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

Dear Reader,

Welcome to the twelfth edition of the monthly Technology Newsletter from Spark Capital. With this newsletter, we have tried to give you a flavour of various updates across the Software, Tech Services, , and FinTech sectors.

In the last edition, we had discussed about the changing paradigm of the consumer internet market in . This month marks the largest deal in the e-commerce segment, not just in India, but across the world.

After months of speculations and rumours, the verdict is finally out, the Indian e-commerce market will be battled out between the three largest retailers in the world: Alibaba, , and . Flipkart, Amazon, and have together sunk-in over USD 10 Bn in a market which is currently anywhere between USD 15-20 Bn. The Walmart-Flipkart deal, 77% acquisition for USD 16 Bn, valuing Flipkart at a whopping ~USD 21 Bn, is the largest deal globally in the E-commerce space. Said another way Walmart is valuing Flipkart at about ~8% of its market cap, while it represents only about 1.5% of its revenue.

This deal beats the ~USD 3.4 Bn acquisition of Chewy by PetSmart and ~USD 3.3 Bn acquisition of Jet by Walmart.

Over the last 2-3 years, the jury seems to be out that omni-channel strategy is the way to conquer the retail market. Consumers seamlessly shop online and offline with the objective of buying what they want and what they need. Online channel, on a standalone basis, is too expensive to acquire and service customers. Amazon, through its ~USD 14 Bn acquisition of Whole Foods and Walmart through its acquisition of Jet and multiple other smaller e-commerce companies have showcased this to the world.

Given the regulations around multi brand offline retail, this leaves online channel as the core strategy along with wholesale cash-and- carry segment for Walmart, which would be looking at India as a ~USD 200 Bn online e-commerce market by 2026 with an opportunity to dominate its arch rival, Amazon, in one of the fastest growing retail markets in the world.

This deal will offer significant amount of synergy to both the parties. Walmart can learn from Flipkart on how to manage an online retail business, something which has evaded Walmart despite its acquisition of Jet; while Flipkart, with inputs from Walmart, can

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

potentially venture into the grocery business, the biggest component of the retail segment. While we watch the action from the side lines, we need to celebrate the fact that the poster boy of the Indian internet start-up has made a fantastic return for its investors, no mean feat despite the ifs and buts. Walmart-Flipkart deal is a great validation of a large exit for its PE and VC investors which was proved difficult in the Indian context, thus far.

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 applications performance management sector and have included the interview of Appnomic, an emerging cognitive-based monitoring and automation company in our ‘Expert Speak’ section. I would like to take this opportunity to thank Mr. Padmanabhan D, Managing Director & CEO and Mr Alton Viegas, Director & CFO of Appnomic for being a great help and providing their thoughts in the interview captured later in this newsletter.

Also covered in this edition are the 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 monthly market overview.

Vikash Kabra Director and Head – Technology, Investment Banking

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

INTO THE LEARN. 05 REAL 06 ANALYZE. WORLD DETECT.

COVER STORY INTERVIEW PLAN.

The Revolutionizing IT e-commerce analytics via milestones Machine Learning

08 09 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 17 EQUITIES DESK Insights from Spark’s ANALYSIS Institutional Equities Desk

May 2018 – Spark Technology Newsletter 4 INTO THE REAL WORLD

Spark fact file The e-commerce milestones

Investment Banking Case Study – Big bets in the global e-commerce market USD 5.6 Bn Total transaction Major e-commerce acquisitions pivoting the outlook of the global e-commerce industry value till date

USD 3.8 Bn Acquirer Target Deal Size (USD Bn) EV/Revenue Capital raised till date 16.00 4.5x USD 1.8 Bn 3.35 NA M&A transaction value till date 3.30 3.3x

300+ (Tradex 1.86 NA Number of fund Tech) relationships Littauer AsiaNet 1.20 NA globally Technologies Corp.

