Wednesday, June 20, 2007

Praful Patel brings in industry friendly norms for aviation sector

The aviation industry has seen a lot of action in the recent past on the M&A front. In line with the trends, Praful Patel the civil aviation minister has decided to support mergers & acquisitions (M&As) in the sector with industry-friendly norms, reported Times Now.

Simple rules for the transfer of traffic rights and the right to use airport infrastructure to facilitate M&As in the sector are among the initiatives proposed in the comprehensive civil aviation policy, which will be considered by a group of ministers (GoM) soon.

The civil aviation ministry’s stand should help M&A deals by making it clear that an airline which takes over another can use the traffic rights of the latter. Parking bays, landing slots, hangars, check-in stands, lounge areas, ticketing areas and office space would also get transferred.

In the aviation sector, management change makes it mandatory for airlines to get several clearances all over again from various authorities including the civil aviation ministry, the Director General of Civil Aviation, Airports Authority of India, the home ministry and the corporate affairs ministry, which could change if the new policy is approved by the GoM.

Max India raises Rs.1000 crs through QIP placement

Max India today announced that it has raised Rs. 1,000 crore through a QIP, which was subscribed 2.3 times by broad based investors, spread globally. CLSA acted as the sole book runner and global coordinator for the issue.

The QIP raises FII holding in the company to 39% from around 26% earlier. Max India has an investment limit of 49% for FIIs.

The company has issued shares at a price of Rs. 240/- per share. Each share of Max India has a face value of Rs. 2/- and therefore, the new shares have been issued at a premium of Rs. 238/- per share. The new shares aggregate 18.8% of the fully diluted equity base of the company. About 40 % of the allocation went to US based investors while the remainder was split evenly between Asia and Europe based investors.

Max India plans to use the net proceeds from this issue to meet its additional funding requirements in line with its strategic business plans to further grow each of its existing businesses. A portion of the proceeds is also expected to be used for general corporate purposes including acquisitions and investments in new ventures. Encouraged by an almost 100% CAGR of its life insurance business since inception, the company has committed itself to growth plans for this business.

Source: Business Wire

Tuesday, June 19, 2007

CLSA Capital Partners invests in Luminous Power Technologies

CLSA Capital Partners, a member of France's Crédit Agricole Group, announced that CLSA ARIA Investment Partners III LP and CLSA Clean Resources Asia have co-invested US$20.3 million in Luminous Power Technologies Ltd.

This is the seventh investment by Aria Investment Partners in India. Managing Director of LPT Rakesh Malhotra said, “This investment by CLSA will provide a strong impetus to our future growth in India and markets across Asia, Africa and Latin America. With this investment we will also be able to execute our strategy of offering high technology Power Electronics and Energy Storage products for the renewable energy sector.”

Luminous Power Technologies is a manufacturer of Inverters, UPS, Deep Cycle and Automotive Batteries and a range of water purification and other home appliances.CLSA Capital Partners is the alternative asset management arm of CLSA Asia-Pacific Markets, with US$1.5 billion under management.

Source: RTT News
Related Posts:
CLSA buys 10.92% stake in Sanghvi Movers

Ruias funding Algoma acquisition through senior notes & loans

Essar Global will raise $900 million through a combination of senior notes and loans to fund its acquisition of Canada’s Algoma Steel, reported Economic Times. The non-recourse fund raising exercise by Essar Global is the second-largest such transaction by an Indian steel company, after Tata Steel’s almost $7 billion loan to finance its acquisition of Corus.

The Ruias’ international holding company had acquired Algoma in April for $1.58 billion in an all-cash leveraged buyout. Essar Global’s acquisition is considered the second biggest by an Indian company in North America, after Hindalco paid $6 billion to buy Atlanta-based Novelis in February.

To finance its Algoma acquisition, Essar Global will sell $450 million of senior notes, recoursed to the Canadian company’s balance sheet. The eight-year notes, denominated in dollars, may yield 9.75% to 10%. UBS is the financial advisor to the offer.

