Wednesday, February 28, 2007

Union Budget 2007-08 Presented: Proposals for Capital Markets and Private Equity

The Finance Minister of India Mr. P Chidambaram has presented the Union Budget for the year 2007-08 today in the Parliament. Some of the proposals suggested for the capital markets are:

PAN to be made sole identification number for all participants in securities market with an alpha-numeric prefix or suffix to distinguish a particular kind of account

Idea of Self Regulating Organizations (SRO) to be taken forward for different market participants under regulations to be made by SEBI

Mutual funds to be permitted to launch and operate dedicated infrastructure funds

Individuals to be permitted to invest in overseas securities through Indian mutual funds

Short-selling settled by delivery, and securities lending and borrowing to facilitate delivery, by institutions to be allowed

Enabling mechanism to be put in place to permit Indian companies to unlock a part of their holdings in group companies for meeting their financing requirements by issue of exchangeable bonds

Rate of dividend distribution tax to be raised from 12.5% to 15% on dividends distributed by companies and to 25% on dividends paid by money market mutual funds and liquid mutual funds to all investors

In case of venture capital funds, pass-through status will be granted to those VCFs only in respect of investments in venture capital undertakings in biotechnology; information technology relating to hardware and software development; nanotechnology; seed research and development; research and development of new chemical entities in the pharmaceutical sector; dairy industry; poultry industry; and production of bio-fuels. In order to promote business tourism, this benefit also will be granted to those VCFs that invest in hotel-cum-convention centres of a certain description and size

Hershey to buy 51% stake in Godrej Beverages & Foods

Hershey, America’s largest chocolate and confectionery-maker, is acquiring majority stake in the food and beverage business of the Godrej Group. Hershey is acquiring 51% equity stake in Godrej Beverages & Foods for Rs. 238 crores or about $54 mn. Hershey would also license Godrej Beverages & Foods some of its trademark rights for a lump sum payment of about $2 mn in addition to royalty payments of 5% for domestic sales and 8% for exports.

With this investment, financial investor IL&FS will exit from the venture while the holdings of the Godrej Group and that of an individual investor A Mahendran would come down. Post-acquisition, Hershey would hold 51% equity while Godrej Industries would hold 43% stake with the remaining 6% to be held by A Mahendran, a senior executive with the Godrej Group. The deal values the equity stake of Godrej Industries, a listed arm of the Godrej Group, at Rs. 200 crores. The deal values Godrej Beverages & Foods at Rs. 466 crores. Hershey would pick up the majority stake through multiple transactions. This would include acquiring the 40% equity held by IL&FS, acquisition of the convertible preference shares held by IL&FS, Godrej Industries and Mr. Mahendran as also subscription to fresh issue of capital in the company.

Godrej Beverages & Food represents the foods and beverages business of the Mumbai-based Godrej Group. It was formed last year when Godrej Industries transferred its foods division to another group company Godrej Tea. The combined entity was renamed as Godrej Beverages & Food Limited. With a turnover of around Rs. 400 crores, the company is engaged in categories such as tea, edible oils, health drinks including soymilk, tomato puree, fruit drinks and bakery fats.

Read The Economic Times article.

Wadhawan Food Retail close to acquiring HLL’s Sangam Direct

Wadhawan Food Retail Private Limited (WFRPL), which operates the Spinach chain of food and grocery stores, is leading the race to acquire Hindustan Lever’s Sangam Direct business. Reliance Retail, Subhiksha and RPG Retail are reportedly the other interested parties.

Sangam Direct is a unique e-tailing format very exclusive to Unilever across the globe. It has been operational for over three years and has been very popular with households in Mumbai. The service now covers almost 80% of Mumbai.

Read the article in DNA Money.

Gujarat Ambuja sells 11% in Ambuja Cement to Holcim

Gujarat Ambuja Cements has sold 11% stake in Ambuja Cement India Limited (ACIL) to Holcim for Rs. 526.5 crores. Gujarat Ambuja owns 33% in ACIL. It has exercised its put option for an 11% stake in ACIL and has sold 9.53 crore shares to Holcim. GACL made a profit of Rs. 240.7 crores by selling these shares. After this sale, Gujarat Ambuja owns 22% shares in ACIL and Holcim the remaining 78%. Holderind Investments, a subsidiary of Holcim, currently holds 16.51% stake in Gujarat Ambuja, while ACIL holds 9.93% stake in the company.

Read the Business Standard article.

Amalgamated Bean Coffee Trading to spin off coffee chain Cafe Coffee Day into a separate company

Amalgamated Bean Coffee Trading Company Limited (ABCTCL) is planning to spin off its coffee chain Cafe Coffee Day into a separate entity. The motive behind such a move would be to list Cafe Coffee Day in the next three years. It is expected that the coffee bar business will have a turnover of a little over Rs. 800 crores by 2010 from the current Rs. 380 crores. It had recently raised close to Rs. 160 crores through a mix of debt and equity from Sequoia Capital and International Finance Corporation.

Cafe Coffee Day has its business spanning the entire value chain of coffee consumption in India. Its different divisions include Coffee Day Fresh ‘n’ Ground (which owns 386 coffee bean and powder retail outlets), Coffee Day Xpress (which owns 500 Coffee Day kiosks), Coffee Day take-away (which owns 7000 vending machines), Coffee Day Exports and Coffee Day Perfect (FMCG packaged coffee) division.

ABCTCL in its roadmap has stated it aims to double the number of coffee bars to 800 in three years, while the coffee powder vending stores will number up to 650 from the current close to 400. The Xpress brand on the other hand will be paced up to 2500 outlets from the current 500 in three years’ time frame. Cafe Coffee Day is present in 70 cities across India, and is branching out to foreign shores by setting up cafes in Vienna, Austria and is planning to set shops in West Asia, Eastern Europe, Eurasia, Egypt and South East Asia in the coming months, besides in Pakistan and the US.

Read the Business Standard article.

Hong Kong-based ADM Capital to invest Rs. 80 crores in Rama Pulp and Papers

ADM Capital, a Hong Kong-based distressed debt fund will invest about Rs. 80 crores in mid-sized paper company Rama Pulp & Papers, which will use the funds for capex and for future programmes, including an acquisition (See Related Post). ADM is learnt to have been selected from players like Bank of America, Actis and DBZ.

ADM Capital joins a growing list of foreign private equity firms such as Citigroup, Standard Chartered, WL Ross, Clearwater and Eight Capital that have been cherry picking underperforming companies in India that they think have the potential to grow and churn profits in the next 4-5 years.

Formed in 1996, ADM Capital advises investment funds that make principal investments in distressed companies and special investment opportunities. ADM Capital had earlier joined Asian Development Bank to raise a $138mn fund to rehabilitate distressed companies in Asia. India’s distressed assets are estimated at $55 bn (about Rs. 253,000 crores). Distressed debt funds typically focus on companies that have either filed for bankruptcy or are likely to do so in the near future. The fund gets involved in restructuring to pull the company out from bankruptcy. Distressed debt firms often forgive the debt obligations of the company in return for equity.

Read the article in The Economic Times.

Actis and the Burmans seek re-bids for Punjab Tractors

Private equity fund Actis and the Burman family, the promoters of Dabur, who together hold a controlling 43.5% in Punjab Tractors (PTL), have rejected offers for the acquisition of their stake from seven interested parties. These companies include Mahindra & Mahindra, Ashok Leyland and Sonalika Tractors and have now been asked to make binding bids by next Monday.

The re-bid was reportedly prompted due to the non-binding nature of the offers. Also, the bids were much lower than the company’s share price, which has shot up around 30% in the month after the bids were invited.

Actis holds 29.5% and the Burmans hold 14% in the Rs. 958-crore tractor company, while the rest is held by financial institutions, the public and banks. Punjab Tractors is India’s fourth-largest tractor making company, with an 8% market share.

Read Business Standard article.
Related Posts:
M&M, TAFE eye Actis’ 29% in Punjab Tractors
M&M, Escorts vie for stake in Punjab Tractors; Actis, Burmans to sell out
Ashok Leyland bids for Punjab Tractors

Tuesday, February 27, 2007

The PVP Group picks up 51% in software training and real estate firm SSI

PVP Group has acquired a 51% stake in Software Solution Integrated (SSI) from the promoters, led by Kalpathi Suresh, for Rs. 613.14 crores. The stake sale would be followed by a mandatory public offer which is said to cost the PVP Group an additional Rs. 239.20 crores for 120 acres of prime land bank in Chennai and Ooty.

SSI was started more than 13 years ago as a software training company, which ventured further into software development and later into real estate. The SSI shareholders now have an option to exit when the acquirers make public offer to them at Rs. 208 a share.

For more details, read The Times of India article.

BPO firm HOV Services acquires US-based firm Lason for $148 mn

Pune-based HOV Services has acquired US-based Lason for $148 mn (about Rs. 660 crores). The acquisition was completed through HOV’s US wholly-owned subsidiary HOV Services LLC and was funded by HOV Capital, Merrill Lynch and Apollo Management; the three of them have invested $63 mn, rest of the acquisition has been funded by debt.

HOV had recently acquired Tracmail and SAM Holdings for $3.74 mn. The Lason acquisition will help HOV gain entry in new business verticals like transaction processing, healthcare and media. Lason has an Indian subsidiary based in Chennai, with a headcount of 8000. It also has presence in China (1200 people), Mexico (250 employees) and North America.

Read more in the Business Standard article.

Holcim to buy additional stake in ACC and Gujarat Ambuja

Swiss cement company Holcim is planning to increase its control in ACC and Gujarat Ambuja Cements for around Rs. 2700 crores. Holcim is in talks to buy Gujarat Ambuja Cements’ 33% stake in Ambuja Cement India Limited (ACIL). ACIL, in turn, holds 35% in ACC and 9.93% in Gujarat Ambuja Cements. At present, Holcim owns 67% in ACIL. The acquisition will make ACIL a wholly-owned Holcim subsidiary.