1.13 1.2x USD 500 Mn Average annual 1.08 19.6x deal closure value for the last 3 years 1.00 NA

11 1.00 5.0x No. of transactions > USD 100 Mn 1.00 1.3x

~USD 1.2 Bn 0.83 6.3x Current value of transactions being 0.76 13.3x executed 0.75 NA

0.70 NA

Technology Internet RightWorks 0.66 Capital Group 34.5x ~USD 1.8 Bn Total transaction value till date The last decade has seen a number of significant acquisitions and buyouts in the e- commerce sector across the globe. The spur continues till date with Walmart acquiring a majority stake in Flipkart to boost online presence in the Indian market.

Source: Public sources, PitchBook May 2018 – Spark Technology Newsletter 5 EXPERT SPEAK

Full Service, Mid-Market I-Bank LEARN. ANALYZE. DETECT. PLAN. . Investment Banking (VC, PE, M&A, IPO, INSIGHTS FROM INDUSTRY EXPERTS QIP, PIPE) . Institutional Equities . Fixed Income solutions We interviewed Mr Padmanabhan D, Managing Director & CEO and Mr Alton Viegas, Director & CFO of Appnomic Systems – a unique machine Investment Advisory . learning-based IT Operations Analytics (ITOA) platform. They talk about their journey, Appnomic’s unique offerings and growth plans. Knowledge Banking . Dedicated sector teams with deep domain expertise . Ability to bring new ideas to the market – Manappuram (2007) – iD Fresh Food (2014) Padmanabhan D Alton Viegas Managing Director & CEO Director & CFO – AasaanJobs (2015) – Unbxd (2016)

1. How has your journey been with Management was being done using tools Relationship Banking Appnomic? that are runtime code profilers. We minimize business outages for . Over 24 clients for I have worked in the IT industry for over enterprises with our unique behavior whom we have closed 25 years with leading organizations like learning techniques. Typically, an PSI-Bull and Infosys. At Infosys, I led the multiple transactions enterprise can have their applications solution architecture team of Finacle – hosted on the cloud or on-premises. Our . Consummated Core Banking solution. I led the team to solutions provide a unique early warning ~USD 1.5 Bn of re-architect the product to a centralized system for business applications, ranging transaction value in browser-based architecture and from identifying performance repeat business optimized the performance. This was a bottlenecks to insider threats. The new benchmark globally for scalability of machine data that is collected on a the core banking applications. It was at regular basis is processed by our Deep Distribution PSI-Bull that I and Alton Viegas met. cognitive engine that triggers robotic Alton was responsible for Mainframe . Extensive reach to process automation to avoid downtime sales for PSI-Bull in South India and for a over 300 funds across and identify anomalies that are difficult brief period, he managed software sales to trace manually. – in the US, Africa & Middle East for a leading software company. One was in – Hedge Funds automating the infra services being done 2. How is the market opportunity for manually, all the big IT service – Family Offices Appnomic? companies had an excel sheet that – Sovereign Funds would size a team of L1, L2 and L3 IT Operations management is a USD 23 resources if number of servers and other Bn opportunity and we also operate in – Corporates devices along with the coverage window the USD 17 Bn BI & Analytics market. needed were entered. The other was in The Application Performance the way the Application Performance Management Market is expected to