Essar Global also plans to issue $450 million in loans, based on Algoma’s earnings. The group’s own contribution will be about $500 million. It could not be ascertained how the rest of the acquisition amount — about $100 million — will be raised.

India Hospitality to buy Mars Restaurants, SkyGourmet Catering for US$110 mn

India Hospitality Corp (IHC) said it wants to create a diversified hospitality company after agreeing to buy India-based Mars Restaurants Private and airline catering company SkyGourmet Catering Private for about 110 mln usd, as reported by Business Wire.

IHC said in a statement that it will pay about 91.6 mln usd in cash and the rest in shares on completion of the transaction. An additional amount may be payable if the businesses hit certain performance targets.

Upon completion of the transaction, current India Hospitality shareholders will own approximately 88.9% of IHC and insiders, including Hayground Cove Asset Management and Navis Capital Partners, will hold approximately 51.1%. Affiliates of Navis Capital Partners and Mr. Sanjay Narang, the founder of both SkyGourmet and Mars, will continue to play an active role in the management of the combined businesses going forward.

One of the major shareholders in the target companies, private equity investor Navis Capital Partners, retains an option to reinvest a substantial portion of the sale proceeds into IHC, the company said. The option allows Navis and its affiliates to subscribe for up to 75 mln usd in cash for new IHC shares, which, if exercised will lift Navis' stake in IHC to about 20.7 pct.

Citigroup keen to divest 80% of its BPO arm

On the heels of Blackstone's acquisition of the back-office firm Intelenet, news is ripe that Citigroup is keen on selling 80 percent of its business process outsourcing (BPO) arm in India for USD 700-USD 750 million, reported the Mint .

Citigroup is in "advanced negotiations" with leading private equity firms for an all-cash deal for Citigroup Global Services, the newspaper said, citing investment bankers close to the deal. A private equity investor was most likely to emerge as the buyer with IBM Corp. and Tata Consultancy Services Ltd. "likely to drop out of the race over terms being proposed by the seller", the bankers told Mint.

Citigroup Global Services operates primarily in financial services and employs about 8,000 people, its Web site showed.

Private firms are eager to invest in back-office firms in India because of the potential for fast growth in the sector. Carlyle, which has a 28 percent holding in Allsec Technologies Ltd., is reportedly bidding for another back-office firm, Cambridge Solutions Ltd.

Intelenet: Blackstones first management buyout in India

Private equity heavyweight Blackstone Group agreed to buy Indian back-office firm Intelenet Global Services Ltd. for an undisclosed sum, its first management buyout in India, reported Business Standard.

U.S.-based Blackstone, which along with rival Carlyle has been grappling with stiff resistance from Indian companies unwilling to sell out, will own 80 percent of Intelenet, with the back office firm's management holding the remainder.


Under the deal, a joint venture comprising HDFC Bank and Barclays Bank will sell its Intelenet stake to SKR Business Process Outsourcing Services, a company co-owned by Blackstone GVP Capital and Intelenet’s management. Although financial terms of the deal were not disclosed, industry Business Standard sources pegged the sale figure at around $420 million.


Intelenet’s management team will continue to be in charge of operations, with current Chief Executive Susir Kumar at the helm. Also, Intelenet will continue to provide services to Barclays in relation to certain processes currently offshored to India.


Intelenet started out in 1994 as a 50:50 joint venture between Tata Consultancy Services (TCS) and HDFC. In 2004, TCS sold its stake to HDFC for Rs 161 crore when it decided to focus on its own business process outsourcing (BPO) business. Subsequently, HDFC sold 50% to the UK-based Barclays, which was looking to outsource back-office processes to India.

Related Posts:
Fujitsu in talks to buy out Intelenet Global Services, eyes acquisitions in the IT space

Monday, June 18, 2007

Merill Lynch loses Sumeet Puri

Sumeet Puri resigned as head of equity capital markets in India at Merrill Lynch & Co., the biggest arranger of share sales in the nation, reported the Economic Times. Puri will leave Merrill by August after 13 years with the New York-based investment bank.

There have been no official statements as of now on this development from Merill Lynch and the reason for quitting, less than five months after he was named to run equities and origination of structured products in India, is not known yet.