The proposed move by Gujarat Ambuja is in line with its two-year-old agreement with Holcim under which it had reserved the put (or sell) option and Holcim had the call (buy) option for one-third of ACIL. In 2005, Holcim had bought a 67% stake in ACIL, 40% from the government of Singapore and American International Group and 27% through subscription of preferential shares, for $800 mn (Rs. 3502 crores).

Read the Business Standard article.

Autoline Industries acquires 51% stake in Belgian company Stokota

Pune-based Autoline Industries has acquired a 51% stake in Stokota, a Belgian special purpose vehicles maker, for Rs. 66.8 crores. Autoline is already contract manufacturing Stokota’s tippers, dumpers and tankers in India. It will fund the deal through a mix of internal accruals, debt and equity.

Autoline will provide 80% of the components to Stokota’s European operations based in Poland and will continue to assemble vehicles for the Indian, Middle Eastern and North African markets. Stokota also has a manufacturing facility in China, which caters to Australia, US and South-East Asia.

Stokota’s current customer base includes Volvo, Scania, MAN, Iveco, Renault, DAF, FAW and Deng Fong. It is the largest manufacturer of aluminium tankers in Europe. Post-merger, Stokota’s operations are expected to contribute Rs. 250 crores to Autoline’s consolidated revenue and Rs. 11 crores to its profit. Autoline, which recently listed on the bourses, expects to end the year with revenues of Rs. 210 crores and a profit after tax of Rs. 16 crores. Autoline has a tool design and manufacturing facility in Pune and is focused on sheet metal assemblies for automobile industry.

Read The Economic Times article.

Austrian company RHI picks up 51% stake in Clasil Refractories

The €1.3 bn-Austrian refractories company RHI has picked up a 51% stake in Clasil Refractories for an undisclosed price. RHI was, until now, the largest importer of refractories in India and supplier to steelmakers without any local production capacities. It imported material worth €40 mn annually. The stake acquisition now brings a local production centre under its fund. The consideration would be used for expansions currently under way, at the RHI-Clasil plant at Venkatapura in Andhra Pradesh. The plant capacity will reach about 40,000 tonnes with sales revenue of €15 mn per year.

Read The Economic Times article for more details.

SIDBI issues bonds, raises Rs. 500 crores

SME micro-finance agency State Industrial Development Bank of India (SIDBI) has raised Rs. 500 crores by selling 10-year bonds to a state-run insurance firm.

The coupon on the bonds is 9.6%, payable annually. SIDBI plans to sell another Rs. 500 crores worth of bonds to other investors through a private placement, on the same terms as its deal with the insurance company. The issue is rated AAA by CARE, signifying the highest safety. Bank of America was the sole arranger for this issue.

Article in The Economic Times.

Mahindra and Mahindra, Renault and Nissan form Rs. 4000 crore-joint venture in Tamil Nadu

Auto and auto components major Mahindra and Mahindra (M&M) has formed a tripartite joint venture with global auto giants, France’s Renault and Nissan from Japan, to set up a Rs. 4000 crore-greenfield automobile plant at Oragadam, near Chennai in Tamil Nadu. The facility will have a capacity to manufacture 400,000 units by 2009 and would be used by all the three auto majors for production of vehicles from their respective stables. M&M will hold 50% stake in the new venture, while the rest will be jointly head by Renault and Nissan of Japan. The Tamil Nadu government would provide land and incentives for the project. M&M President, automotive sector, Pawan Goenka was named the chairman of the JV company.

The Tamil Nadu government has already had some land and would acquire more to meet the needs of the facility, which would come up on a 925-acre plot. The new facility would see to it that those displaced due to acquisition of land for the project would be relocated at a place convenient to them. The new company would also start vocational schools in the area to train students and absorb them in the facility.

The project would consist of integrated automobile manufacturing facilities which would include engine plant, transmission plant, press shop, body shop, paint shop and assembly line, an official press release here said, adding this would be India's biggest vehicle manufacturing centre at a single location. It would involve manufacture of 50,000 tractors per annum and there would be a Mahindra Research Valley in the Mahindra World City near Chennai.

The project would result in gross value addition of about Rs. 18,000 crores per annum to Tamil Nadu's GDP and the additional investment in the State by vendors and supporting service providers was expected to be about Rs. 10,000 crores. The new facility would provide direct employment to 5000 people and indirect employment to many more.

M&M and Renault already have an existing JV which is manufacturing the Logan brand of cars.

Read the articles in The Economic Times and Business Standard.

Highlights of The Economic Survey 2006-07

The Finance Minister of India Mr. P Chidambaram presented the Indian Economic Survey 2006-07 to the Parliament today. Major highlights of the survey are:

· GDP to grow 9.2%, touch Rs.. 2,844,000 crore in 2006-07
· Inflation at 6.7% (as on Feb 3) a matter of concern
· Government's top priority: Growth without high inflation
· Risks include volatile oil prices, delays in WTO talks, global macroeconomic imbalances
· Priorities include making growth inclusive, fiscal prudence, high investment improving government intervention in critical areas like education & health, subsidies to be targeted
· Agriculture to grow 2.7%, share in GDP dips to 18.5%
· Industry to grow at 10%, share in GDP up to 26.4%
· Services to grow at 11.2%, share in GDP rises to 55.1%

· 10th plan average GDP growth at 7.6% versus targeted 8%
· Average inflation in 52 weeks ending Feb 3 at 5%
· Food items, wheat, pulses, sugar driving inflation
· In industry, mining, gas and power issues of concern
· Current account deficit at $11.7 billion in H1 of FY07
· Exports up 36.3% to $89.5 bn in April-Dec 2006-07
· Capital flows strong, FDI up 98.4% in Apr-Sept 2006-07

· FIIs sellers in H1, but likely to be positive in H2
· Core sector growth 8.3% versus 5.5% in Apr-Dec 2006-07
· Infrastructure to require $320 bn in 11th plan
· Public sector to fund 60% of infrastructure
· Fiscal deficit budgeted at 2.8% in 2006-07
· Tax-GDP ratio rises to 11.2% FY07 versus 10.3% in FY06
· Personal income tax mop up rose 30.3% in Apr-Dec FY07
· Share of direct taxes in total revenues grows to 47.6%
· Stock markets buoyant, market cap rises to 91% of GDP

· Rs. 161,769 crore raised from IPOs in 2006
· Mutual funds raise Rs. 104,950 crores in 2006, up four-fold
· Corporate tax collections up 55.2% in Apr-Dec FY07
· Tourism earnings cross $6.6 bn in 2006

· Gross domestic savings rate up at 32.4% in 2005-06
· Gross domestic investment rate at 33.8% in 2005-06
· Gross fixed capital formation rises to 28.1% in 2005-06
· Savings of private corporates rise sharply at 8.1%
· High savings rate to continue

· Government final consumption expenditure up 11.5% in FY06
· Saving-investment gap turns negative at 1.3%
· Government to miss 2007 target of elementary education to all
· Employment rate grows to 2.5% in 1999-2005
· Decline in organized sector jobs
· Unemployment rate up to 3.1% in 2004-05
· Poverty down at 22% in 2004-05 versus 26.1% in 1999-2000
· Population to stabilize around 2045

Read more about the Economic Survey in The Economic Times.

Monday, February 26, 2007

Alagappan Murugappan returns to ICICI Securities as head of equities

Alagappan Murugappan has re-joined ICICI Securities, the investment banking division of The ICICI Group as head of equities. Prior to this, he was with private equity firm Deeva Capital where he was a partner and returns to the ICICI fold after an overall three-year stint in private equity. Before he joined ICICI Securities, Murugappan was with Cazenove, heading its Indian operations; Cazenove was primarily into equities broking. Murugappan began his career with Cazenove in London after qualifying as a solicitor in England. He holds an LLM from Cambridge University.

Murugappan was one of the three founding partners of Deeva Capital and had spent one year at Deeva. Deeva Capital is a start-up private equity firm with about $100 mn secured from international seed funding. Murugappan had left ICICI Securities in early 2004 to pursue a career in the private equity business. Then, Murugappan had joined Actis as an investment principal and was responsible for leading and coordinating fundraising activities relating to South Asia and for deal generation in India. Murugappan quit Actis to form Deeva in early 2006.

Read more in the article in AsianInvestor.net.

EDS to buy Bangalore-based software testing company RelQ for $40 mn

Bangalore-based RelQ Software has finalized a deal worth $40 mn to be acquired by IT consulting major Electronic Data Systems (EDS). RelQ specializes in software testing, validation, verification and quality assurance. It has 800 people and posted revenues of $22 mn last fiscal. It is expected to record revenues of $30 mn in 2006-07.

RelQ will help the $21-billion EDS, which focuses on consulting, application management, maintenance, re-engineering, migration, technical support and testing, to ramp up its testing practice in India. EDS has over 17,000 employees here across varied verticals.

Read The Times of India article.
Related Post: Software testing company up for sale by stakeholders ICICI Ventures and Acer Technologies

Bennett Coleman picks up 5% stake in YOU Telecom

Bennett & Coleman Company Limited (BCCL), the holding company of the Times of India, has acquired a 5% stake in YOU Telecom India Private Limited for an undisclosed sum. YOU Telecom is India's first ISO 9001:2000 accredited broadband company. Citigroup Venture Capital International is already an investor in YOU Telecom.

AV Birla Group bids €85 mn for Italian fibre firm

The AV Birla Group has reportedly made a bid of close to €85 mn to acquire Italian cellulose fibre company BembergCell. Bemberg Cell is a financially distressed company and is on the block through a corporate administered process.

BembergCell has three production centres located in Italy with 155 spinning machines to produce yarns. BembergCell is the result of the union of three companies: Bemberg, Novaceta and Nuova Rayon. The company employs close to 400 people. The other bidders in the fray include a top manager of another Italian fibre company, Italo Fabbro, and Germany-based International Chemical Investor, promoter of the brand Erika.

Read The Economic Times article.

