Monday, January 8, 2007

Key senior people exit Avendus Advisors to float boutique investment bank

A major “personnel crisis” is being witnessed in one of India’s leading boutique investment banks. Avendus Advisors is seeing key senior management people exiting the company to start on their own.

Shyam Shenthar, partner at Avendus, has left the company to start his own investment advisory that aims to target a largely untapped market for mergers and acquisitions and private equity in mid-cap companies. He was supervising the Capital Markets and Broking activities of Avendus. He is being joined by Deepesh Garg, Assistant Vice-President in the Consumer Products and Services Team, and Shiraz Bugwadia, Assistant Vice-President in charge of Pharmaceuticals and Healthcare from Avendus, and TR Srinivas of Taib Securities. The yet-to-be-named start-up will operate from Mumbai and Bangalore.

Avendus has been one of India’s ten top investment advisory companies and has completed deals worth well over $ 532 mn (Rs. 2300 crores) in the last two years. The company has declared 34 deals in the same period.

The development follows a shake-up in the company that resulted in restive executives looking for fresh opportunities. The new company plans to focus on the booming mergers and acquisitions space in India and intends to work with private equity players and the capital markets. The company would also look at wealth management services and financial services space.

Read the article in the Hindustan Times.

Temasek Holdings buys 10% in Tata Sky for Rs. 250 crores; values the DTH provider at Rs. 2500 crores

Singapore-based private fund Temasek Holdings has invested Rs. 250 crores in Tata Sky, the DTH service joint venture between the Tata Group and Star TV, for a 10% stake, belonging to Tata Group holding company Tata Sons. Following this restructuring, Tata Sons' stake has been reduced to 70%, while Star continues to maintain its 20% holding. This is Temasek's second investment in the Tata Group of companies. It had earlier acquired about 10% stake in CDMA service provider Tata Teleservices.

In a related development, Sky TV’s competitor, Dish TV is reportedly in talks with Warburg Pincus for diluting a stake to the latter.

Read the article in The Economic Times.

Clearwater Partners invest Rs. 90 crores in Kinetic Engineering

Private equity firm Clearwater Partners will invest around Rs. 90 crores in Kinetic Engineering Limited (KEL). Clearwater will get non-convertible debentures worth Rs. 75 crores, and warrants at market price, to be converted to equity, which would constitute around 10% of KEL’s stake.

The group is consolidating its two-wheeler manufacturing under Kinetic Motor Company (KMCL), while the flagship KEL will become the group’s auto component manufacturer. Earlier, KMCL had brought in a Taiwanese company SYM as equity partner, with a 11.1% stake. SYM had purchased the shares at around Rs. 14 crores, and is keen to hike its stake in the company and that its officials had met the Kinetic officials.

Read the complete article in The Economic Times.

VSNL may bid $90 mn for US-based Data Return

The Tata Group is making news all around. This time, another group company VSNL, an international long distance telecom major, is reportedly planning a bid for US-based Data Return, which is into managed hosting services and IT operations. The deal size is estimated to be around $90-100 mn. Data Return is a privately-held entity, of which 80% is owned by an investment firm Saratoga Partners and the rest being held by the management. It primarily caters to the North American market and has a headcount of around 250.

Data Return registered revenues of $51.1 mn for the 2005 fiscal and had a net loss of $8.5 mn, with valuation of the company pegged at $85-95 mn. The auction process for the proposed sale has evinced interest from two other bidders.

Daewoo creditors call off deal with Videocon

The creditors of Daewoo Electronics, led by Woori Bank and Korea Asset Management Corp. (Kamco), rejected the Videocon offer to buy Daewoo Electronics. The deal was scrapped mainly due to differences in pricing.

In October 2006, the Videocon-led consortium agreed to buy 97.6% of Daewoo for 700 bn won ($749 mn; €573 mn), but later demanded a 13% cut on the agreed price. Daewoo Electronics, South Korea's third-largest electronics goods maker by sales has been under a creditor-led debt-rescheduling program since 2000 after collapsing under huge debts, amounting to around $80 bn.

Read The Economic Times and Business Standard articles.

