The Indian Private Equity opportunity

1. The Indian Private Equity opportunity April 2008

2. The Indian Private Equity opportunity Overview of ICICI Group • One of India’s 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 India’s Growth Potential 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

3. Overview of ICICI Bank Development of Private Equity in India India’s Growth Potential Overview of ICICI Group

4. One of India’s pre-eminent financial institutions ICICI Bank Ltd • Largest private sector bank in India • $22 billion market cap¹ • $94 billion of assets2 • 18 international locations • First Indian company listed on the NYSE • Listed in Forbes Asia’s “50 Fab Companies 2007” • Completed India’s largest equity issuance of US$4.3 billion ICICI Ventures ICICI Lombard ICICI PRU Life Insurance ICICI Prudential AMC ICICI Securities • One of India’s largest PE firms • AUM > US$2bn • Completed 55+ transactions • One of the largest private sector general insurer • iAAA rated by ICRA • India’s no.1 private life insurer • AAA rated by Fitch • One of the largest asset managers • AUM of US$17.6 bn2 • Leading equity broking house • Leader in fixed income market 1. As at 24-March-2008. 2. As at 31-December-2007.

5. Overview of ICICI Bank Development of Private Equity in India India’s Growth Potential India’s growth potential

6. 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 world’s tea is produced in India Source : Economic Survey, Ministry of Agriculture, Government of India, report by investment commission of India

7. 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 India’s GDP (US$ terms) expected to surpass that of the US by 20501 2nd largest economy in the world by 2050 India GDP (US$ billions)2 Actual Estimate / Forecast CAGR: 17.4% CAGR: 14.9% 1. Source: Goldman Sachs Research “India’s Rising Growth Potential”, Jan-2007. 2. Source: Goldman Sachs Economic Research.

8. Requirement of US$475 billion of infrastructure investments from 2007 to 2012 40% to be funded by private investors Policy initiatives to attract investments in core infrastructure projects related to power, transportation, etc Key growth drivers Infrastructure Investment1 Large Population • 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 Globalisation3 • 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 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 India’s Consumer Market 3. Source: ‘Asia Pacific IT Services Market and Forecast, 2006-2011’ report by Springboard Research 4. Source : FICCI- E&Y study

9. Beneficial backdrop for growth The Regulatory Framework Liquid and deep financial markets • 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 • Integrated financial markets • Increasing stability and breadth of the public markets • Advanced settlement systems Pro Growth Policies Government focus on reforms • 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 • Liberal FDI policies across major sectors • Forex reserves can be used for infrastructure projects • Mature political economy with development as its core agenda Source: IMD would competitiveness report to 2005

10. Key risks Policy • 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 Global • High Energy Prices: Oil imports constitute more than 40% of India’s 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

11. Overview of ICICI Bank Development of Private Equity in India India’s Growth Potential Development of Private Equity in India

12. 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 Growth of asset class Value and Number of Number of Deals Source: Venture Intelligence

13. Top Private Equity destination in Asia Annual Growth in Private Equity Investments (1998-2007) • From 1998 – 2007, India was the fastest growing private equity market in Asia • In 2007, India was the largest market for private equity investments in Asia (ex. Australia) Australia/NZ 25% Source: Thomson Financial, AVCJ, Venture Intelligence

14. Uptick in ticket size in sync with valuation Average Deal Size (2007) India – Average Deal Size Source: Thomson Financial, AVCJ, Venture Intelligence

15. Increasing diversification across industry 2003 2007 • Proportion of “non-Information Technology” deals has risen from 19% in 2003 to 76% in 2007 • Growth in investment into Manufacturing, Financial Services and Medical and Health Number of Deals Other35% I.T. & ITES 24% Other33.1% I.T. & ITES 59% Financial Svcs. 3% Medical & Health 7% Manufacturing 16% Manufacturing 3% Energy & Contr. 8% Financial Svcs. 13% I.T. & ITES 7% Manufact. 12% Value of Deals I.T. & ITES 31% Other39% Other68% Financial Svcs. 1.0% Medical & Health 3% Financial Svcs. 28% Energy & Contr. 11% Manufacturing 0.1% Source: Venture Intelligence.

16. Growth Across Segments 2003 2007 Number of Deals Other¹ 4% • Most significant investment currently in growth / expansion segments • PIPE deals form a significant portion Buy Out 5% Buy Out 2% PIPE 11% VC 24% PIPE 19% VC 47% Growth/ Expansion 37% Growth/ Expansion 51% Value of Deals Buy Out 16% VC 4% Other¹ 14% Growth/ Expansion 48% VC 28% Buy Out 5% PIPE 36% Growth/ Expansion 19% PIPE 30% 1. Includes infrastructureSource: Venture Intelligence

17. Evolving exit routes Other¹ Other¹ Other¹ IPOs IPOs IPOs Transaction value of PE exits $3.3bn $0.5bn $1.5bn Number of IPO exits 17 19 16 Warburg Pincus from Bharti Tele CVC from Suzlon energy Largest Exits By Actis, CVC from Daksh e-services 1. Source : Venture Intelligence

18. 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 Key differences to “Western” private equity model

19. Current dilemma facing investors Current PE Market… …Investor Dilemma • Very rapid expansion in number of India-focused funds • Risen from 8 in 1995, to 300+ in 2007 • Evaluating managers without track records • Selecting funds from a broad universe • Large number of “first time” funds • ~15 India-dedicated private equity funds with at least one fund vintage • Gaining access to the best funds Rationale for Fund of Funds Product

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