Saturday, February 24, 2007

Zensar Technologies buys US-based IT firm ThoughtDigital for $24.9 mn

Zensar Technologies has acquired the US-based ThoughtDigital and its holding company SOA Software for $ 24.9 mn. ThoughtDigital focuses on Oracle applications. The acquisition puts Zensar in a position to become one of the top 10 organizations for Oracle implementation globally. The acquisition will be funded through a mix of debt and internal accruals, with 60% coming from borrowings. The all-cash deal is structured with earn-outs to be paid over two years.

ThoughtDigital had revenues of $27 mn and an operating profit of $3 mn in 2006. It employs 120 Oracle consultants and its customer base includes firms like Gartner, Cingular Wireless, Primavera and USPS.

Read The Economic Times and Business Standard articles.

Shoppers' Stop, Nuance form airport retail JV

Shoppers’ Stop and Nuance Group AG have formed a joint venture to bid for contracts to set up duty-free retail outlets in Indian airports. The JV is among the five short-listed bidders for a contract to set up duty-free retail outlets at Mumbai international airport. In the airport retailing space India, with a projected annual passenger growth of 10.4%, is considered a strong growth potential market. Nuance with an annual turnover of $1.7 bin has a presence in 17 countries with 340 shops across 57 airports operating in duty-free core categories like cosmetics, liquor, chocolates and specialty stores like food and beverage outlets.

Read the Business Standard article.

SEBI bars Atlanta Infra, 15 others from capital market transactions for price rigging

The Securities and Exchange Board of India (SEBI) has barred 16 entities from selling or buying the shares of Atlanta Infrastructure, a construction and engineering company, for alleged price manipulation. These entities include the promoters of Atlanta as well as managing director Rajoo Barot and company secretary Sachin Jain.

The SEBI has also asked exchanges not to approve the listing of Atlanta’s convertible warrants and shares, till further directions. It also has asked depositories not to dematerialize convertible warrants and shares issued upon conversion and not to allow stock-split plans. The company had raised Rs. 85.72 crores by issuing convertible warrants at Rs. 317.50. At its EGM on February 16, the company approved 1:5 stock split and further raising of funds through foreign currency convertible bonds.

Shares of Atlanta, which were listed on September 25, 2006, have rose from its offer price of Rs. 150 to Rs. 1446 on January 17 a rise of 681% in 55 trading days. Sensing something fishy in the sudden spurt in its share price, the SEBI advised the NSE and the BSE to conduct a probe. The probe concluded that the Manish Marwah / Dilip Nabera Group, the Atul Shah Group and the Nirmal Khotecha Group made large scrip purchases during the period. It also said the employees, who were allotted shares, had immediately transferred the shares through off-market transactions, to persons connected with the company.

Read the article in Business Standard.

GIC, Deutsche Bank, L&T Infra submit bids for SICOM stake

Government of Singapore Investment Corporation (GIC), Deutsche Bank, Standard Chartered Bank and L&T Infrastructure have submitted their bids along with eight others with the Specified Undertaking of Unit Trust of India (SU-UTI) for acquiring its 40% stake in the State Industrial Corporation of Maharashtra (SICOM), the investment arm of the Maharashtra government. The tender invited by the SU-UTI closed in the second week of February and 12 parties have submitted their expressions of interest. Currently, the Maharashtra government holds 49% in SICOM, SU-UTI 36.5% and another 3.5% stake is held by UTI AMC.

ICICI Securities has been appointed as the merchant banker by SU-UTI for the stake sale. It will hold talks with the interested buyers soon. SU-UTI is also said to be in talks with the state government to offload its stake in SICOM.

SICOM has posted a net profit of Rs. 33.98 crores in 2005-06, up 69% from Rs. 20.15 crores in the previous year. SICOM offers advisory services to the state government, Maharashtra Electricity Regulatory Commission and other corporates. It is launching a second venture fund and would be soon offering merchant banking, treasury management and real estate development through subsidiary or joint ventures.

Read the Business Standard article.
Related Posts:
IFC, DEG planning to acquire a stake in SICOM
UTI to divest 36.58% stake in SICOM

MCX promoter Financial Technologies eyes stake in OTCEI, ISE

Financial Technologies, the promoter of the Multi Commodity Exchange of India (MCX), has shown interest in acquiring stakes in the Over the Counter Exchange of India (OTCEI) and the Inter-connected Stock Exchange (ISE). The company had recently applied to the Securities and Exchange Board of India (SEBI) expressing interest in floating a separate stock exchange for small and medium enterprises (SMEs). The company’s move to acquire a stake is seen as a step towards setting up an SME bourse. The OTCEI had placed Financial Technologies’ proposal to buy stake before its promoters and was awaiting their response. The ISE is expected to complete its valuation shortly, with the September 14 deadline for the completion of demutualization process approaching. Apart from Financial Technologies, a few other IT companies and private equity firms are learnt to have approached the exchange to acquire stake. The OTCEI is promoted by financial institutions such as UTI, ICICI, IDBI and LIC, while the ISE is promoted by 13 regional stock exchanges of Bangalore, Kochi, Jaipur, Bhubaneshwar and Mangalore, among others.

Read the Business Standard article.

Friday, February 23, 2007

SREI Venture to raise $250 mn infrastructure fund by April 2007

SREI Venture Capital is raising a $250 mn infrastructure-focused fund by April 2007. The company plans to tap the UK’s Alternative Investment Market (AIM) or the main UK market. This will be SREI’s first overseas fund-raising, with the company’s contribution at 2-5%. The new fund will focus on the entire gambit of infrastructure projects in India right from oil & gas to roads to power projects.

SREI Venture Capital is a wholly owned subsidiary of SREI Infrastructure Finance, which is into financing infrastructure equipment, infrastructure projects and renewable energy projects. SREI Infrastructure manages assets worth of around Rs. 4500 crores.

This is the second time that SREI is attempting to raise a Rs. 1000 crore-plus fund after it launched the India Global Competitive Fund (IGCF) in mid-2005; so far, the fund has raised around $80 mn (Rs. 360 crores) and is in the process of raising further funds.

International Finance Corporation (IFC), DEG, Germany (a financial institution owned by the Government of Germany), FMO, the Netherlands (financial institution owned by the Government of the Netherlands) and BIO (financial institution owned by the Government of Belgium) are among the large stakeholders in the company.

Read the Business Standard article.

L&T merges Datar Switchgears with itself

Larsen & Toubro Limited (L&T) has reportedly merged the Nashik-based Datar Switchgear with itself for an undisclosed amount. L&T has also absorbed 160 workers of Datar Switchgears in its Ahmednagar facility. The remaining legal formalities in this regard are expected to be completed within the next one or two months. The distressed Datar Switchgear, spread over four acres in Ambad in Maharashtra Industrial Development Corporation (MIDC) facility, was engaged in the manufacture of electrical and electronic products.

The company was a pioneer in the production of circuit breakers. The move is aimed at extending its presence in the low voltage electrical business. The Board of Industrial & Financial Restructuring (BIFR) has also reportedly given its clearance for the merger of Datar Switchgears with L&T. L&T has already shifted all the technology and machinery of Nashik-based Datar Switchgears to its Ahmednagar facility in Maharashtra.

Datar Switchgears, established in 1984 in Nashik, had indigenously developed the technology for the manufacture of earth leakage circuit breakers (ELCB) and minutes circuit breakers (MCB). Datar Switchgears was also involved in manufacturing switchgears, ultrasonic welding machines and of capacitor panels, for rental and outright sales. But the company had financially come into distress with the collapse of company’s cash flow and affecting payments of interest and principle to financial institutions, banks and other financiers, and also a loss of substantial business opportunities.

Read the Business Standard article.

Kotak AMC ties up with US-based T Rowe Price

Kotak Asset Management Company has tied up with the US-based T Rowe Price to launch a fund that will invest in the Luxembourg-domiciled T Rowe Price Funds Sicav-Global Emerging Markets Equity Fund.

Baltimore-based T Rowe Price is one of the world’s leading independent investment management firms. The fund is expected to be launched in the next couple of months. The tie-up with T Rowe encompasses only product initiatives.

The size of the fund can be up to $150 mn. The fund will aim to outperform the MSCI Emerging Markets Index over the medium-to-long-term by investing in T Rowe Price fund. The fund invests primarily in a widely-diversified, global portfolio of transferable equity and equity-related securities of companies established or conducting a significant proportion of their business activities in the emerging countries of Latin America, Asia, Europe, Africa and the Middle-East.

Read the article in Business Standard.

Firstsource Solutions, 24/7 Customer to merge

India’s fifth-largest BPO Firstsource Solutions (formerly ICICI OneSource) and 24/7 Customer, the tenth-largest, are planning to merge themselves in a move which would usher in a whole new era of consolidation in the Indian BPO / ITeS industry.

It is reported that Sequoia Capital is behind this action, which has substantial stakes in both companies. An array of strategic investments has been made in Firstsource by Sequoia, Temasek, Metavante and ICICI. In June 2003, Sequoia had led the $22 mn funding in 24/7 Customer. Firstsource employs over 10,717 people; 24/7 has 5500 people on its rolls.

Read the article in DNA Money.

WPP merges Bates with David; David head Josy Paul resigns

WPP is merging its agencies Bates Enterprise and David to form Bates David Enterprise in India. The boards of directors of both the companies have approved the merger. Integration of processes and people is expected to be completed over the next two months. The offices in Delhi, Kolkata, Bangalore, Chennai and Mumbai, will offer a complete range of communication services. Bates David Enterprise will be led by Subhash Kamath as CEO and Mohammed Khan as chairman. Josy Paul, chairman and NCD, David, has put in his papers and will not be part of the new entity.

Read more in DNA Money.

Apollo Hospitals has UK-based Abbey Hospitals on its radar

Indian healthcare major Apollo Hospitals may bid for Abbey Hospitals, a UK-based hospital chain. Abbey Hospitals has been put up for sale by its parent company, the British healthcare group Covenant. It operates a chain of six hospitals. Any sale would happen at an estimated deal size of $100-150 mn. JP Morgan’s private equity arm, One Equity Capital is likely to partner Apollo Hospitals in the buyout. The fund already has investments in the Apollo Group companies.