Related Posts:
Videocon’s Daewoo acquisition in jeopardy
Videocon may agree to a less than 10% cut in bid price for Daewoo Electronics; budges from earlier demand of a 15% cut

Videocon may agree to a less than 10% cut in bid price for Daewoo Electronics; budges from earlier demand of a 15% cut

Controversy seems to be seeping into the deal involving the Videocon-Ripplewood combine and Daewoo Electronics. After proving to be the final bidder for Daewoo for $730-750 mn, Videocon had demanded a cut of 15% in the bid price. However, the 40 banks controlling Daewoo Electronics, which has been under a creditor-led debt-restructuring programme since 2000, after its insolvent parent Daewoo Group was put under the workout programme post its collapse under a $80 bn debt, have vetoed the issue.

Videocon is worried about losing out on a global deal, which would bring with it tremendous capabilities in terms of scale and distribution. Also, Daewoo’s creditors are understood to be under pressure from locals for selling the plant to a foreign hand; the Koreans have opposed Videocon’s bid following concerns of technology leaks and opposition over the migration of technology to Korea’s potential rival, India. Accordingly, Videocon has decided to settle for a less than 10% cut in the offer price. Videocon is now willing to settle for the ‘best possible business terms’ for both parties, rather than lose out on the deal. If both parties come to a consensus, the final deal is likely to be signed after another month’s delay. The deal was earlier supposed to be signed sometime in December last year.

Daewoo is estimated to have global sales of about $2.5bn, whereas Videocon Industries’ consumer electronics business is currently generating revenues of about $1.5 bn. The Videocon-led consortium emerged as the preferred bidder to buy a controlling 97.6% stake in Daewoo Electronics.

Read The Economic Times and Business Standard articles – 1 2 3 .

Ruchi Soya bids Rs. 200 crores for Marico brand Sweekar

Ruchi Soya has bid Rs. 200 crores for Marico’s Rs. 100 crore-brand Sweekar. About a week ago, Adani Wilmar has made an offer of about Rs 150 crore for the same brand.

Ruchi is very keen on closing the deal, especially since Sweekar was a well-known brand and fitted in with its larger strategy of transitioning from a trading to a branded business.

The Rs. 5000 crore-Ruchi Soya is a flagship company of the Ruchi Group of Industries and manufactures edible oils, vanaspati, bakery fats and soya foods. Some of its better-known brands include Soyumm (soyabean oil), Ruchi Gold (palmolien oil), Sunrich (sunflower oil), Mandap (mustard oil) and Nutrela (soya chunks and granules).

Marico is focusing on high-value products like Saffola to cash in on the growing health consciousness in the Indian market. That’s why it has chosen to divest Sweekar, but retain Saffola in its portfolio. The cooking oil market is estimated to be around 12 mt a year with annual growth rates pegged at around 15-18%. This includes both branded and unbranded cooking oils. Marico launched Sweekar sunflower refined oil in 1988 and it was one of leading brands in the category.

Other leading players in the edible oil market include Adani Wilmar, Agrotech, Cargill, Marico, ITC and Godrej.

Read The Economic Times article.

Mitsui’s 51% stake in Sesa Goa up for sale

Sesa Goa’s 51% stake held by Mitsui Corp. through its subsidiary Finsider International is up for sale. Major companies such as Arcelor-Mittal, Sterlite Industries, mining major BHP Billiton are interested in buying out Mitsui Corp. Bids from interested companies have been sent to JM Morgan Stanley, Mitsui’s advisor for the deal and are scheduled to close on Thursday.

Large-scale Indian steel players such as Tata Steel and JSW Steel, mining firm MSPL, global mining majors CVRD and Rio Tinto and the Aditya Birla group are some of the other names that are doing the rounds for bidding.

The Goan company has already attracted good interest among foreign investors, with US-based pension fund CalPERS (Californian Public Employees Retirement System) owning about 1.44% in Sesa Goa.

Read The Economic Times article.

FirstSource acquires US outsourcing company BPM for $30 mn; sells stake to US-based technology firm Metavante and hedge fund Galleon Partners

BPO company FirstSource Solutions, formerly known as ICICI OneSource, has acquired a Delaware-based healthcare claims' outsourcing company called BPM and its two wholly-owned subsidiaries MedPlans 2000 and MedPlans Partners for an estimated $30 mn. This is FirstSource’s second US acquisition after it had acquired Account Solutions Group In September 2004.

