Friday, January 12, 2007

Reliance ARC to receive funding from George Soros’ fund, Blue Ridge Capital

Cyprus-based Dacecroft, a wholly-owned entity of Quantum Endowment Fund backed by billionaire investor George Soros and New York-based investment firm Blue Ridge Capital are picking 21% equity stake in Anil Dhirubhai Ambani Group’s Reliance Asset Reconstruction Company (Reliance ARC).

While Dacecroft, which would pick 11% stake, would come on board as the sole foreign sponsor of the company, Blue Ridge would be putting in its money as another investor. Dacecroft would invest Rs. 11 crores in the company. Blue Ridge would invest Rs. 10 crores through two arms: Blue Ridge Limited Partnership would pick 6.2% stake and Blue Ridge Offshore Master Partnership would hold 3.8% in Reliance ARC.

The second largest investor in Reliance ARC, Corporation Bank, which holds 20.76%, will hold 10% after the induction of foreign investors. The holding of General Insurance Company (GIC) would also come down from 17.65% to 10%.

Read the article in The Economic Times.

IFC, DEG planning to acquire a stake in SICOM

The private equity arm of the World Bank, the International Finance Corporation (IFC), and Germany-based DEG, one of the largest European development finance institutions, are eyeing a stake in the State Industrial Corporation of Maharashtra (SICOM), the investment arm of Maharashtra government. Standard Chartered Private Equity (SCPE), Lehman Brothers, Temasek and a couple of hedge funds may also be interested in picking up stake in SICOM.

Existing shareholder in SICOM, the Specified Undertaking of Unit Trust of India (SU-UTI) is planning to fully divest its 36.5% in SICOM. Both IFC and DEG have approached the investment banker appointed by SU-UTI for the divestment. UTI AMC holds another 3.5% in the corporation.

SICOM offers advisory services to the government of Maharashtra, Maharashtra Electricity Regulatory Commission as well as other corporates. It also gives investment facilitation services to MNCs as well as Indian companies who wish to setup their manufacturing units in Maharashtra. The company is launching a second venture fund and would be soon offering merchant banking, treasury management of state PSUs, real estate development through subsidiary or joint ventures.

Read the article in Business Standard.

Videocon to now bid on a non-exclusive basis for Daewoo Electronics

It looks like that Videocon will not give up on Daewoo Electronics so easily. The Economic Times reports that Videocon Industries has got UBS and Citigroup, its investment bankers, to put forth a completely separate bid for troubled consumer durables maker Daewoo Electronics after recently losing its ‘preferred bidder’ status. The company will now compete on a non-exclusive basis with MBK Partners, a South Korea-based private equity fund which was selected as the secondary bidder for the deal.

The promoters of Videocon, the Dhoots, are visiting Korea early next week to renew discussions with the Korean durable company. Videocon had earlier insisted on a 15% reduction in the original purchase bid of $730 mn. Videocon is now hoping to win the bid on the premise that the second sole bidder is an equity fund without the capabilities and expertise to manage Daewoo’s durable business. However, Videocon may stand to lose the bid in case a new bidder enters the fray, offering a more attractive valuation.

Read more on this in The Economic Times.
Related Posts:
Daewoo creditors call off deal with Videocon
Videocon may agree to a less than 10% cut in bid price for Daewoo Electronics; budges from earlier demand of a 15% cut
Videocon’s Daewoo acquisition in jeopardy

3i invests $22 mn in digital theatre chain UFO Moviez

Private equity firm 3i has invested $22 mn in UFO Moviez, a digital cinema chain. It has an option of investing another $3 mn later.

UFO Moviez plans to utilize the money to part finance its expansion plans. It intends to invest in hardware to expand its presence in India and overseas in markets like the Middle East, South-East Asia and Africa by January ’07. UFO plans to scale up its Indian operations from 600 to 2000 screens and plans to reach 3000 digital cinema houses worldwide by 2008.

This is the second investment by 3i in the media space, the earlier being in Nimbus Communications, which holds the BCCI global media rights till 2010. Apollo group’s Onkar Singh Kanwar owns 60% in UFO, while about 15% is held by the Singapore-based DG2L Technologies. The remaining stake is held by its CEO Sanjay Gaikwad.

Read the article in The Economic Times.

Hindalco to bid for Alcan’s US subsidiary

India’s leading aluminium company Hindalco Industries may bid for the US subsidiary of Canadian aluminium major Alcan. Alcan is the world’s second largest aluminium maker.
Revenues of the undisclosed unit are estimated to be in the range of $2 bn and $3 bn.

Hindalco already has a joint venture with the Canada-based Alcan, called Utkal Alumina, to build an alumina refinery in Orissa. The proposed bid would be part of the company’s ambitious plans to become one of the top 10 aluminium producers globally over five to six years.

Hindalco recently formed a joint venture partnership with Almex USA, Inc. to make high-strength aluminium alloys used in the aerospace, sporting goods and surface transport industries. The joint venture is to be named Hindalco-Almex Aerospace. Hindalco owns 70% of the equity capital, with Almex holding the balance 30%.

Read the articles in The Economic Times and Business Standard.

Reliance Industries may bid for GE Plastics

Reliance Industries Limited (RIL) is reportedly planning a bid to acquire the plastics division of US-based industrial conglomerate General Electric (GE). This would be the largest outbound acquisition deal by an Indian company. The last acquisition made by RIL was German specialty polyester manufacturer and market leader Trevira for €80 mn (Rs. 430 crores). Early last year, Reliance Industries had made an unsuccessful $8-billion bid for British Petroleum’s Innovene.

GE Plastics had estimated revenues of $7 bn and is valued at around $10 bn. The plastics division contributes about 8% to GE’s total revenue and 5% to its net profit. However, factors such as increasing raw material costs, rising competition and a downtrend in the automobile industry, have hurt the company’s bottomline in the recent past. In the first three quarters of 2006, GE plastics’ revenue was flat at $5 bn, but operating profit dropped 13% to $560 mn. The possibility of the sale of the plastics business has been speculated for long time ever since GE chairman Jeffrey Immelt hinted that GE might pull out of some of its commodity businesses.

Reliance may not be the only one to bid for the GE unit; global petrochemicals majors such as Dow Chemicals, Rohm and Haas, PetroChina, BASF and DuPont as well as private equity funds, including Apollo Management, Blackstone Kohlberg Kravis Roberts (KKR) should also be interested in acquiring the company. US-based investment banking giant Goldman Sachs has been reportedly mandated by GE to coordinate with private equity firms and other companies interested in bidding for the company’s plastics division.

Reliance’s 3.5 mn tonne plastics business is largely commodity-led. Even though 30% of the volumes are exported, most of it is through the trading route, where margins are relatively low. It has a negligible presence in the superior engineering plastics business, which is largely used by auto components and consumer durable manufacturers. Reliance sees a good strategic fit with GE Plastics, if acquired.

Reliance is said to be exploring options for the bid; possibly a tie-up with Dow Chemicals. The US major has signed a MoU with Reliance to set up a unit in Reliance’s Jamnagar SEZ. In turn, Dow would offer a substantial stake in its struggling petrochemicals unit in the US. A formal announcement is expected anytime. Sources say the bid for GE Plastics is contingent on whether Reliance is able to expand its strategic relationship with Dow Chemicals.

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