Covenant Group is controlled by the Cognetes Fund. Cognetes acquired Covenant from Phoenix Private Equity for about $170 mn in 2005. Capio, the other identified target is also controlled by private equity funds Apax Partners and Nordic Capital. Deloitte is managing the sale process of Abbey and is expected to kick off the procedure in the next few weeks.

Read The Economic Times article.

Thursday, February 22, 2007

Infosys eyes UK-based SmartStream Technologies; deal valued at £100 mn

Indian IT behemoth Infosys may acquire UK-based SmartStream Technologies, a solutions provider for financial services sector, for over £100 mn. Headquartered in London, SmartStream has direct operations across Europe, New York, Sydney, Beijing, Singapore and Mumbai.

SmartStream has more than 70 of the world’s top 100 banks as its clients and has 38% share of the transaction lifecycle management solutions market. The acquisition of SmartStream will be Infosys’ second major one, after it acquired an Australian IT firm for $22.9 mn in 2003.

Buyout fund TA Associates holds 60% stake in SmartStream. TA acquired the company around 18 months back after the exit of 3i, which supported a management buyout in 2000.

Read more in The Economic Times article.

Changi Airport forms airport modernization JV with Tata Realty & Infrastructure

Singapore’s Changi Airport International (CAI) is entering into a joint venture company with Tata Realty & Infrastructure, a subsidiary of the Tata group, to pursue airport modernization projects in India. The two partners have signed a memorandum of understanding (MoU) to set a joint venture company in which Tata Realty will hold a majority 51% stake and CAI 49%, to invest in, develop and manage Indian airports.

The scope of the venture could include bidding for the impending modernization and operations of the Chennai and Kolkata airports, India’s third and fifth busiest airports respectively, which the government wants to develop as alternative hubs to Mumbai and Delhi. The venture could also extend to investments in some of the 35 smaller airports, as well as the proposed Rs. 4235 crore-Navi Mumbai airport project. Regarding Chennai and Kolkata airports, the government is expected to make a formal announcement of a privatization programme. Chennai handled 6.77 mn passengers and Kolkata 4.4 mn in 2006. The Navi Mumbai airport is expected to absorb 10 mn passengers a year in 2013, its first year of operation, and 40 mn passengers a year by 2030.

CAI is wholly owned by the Civil Aviation Authority of Singapore. It had earlier teamed up with telecom giant Bharti for the Mumbai airport modernization project but later pulled out citing lack of confidence in meeting tender conditions. Besides the Tata group, CAI is exploring the option of teaming up with hotel major Leela Group to develop Kannur airport in north Kerala. Though it had withdrawn from the Mumbai airport project, CAI has teamed up with GVK Group, the present developers of the Mumbai airport, to implement a 100-day improvement programme and assist them in reviewing their master plan.

Read the Business Standard article.
Related Post: Tata Group forms Tata Realty & Infrastructure with Rs. 4500 crore-fund

Bharti Enterprises to engage in PE activity

Bharti Enterprises, the parent company of Airtel, plans to get into the investments space by being strategic partners in new businesses. The company has roped in Mr. Prakash Nene, a senior ICICI Ventures executive as corporate director, investments and new opportunities to spearhead the initiative with the mandate to identify new business opportunities where Bharti Enterprises can invest. He would report directly to Mr. Sunil Mittal.

Bharti Enterprises is the parent company of the Sunil Mittal group with investments in Bharti Airtel, financial services venture Bharti-AXA and fresh food and vegetables distribution business Field Fresh. The group is making a foray into the retail business through a wholly-owned subsidiary Bharti Retail.

Bharti Enterprises has surplus cash and is looking at new investment opportunities to deploy these funds in an optimal manner. The company is clear that it does not want to be a mere financial investor and wants to invest with a long-term horizon and help the investee company or business in creating value. It is possible that the company may also incubate new businesses.

Bharti Enterprises will also look at investments in mutual funds and sundry other financial instruments. Bharti Enterprises move to enter the strategic investment space is in line with other business families and high net worth individuals who have branched out into private equity. Prominent examples include Azim Premji, who has started Azim Premji Investments, and Dabur’s Burman family who have made investments in their personal capacity in companies such as Punjab Tractors and Vishal Mega Mart. Bharti Enterprises will differentiate itself from others in that it will make direct investments as a company and play a far more active role.

Read more in The Economic Times article.

Sony Pictures company buys 51% in Chennai-based animation firm FrameFlow

Chennai-based FrameFlow, a three year-old animation and visual effects company has sold 51% stake to US-based Sony Pictures Imageworks (SPI) for a reported $5 mn. FrameFlow has been renamed as Imageworks India. Founded in the year 2003, FrameFlow has a state-of-art production facility in Chennai employing 80 people delivering solutions to the visual effects industry. SPI will invest in infrastructure and proprietary technology software, besides offering high-end training, and expect to generate revenues of $20 mn over the next three years.

Read The Economic Times article

Shell buys out BPCL’s 49% stake in Bharat Shell

Shell Overseas Investments has bought out Bharat Petroleum Corporation Limited’s (BPCL) 49% stake in Bharat Shell. Both companies want to focus on their own specific lubricants brands in the growing lubricants market in India. The financial details of the deal have not been disclosed. Bharat Shell was a 51:49 JV between BPCL and Shell Overseas and was incorporated in 1993 for marketing Shell’s lubricants in the country. The joint venture has an authorized capital of Rs. 250 crores and a paid-up capital of Rs. 200 crores. Bharat Shell also markets LPG to both domestic and industrial consumers.

Read more in the Business Standard article.

HDIL in talks with PE funds for pre-IPO stake sale

Mumbai-based real estate developer Housing Development and Infrastructure Limited (HDIL) is in talks with private equity and real estate funds such as ICICI Ventures, Kotak Realty and HDFC Realty for selling a 4% stake for about Rs. 550 crores. It is quite possible that these three firms together can subscribe to the pre-IPO portion.

HDIL is in the process of diluting 4% stake in the company as part of its pre-IPO placement. It plans to do an IPO to raise over Rs. 2000 crores some time soon. HDIL has developed approximately 72.8 mn square feet of saleable area and 5.5 mn square feet of rehabilitation housing area so far. The company is in the process of expanding its property development activities to other parts of India.

Article in The Economic Times.

LN Mittal to buy 49% stake in HPCL’s Bathinda refinery for Rs. 3300 crores

Indian-born British steel magnate LN Mittal will pick up a 49% stake in the Rs. 16,700 crore-greenfield refinery project at Bathinda in Punjab with an investment of around Rs. 3300 crores. The refinery is being set up by Hindustan Petroleum Corporation Limited (HPCL). This is the first foreign direct investment in the refinery sector. HPCL will sign a JV with Luxembourg-based Mittal Investments for the 9 mmtpa Guru Gobind Singh Refinery project and allied facilities at Bathinda. Mittal Investments is wholly owned by the Mittal family and is registered in Luxembourg. It holds 38% in Mittal Steel Company.

Earlier, on two occasions, HPCL failed to forge alliances with British Petroleum of the UK and Saudi Aramco of Saudi Arabia. HPCL and Mittal Investments will hold 49% equity each in the project, while the balance 2% will be held by financial institutions. It is expected that a formal agreement between the two partners will be signed during the proposed visit of Mr. Mittal on March 2. Public sector Oil India (OIL) may also join the project at a later date and may get a 10-15% stake in the project out of HPCL’s 49%. The HPCL board had cleared the JV proposal on Monday. The project is expected to be commissioned by 2010.

Read The Economic Times article.

Canaan Partners to invest in 3 companies; deals to close by year-end

Canaan Partners, a US-based early-stage venture capital firm, which was last year in the news for its $2.5 mn investment in online matrimonial portal BharatMatrimony.com, has short-listed three more such deals. These are likely to get funding by the end of the year. The company is also exploring options to bring an Indian adaptation of Shutterfly, a US-based photograph printing and publishing portal.

Canaan Partners is looking at investing $2-5 mn in the first phase and around $15 mn in the next stage. The companies identified are all technology-based; however, it is also looking at start-ups in the services and telecom space.

The VC firm has an office at Gurgaon and is planning to set up two more offices this year in Mumbai and Bangalore. Canaan Partners has a cumulative capital investment capacity of $450 mn. In 2000, the venture capital (VC) firm had invested in Aztec Software, a software development firm, and in e4e, a diversified business-outsourcing firm.

Read the Business Standard article.

New Enterprise Associates buys 40% in HFCL Infotel for Rs. 375 crores

US-based private equity firm New Enterprise Associates (NEA) has acquired a 40% stake in HFCL Infotel for Rs. 375 crores. The deal has been signed and the transaction is likely to close in the next few weeks. The deal values HFCL Infotel at around Rs. 950 crores. HFCL Infotel offers CDMA-based wire-line, fixed wireless and mobile services in Punjab.

The Silicon Valley-based NEA has over $8.5 bn under management. It is one of the oldest and largest venture firms in the world. NEA had been scouting for buys in India and has opened an office in Bangalore and more recently, in Mumbai (read press release). In February 2006, it created an Indian arm, NEA-IndoUS Ventures with plans to invest $150-200 mn in India.

HFCL Infotel was being eyed by several PE funds wanting a slice of India's telecom action. It is a loss-making unit of Himachal Futuristic Communications Limited (HFCL) incurred a loss of Rs. 25.6 crores during the quarter ended September 2006 and had accumulated losses of Rs. 70.25 crores, resulting in negative net worth of Rs. 8.54 crores.

The promoters now own 62% in HFCL Infotel, private corporate bodies hold just over 30% and 2.51% is held by the public. The private component is held between seven entities -- Masita Capital Services, August Trading, IDBI (with the largest share with a little over 12% stake), Oriental Bank of Commerce, MKJ Enterprises, Mantu Housing Projects and Micro Management.

