Wednesday, January 3, 2007

Ybrant Technologies in acquisition talks with 7 more US firms post MediosOne-acquisition

E-marketing solutions company Ybrant Technologies is in talks with seven US companies for acquisitions to expand its offerings in the e-marketing space. It had recently acquired MediosOne, an Internet advertising network focused on a global consumer base. The acquisition of MediosOne gave Ybrant the required push into South America, Europe and it will also help Ybrant enter the Indian e-marketing space.

Suresh Reddy, co-founder and chairman of Ybrant Technologies says that he wants to acquire at least one company in each of the five different e-marketing tools.

Ybrant’s development centre at Hyderabad has 200 people working on various development tools and has about 15 different platforms catering to Internet and other marketing requirements. With almost 200 clients in its kitty, primarily in the US, Ybrant has lined up exciting growth plans.

Read the Business Standard article for more details.

Setco acquires Haldex manufacturing facility in the US for around $5 mn

Clutch manufacturer Setco Automotive has acquired the US manufacturing facility of Haldex Brake Products Corporation for $4.9 mn (around Rs. 22-23 crores). The company has a presence in 14 countries and intends to set up operations in 30 countries in three years. Last year, around the same time, Setco had acquired the Lipe Clutch division of the Dana Corporation for Rs. 16 crores. The acquisition would be funded, 13 crores in part by internal accruals, and Rs. 9 crores by way of debt, provided by the New York branch of Bank of Baroda.

Setco has acquired the company through its overseas subsidiary Setco Automotive NA in the UK.

The company, formerly known as Gujarat Setco Clutch, has posted a net profit of Rs. 5 crores on a total income of Rs. 67 crores last year. Harish Sheth, currently the MD of the company, and his family are the promoters of the company and hold 65% stake. New Vernon Private Equity holds 14% and the rest is widely held by the public. Setco has been a supplier of clutches to all major Indian truck companies including Tata Motors, Eicher and Ashok Leyland.

Read the articles from Business Standard and The Economic Times.

Orra interested in a strategic funding in jewellery brand Tanishq

Leading jewellery brand Orra, a part of the $1.7-billion jewellery group Rosy Blue, keen on a strategic investment in India and is keen on Tanishq, Titan Industries’ jewellery business. Tanishq is India’s fastest-growing jewellery brand and posted revenues of around Rs. 800 crores in 2005-06, and is aiming at Rs. 1000 crore plus business in the current financial year. Tanishq has also been posting profits since 2003 after nearly a decade of losses, and has sustained 40 per cent year-on-year growth this year, despite volatile gold prices.

Orra, which has been exporting diamond jewellery from India for over a decade, is keen to expand the retail end of its Rs. 1000-crore business, the bulk of which comes from exports.

The diamond jewellery market is only around 10-15% of the total jewellery retail business which is worth Rs. 60,000 crores, but it is growing at 20% against a 5% growth in gold jewellery.

Read the article in Business Standard.

Mahansaria, Warburg to buy Israel’s Alliance Tyre

Brothers Yogeshkumar and Ashokkumar Mahansaria, one of the promoters of Balkrishna Industries Limited (BIL), are quitting the tyre company owing to family differences. They have tied up with private equity firm Warburg Pincus to acquire Israeli tyre company Alliance Tyre for $45 mn. The transaction is expected to be completed before June 2007.

Alliance started negotiations with the two buyers, which will include an open offer for the public’s shares. The Mahansarias will float a new venture this year and the Alliance acquisition is a part of this move.

The management of Balkrishna Industries are not involved in the Alliance deal.

Read the article in Daily News and Analysis.

JK Cement may buy a 2 mt-plant

JK Cement Limited may acquire a 2 mt-plant in the coming year and may even consider diluting a substantial portion of equity for funding the acquisition. JK Cement has an annual capacity of 4 mt for grey cement and 0.4 mt for white cement. It is amongst the top four cement players in northern region along with ACC, Grasim and Gujarat Ambuja, and also the second largest player in white cement market after Grasim. Being a prominent player in the North, J K Cement’s primary markets are Haryana (18.2% market share), Delhi (13.4%), Rajasthan (11%) and Punjab (4%). Promoters’ holding in the company is currently at 62%, while financial institutions and the public hold the rest. In the next two years, assuming cement prices do not fall, internal accruals and cash in hand could give it about Rs 550 crore.

The Indian cement market is the second-largest in the world with a domestic annual consumption of 135 mt and an installed capacity of 160 mt and the overall cement demand in India is expected to grow at a rate of 9% for the next five years.

Read the complete article in Daily News and Analysis.