Merrill's top executive in India, Amit Chandra, and its head of investment banking Munesh Khanna quit at the end of last year to start buyout funds.

Related Posts:
Merrill names Sumeet Puri as head of India equity capital markets
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From DSP ML to Citi: Vikas Khattars big move
Deutsche names Sanjay Sharma head of India equity capital markets

Merill invests US$ 11 mn in India's Copal Partners

Merrill Lynch completed a minority investment in KPO provider Copal Partners, joining Citigroup and Deutsche Bank as minority investors in the firm, reported . The three banks now collectively own around 25% of the business.

Based in the UK, Copal Partners is a leading KPO with approximately 550 employees based primarily in India and Mauritius. Copal is a leading outsourced research provider to Wall Street firms and the buy-side. The funding will be used for expansion organically and through acquisitions

According the WSJ, Copal is valued around $300 million, putting Merrill’s stake around 3.7%. The investment is a strategic one, in the sense that Merrill, like the other minority investors, relies heavily on outsourcing for its own research and other activities such as investment banking prep work.

Citigroup Venture Capital to invest a fresh $1.5 bn in India

Citigroup Venture Capital International (CVCI), Citi’s emerging markets private equity investment arm, will invest a fresh $1.5 billion in India over the next three years, reported the Mint. It will be the largest such infusion by a single private equity investor in the Indian market and outstrips the $1 billion allocations made by the Blackstone Group and Carlyle Group each in 2005.

The investments will be made out of CVCI’s global $4.5 billion Growth Partnership LP Fund II, which is slated to complete fund-raising in a few weeks. In three years, CVCI’s exposure to India will jump three-fold from the $500 million it has invested here so far.

The move to up the ante in India follows the recent reorganization of Citi’s global alternative assets businesses, namely hedge funds, private equity and real estate development, under Citi Alternative Investments (CAI), led by former Morgan Stanley executive Vikram Pandit.

CVCI stepped up its investments in India in 2005 soon after the launch of its $1.7 billion Growth Partnership LP Fund I. This fund, incidentally, was the first independent PE fund that CVCI raised since it started operations as a private equity investor in 1996. The bulk of the $500 million it has invested in India so far came from Fund I. Investments prior to 2005 were made mostly out of proprietary funds from Citi.

Among its notable investments pre-2005 were I-Flex Solutions Ltd in Mumbai, Progeon Ltd (now known as Infosys BPO) in Bangalore and Polaris Software Lab Ltd in Chennai.From the new fund, it will go after deals in cross-border outsourcing, consumer-driven industries, infrastructure and restructuring plays among others.

Barings is launching its third India dedicated fund

Baring Private Equity Partners India Ltd plans to launch its third India fund in the second half of 2007, with a corpus of at least $175 million (Rs717.5 crore) to target the energy and the knowledge process outsourcing (KPO) sectors, reported the Mint. The focus will be on alternative energy projects as they have a small gestation period and are comparatively smaller as compared to the conventional power projects.

Baring Private Equity Partners was founded in 1984 and has operations in Latin America, Europe, Russia, Asia and India. The company already has two funds operating in India with interests across sectors such as information technology, life sciences, financial services, energy and fast moving consumer goods.

Baring’s Indian operations started in 1997 with a $40 million fund and its second India fund of $175 million. Its two funds have invested in companies such as Mphasis BFL Software Ltd and Integra among others.

Yash Raj attracts PE interest

Yash Raj Films (YRF) is planning to enter the TV content and broadcast business and is in talks with private equity funds to raise money. A separate company may be created for the TV business.

YRF founder-promoter Yash Chopra has had talks with private equity investor Blackstone, the source adds. Among the other new initiatives, YRF is planning to get into the film exhibition business.

When queried about the TV business, Yash Raj Films chief executive Sanjeev Kohli said: "We are considering an entry into the TV space. We will be firming up our plans in the next few months." He did not rule out a presence in the broadcasting arena, but said no definite plans had been worked out yet.