Read The Economic Times article.
New Enterprise Associates to buy 50% stake in HFCL Infotel

Teledata Informatics buys majority stake in eSys Technologies for $105 mn

Teledata Informatics, a Chennai-based IT company has acquired a strategic majority stake in eSys Technologies for $105 mn. The promoter of eSys, Vikas Goel, would continue to hold 49%, in the company. eSys Technologies is a Singapore-based distributor of hard drives and PC manufacturer. eSys is a $2 bn-privately-held firm started by an Indian entrepreneur. Teledata provides software and solutions for the marine, education, telecom and utility sectors. Teledata has picked up the stake in the Singaporean company through a fresh infusion of capital.

eSys derives nearly 95% of its revenues from distribution and manufacture of hardware. It distributes hard disk drives and other computer components. It also produces personal computers, some under contract manufacturing, while it also sells under its own brand name. eSys now manufactures more than 2 mn PCs annually at its facilities in Singapore, India, US and the Middle East.

Read the article in The Economic Times.

Merrill Lynch may up stake in India Infoline from current 14.1%

Merrill Lynch may acquire an additional stake in equity brokerage and financial services company India Infoline, over and above the 14.1% stake currently in the company. Merrill presently is negotiating with the company’s promoters.

If Merrill buys a further stake in India Infoline and its shareholding goes above 15%, it will have to make an open offer to the brokerage firm’s shareholders to pick up an additional 20%. At present, the promoters hold 36% stake, which is valued at about Rs. 600 crores at current market prices. The current market capitalization of India Infoline is Rs. 1670 crores. The deal would mark the entry of Merrill Lynch into retail brokerage business in India.

Read The Economic Times article.

JM Financial and Morgan Stanley to go separate ways

In one of the biggest developments to have happened in the Indian investment banking space, the JM Financial Group and Morgan Stanley have called it quits on their Indian joint venture JM Morgan Stanley, one of the most prominent names in the investment banking and securities broking businesses in India. The joint venture, inked in 1997 and formalized in 1999, established a pre-eminent investment bank, equity broking, research, wealth management and advisory and securities distribution operations in India during the decade long relationship.

JM Financial will acquire the 49% holding of Morgan Stanley in JM Morgan Stanley, which along with the investment banking business will also include its subsidiaries engaged in fixed income, equity broking, wealth management, advisory and distribution businesses of the joint venture at around book value for $20 mn (approximately Rs. 88.5 crores). JM Financial will simultaneously sell to Morgan Stanley, their 49% holding in JM Morgan Stanley Securities, the institutional equity broking business for $445 mn (around Rs. 1970 crores).

The transaction is expected to close by the first quarter of FY2007-08.

Monday, February 19, 2007

Tata Group forms Tata Realty & Infrastructure with Rs. 4500 crore-fund

The Tata Group has promoted a real estate arm, Tata Realty & Infrastructure, which will invest in infrastructure and real estate projects. The company has a corpus of Rs. 4500 crores. Dinesh Chandiok, the former CEO of Ansal Properties to head Tata Realty, will lead the initiative.

Apart from the Tatas, foreign investors too would be sponsors of the fund. There would be different fund schemes for different projects in phases. International Consultancy firm KPMG has been involved in strategizing the Tatas' real estate business. Tata Realty would look at investing in housing complexes, special economic zones and construction of bridges, ports and airports.

Read more in The Times of India article.

Vornado, Uppal Group to finance Rs. 5000 crore-SEZ

New York-based Vornado Realty Trust, a leading operator of office buildings in the US, and Uppal Group, an Indian real estate player is forming a joint venture to fund a 263 acre-tax-free enclave in Gurgaon. The enclave will require a massive investment of Rs. 5000 crores and house information technology and other exclusive service businesses. Vornado will acquire a 50% stake in the project. The project will be paid for through a number of debt, internal accruals, and equity from both companies.

Read the article in Indianrealtynews.com.

Apollo Hospitals to buy UK-based healthcare unit

Apollo Hospitals is looking at acquiring a UK-based hospital chain estimated to be valued upwards of £1.2 bn, in partnership with private equity players. Apollo will provide its management expertise in such deals.

Apollo Hospitals has already expressed an interest in the British unit of Swedish healthcare company Capio that is owned by private equity groups Apax and Nordic Capital. The private equity owners of Capio were considering the sale of Capio's British unit in response to antitrust concerns.

Apollo has also been looking at other hospitals including The Priory Group, owner of the famous rehabilitation centre for pop stars and fashion models. Priory Healthcare's major shareholder ABN-AMRO has appointed Morgan Stanley to conduct a strategic review.

Read the Moneycontrol.com and Reuters.co.uk articles.

Indian Government to announce an incubation fund for entrepreneurs

The Indian government is proposing to set up an incubation fund which could be announced in the forthcoming Budget. The fund will help graduates from leading technical and management institutes with the seed money to float their ventures. The initiative will be on the lines of private venture capital funds. The fund will provide capital support and interest subsidy for a project. The proposal is being worked out on the basis of recommendations made by a committee under the Planning Commission.

While the government may provide seed money for the fund by way of token provision for the next fiscal, the industry may also be asked to take it forward. The industry may be involved in the identification and implementation of viable projects. Incubatee entrepreneurs may be allowed certain concessions. Besides, contributions to the fund by business houses could earn them deductions from income tax.

A Planning Commission committee on technology innovation and venture capital has suggested that all technical institutions should set up profit-sharing Enterprise Incubation Units to provide advisory services, help in filing patents and protecting commercially valuable intellectual property. The committee also has suggested that these incubation units should get grants of up to 50% of their expenditure and exemption from tax as long as returns are used for further innovation. The committee has also suggested that enterprises being developed at incubation centres should also be categorized a priority sector for extending concessional bank credit.

Read The Economic Times article.

Bank of India forms life insurance JV with Dai-Ichi Mutual Life Insurance and Union Bank

Bank of India has formed a life insurance JV with Japanese company Dai-Ichi Mutual Life Insurance Company and Union Bank of India. Bank of India will hold a 51% stake in the JV, while 26% will be held by Dai-Ichi and 23% by Union Bank of India. The bank is also contemplating a joint venture in Zambia soon. It has also entered into a strategic alliance with Union Bank of India and IDFC for loan syndication, international business, cash management, cheque collection and training.

Article in The Economic Times.

Tata Tea to divest stake in tea plantations to IFC, IL&FS, workers

Tata Tea will divest 80% in its North Indian Plantation Operations (NIPO), and will spin it off to a number of investors and workers. The value of Tata Tea’s 80% stake in NIPO, which consists of 24 estates in West Bengal and Assam, is pegged at Rs. 290 crores, with the entity’s total valuation at Rs. 359 crores. The separation of NIPO will be effective April 1, 2007.

The company will detach itself from plantation management with the divestment. A couple of years ago, Tata Tea handed over the management of its south Indian plantations to its workers. The management of the company will be vested with the workers and Tata Tea will handle the marketing and distribution of NIPO’s produce. World Bank PE arm International Finance Corporation (IFC) and ILFS will each pick up a 20% stake in NIPO. This will be IFC’s first overseas investment in the plantation sector.

Globally Managed Services (GMS), a firm promoted by Mumbai-based Assamese consultant Ranjit Barthakur may pick up 10-15% and the workers of the 24 estates another 15%. The balance will be held by a couple of agri-companies. The agri-companies are being roped in to cash in on Tata Tea’s multi-cropping activities, so that NIPO emerges as an agricultural company with tea as its mainstay.

IFC and ILFS may likely pay nearly Rs. 72 crores each for their acquisition, while GMS will pay Rs. 36-54 crores, depending on the size of its shareholding. The workers will have to shell out Rs. 54 crores; the amount is planned to be raised through loans from the company spread over 5-10 years.

Read more in the Business Standard article.

Spanish firm Gestamp to acquire 37.5% stake in TACO

Spain-based Gestamp Servicios SL will acquire 37.5 % stake in Automotive Stampings & Assemblies Limited, a Tata Group company for a consideration of around Rs. 36.31 crores. Gestamp would acquire up to 37.5% of the paid-up equity share capital of the company from one of the promoters, Tata AutoComp Systems Limited (TACO), and partly through an open offer to the shareholders at a price of Rs 94.96 per share.

Post acquisition, Gestamp along with TACO and Tata Industries Limited would become the promoters of the company. Yes Bank is acting as the financial advisor to Gestamp Servicios. After completion of the sale of shares as above, the company would become a joint venture of TACO and Gestamp. Gestamp and TACO would eventually have a 50:50 equity stake in the company.

Read The Economic Times article.

Indian Tourism Infrastructure acquires Gem Tours for Rs. 400 crores

Mumbai-based Indian Tourism Infrastructure Limited (ITIL) has taken over city-based Gem Tours & Travels Private Limited for a consideration of Rs. 400 crores. Gem Tours will get a 26% stake in ITIL. Gem Tours is acquiring 1000 acres of land in Mandangadh and 1400 acres in Sindhudurg along the Konkan coastline. ITIL plans to establish special economic zones, especially for tourism, at Mandangadh and Sindhudurg. The company proposes to apply for necessary permissions for these proposed SEZs.

ITIL plans to purchase luxury yachts, helicopters and create the necessary tourism infrastructure. The company is planning a time share concept for yachts for the first time in India. Besides, it would start 40 hotels across the country and set up a convention centre, which can accommodate 10,000 people at a time. ITIL plans to recruit 10,000 agents all over India to carry out diverse business interests like packaged tours, air tickets, time share vacations, real estate, hotel chains, chartering of private jets, helicopters, cruise sailing, and yacht hiring. ITIL may enter the capital markets soon.

Read the Business Standard article.

ICICI Bank raises $500 mn via five-year bond

ICICI Bank has raised $500 mn (Rs. 2205 crores) through dollar-denominated five-year bond overseas. The bank will pay a coupon of 62 basis points above the London Inter-Bank Offered Rate (LIBOR). Road shows for the issue were conducted in London, Singapore, Hong Kong, and Paris. Barclays Capital and Deutsche Bank AG were the lead managers to the issue. This is the second time that ICICI Bank is tapping the overseas market in 2007. In January this year, ICICI Bank had raised $2 bn through a bond issue in three tranches.

Read the article in Business Standard.

