Wednesday, January 17, 2007

MCX may divest stake to Dubai Multi Commodities Centre

The Dubai government-owned Dubai Multi Commodities Centre (DMCC) may buy stake in Multi Commodity Exchange (MCX). DMCC would initially pick up a minor ownership in the MCX and later increase it following MCX’s initial public offering (IPO).

MCX is planning an IPO to raise about Rs. 300 crores. US-based New York Mercantile Exchange was reportedly eying a 9% stake in MCX for about $60 mn. In early 2006, foreign institutional investor Fidelity International had picked up more than 9% in MCX for $49 mn. Currently, the major shareholders of MCX, other than its promoter Financial Technologies, are State Bank of India, NABARD, the National Stock Exchange, Union Bank, Canara Bank, Bank of India, Bank of Baroda, HDFC Bank and SBI Life Insurance.

DMCC, MCX and Financial Technologies had together set up the Dubai Gold and Commodity Exchange, which had commenced trading more than a year back. Recently, the New York Stock Exchange Group, General Atlantic, Goldman Sachs and Softbank Asian Infrastructure Fund bought 5% each in the National Stock Exchange (See Related Post).

Read more on this in DNA Money.

EBRD invests Rs. 40 crores for a 15% stake in SREI’s Russian unit

SREI Infrastructure & Finance Limited is diluting a 15% stake in its Russian arm Zao SREI Leasing to The European Bank for Reconstruction & Development (EBRD) for a consideration of around Rs. 40 crores. Zao SREI Leasing is the wholly owned Russian subsidiary of Kolkata-based SREI Group and is held through the group’s German arm, IIS GmbH.

SREI has set up Zao SREI in 2005, and is involved in construction equipment leasing in Russia and CIS countries. It recently structured and financed work-over rigs to be deployed in West Siberia. SREI said its immediate plan was to extend presence from the capital Moscow to St. Petersburg and other regions in Russia. Apart from EBRD, few other strategic investors are also interested in picking up stake in the Russian arm of SREI. However, Zao SREI Leasing will continue to be a subsidiary of the SREI Group. In future, Zao SREI may participate in PPP projects like its parent company in India.

Read the Business Standard and The Economic Times articles.

Amtek Auto to re-bid for UK plant

Amtek Auto may renew its bid to acquire JL French Automotive Casting's Whitham plant in Essex in the UK. It had unsuccessfully attempted six months ago to acquire the plant. Two other die-casters, one each from China and Spain, have also shown interest in the Whitham plant.

Amtek has been expanding its presence in the UK for the last few years. In 2005, it bought Halberg Guss (Bourne), one of the largest die-casters in the UK.

The sale of the plant looks complicated as the acquirer wanted assurance from Ford Motors, JL French's main customer, that it would continue its contract with the plant post-acquisition. Even the price of the acquisition depends on the assurance. However, with Ford itself undergoing a restructuring process, it is unlikely that the auto major would make any commitments.

The administrator of the plant, BDO Stay Hayward, would look for a quick solution as delay in selling the plant might force it to pull down shutters. The plant, which buys nearly 500 tonne aluminium alloy ingot, is losing over Rs. 50 crores a year. JL French put up its Whitham and Wales units for sale after it had filed for bankruptcy in April last year.

A clutch of foreign financial investors have invested in the Rs. 900 crore-Amtek Auto. Warburg Pincus tops the list with nearly 10% stake. The list of other foreign financial institutions includes CLSA, HSBC Global and Oppenheimer Fund. Swiss Finance Corporation is in the process of acquiring stake through subscription of preferential shares.

Read the Business Standard article.

The Hinduja Group interested in majority stake in Telecom Italia

The Hinduja Group is looking to acquiring a stake in Telecom Italia, Italy's largest telecom company and Europe’s fifth largest telecommunications group. The group is said to be examining buying tyre maker Pirelli's 18% stake in the Italian company.

Telecom Italia boasts of around 31 mn mobile subscribers in Italy and another 24 mn in Brazil. As of September 2006, it posted sales of €23 bn and its EBITDA was €9.8 bn. As Telecom Italia's market cap is about $77 bn, Pirelli's 18% stake will be valued at around $12-13 bn.