May 2018 – Spark Technology Newsletter 6 EXPERT SPEAK

Select Technology grow from $2.72 billion in 2014 to $4.98 looking to accelerate our growth in Asia Transactions billion by 2019, at a CAGR of 12.86% and Middle East markets, as well as raise and is projected to reach $8.77 Billion by our level of penetration in the U.S. We 2023. This is a niche market and highly would adopt different go-to-market December 2017 technology driven. strategies for each of these markets. Exclusive Advisor These are for now Work-in-progress and we should see some good results during To 3. Can you give a brief on Appnomic’s this year. offerings? We have two products, one is an Majority Stake Acquisition 5. How is Appnomic’s offerings analytics software for IT application differentiated from its competitors? By operations which eliminates the need for manual setting and management of Our primary differentiator is the monitoring thresholds, while the other is methodology we use to identify gaps Undisclosed a data center automation software based on machine data, allowing us to platform which enables cost effective extract actionable insights from our automation to improve productivity of cognitive engine. This self-learning November 2017 various data center processes. Our technology platform is highly flexible primary differentiator is the and adaptive to application and business Exclusive Advisor methodology we use to identify gaps process level changes. Our products & To based on machine data, allowing us to solutions are application and infra extract actionable insights from our agnostic. We can easily integrate into cognitive engine. This self-learning any system and platform thereby giving 51% Acquisition technology platform is highly flexible is an edge over other solutions. Our unique and non-intrusive method of and adaptive to application and business Of identifying outages and arriving at the process level changes. Our machine- root cause is also a USP. learning capability is not limited to ~USD 24 Mn identifying problems in real-time, it goes a step further to build functionalities 6. What are the growth plans for across the application. The granular-level Appnomic? data that we capture, in true sense is Big September 2017 Data. Other APM tools also capture it. We are looking to increase our thrust in Advisor Yet, what differentiates us is the way we the US market going forward. We are To process and present this data. Our planning to add additional features in the approach allows applications and new versions of our offering. Along with business owners to interpret it for better the new features, monitoring on the planning and budgeting. Apart from the cloud with cognitive forensics and Rights Issue two products, we provide consulting remediation would take the product to services including topology review, the next level. We expect to triple our behavior analysis, Capacity planning and revenues in the next couple of years. performance review. USD 31 Mn

4. What is your go-to market strategy? August 2016 India is our first market and we are experiencing steady growth in this Exclusive Advisor market, a sign of our product maturity as To well as our movement from the early adopters to more discerning customers. We operate across multiple sectors Private Equity Fund Raise including BFSI, telecom, travel portals, retail, manufacturing, E-Commerce etc. From We have some marquee BFSI clients in HDFC Bank, ICICI Bank, State Bank of India, LIC, Central Bank of India, Bank of USD 10 Mn Maharashtra among others. We are

May 2018 – Spark Technology Newsletter 7 LATEST NEWS AND ANNOUNCEMENTS

Select Technology Transactions SMAAT India’s Water ATM (a water ‘ATM’ that can produce 3,000 litres of clean drinking water in one day at just 20 paise per litre); ATGC Biotech’s March 2016 General Revolutionary Pest Control (creates a false signal for the male insects and confuses the mating behaviour Exclusive Advisor 5 MADE-IN-INDIA of insect pests, thereby preventing the pest To TECHNOLOGY population to build up); Drishti’s AI app (helps INNOVATIONS visually-impaired persons perceive the world in a unique way); AutoNxt’s autonomous e-tractor Private Equity Fund Raise Across segments (battery-powered, self-driving tractor that can learn From to adapt to the field it is in); a Sensor to detect chronic kidney disease (uses a highly sensitive electrochemical method, which can be used to detect Undisclosed the disease at different stages)

As per the report, India has accounted for 56% of deal PE/VC December 2015 value and 71% of the deal volume of the total PE and VC tech activity in the Indian and Southeast Asian INDIA - KEY Exclusive Advisor markets since 2015. MARKET FOR PE, To As the next biggest market, accounted for VC TECH ACTIVITY 33% of deal value and 10% of volume, while Kroll & Mergermarket Indonesia accounted for 7% of deal value as well as report Private Equity Fund Raise volume. From According to a PwC India and ASSOCHAM report, Deep Tech “With over 36% of large financial establishments Undisclosed INDIA WELL investing in AI-driven technologies and 70% planning POSITIONED FOR to embrace it, India is well poised for AI-led economic transformation. AI-LED ECONIMIC November 2015 TRANSFORMATION The report added: Yet, while AI, Machine Learning and robotics have a wide range of use cases in ML, the up-and-coming Joint Financial Advisor financial services sector, their potential has not been big thing in tech To fully realized in India.