IFCI to get a strategic partner

The Industrial Finance Corporation of India (IFCI) may get a strategic partner if the Indian Government has its way. The distressed organization has been forced to stop its lending activity, having accumulated losses of over Rs. 4000 crores. This has been a result of a combination of aggressive lending in the early part of the last decade, which later resulted in a good deal of the portfolio turning into bad loans, and higher cost of borrowings.

According to senior government officials, a proposal is being considered to bring on board a strategic investor which could even be a foreign or a local bank. The track record of the investor, including its lending business would be a key deciding factor in divesting the stake. The government has already been sounded out by a couple of top foreign banks operating in India, as well as an overseas firm specializing in recovering distressed assets. However, it is a given that such asset recovery firms or private equity funds would not be encouraged to partner the institution.

IFCI still has control over some good quality assets besides the fact that it has several subsidiaries or associates in various business segments. These include the credit rating agency-CARE, Tourism Finance Corporation of India (TFCI), an asset reconstruction firm —ACE, a factoring firm—Foremost Factors, IFC Venture Capitals, IFCI Financial Services besides equity holding in SHCIL, DFHI, NSE, OTCEI and LIC Housing Finance.

In the last quarter, IFCI reported profit after tax of Rs. 115.83 crores against a total income of Rs. 325.47 crores. Recovery of bad loans (which have shrunk to Rs. 667 crores in 05-06) has improved and the proceeds are now being parked in deposits of top rated firms. IFCI has also started lending in a limited way to finance firms which have a AAA rating.

Read the article from The Economic Times.

Endurance Group buys German auto ancillary company

Pune-based auto components company Endurance has acquired Amann Druckguss GmbH and Co KG, a German aluminium die casting manufacturer, in the range of Rs. 180-200 crores.

Amann Druckguss supplies to premium auto-makers such as DaimlerChrysler, Porsche, Audi and Behr. Endurance will supply engine, drive train and chassis components to them. Endurance has acquired Amann Druckguss from private equity firm Granville Baird Capital Partner Advisers.

This is the Pune-based company’s third overseas acquisition in the past one year. It acquired a 51% controlling stake in Nova Renopress of Bologna, which brought in customers like Honda, Bosch and Siemens, and a 40% stake in Paioli Meccanica SpA.

In August 2006, Standard Chartered Private Equity invested Rs. 150 crores in Endurance Technologies. The group is already scouting for another acquisition in the European market by March-end 2007, especially in the Italian, German and French for the acquisition of a Rs. 175-235 crore company.

Read The Economic Times article.

Mexican cement company Cemex may acquire Deepak Cements

The $15 bn Cemex SAB de CV, the world’s third-largest cement company, is in talks with Ahmedabad-based Deepak Cements and Chemicals for a possible acquisition of the latter’s operations in Kutch. Cemex is a Mexico-based company. It had earlier attempted to acquire B K Birla group-owned Mangalam Cement some years ago but had failed. Cemex’s holding company in Asia, Cemex Asia Holding may be the vehicle for the acquisition.

Deepak Cements already has a small plant in Kutch and proposes to set up another 3 mtpa unit costing Rs. 1300 crores in the same region with an initial capacity of 2000 tonnes per day. Cemex may buy the existing plant and could also enter into a joint venture for the new project.

The cement sector in India is seeing lot of action in the recent past. France’s Lafarge, Swiss giant Holcim, Germany’s Heidelberg and Italy’s Italcementi Group have all entered the Indian cement market through acquisitions. French cement maker Vicat is also on the hunt for acquisitions in India.

Read the article in Daily News and Analysis.

Brindco to buy 20% stake in wie maker Grover Vineyards

India’s largest wine importer Brindco is about to acquire 20% stake in premium domestic wine maker Grover Vineyards. Grover is a Bangalore-based company. The deal is estimated to be at an EV of Rs. 80-100 crores. Brindco will take over the marketing and distribution of the Grover Vineyard brands as well.

This is a second such investment in Grover, the first being made by Mphasis founder Jerry Rao to pick up 15% stake in the vintner. The deal with Brindco is considered to be strategic in nature as it unlocks the untapped distribution potential of Grover wines. Grover recently unveiled its economy-priced portfolio under the Sante range and is set to appoint a resident French wine maker, touted as a first in the domestic wine industry.

Brindco’s move into wine making is significant as it comes at a time when the tariffs on imported wine are poised to fall in the coming months. Sources said the Centre was expected to slash duties and remove countervailing levies on imported wines, which is likely to usher in a larger play in the country’s international wine business. Further, the domestic wine consumption (over 9 mn bottles annually), which is growing at 30% year-on-year, has seen the entry of the big players like the Vijay Mallya-led United Breweries Group and Seagram with their play expected to gather steam in the next 12-18 months.