Source: Indiantelevision.com
Related: Mickey Mouse meets loverboy Raj

Ascendas launches S$500m development fund for India

Business space provider Ascendas has launched its first ever development fund for India - to tap into the country's booming real estate sector. Totalling S$500 million, the private fund will invest in the development of integrated property projects like business and IT parks.

The new Ascendas India Development Trust will start by developing two IT business parks, in the Indian cities of Pune and Nagpur. Ascendas had announced in April that it was developing the two projects through joint ventures with Indian government agencies.

It plans to raise the total asset size of the fund to S$1 billion - and is in the process of securing new investment projects. Current investors in the fund include Bahrain-based asset manager Arcapita, and Holland's ING Private Banking

Source: Channel NewsAsia
Related Article: Singapore-based real estate firm Ascendas to raise $1 bn fund for India & China

Vineet Vohra to head ING India operations

ING Groep NV's (ING) investment management unit said Wednesday it appointed Vineet Vohra as chief executive of its India operations.

He will take over from Kavita Hurry, who has been chief executive since 2002 but is leaving ING to pursue other interests.

Vohra comes to ING from Citibank N.A., where he helped build the firm's wealth management franchise as regional director and business head for Citibank's Asia Pacific Consumer Investments business.

Vulture Funds investing in SMEs

There was an interesting article in the Economic Times on June 13, on how distressed assets funds (also called as Vulture funds) have been attracted to the SME segment in India. Over the past six months, funds specialising in distress assets like ADM, Clearwater, Citadel, Goldman Sachs Special Situations and DE Shaw have invested in such companies.

Spinnaker has invested in Spice Telecom and Clearwater in Sanghi Movers and earlier Diamond Cables. While Asia Debt Management (ADM) has invested in Rama Pulp and Paper, DE Shaw has invested Amar Ujala, Citadel in Aban Lloyd and Goldman Sachs has put in money in Cremica.

Both the SMEs as well as distress funds have their own motives to embrace each other. The SMEs may get funds for working capital from the banks, expansion capital is much more difficult. From a distress funds perspective, there are not enough distress opportunities considering the economy is growing at around 9%. Hence funds are forced to look outside their focus area

Read full article

NEA-IndoUS Ventures Fund invests in ISGN Technologies

ISGN Technologies Ltd, a software services firm servicing US funding from mortgage customers, has received $25 million (Rs102.5 crore) venture capital firm New Enterprise Associates (NEA) and an affiliate NEA-IndoUS Ventures Fund, a firm controlled by Vinod Dham, a former engineer who was part of the Intel team that designed the first Pentium chip.

The NEA firms declined to disclose financial terms but said they will pick up equity between 10% and 30% at ISGN. ISGN will use the investment to set up new offices and finance sales and marketing. The revenues of ISGN, backed by India’s K.K. Birla group of companies, as on March 2007 were $30 million. K.K. Birla is the chairman of HT Media Ltd

Firms from the outsourcing industry have attracted significant Private equity interest. Early this year, Adventity, a back office firm specialising in financial services, announced its first round of funding of $20 million from an investment to fund its domestic and oversees group led by Norwest Venture Partners expansion plans.

New Delhi-based Global Vantedge, that had carved a niche in the insurance recovery industry got strategic funding of around $8 million from private equity firm ChrysCapital in 2002, and was acquired by an Essar group call centre company in February 2007.

Indecomm Global Services Ltd, which provides financial services to its clients, received $5 million funding from West Bridge Capital Partners and Acer Venture Capital in 2003.

Source: Mint

Thursday, June 14, 2007

Lehman completes a Trimurti of senior hires

Lehman Brothers has made the last in a trimurti of senior hires to its Indian investment banking unit with the appointment of a venture capital specialist Jayanta Banerjee to run its private equity business in the country, as reported by Reuters.

Jayanta Banerjee joins from ICICI Ventures where he was a committee member on India’s largest private equity fund, the $810m India Advantage Fund Series 2.

By hiring Banerjee, Lehman has appointed new heads for its three main growth businesses in India this year. In January the bank hired Surojit Shome as head of investment banking before appointing Pankaj Vaish as head of equities and fixed income markets in April. Both were earlier working with Citigroup.