Using this feature, when users search for job-related Internet Majority Stake Acquisition queries like "jobs near me", "jobs for freshers" or By others, they will see a special module that can be BRINGS ITS expanded to a more immersive experience. One can JOBS SEARCH click on any job listing to view more details about the FEATURE TO INDIA USD 270 Mn job title, location, and whether it is full time or part …ever extending product time among others. offerings

November 2014 Video streaming major has signed a strategic Exclusive Advisor partnership with direct-to-home player Tata Sky that General will enable subscribers of both the services easily access To NETFLIX-TATA SKY Netflix catalogue through future Tata Sky platforms. SIGNS A STRATEGIC Harit Nagpal, MD & CEO of Tata Sky said, “Tata Sky’s Private Equity Fund Raise PARTNERSHIP partnership with Netflix adds another dimension to providing world-wide quality content On-Demand for From Tata Sky strengthening its position in DTH space our subscribers. We are glad to include Netflix in our family and look forward to keep offering an extraordinary entertainment experience to all our USD 346 Mn subscribers."

Source: News articles May 2018 – Spark Technology Newsletter 8 SOFTWARE MARKET SNAPSHOT

Select Technology A Stock Price Performance Transactions 240 220 June 2013 200 180 Exclusive Advisor 160 140 To 120 100 80 Leveraged Buyout By Diversified Infrastructure Security SaaS BI & Analytics Vertical NASDAQ USD 270 Mn

B % Returns

March 2013 1 year 3 years* Exclusive Advisor Diversified 18% 19% To Infrastructure 49% 26% Security 32% 16% SaaS 52% 30% Majority Stake Acquisition BI & Analytics 45% 13% In Vertical 26% 17% NASDAQ 18% 14% USD 182 Mn

C Trading Comparables

July 2012 EV/Revenue CY18E EV/EBITDA CY18E Exclusive Advisor Diversified 4.8 x 12.1 x To Infrastructure 4.3 x 15.2 x

Select Institutional Buyers Security 4.7 x 24.5 x

SaaS 6.7 x 43.4 x Secondary Block Deal BI & Analytics 2.5 x 29.7 x

USD 38 Mn Vertical 5.8 x 23.3 x

Revenue Growth % EBITDA Margin CY18E April 2011 (CY18E/CY17) Exclusive Advisor Diversified 8% 41% To Infrastructure 20% 28%

Security 10% 20% Majority Stake Acquisition SaaS 20% 17% Of BI & Analytics 15% 12% USD 19 Mn Vertical 14% 24%

Source: Bloomberg as on 3rd May 2018, All companies calendarised to December year end. Multiples represent median of companies in sub-sector. List of companies included in May 2018 – Spark Technology Newsletter 9 sub-sector detailed in annexure. Stock price performance within each sub sector has been weighted for market cap * Annualized return SOFTWARE MARKET SNAPSHOT

Select Technology A Select M&A Transactions Transactions Global (excl. India): 20 deals, ~USD 9.5 Bn India: 2 deals, NA May 2010 TV EV/ Exclusive Advisor ACQUIRER TARGET DESCRIPTION (USD Mn) Rev To Global Developer of a cloud-based performance management 2,400 8.9x Majority Stake Acquisition platform In Developer of business communications and 2,000 NA collaboration software Provider of a healthcare USD 44 Mn 1,200 NA technology platform Operator of a project 1,200 6.0x management platform October 2009 Provider of a cloud-based 550 NA financial analytics software Exclusive Advisor Developer of 3D inspection 444 NA To software and electronics India Provider of bootstrapped Sale of Blue Alley NA NA database management tools To

USD 14 Mn B Select Financing Transactions Global (excl. India): 8 deals, ~USD 1.3 Bn October 2009 India: 5 deals, ~USD 2 Mn (across 2 deals) Exclusive Advisor TV EV/ To INVESTOR TARGET DESCRIPTION (USD Mn) Rev Global Provider of video telematics for * 700 NA Majority Stake Acquisition global driver risk management In Provider of a SaaS and on- premises based business 172 NA technology and IT service USD 11 Mn management platform Developer of Administration 110 NA Software and Payment Systems Developer of intelligent October 2008 Evergreen Coast Capital enterprise search and predictive 100 NA Exclusive Advisor insights platform Developer of a cloud-based To * 67 NA communications platform India Provider of delivery digitization Majority Stake Acquisition * 2 NA & cost optimization services In