The acquisition will allow FirstSource to penetrate the healthcare vertical with capabilities in complex claims' adjudication. FirstSource will now offer clients database management, policy administration, claims processing and complex claims adjudication capabilities.

The company, by virtue of this acquisition, has also acquired a client portfolio that includes six Fortune 1000 companies and adds three centres in Rockford, Illinois; Fort Scott, Kansas and Louisville, Kentucky to its current 17 delivery centres globally which includes 11 in India, 3 in the US, 2 in the UK and 1 in Argentina. The company has a workforce of 9,018 full-time employees and 61 clients as of September 30, 2006. With this acquisition, the US headcount of FirstSource Solutions has risen to 800.

Read The Economic Times and Business Standard articles.

In a related development, the ICICI Group has divested around 19% stake in FirstSource to US-based banking technology solution provider Metavante and US hedge fund Galleon Partners in a pre-IPO placement. Metavante already holds an 11% stake in Firstsource which it had acquired in April last year through a combination of primary infusion and secondary purchase. The deal has been reported at $$75-80 mn; the ICICI spokesperson has confirmed the deal but declined to comment on its size.

Along with group companies ICICI Bank and ICICI Ventures, Sequoia Capital and Temasek Holdings also holds stake in FirstSource. Sequoia Capital has invested $17 mn in FirstSource for 11% stake and hopes to make $60 mn on its initial investment in the company’s upcoming IPO. Temasek Holdings has invested $50 mn for picking 11-12% stake in the company.

Metavante has picked up a 14% additional stake in the company, taking its total shareholding in the company to 25%. Galleon Partners has acquired 5.84%. FirstSource is planning a public issue of 95.6 mn equity shares, including a fresh issue of 60 mn equity shares and 35.6 mn equity shares, to be offered for sale by the ICICI Group.

Read The Economic Times article.

Voltas shopping abroad for water treatment businesses

Tata group company Voltas is looking to acquire companies in Singapore and Europe in the water treatment sector by the year-end. It is already executing a Rs. 300-crore water reclamation project for the Singapore government in which it is converting sewage water for use by agriculture and textile units. Voltas and United Engineers (Singapore) Private Limited had jointly bagged a Singapore $200 mn component of the Singapore $2.2-billion Changi water reclamation plant recently, in which Voltas’ share was around Singapore $116 mn. Voltas had hired an external consultant a few months back, which has submitted its report on the possible strategy the company could adopt to grow the water treatment business.

Read the DNA Money article.

Top investment banks back out of DLF issue

Two of the book running lead managers (BRLM), involved in the mega-IPO of real estate behemoth DLF have backed out of managing the issue. Enam Financial Services and JM Morgan Stanley seemed to disagree over valuations of the company with the DLF management, and have withdrawn from managing the issue. They have been replaced Lehman Brothers and Deutsche Equities, as per the revised prospectus filed with the Securities and Exchange Board of India (SEBI).

Nimish Kampani, CMD, JM Morgan Stanley, also happens to be a member of the SEBI’s capital markets committee.

Kotak Mahindra Capital and DSP Merrill Lynch have been retained as the global coordinators for the issue, so have been Citigroup, ICICI Securities and UBS AG as the other book-running lead managers for the issue. SBI Capital Markets is the co-book runner for the IPO.

This is the second time in which investment banks have backed out of an IPO. Earlier, during the IPO of low-cost airline operator Deccan Aviation, the BRLMs SBI Capital Markets, JP Morgan and ABN-AMRO Rothschild had backed off, citing differences over valuation. The issue was finally handled by Enam Financial Services and ICICI Securities.

Read the Business Standard article.

The Times Group invests in stem cell processing company LifeCell

LifeCell, a Chennai-based stem cell processing and banking facility, has divested stake to the Bennett, Coleman and Company (BCCL), proprietors of The Times of India and The Economic Times.

LifeCell was launched in November 2004 and is a pioneer in India for stem cell banking, research and therapy. It has 21 marketing and collection centres across India, and has enrolled over 5000 customers. LifeCell recently forayed into international markets with the launch of its Dubai operations and will soon expand its presence to Malaysia, Saudi Arabia, Sri Lanka, Singapore and Pakistan. It also has a technology tie-up with US-based CRYO-CELL International, which is the pioneer in the field of cord blood banking, and is the world's biggest cord blood bank with over 130,000 members.

Read the article in The Economic Times.