GE’s India lighting brand CEMA bought by US-based Saratoga Partners

Saratoga Partners, a New York-based buyout investment firm, is buying out GE’s consumer lighting business in India, including the CEMA brand and the manufacturing facility in Gujarat. The financial details of the transaction are not available. Saratoga Lighting Holdings has also entered into an agreement for using the GE brand in the domestic consumer lighting business. CEMA and GE brands together account for over 2% of the domestic consumer lighting market estimated at Rs. 2500 crores.

CEMA Electric Lighting Products India Private Limited, the new legal entity formed during the acquisition, will function as a subsidiary of Saratoga Lighting Holdings. Saratoga Lighting is a portfolio company of Saratoga Partners, a US-based private equity firm that manages a group of investment limited partnerships. It focuses on the global lighting industry and has operations in several countries including USA, China and India.

Read The Economic Times article.

Friday, February 16, 2007

IDEB Projects gets PE funding of $32 mn from Samsara Capital and Fortune Partners

Bangalore-based engineering construction and property development company IDEB Projects has received a private equity funding of $32 mn (Rs. 150 crores) from Samsara Capital of USA and Fortune Partners of Singapore. IDEB has been involved in the construction of infrastructure projects like roads, bridges, build-operate-transfer (BOT) projects, high-rise buildings, mass housings, elevated and intricate RCC structures and treatment plants since 1998. PricewaterhouseCoopers were the financial advisors to the transaction.

The funding will be used by IDEB for building land banks in 6-8 cities. At present, the company has a construction business order book of Rs. 1100 crores and is developing over 8 mn square feet of real estate projects in Bangalore, Chandigarh, Goa, Jaipur, Mysore, Pune and Uttaranchal. The company is building a 4 acre-IT Park in Dehradun in a joint venture (JV) with the state government through the State Industrial Development Corporation, a Rs. 165 crore-design-and-build contract for Delhi Metro for an elevated viaduct of 4.55 km, and five elevated stations for Phase II of the Delhi Mass Rapid Transport System in a JV with the Shanghai Urban Construction Group.

After the fund infusion, the company is targeting consolidated revenues of over Rs. 1500 crores in 2007-08. The company is expected to achieve consolidated revenues of about Rs. 550 crores in 2006-07 from its engineering construction and real estate businesses. It is looking at an IPO sometime in 2008-09.

Read the article in Business Standard.

Orissa considers VC fund for IT SMEs

Orissa is considering setting up a Venture Capital Fund (VCF) for small and medium IT enterprises in the state. This is in line with plans to set up a National Venture Capital Fund (NVCF) for IT SMEs, currently pending with the Planning Commission (See Related Post).

Currently, the Orissa STPI (Software Technology Park of India) has a catalogue of 100 registered IT / ITeS companies, of which only 5% are in the big league and the remaining are IT SMEs.

Orissa's current software exports stand at Rs. 465 crores. Around 85% of Orissa's software export earnings are from Infosys and Satyam. Of late, TCS, Wipro, MindTree and Hexaware are also planning forays into the state. Around Rs. 1000 crores has been invested in the IT / ITeS sector in the state, as per estimates.

Read the Business Standard article.

SBI Capital Markets tops Lead Manager rankings

State Bank of India’s i-banking unit SBI Capital Markets has been ranked as the top mandated lead arranger and advisor in the Asia-Pacific region by Project Finance International (PFI) for the year 2006. SBI Caps has also been ranked 9th and 3rd globally in the ‘Project Finance Arranger’ and ‘Project Finance Advisory’ categories, respectively, in 2006 by PFI. It is the only Indian investment bank to figure among the top 10. Leading global data, news and analytics provider Bloomberg has also ranked SBI Caps as the No. 1 Mandated Arranger for the second year in a row.

Read the Business Standard article.

Pioneer Asset Management to acquire 51% stake in BoB Mutual Fund

Pioneer Global Asset Management, part of Italian banking group Unicredito, will pick up a 51% stake in BoB Asset Management Limited, a subsidiary of Bank of Baroda. Pioneer is re-entering the Indian mutual fund business after exiting in the early part of 2000’s. It was earlier present in India through the Kothari-Pioneer Mutual Fund.

Unicredito acquired the Pioneer Group in 2000 but due to differences with the local JV partner decided to exit the Indian markets.

BoB has signed a memorandum of understanding with Pioneer. Pioneer will acquire stake at premium and control the operations of the AMC as they will provide domain expertise. BoB will bring in local expertise and access to its wide distribution network of over 2700 branches and 29 mn customers. The Unicredito group will also explore the possibility to establishing investment banking and private equity presence in India.

Read more in the Business Standard article.

Jain Irrigation to acquire US-based Aquarius Brands for $21.5 mn

Jain Irrigation Systems will buy 100% stake in California-based Aquarius Brands from Habasit Holdings for $21.5 mn (Rs. 94.7 crores) in an all-cash deal. With the acquisition, Jain irrigations will become the second largest drip irrigation firm in the world. The acquisition will be made through Jain Irrigation, Inc., the wholly-owned US subsidiary of the company. Earlier, Jain Irrigation had acquired Chapin Watermatics, a leading manufacturer of drip taps in Watertown, New York in May 2006.

Read the article in Business Standard.

Bangalore-based floriculturist Karuturi to acquire Netherlands-based rose grower Sher

Bangalore-based floriculture company Karuturi Networks is close to acquiring the Netherlands-based Sher, the world’s largest producer and supplier of roses, for about $50 mn (Rs. 220 crores). Sher has greenhouses in the Netherlands, Kenya and Ethiopia with an annual production of 600 mn roses.

The acquisition will be funded through internal accruals and the proceeds of a $25 mn FCCB issue. UTI Bank and the London-based Silverdale Services are advisors to the transaction. Established in 1994, Karuturi Networks currently processes 12 mn roses annually. Karuturi Networks has 60 hectares of greenhouses in India and Ethiopia for rose cultivation. With this acquisition, Karuturi will get a strong brand in Sher as well as European facilities.

Read The Economic Times article.

Aurangabad-based Endurance acquires Italian, German die-casting firms

Aurangabad-based die-casting company Endurance Technologies has acquired two European aluminium die-casting firms, Nuova Renopress in Italy and Amann Druckguss in Germany. The combined deal size of both the acquisitions is €40 mn (Rs. 230 crores). Endurance has also acquired a 40% stake in Italian auto component company Paioli Meccanica for €6 mn (Rs. 34.46 crores), with an option of hiking the stake further at a later stage.

Nuova Renopress has a turnover of €25 mn, has a good technology base and boasts of customers like Honda, Bosch and Siemens. Amann Druckguss has a turnover of around €40 mn and has customers like Daimler-Chrysler, Porsche, MAN, Behr, John Deere and Audi.

Endurance Technologies belongs to the Rs. 1500 crore-Endurance Group. The Endurance Group had recently raised Rs. 150 crores in August 2006 from Standard Chartered Private Equity Fund. The company plans to hit the market in the next 18-24 months. KPMG was the advisor for the acquisitions. The acquisitions have been funded through a mix of internal accruals, proceeds of the private equity sale and debt.

Read the articles in Hindustan Times, The Economic Times and The Financial Express.
Related Post: Endurance Group buys German auto ancillary company

BPL promoters sell 6.3% stake in company in open-market transaction

The promoters of BPL, the Nambiars, have sold a 6.3% stake in the company for about Rs 25-30 crores. The stake was sold in the open market. In June 2006, the Nambiars had significantly raised their stake in BPL through a preferential allotment; they have now sold their stake at more than double the price of the preferential allotment. The allotment was made at a price of Rs 43 per share. The promoters’ stake in BPL has now come down to 65.26% from 72.6% stake as of December 2006.

The preferential allotment made to the Nambiars in June 2006 was in lieu of conversion of a loan advanced by the promoters to comply with the corporate debt restructuring plan. BPL is currently undergoing a debt restructuring programme; BPL has been going through financial pressure including cash flow problems.

For the quarter ending December 31, 2006, BPL had reported net sales of Rs. 24.97 crores on a net loss of Rs. 8.78 crores.

Read The Economic Times article.

Thursday, February 15, 2007

Citigroup, Blackstone, IDFC, IIFC tie-up for $5bn India Infrastructure Financing Initiative fund

US-based financial services giant Citi and private equity major Blackstone have joined hands with infrastructure finance companies IDFC and India Infrastructure Finance Company Limited (IIFC) to set up a $5 bn (Rs. 22,000 crores) fund to finance the India Infrastructure Financing Initiative. According to government estimates, infrastructure development in India would require $320 bn in the next five years. The India Infrastructure Financing Initiative will have equity and quasi-equity of $1 bn and $3 bn long-term debt. The equity financing programme will be managed by IDFC and the fund will be invested in greenfield, brownfield and operating projects. Debt financing will be channeled through IIFC, in several tranches over the next three years for projects appraised by IDFC, certain banks and financial intermediaries. IDFC, Citi and Blackstone will together invest $250 mn while the balance is expected to come from reputable international investors as well as select domestic institutional investors, including IIFC.

Read the article in Business Standard and The Economic Times.

Mitsubishi UFJ Securities opens office in India

Reuters.com reports that Mitsubishi UFJ Securities, the investment banking and brokerage arm of Japan's Mitsubishi UFJ Financial Group, has set up its Mumbai office in India to offer corporate finance and capital market-related advisory to Indian corporates. Mitsubishi UFJ will focus on areas such as mergers and acquisitions, corporate finance, asset management and fund raising in Japanese capital markets for Indian companies. Lat year, Mitsubishi UFJ Securities had signed a Memorandum of Understanding with ICICI Bank to explore a non-exclusive alliance. Mitsubishi UFJ Securities also offers the PCA India Infrastructure Equity Fund in Japan, which has funds of $516 mn.