USD 10 Mn

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

Select Technology A Stock Price Performance Transactions 200 180 August 2008 160 140 Book Running Lead Manager 120 To 100 80

QIP Consulting HR Services Large Cap IT Mid Cap IT Healthcare IT Diversified BPO CRM BPO NASDAQ NIFTY IT USD 18 Mn

B % Returns

December 2007 1 year 3 years* Exclusive Advisor Consulting 28% 17% To HR Services 15% 13% Large Cap IT 19% 11% Mid Cap IT 70% 24% Healthcare IT 10% 7% Minority Stake Acquisition Diversified BPO 23% 11% By CRM BPO 9% 11% NASDAQ 18% 14% NIFTY IT 36% 7% USD 9 Mn

C Trading Comparables

April 2007 PE CY18E EV/EBITDA CY18E Exclusive Advisor Consulting 17.0 x 11.1 x To HR Services 22.7 x 14.9 x Large Cap IT 14.8 x 10.4 x Majority Stake Sale Mid Cap IT 21.1 x 14.5 x To Healthcare IT 33.8 x 13.8 x Diversified BPO 10.9 x USD 64 Mn 18.0 x CRM BPO 14.2 x 7.5 x Revenue Growth % EBITDA Margin CY18E April 2005 (CY18E/CY17) Book Running Lead Manager Consulting 4% 12% To HR Services 7% 22% Large Cap IT 5% 21% IPO Mid Cap IT 13% 16%

Healthcare IT 14% 27% Diversified BPO 8% 17% USD 9 Mn CRM BPO 5% 11%

Source: Bloomberg as on 3rd May 2018, All companies calendarised to December year end. Multiples represent median of companies in sub-sector. List of companies included in May 2018 – Spark Technology Newsletter 11 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): 5 deals, ~USD 13.1 Bn India: 1 deal, ~USD 12 Mn May 2018 TV EV/ Exclusive Advisor ACQUIRER TARGET DESCRIPTION (USD Mn) EBITDA To Global Provider of technology 6,900 11.3x consulting services Acquisition Provider of specialized technology, strategic advisory By 5,400 7.8x and business operations outsourcing services Provider of system engineering Undisclosed 775 11.5x and IT services Operator of a compliance and 17 NA archiving platform January 2018 Provider of retail technology 13 NA Exclusive Advisor services India To Developer of an e-learning 12 NA platform Private Equity Fund Raise By B Select Financing Transactions ~USD 16 Mn Global (excl. India): 2 deals, ~USD 361 Mn India: No deals TV EV/ December 2017 INVESTOR TARGET DESCRIPTION (USD Mn) EBITDA Advisor Global To Operator of data centers 230 NA Provider of consumer product 131 NA content management services Private Equity Fund Raise From

~USD 32 Mn

December 2017 Advisor To

Private Equity Fund Raise From

~USD 10 Mn

Source: VentureIntelligence, PitchBook TV – Transaction Value; TV rounded-off; Multiples rounded-off to one decimal; May 2018 – Spark Technology Newsletter 12 Global deals (excl. India) under consideration have TV >USD 10 Mn * Includes other investors INTERNET MARKET SNAPSHOT

Select Non-Tech A Stock Price Performance Transactions 380 330 November 2017 280 Exclusive Advisor 230 180 To 130 80

Private Equity Fund Raise

From Search / Online Advertising Internet Content Internet Commerce Gaming ~USD 15 Mn & News Platform NASDAQ

B % Returns October 2017 Book Running Lead Manger 1 year 3 years* Search / Online Advertising 23% 25% To Internet Content 46% 25% Internet Commerce 68% 47% IPO Gaming 47% 36% Social Media & News Platform 16% 29% NASDAQ 18% 14%

