata Solutions Inc IBM Cerner Corp Coupa Software Inc New Relic Inc RealPage Inc Accenture PLC Medidata Solutions Inc Qualys Inc Progress Software Corp Allscripts Healthcare Tata Consultancy Services Veeva Systems Inc Mimecast Ltd Solutions A10 Networks Inc Ltd Inovalon Holdings Inc SPS Commerce Inc Inovalon Holdings Inc Security Cognizant Technology Diversified BPO Five9 Inc Appfolio Inc Solutions Symantec Corp Genpact Ltd Benefitfocus Inc HealthStream Inc Infosys Ltd Check Point Software ExlService Holdings Inc Instructure Inc Instructure Inc HCL Technologies Ltd Palo Alto Networks Inc Capita PLC Splunk Inc Workiva Inc Itron Networked Solutions Wipro Ltd Inc Conduent Inc Fortinet Inc Carbonite Inc Capgemini SE Castlight Health Inc WNS Holdings Ltd Apptio Inc CGI Group Inc Trend Micro Inc/Japan CRM BPO LivePerson Inc Nippon Telegraph & Proofpoint Inc Teleperformance Castlight Health Inc Telephone FireEye Inc SYNNEX Corp BrightView Holdings Inc Atos SE CyberArk Software Ltd Convergys Corp Brightcove Inc Nomura Holdings Inc Imperva Inc TTEC Holdings Inc ChannelAdvisor Corp Tech Mahindra Ltd Qualys Inc Sykes Enterprises Inc Amber Road Inc Mimecast Ltd Transcosmos Inc Marin Software Inc SecureWorks Corp Relia Inc Rapid7 Inc Atento SA F-Secure OYJ Hinduja Global Solutions OneSpan Inc Ltd MobileIron Inc Firstsource Solutions Ltd Zix Corp Absolute Software Corp Quick Heal Technologies Ltd

November 2018 – Spark Technology Newsletter 21 ANNEXURE

LIST OF COMPANIES

Internet FinTech

Search / Online Advertising Internet Commerce Payments Information Processors / Credit Alphabet Inc Amazon.com Inc Visa Inc Bureaus Microsoft Corp Alibaba Group Holding Ltd Mastercard Inc Experian PLC Yandex NV Booking Holdings Inc American Express Co Equifax Inc Criteo SA Netflix Inc PayPal Holdings Inc Fair Isaac Corp Trade Desk Inc/The eBay Inc Discover Financial Services Acxiom Corp Rubicon Project Inc/The Expedia Inc Cielo SA Investment Services, Software and Technology Rhythmone PLC Qurate Retail Group Inc QVC First Data Corp SEI Investments Co QuinStreet Inc Group Worldpay Inc Broadridge Financial Solutions Inc YuMe Inc Copart Inc Global Payments Inc SS&C Technologies Holdings Inc Marchex Inc GrubHub Inc Total System Services Inc DST Systems Inc Telaria Inc Trivago NV Worldpay Group Ltd Financial Engines Inc Marin Software Inc Cimpress NV Wirecard AG Envestnet Inc Internet Content Stamps.com Inc Square Inc Financial Data, Content, & Zillow Group Inc Shutterstock Inc GMO Payment Gateway Inc Analytics IAC/InterActiveCorp Etsy Inc EVERTEC Inc S&P Global Inc TEGNA Inc Quotient Technology Inc SafeCharge Thomson Reuters Corp GoDaddy Inc 1-800-Flowers.com Inc Western Union Co/The Moody's Corp Shutterfly Inc Overstock.com Inc Euronet Worldwide Inc IHS Markit Ltd comScore Inc ANGI Homeservices Inc FleetCor Technologies Inc Verisk Analytics Inc Web.com Group Inc Travelzoo Alliance Data Systems Corp MSCI Inc Renren Inc CafePress Inc Edenred FactSet Research Systems Inc XO Group Inc Gaming WEX Inc Dun & Bradstreet Corp/The Care.com Inc Tencent Holdings Ltd Blackhawk Network Morningstar Inc TechTarget Inc NetEase Inc Green Dot Corp Insurance/Banking Technology DR Horton Inc Activision Blizzard Inc Net 1 UEPS Technologies Inc Verisk Analytics Inc eHealth Inc Electronic Arts Inc Cardtronics PLC Guidewire Software Inc NAVER Corp Everi Holdings Inc Ebix Inc NCSoft Corp NCR Corp Crawford & Co Ubisoft Entertainment SA Ingenico Group SA Intellect Design Arena Ltd DeNA Co Ltd VeriFone Systems Inc Symbility Solutions Inc Zynga Inc PAR Technology Corp GungHo Online Entertainment Inc Banking and Lending Technology Changyou.com Ltd Intuit Inc Gree Inc Fidelity National IS Glu Mobile Inc Fiserv Inc Social Media & New Platform Jack Henry & Associates Inc Facebook Inc Temenos Group AG Snap Inc Ellie Mae Inc Twitter Inc ACI Worldwide Inc LINE Corp LendingClub Corp Pandora Media Inc Q2 Holdings Inc Yelp Inc Bottomline Technologies On Deck Capital Inc

November 2018 – Spark Technology Newsletter 22 DISCLAIMER

. Information provided in this document with respect to the industry have been compiled from publicly available sources, including official publications and research reports, and is given as general information and has not been independently verified by Spark Capital Advisors (India) Pvt. Ltd. (“Spark Capital”). Spark Capital has not carried out any independent verification of any information contained herein (including statements of opinion and expectation). Accordingly, Recipients should not place undue reliance on such information. The delivery of this document does not constitute a representation that the information given in this document is correct whether at the date hereof or any time subsequent to the date hereof. Spark Capital makes no representation or warranty with respect to the accuracy or completeness of any information or idea contained in this document, nor does Spark Capital undertake any obligation to update this document.

. This document does not purport to contain all the information that the Recipient may require. This document is being provided to give a general overview on the industry. Please note that all forward looking statements contained in this document have been sourced from multiple databases. No representations are being made about the correctness or achievability of these statements or their underlying assumptions.

. This document has been prepared solely for the purpose of providing information related to the Technology sector and is not to be reproduced or used for any other purpose.

. Neither Spark Capital nor the Promoters nor any of their respective affiliates, directors, officers, employees, shareholders, agents, representatives and advisors of Spark Capital shall have any liability for any loss or damage (direct or indirect) suffered by Recipients on account of their reliance on any representations (express or implied) contained in, or any omissions from this document or any information transmitted orally, in writing, electronically or in any other form to the Recipients.

. All enquiries relating to this document should be directed to Spark Capital personnel mentioned in this document.

November 2018 – Spark Technology Newsletter 23 TECHNOLOGY TEAM

Vikash Kabra Director and Head – Technology, IB [email protected]

Vikram Sivaraman Vice President – Technology, IB [email protected]

Aditya Jaju Associate– Technology, IB [email protected]

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