Singapore-based real estate firm Ascendas to raise $1 bn fund for India & China

Singapore office and industrial parks landlord Ascendas is in talks with potential private equity investors to raise a combined $1 bn for two private-equity funds it is setting up for its expansion in India and China. The initial size of the India investment fund, which will focus on developing land into industrial parks, will be $500 mn. Ascendas has assets valued at $640 mn in its India properties representing about 3.6 mn square feet. Ascendas already manages an office real estate investment fund in India fund that invests in information technology (IT) parks. General Electric (GE) Commercial Finance Real Estate, a unit of conglomerate GE, is one of the investors in the India fund. Ascendas is in talks with banks for a Singapore listing of the first India fund.

Article in The Business Times, Singapore.

Gitanjali Gems acquires second US-based jewellery company Tri-Star Worldwide

Diamond and jewellery manufacturer and retailer Gitanjali Gems has purchased a majority interest in New York-based Tri-Star Worldwide proprietor and marketer of the Canadia branded diamonds and diamond jewellery.

Tri-Star is also a BHP Billiton direct customer and a licensee of CANADMARK. Along with Tri-Star founding partner Beny Sofer & Sons, Gitanjali plans to expand Tri-Star and the Canadia brand. The new partnership will allow Canadia Diamonds to market to leading jewelers of the world, an exclusive network of top US independent jewelers, and to the existing Gitanjali customer base of 1200 independent retail jewelers. Tri-Star Worldwide was founded by Beny Sofer & Sons in 2002. The company started out by selling branded loose diamonds from the recently discovered rich diamond resources in the north-west territories of Canada and was one of the first to offer country of origin certification, along with comprehensive marketing support.

DTC site-holder Gitanjali Gems is based in Mumbai owns the brands Nakshatra, Asmi, Gili, D’Damas, Sangini, Collection G, Gold Expressions and Vivaha Gold. The company is also playing a key role in developing two SEZs, including one across 200 acres in Hyderabad, one of the largest of its kind for jewellery.

Article in The Economic Times.
Related Post: Gitanjali acquires US-based Samuels

JP Morgan, AIG to launch mutual funds in India

JP Morgan Asset Management, a manager of over $1.013 trn assets across the world, and the AIG group that manages $670 bn will be launching their mutual funds for local investors in India. Both have received the Securities and Exchange Board of India (SEBI) approval for opening shops in India. Fidelity Investment in early 2005 was the last big global player that entered the Indian mutual fund space. Aegon Global, Dawnay Day, Nikko Asset Management, a JV between Ambit Capital and Nikko AMC of Japan, Bharti-AXA, another JV between Bharti Enterprises and asset management firm AXA of France are some of the other players wanting to float funds in India. Currently, the domestic mutual fund industry has 30 players managing Rs. 339,000 crores of assets. JP Morgan plans to start the domestic business with an initial net worth of Rs. 45 crores, AIG has earmarked $20 mn. The Indian regulator requires asset management companies to have a minimum net worth of Rs. 10 crores.

JP Morgan is headed by Krishnamurthy Vijayan, who was heading the JM Financial Mutual Fund for five years. Nandkumar Surti, also of JM Financial, will be heading JP Morgan’s fixed income business in India. Similarly, Saurabh Sonthalia, who heads AIG Global Investment Group, was earlier with DSP Merrill Lynch Mutual Fund. On the investment management side, Tushar Pradhan, who was earlier with HDFC Mutual Fund, will be the Chief Investment Officer, Equities at AIG.

Read the article on livemint.com.

Investment banking fees in India touch $200 mn from Jan-Feb 2007

Investment banking houses in India have generated a deal fee of around $200 mn in the months of January and February in 2007, as compared to $150 mn for the total year of 2006. Total fees earned during 2006, including equity and debt capital for India, was around $500 mn. Of the $500 million, equity capital markets could have contributed around 60% while around 10% could be the debt capital market fees. The M&A transactions have contributed the remaining $150 mn. Equity and capital market deals entail issuance of shares and bonds by companies to raise money.

For multi-billion deals above $10 bn, advisory fees range from 0.1% to 0.2% of the deal size or anywhere between $10-25 mn. Global i-banks charge a minimum of $1 mn. For small-sized deals, the fee could be around 3.5% of the deal size. With corporates looking at big-ticket deals which require large syndication ability of banks, a commitment fee is also now being levied. This would ensure a minimum payment to i-banks from the deal, even if the corporate eventually loses out in the bidding battle. As deals turn complex, i-banks have also started levying ‘drop dead’ fee or non-refundable fee in case of failed transactions. This is simply to compensate for their time and effort. The bigger chunk of the fee collected by i-banks is garnered from financing and structuring the deal. This fee could range anywhere between 0.50% and 1.25% of the deal size. Fees are higher for equity transactions.

In most of the recently announced deals, European banks have been the lead advisors as Europe has been the destination for the maximum number of acquisitions by Indian corporates. In case of Tata Steel, it was ABN-AMRO, Deutsche Bank and NM Rothschild, while in case of Vodafone and Hindalco, UBS was the sole advisor.

Read more in The Economic Times article.

Clariant, DIC, Ciba race for Asahi Songwon stake

Major foreign chemical companies are vying for a stake in Ahmedabad-based pigment manufacturer Asahi Songwon Colors Limited (ASCL). Specialty chemical majors Clariant, DIC and Ciba are said to be holding talks with ASCL for a stake sale. Clariant already holds a 9.39% stake in Asahi. A stake in ASCL would give the buyer access to cost-effective and reliable supplies of raw materials.

ASCL soon will be raising Rs. 44 crores from its initial public offering to fund the expansion project at its Vadodara plant at a cost of Rs. 52 crores. The company has already received a term loan of Rs. 8 crores from the State Bank of India. ASCL’s turnover for FY05-06 was Rs. 24.5 crores and net profit at Rs. 2.6 crores. Unaudited results for the six months of FY 06-07 show a turnover of Rs. 31 crores and the net profit at Rs. 4.6 crores.

Read more in the Business Standard article.

Amitabh Chakraborty joins Religare Securities as president of the equity business

Amitabh Chakraborty, who was heading the research team at BRICS Securities, has now joined Religare Securities Limited, a Ranbaxy group company, as President, Equity Business. He will be based out of Mumbai.

Mr. Chakraborty has been mandated for setting up the equity research team and spearheading the equity related initiatives to drive the high profile equity broking business at Religare.

Mr. Chakraborty was earlier with BRICS Securities. Prior to BRICS, he was heading the research team at Kotak Securities, from where he was sacked for an undisclosed internal code of violation.

Read the press release on Moneycontrol.com.

Wednesday, February 14, 2007

Google invests in early stage Indian VC funds

Google has invested in Bangalore-based Seedfund and Erasmic, two early-stage venture capital funds. India is the first place where Google has made a limited partner investment in early stage funds. The company did not disclose the financial terms of the deals. Seedfund has backing from global leaders in venture capital space including Motorola Ventures, Reliance Capital and SVB Financial Group; international venture funds like Sierra Ventures and individual investors like Kanwal Rekhi, K B Chandrasekhar, B V Jagadeesh and Sridar Iyengar.

Read more in the CIOL.com article.

Deutsche Borse buys 5% stake in BSE for Rs. 189 crores

Germany's Deutsche Borse has bought a 5% stake in the Bombay Stock Exchange for Rs. 189 crores ($43 mn). The deal values the BSE at $854 mn. BSE may sell a further 21% to private equity funds. Last month the NYSE Group, private equity firms General Atlantic and Softbank Asia Infrastructure Fund and global investment bank Goldman Sachs bought a 5% stake each in the National Stock Exchange.

The BSE has been planning to sell a total stake of 26% to strategic investors and offload another 25% through an initial public offering as part of efforts to reform the country's markets. A stake in the BSE will give Deutsche Borse a foothold in one of the world's fastest growing capital markets while the BSE will gain access to the German company's technological expertise and access to western markets.

Read more in the MSNBC.com article.
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Singapore Stock Exchange leads race for BSE stake

France-based Thomson acquires controlling stake in Paprikaas Animation

The €5.4 bn, French digital video technologies major Thomson has acquired a controlling majority in Bangalore-based Paprikaas Animation Studios. The size of the deal has not been disclosed. The acquisition was done through Thomson’s Tehnicolour Content Services business which provides various content activities to media and entertainment sectors. With this buyout, Thomson would be looking sourcing its requirements for the global market through Paprikaas. Paprikaas employs around 150 people.

Read the article in DNA Money.

Tata Power to bid $1.6 bn for Indonesian coal mine Bumi Resources

Tata Power is preparing to bid around $1.6 bn for a 30% stake in Indonesian coal company Bumi Resources in an effort to counter-bid Japanese company Mitsubishi’s offer of $1.32 bn. Mitsubishi has made the highest bid so far.

Tata Power has been asked to submit a binding bid by February-end. Mumbai-based Tata Power major may also look at hiking the bid, if found necessary.

Bumi had put a reserve price at $1 bn. Five bidders were short listed including the Anil Ambani-owned Reliance Energy and Kepco, a power major from South Korea.

Tata Power’s bid will put the valuation of Bumi resources at $5.2 bn. Tata Power has won the 4000 MW Mundra Ultra-Mega Power Project and has been actively scouting for imported coal at cheaper rates. It would need to import around 12 mn tonnes of coal annually starting 2012 for the project.

Read The Economic Times article.
Related Post: REL, Tata Power looking at Indonesian coal company Bumi

Russia’s Rusal may counter-bid for Novelis

Hindalco’s bid for Novelis may see competition from Russian steel major Rusal. Rusal is the world’s largest aluminium and alumina producer. Hindalco will pay the shareholders of Novelis $44.93 per share, or $6 bn, to buyout the US-based company.

Hindalco’s offer has been cleared by the Novelis’ board but is yet to be approved by shareholders. Novelis was spun off Canadian aluminium major Alcan but incorporated in Atlanta in the US. Under Canadian laws, any new bidder would have to pay a break-fee and also better the existing offer. Other potential bidders, such as private equity firm Texas Pacific Group, are also considering mounting a counter-bid for Novelis. Texas Pacific Group controls US-based Aleris.

Regulations stipulate a $100 mn break-fee payable to Hindalco, if a competing bid is made and if in the event, the deal is derailed. As per terms agreed between the Hindalco and Novelis boards, about 66.66% of Novelis shareholders present and voting must tender their shares for Hindalco to go ahead with the deal.