~USD 74 Mn C Trading Comparables

EV/Revenue CY18E EV/EBITDA CY18E July 2017 Search/Online 4.8 x 13.2 x Exclusive Advisor Advertising To Internet 2.3 x 15.2 x Content Private Equity Fund Raise Internet 3.3 x 15.8 x From Commerce Gaming 2.6 x 13.7 x Social Media & ~USD 52 Mn 5.6 x 17.6 x News Platform Revenue Growth % EBITDA Margin CY18E (CY18E/CY17) March 2017 Search/Online 31% 30% Exclusive Advisor Advertising To Internet 16% 21% Content Internet 17% 18% Private Equity Fund Raise Commerce From Gaming 9% 26% Social Media & 19% 28% USD 100 Mn News Platform

Source: Bloomberg as on 3rd May 2018, All companies calendarised to December year end. Multiples represent median of companies in sub-sector. List of companies included in May 2018 – Spark Technology Newsletter 13 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): 11 deals, ~USD 11.4 Bn India: 7 deals, ~USD 2 Mn (across 1 deal) March 2017 TV EV/ Exclusive Advisor ACQUIRER TARGET DESCRIPTION (USD Mn) Rev To Global Operator of an online betting 3,637 NA and gaming website Private Equity Fund Raise Provider of student From information management and 3,000 5.4x reporting platform - Provider of a bike sharing 2,700 NA USD 32 Mn Dianping platform Developer of an e-commerce 525 NA (.Market) selling platform Provider of in-demand January 2017 413 4.1x education and career services Co-Book Running Lead Manger To B Select Financing Transactions Global (excl. India): 8 deals, ~USD 321 Mn IPO India: 18 deals, ~USD 509 Mn (across 15 deals) TV EV/ ~USD 183 Mn INVESTOR TARGET DESCRIPTION (USD Mn) Rev Global Provider of an online travel 95 NA service platform November 2016 Developer of an online car 57 NA Exclusive Advisor rental platform Provider of an online To * 54 NA shopping platform Provider of an e-commerce 35 NA Private Equity Fund Raise platform Provide of e-commerce From 25 NA commercial printing services India USD 68 Mn Provider of 445 NA (E-commerce) platform Provider of online tea and * 20 NA June 2016 food delivery services Provider of online platform for Exclusive Advisor * 12 NA travel package bookings To Provider of tech-driven * 5 NA logistics platform

Private Equity Fund Raise From

USD 32 Mn

Source: VentureIntelligence, PitchBook TV – Transaction Value; TV rounded-off; Multiples rounded-off to one decimal; May 2018 – Spark Technology Newsletter 14 Global deals (excl. India) under consideration have TV >USD 10 Mn * Includes other investors FINTECH MARKET SNAPSHOT

Select Non-Tech A Stock Price Performance Transactions

170 May 2016 Exclusive Advisor 130 To 90

Majority Stake Acquisition By Payments Banking & Lending Technology Information Processors / Credit Bureaus Investment Services, Software and Technology Financial Data, Content, & Analytics Insurance & Banking Tech USD 28 Mn NASDAQ

B % Returns January 2016 1 year 3 years* Exclusive Advisor Payments 21% 13% To Banking & Lending Tech 27% 21% Information Processors / Credit Bureaus 2% 12% Investment Services, Software and Tech 41% 20% Structured Capital Raise Financial Data, Content, & Analytics 24% 16% From Insurance & Banking Tech 33% 19% NASDAQ 18% 14% USD 30 Mn C Trading Comparables

EV/Revenue CY18E EV/EBITDA CY18E Sep 2015 Onwards Exclusive Advisor Payments 4.3 x 10.9 x To Banking & Lending Tech Information Processors / 5.6 x 16.7 x Select Institutional Buyers Credit Bureaus 4.2 x 12.3 x Secondary Stake Acquisition Investment Services, In Software and Tech 3.7 x 15.5 x Financial Data, Content, & Analytics 6.8 x 15.6 x USD 403 Mn Insurance & Banking Tech 4.2 x 20.4 x Revenue Growth % EBITDA Margin CY18E May 2015 (CY18E/CY17) Payments Exclusive Advisor 10% 29% To Banking & Lending Tech Information Processors / 10% 26% Credit Bureaus Private Equity Fund Raise Investment Services, 6% 33% Software and Tech From 7% 27% Financial Data, Content, & Analytics 8% 44% USD 43 Mn Insurance & Banking Tech 15% 15%