Read The Economic Times article.

Allcargo to pay Rs. 8.9 crores for Hindustan Cargo

Allcargo Global Logistics Limited is buying the air cargo subsidiary of travel and forex company Thomas Cook (India) Limited for Rs. 8.9 crores. Allcargo would make Hindustan Cargo its independent airfreight services subsidiary. The deal would be funded through internal accruals. Hindustan Cargo reported revenues of Rs. 32 crores and a profit before tax of Rs. 1.3 crores for the year ended October 2006.

The deal is the first major restructuring initiative undertaken by Thomas Cook India. Last year it had acquired LKP Forex, Travel Corporation of India and the visa business of TTK Enterprises.

Allcargo recently acquired 100% stake in ECU Line, the world’s second largest cargo consolidator having significant global presence.

Read the article from Business Standard and Economic Times.

Private equity investments at $7.5 bn in India for 2006

A record $7.5 bn was invested by private equity firms across 299 deals in India during 2006, according to a study by Venture Intelligence, a Chennai-based PE tracking firm. The final quarter witnessed PE companies investing $2.559 bn across 67 deals. Mega deals like Idea Cellular's pre-IPO placement and the KKR-Flextronics Software buy-out contributed significantly to the total. The year witnessed several large global PE companies - with appetite for large deals - making their first investments in India. There were 26 deals involving investments of $50m during 2006 compared to just nine such deals in the previous year.

Information Technology and IT-Enabled Services continued to remain the favorite industry among PE investors during 2006 accounting for $1.470 bn across 87 investments, followed by the manufacturing industry attracting 55 investments worth $962 bn. Other industries that attracted significant PE investor attention during the year included banking, healthcare and life sciences and engineering and construction.

Late-stage investments accounted for 36% of all deals while PIPEs accounted for 22% of the deals. Early-stage investments accounted for about 20% of deals during 2006.

Read the articles from The Economic Times, AltAssets.com and Reuters.com.

Core Projects gets equity infusion from Morgan Stanley, Goldman Sachs, Deutsche

Bulge bracket investment banks Morgan Stanley, Goldman Sachs and Deutsche Bank have picked up 10% stake in Mumbai-based software firm Core Projects and Technologies Limited (CPTL) at a combined investment of Rs. 39.76 crores. Morgan Stanley has taken the largest share at 4.03%. Goldman Sachs, through its investment arm Grants Investments Limited, has taken 3.46% and Deutsche Bank 2.59%.

Core Projects was recently in the news for its plans to acquire two US-based software firms. It is also setting up an offshore development centre in Navi Mumbai, to be completed by January-end 2007.

The stake was picked up following conversion of FCCBs issued in November 2006. FCCBs of the value of Rs. 15.90 crores still remain for conversion into equity shares.

Read The Economic Times and Business Standard articles.
Related Post: Mumbai-based software company Core Projects plans two US buyouts

Pantaloon Retail to divest stakes in subsidiary companies

Pantaloon Retail India Limited (PRIL) is planning to dilute stakes in its subsidiary companies for expansion-related purposes. The companies that are lined up are Future Media, Future Capital, Future Logistics and Central and dilution of stakes would either be way of IPOs, preferential allotment or strategic sale.

Future Media targets developing retail space and malls as an outdoor media option. PRIL is in talks with WPP for a strategic partnership in Future Media. Future Logistics deals in supply chain and distribution management. Future Capital is a PRIL subsidiary that focuses on asset management and consumer finance. It manages Horizon and Kshitij, two real estate investment funds and Indivision, a consumer-related private equity fund, and soon plans to get into insurance, consumer credit and other consumer-related financial products and services. Central is a chain of lifestyle retail stores.

Equity analyst Edelweiss Securities estimates that of PRIL’s total requirement of Rs. 4500 crores, equity dilution would get the company Rs. 1000 crores. Quoting the company’s internal projections, the research firm also says that in all Mr. Biyani’s company needs approximately Rs. 2300 crores from external sources of which Rs. 1300 crores will come in the form of debt. Pantaloon’s expansion plans are targeted at taking the group’s total retail space to about 30 mn square feet by the end of 2011 from the current 3.5 mn square feet. By the end of FY10, Mr. Biyani is looking at 80 Pantaloon stores in various parts of the country from the current number of 23. Similar expansion is in the pipeline for Big Bazaar and Food Bazaar, where the company aims to take the number of stores to 225 and 250 respectively, growing from the current 35 and 53 respectively

In October 2006, ICICI Ventures and Kotak SEAF India had picked 15% and 6% stakes respectively in another PRIL subsidiary, Home Solutions Retail, bringing an investment of about Rs. 120 crores.

Read the article in The Economic Times.