Rusal recently created a three-way merger with Russia’s Sual group and Switzerland’s Glencore International to become the world’s largest aluminum and alumina producer. The annual production would total 4 mn tonnes of aluminum and 11 mn tonnes of alumina, accounting for about 12.5% of global aluminum and 16% of the global alumina market.

Read more in The Economic Times article.

The Reserve Bank of India hikes CRR rate by 50 bps to 6%

The Reserve Bank of India (RBI) has upped the Cash Reserve Ratio (CRR) by 50 basis points. The CRR now stands at 6%. This move by the RBI is said to drain liquidity to the tune of Rs. 14,000 crores from the system. The CRR rate hike will have it effect on banks in that many would be forced to hike interest rates. The CRR rate hike has been effected in two stages. The first hike of 25 basis points will be effective from February 17 and the second from March 3. The RBI’s move of hiking the CRR rate is aimed at checking liquidity from further compounding the inflation rate and follows a fortnight after the central bank raised its overnight lending (repo) rate to 7.5% on January 31.

Read more in the article in Business Standard.

Boutique i-bank Atherstone to raise infrastructure, real estate funds

Atherstone India Invest (AII) is raising two India-dedicated funds. These would include an infrastructure fund of $1 bn and an exclusive real estate fund of €250 mn. The funds will be partnered by European pension funds and insurance companies that are increasingly hungry for India's infrastructure and real estate sectors. AII is an asset management and business advisory firm dedicated to European and Indian cross investment businesses.

AII is a joint venture between the Mumbai-based Atherstone Group and India Invest, a firm based in Switzerland. AII is promoting commercial ties between India and Europe through India-focused funds, business consulting and merger and acquisition advisory. Atherstone Group is a two-year old global investment banking firm with an India focus. The real estate fund will be raised by March-end, followed by the infrastructure fund. The real estate fund is an open-ended fund; it will keep raising funds and deploying them in various projects.

The infrastructure fund will target a judicious mix of infrastructure service companies, technology-based vendors and project development companies. Target firms would be mid-market Indian firms having turnover up to $30 mn. Infrastructure service companies could include those engaged in toll road management, billings and collections in the power sector, demand-side energy management, logistics, and water conservation. However, AII is likely to avoid project development companies, except in sectors that offer higher returns, and where limited funds leveraged with project finance can have an impact. Similarly, technology-based vendors could include specialized vendors in railway signaling, automated tolling, electronic power meters, solar applications, energy efficiency, and pollution control.

The real estate fund will focus on townships, special economic zones (SEZs), large commercial projects and also Tier-II cities like Hyderabad and Pune. UK-based asset management group Belgravia Financial Services will help AII in risk management and asset management process.

Article in The Economic Times.

Pradip Overseas to form JV with US textile firm; hit capital markets with Rs. 200 crore-issue

Ahmedabad-based Pradip Overseas Limited, a manufacturer of household linens, is forming a JV with a US-based textile company for branding and marketing its home linen in the overseas markets. The size of the JV is around Rs. 200 crores and will be finalized by Pradip next month by signing a Memorandum of Understanding with the US company. The name of the American company has not been disclosed.

Pradip Overseas is also planning a domestic JV with at least two Mumbai-based companies. The companies would look after the branding and marketing activities of Pradip in the domestic market. The domestic JVs will also be worth Rs. 200 crores.

Pradip Overseas is planning to raise funds for its Green Field Textile Park in Ahmedabad in the debt-equity ratio of 60:40. Of the equity, 20% would be raised from the capital markets for which it plans to come out with a public issue of Rs. 200 crores in the next six months. As of December 2006, the turnover of the company was Rs. 280 crores.

Read the Business Standard article.

US-based boutique hotel brokerage Molinaro Koger plans $300 mn India-dedicated hotel fund

The Economic Times reports that Molinaro Koger, a US-based hospitality advisory and brokerage firm, is raising a $250-$300 mn fund for investing in hotel assets in India. Molinaro Koger has facilitated around $3 bn of hotel transactions and funding globally in 2006. it will launching the fund towards the end of 2007. The fund would largely target greenfield hospitality projects, especially those in the under-served markets such as religious tourist hotspots and beaches. The fund will be managed by Molinaro Koger’s Capital Markets Group. Molinaro Koger opened its India office in January this year in Mumbai and is in the process of ramping up the India team that would include hospitality advisors, analysts and brokers. Abhijit Das will be the Managing Director of Molinaro Koger India.

Lanco Infrastructure and Jindal Steel & Power buy Globeleq Singapore

Lanco Infrastructure and Jindal Steel & Power Limited (JSPL) have acquired Globeleq’s Indian assets by acquiring Globeleq Singapore. Lanco and JSPL will now implement the Rs. 16,000 crore-Ultra Mega Power Project (UMPP) in Sasan. Lanco and JSPL have purchased 60% and 40% shareholding, respectively, in the Singapore-based subsidiary of the investment arm of Department for International Development, the development agency of the British government. The consideration for the buyout has not been disclosed; Lanco management says that it is nominal.

Lanco has roped in Jindal Steel to address the concerns of the government over the successful completion of the project in the light of Globeleq’s exit from the consortium. Around two months ago, the Lanco-Globeleq consortium had emerged as the winning bidder of the Sasan project. Lanco had 30% stake, while Globeleq had 70% stake in the consortium. With the acquisition of Globeleq’s stake, Lanco will have 72% interest, direct and indirect, over the Sasan project while JSPL will have 28% stake. JSPL reserves the right to scale up its holding to 49% in the project in five years. The shareholders will chip in Rs. 3200 crores as equity contribution towards the project while the remaining Rs. 16,000 crores will be generated through debts. Lanco may also look at other assets of Globeleq which have been put up for sale.

Read the Business Standard article.
Related Posts:
Reliance Energy to bid for Globeleq's global assets
Tata Power, Kalpataru, Lanco to join Reliance Energy in bidding for Globeleq’s assets

Citigroup Property Investors to invest $120 mn in Nitesh Estates’ luxury hotels business

New York-based Citigroup Property Investors (CPI) will invest around $120 mn in Bangalore-based Nitesh Estates' luxury hotels. CPI would partner with Nitesh Estates on the latter’s forthcoming hotel properties. CPI reportedly also has committed itself to 30% in the group's recently announced $100 mn 5-star hotel property on Bangalore's Residency Road. Nitesh Estates is planning to build four more hotels in Goa, Chennai, Hyderabad and Kochi. The company is believed to have acquired land in Goa and is in the process of acquiring land in other locations. CPI has already invested close to $250 mn in India and plans to invest a further $500 mn. Of this, around 40% is expected to be invested in hotels and service apartments. Nitesh Estates had earlier received a PE funding of $100 mn from New York-based Siachen Capital for an undisclosed stake and was also known to have divested a 25% stake for $55-60 mn to New York-based hedge fund Och-Ziff Capital Management Group.

Read the Business Standard article.

Iceland-based generics pharmaco Actavis acquires Sanmar Group's API division

Iceland-headquartered generics pharma company Actavis has acquired the API (active pharmaceutical ingredient) manufacturing division of Sanmar Specialty Chemicals Limited (SSCL), a subsidiary of the Chennai-based Sanmar Group, for an undisclosed sum. The division will give Actavis a wholly-owned, FDA-approved facility as well as the ability to develop and manufacture its own APIs. Prior to the SSCL acquisition, Actavis has concluded two more acquisitions in India: Chennai-based Grandix Pharmaceuticals in December 2006 and Bangalore-based CRO (Contract Research Organisation) Lotus Laboratories in February 2005.

The SSCL division is located near Chennai and supplies APIs to international pharmaceutical companies, mostly in Europe and the US. The division currently manufactures 15 products and employs approximately 70 people. Actavis has also entered into a service agreement with SSCL to provide Actavis with API research and development services at SSCL’s research facilities. Actavis already has a wholly-owned, fully-operational API development centre set up in Bangalore. Actavis now has over 620 people employed in India, with operations in Chennai, Bangalore and Hyderabad. Actavis now has a total of 30 API projects under development in India.

Read The Economic Times and Business Standard articles.

Tuesday, February 13, 2007

Tata Group not to exercise government call option; will hike VSNL stake via market purchase

The Tata Group will increase its stake in group company Videsh Sanchar Nigam Limited (VSNL) through market acquisitions instead of buying the government’s 26.12% residual stake in VSNL through the exercise of a call option.

The Tata Group has a combined effective shareholding of over 50% in VSNL. The government divested VSNL in 2001, with Tatas acquiring the majority stake in the company. However, the government was holding on to 26.12% stake in the company that gave it a controlling power and two nominees on its board.

Panatone Finvest (a Tata Group entity) holds 40.7% in VSNL, while Tata Sons has 8.51%, Tata Power holds 0.09% and Government of India holds 26.12%. Institutional investors and individuals hold the remaining stake in the company. The government was earlier ready to dispose of the residual stake, but had asked for a golden share in the company. A golden share means that the government would sell its 26.12 per cent stake in the company and in return ask for a single share with controlling stake. This was not acceptable to the Tatas.

Read the Business Standard article.

Indian raises $500 mn loan from Germany-based KfW Bank

State-owned carrier Indian has raised a loan of $500 mn (Rs. 2250 crores) from Germany-based KfW IPEX-Bank to finance the acquisition of 43 Airbus aircrafts. The airline has commissioned the bank to finance the first batch of 10 aircrafts. Repayment tenure of the loan is 12 years. Indian had placed an order for the purchase of 43 Airbus aircraft last year, the first of which was delivered in October 2006. The public sector airline will use these aircraft to extend its network beyond south-east Asia and the Gulf region.

The KfW bank has also signed for a 50:50 joint underwriting agreement with the Germany-based HSH Nordbank. Subsequent syndication in the international bank market is envisaged by the underwriters. The KfW bank specialises in financing of complex transport and infrastructure investments.

Read more in the article in The Economic Times.