Source: Bloomberg as on 3rd May 2018, All companies calendarised to December year end. Multiples represent median of companies in sub-sector. List of companies included in May 2018 – Spark Technology Newsletter 15 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 11.1 Bn India: 1 deal, ~USD 200 Mn April 2015 TV EV/ Exclusive Advisor ACQUIRER TARGET DESCRIPTION (USD Mn) Rev To Global Provider of services and expertise that enable point of 3,400 1.8x Structured Capital Raise sale electronic payment From transactions Provider of technology- enabled financial and 3,020 5.8x USD 60 Mn investment advisory services Provider of information technology services such as 2,094 6.0x trading and investment January 2015 management systems, etc. Operator of an online Exclusive Advisor Financial * payment system with small 1,900 6.2x To Services financial licenses Provider of a platform for automating real estate 219 9.9x Minority Stake Acquisition receivables In India Operator of an online foreign 200 5.4x exchange store USD 20 Mn

May & Nov 2014 B Select Financing Transactions Exclusive Advisor Global (excl. India): 1 deals, ~USD 11 Mn India: 4 deals, ~USD 10 Mn To TV EV/ INVESTOR TARGET DESCRIPTION (USD Mn) Rev Private Equity Fund Raise Global From Developer of a financial * 11 NA trading platform USD 68 Mn India Provider of online loan 4 NA marketplace Provider of digital financial August 2014 3 NA services platform Book Running Lead Manager Provider of online personal To 2 NA loans for urgent needs

QIP

USD 42 Mn

Source: VentureIntelligence, PitchBook TV – Transaction Value; TV rounded-off; Multiples rounded-off to one decimal; May 2018 – Spark Technology Newsletter 16 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 1 Spark upgrades rating of Persistent Systems to BUY (TP: INR 840) coverage One Year Outlook USD 1.2 Tn We maintain a positive outlook and upgrade our rating from ADD to BUY for Total market cap of Persistent Systems, as the current valuations of 15x FY19EPS and 13x FY20EPS stocks under makes risk reward favorable, given our expectations of recovery in revenue growth coverage in FY19E and FY20E. INR 260 Bn The decline in US$ revenues by 4.6% QoQ during Q4 is led by dip in IP led revenues Total cash market (declined ~21% QoQ) and we expect the lost revenues to be recovered in FY19. We volume in H1FY18 build in 11.3% yoy US$ revenue growth for FY19E. The EBITDA margins of 14.4% in Q4 compared to 15.7% during 9MFY18 is primarily 350+ led by lower contribution from IP led revenues, and is partially compensated by Number of fund higher utilizations and lower headcount. With utilization levels already above 80% relationships and likely increase in headcount in FY19, especially in the sales & marketing division, globally we believe the margin levers for Persistent going forward is limited to improvement in the proportion of IP led revenues and higher realizations in the digital led “Go-to” broker revenues. We build in EBITDA margins of 15.7% for FY19E, similar to the levels for stocks in the witnessed during 9MFY18, up 30bps from FY18 margins, and further expect the mid-market space margins to expand by 40bps to 16.1% in FY20E. We value Persistent at 15x P/E based on our Mar-20 EPS of INR 56, which is similar to the upper end of its long term average valuation of 14-15x, due to its ability to either spot technological changes and invest in them, or acquire capabilities ahead of peers.