Banerjee will report to Tarun Jotwani, the chief executive of Lehman’s business in India, and Christopher Manning, head of the bank’s Asia investment management division.

Reliance Cap bitten by the Investment Banking bug

The growth in the Indian Investment Banking field continues to lure more players .

Reliance Capital, having a presence in asset management, retail broking and insurance businesses in the country, now intends to start an investment bank in partnership with a foreign player, reported the Economic Times. Reliance Capital’s vice-chairman Amitabh Jhunjhunwala is said to be overseeing the initiative.

Bear Sterns and Paine Webber are some of the names floating around who could partner Relaince Capital in this venture.

Investment bankers from rival firms believe Reliance Capital can have a significant presence in the investment banking business, given the fact that it holds minority stakes in various companies across sectors, which could lead to securing fund-raising mandates of these companies.

Mickey Mouse meets loverboy Raj

Walt Disney is typing up with the production house of Bollywood showman Yash Chopra (Yashraj Films) to co-produce animated films in Bollywood, as reported by Economic Times.

While the deal is not a joint venture with equity participation, the industry perceives it as the beginning of a relationship that may later culminate in a strategic equity partnership. For Walt Disney, the Indian game plan could be to secure a supply chain so as to make inroads into the local market. Joining hands with an established house would make greater sense in high growth markets.

Amid reports of Yashraj’s tie-up with Disney, rumours are also floating that some private equity players have evinced interest in investing in the production house.

ICICI Ventures buys stake in Radiant Research

ICICI Venture has acquired majority control in US-based clinical research company Radiant Research for an undisclosed amount, as reported by Economic Times.

Last year Radiant Research had sold a part of its clinical research business, constituting eight clinical pharmacology centres, to US-based clinical research company Covance for $65 million. With 26 other clinical centres, the current deal could have been valued at $150 million plus.

Apart from clinical centres, Radiant compromises of a full service CRO and a centralised patient recruitment company, employing over 400 clinical research professionals. Radiant Research had clocked revenues of $73.5 million in 2003.

ICICI Venture has multiple exposure in the life sciences business. Its investment portfolio includes Arch Pharmalabs, Malladi Drugs, Bharat Biotech, I-Ven Pharma, RFCL, Metropolis, Perlecan, Avesthagen, Biocon, Medicorp and Intas Pharma.

Tuesday, June 12, 2007

Mayfield Fund is building its team in India

Mayfield Fund, which has $2.6 billion under management with investments in high growth companies in the U.S., China and India, announced the addition of Nikhil Khattau and Vikram Godse to its India investment team based in Mumbai, as reported by Finance Asia.

This follows the fund's two direct investments in the past six months in India in Tejas Networks and the Seed Fund. Mayfield's activities in India are being led by the U.S.-based Managing Directors Navin Chaddha and Robin Vasan.

Khattau was earlier the founding chief executive of Sun F&C Asset Management, one of India's first private-sector asset managers, which is now part of the Principal Financial Group.

Godse was a founder of JM Financial Investment Managers, an Indian private equity fund. Before that he worked in India for the investment unit of Cisco and for Infinity Venture Capital, one of India's first venture capital firms.

Mayfield will focus on investments in the consumer services (retail, entertainment and travel), infrastructure (power, roads, buildings and waste disposal), manufacturing and offshore sectors in the country.

Wednesday, June 6, 2007

Apax to buy Patni stake for USD 800 mn

Apax Partners, a UK-based private equity firm, is planning to buy a controlling stake in Mumbai-based Patni Computer Systems for over USD 800 million, reports Economic Times. Apax is willing to pay 8-10% higher over the present share price, for 44% stake in the company.

Two other mid tier Indian IT companies and other private equity firms are also in the race to acquire stake in the company.

The move was stimulated by Gajendra and Ashok Patni (co-founders of the company), who expressed their will to exit from the company. They together hold 28% stake in the company. General Atlantic, another private equity firm is also considering to sell 16% stake. Narendra Patni (co-founder) will continue to hold a 16% stake in the company.