2 Spark maintains ADD rating of Infosys (TP: INR 1,230)

One Year Outlook We reiterate our positive outlook and ADD rating on Infosys post an in-line Q4 results, as we expect RoE to improve from 24% in FY18 to 27% in FY20E driven by a th 5 position in 2017 combination of higher dividend pay out and share buy-back , in spite of lower margin All India research guidance for FY19E, which would justify one year forward PE multiple of 16x. team While the lower operating margin guidance for FY19E is discouraging, we believe the investments earmarked in FY19 predominantly in the digital domain, are necessary and would drive revenue growth in the near to medium term. We expect US$ revenues to grow by 8.0% and 8.1% yoy in FY19E and FY20E respectively. Technology We expect the operating margins to contract by 100bps yoy to 23.3% in FY19E and 24 expand marginally to 23.5% in FY20E. We believe the margin levers going forward would be restricted to higher proportion of digital revenues, as these revenues Stocks under command higher gross margins compared to core IT services margins, while the coverage levers like utilization and onsite/offshore mix of revenues are unlikely to provide ~USD 190 Bn further upside. Total market cap The TCV of large deal wins improved from $657mn in 1QFY18 to $905mn in of Stocks under 4QFY18, although registering a decline of 12% yoy for FY18. With strong exit run coverage rate, the deal wins are likely to improve going forward. We believe the acquisition of WongDoody, a full service advertising agency, for a consideration of $75mn, is a right step and would add to the digital capabilities of the company. We increase our 1yr FW PE multiple to 16x (from 15x earlier) and arrive at a TP of INR 1,230. The increase in PE multiple is driven by higher RoE led by increased payout, in spite of lower operating margins.

Source: SPARK Research May 2018 – Spark Technology Newsletter 17 ANNEXURE

LIST OF COMPANIES

Software Tech Services

Diversified SaaS BI & Analytics Consulting Mid Cap IT Alphabet Inc .com Inc Splunk Inc FTI Consulting Inc EPAM Systems Inc 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 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 Callidus Software Inc Solutions A10 Networks Inc Ltd Inovalon Holdings Inc Mimecast Ltd Inovalon Holdings Inc Security Cognizant Technology Diversified BPO SPS Commerce Inc Appfolio Inc Solutions Symantec Corp Genpact Ltd Five9 Inc HealthStream Inc Infosys Ltd Check Point Software ExlService Holdings Inc Benefitfocus Inc Instructure Inc HCL Technologies Ltd Palo Alto Networks Inc Capita PLC Splunk Inc Instructure Inc Itron Networked Solutions Wipro Ltd Inc Conduent Inc Fortinet Inc Workiva Inc Capgemini SE Castlight Health Inc WNS Holdings Ltd Carbonite Inc CGI Group Inc Trend Micro Inc/Japan CRM BPO Apptio Inc Nippon Telegraph & Proofpoint Inc Teleperformance LivePerson Inc Telephone FireEye Inc SYNNEX Corp Castlight Health Inc Atos SE CyberArk Software Ltd Convergys Corp Bazaarvoice Inc Nomura Holdings Inc Imperva Inc TTEC Holdings Inc Brightcove Inc Tech Mahindra Ltd Qualys Inc Sykes Enterprises Inc ChannelAdvisor Corp Barracuda Networks Inc Transcosmos Inc Amber Road Inc Mimecast Ltd Relia Inc Marin Software Inc SecureWorks Corp Atento SA Rapid7 Inc Hinduja Global Solutions F-Secure OYJ Ltd VASCO Data Security Firstsource Solutions Ltd MobileIron Inc Zix Corp Absolute Software Corp Guidance Software Inc Quick Heal Technologies Ltd

May 2018 – Spark Technology Newsletter 18 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 Holding Ltd Mastercard Inc Experian PLC Yandex NV 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 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 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 Inc ACI Worldwide Inc LINE Corp LendingClub Corp Pandora Media Inc Q2 Holdings Inc Yelp Inc Bottomline Technologies On Deck Capital Inc

May 2018 – Spark Technology Newsletter 19 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.

May 2018 – Spark Technology Newsletter 20 TECHNOLOGY TEAM

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

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

Aravind Ganesan Assistant Vice President – Technology, IB [email protected]

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