Telecom Italia is owned 18% by a company called Olimpia, which, in turn, is controlled by Pirelli, the Italian tyre and real estate group. Sometime ago, Pirelli increased its Olimpia holding to 80% by buying stakes owned by two banks. This transaction raised the possibility of Pirelli consolidating Olimpia's accounts with itself. Such a move would badly dent Pirelli's credit rating as its net debt would jump 31 times. The debt of both Olimpia and Telecom Italia is at around $57.12 bn. To avoid this, Pirelli is believed to be scouting around for buyers for the telecom company.

The Hinduja Group is also in the race for India’s fourth largest telecom company, Hutchison Essar, in which British telecom major Vodafone, Reliance Communications and Essar are bidding. On Friday, the group announced that it would begin due diligence of Hutchison Essar on January 24 and that a final bid will be submitted after that.

Blackstone, the private equity group, had said in November 2006 that it might be interested in taking a stake in Telecom Italia.

Read more in The Economic Times and Business Standard.

BSE to stick to May deadline for float

The Bombay Stock Exchange (BSE) will stick to the May 2007 deadline of completing its initial public offering (IPO) and is talking to select foreign exchanges for a possible partnership (See Related Post).

The exchange has appointed Morgan Stanley, Merrill Lynch and Kotak Securities as its merchant bankers for the proposed IPO. For valuation, the exchange is banking on the Sensex brand.

Read the Business Standard article.

AMR Construction, Malaysian investor float coal mining JV in Indonesia

AMR Construction and a Malaysian investor Bob Sundaram have floated an Indonesian joint venture for coal mining called PT AMR Mineral Resources. AMR holds 70% in the JV and Mr. Sundaram holds the remaining 30%.

This is the company’s first coal mining venture. The JV has acquired 1700 hectare-coalfield in Indonesia and is eyeing more mines for acquisition. It is planning to bring 70% of the coal produced in Indonesia to India and the rest will be exported to China.
The company will invest $15 million to develop the recently acquired mine. Moreover, plans have been chalked out to acquire more mines in the Middle East and talks are in progress for the same. Almost 70% of our production from Indonesia will be consumed by the power and cement plants in south India.

AMR is also planning to acquire stake in iron ore mines near Bellari and Chitradurga in Karnataka. The company has 10 years experience in iron ore mining as a contractor. It may come out with a public offering next year.

In the real estate segment, AMR has signed a 70:30 JV agreement with Malind Infra, a Malaysian firm to build a luxury apartment complex at Kompally in Hyderabad. The company has also executed many infrastructure projects in Nepal for L&T. Its clientele includes Gannon Drunkenly, Bridge & Roof, Madras Cements, Visakha Cements, Grasim Cements and Bharat Electronics.

Read The Economic Times article.

UTI Securities witnesses senior management exits in i-banking unit

Mumbai-based securities firm, UTI Securities, is witnessing major people exits, particularly in its investment banking division, with six senior and middle level executives resigning from the organization in the past one month. The list includes Head of Investment Banking, K Srinivas, company VP, Jinesh Mehta, VP of Broking, Sunil Nair, and VP – IPO and MF Distribution, Nirmal Rewaria.

Their resignations may prompt more junior executives to take the same route amid concerns over the prospects of the organization in the absence of top executives. Factors like lack of both focus and flexibility in decision making are cited as a few major reasons behind their leaving the organization.

Originally promoted by UTI, UTI Securities is now a subsidiary of Securities Trading Corporation of India (STCI). UTI Securities was incorporated as UTI’s 100% subsidiary in 1994. On repealing of the UTI Act, the management of the firm was transferred to the Administrator of the Specified Undertaking of UTI (UTI-I). In April 2006, the broking firm was sold to STCI for Rs. 265 crores.

UTI Securities recently completed Rs. 157 crore-IPO of Essdee Aluminium. Some of the forthcoming IPOs managed by the merchant banker include Pophiraju Industries (Rs. 38 crores), SMS Pharmaceuticals (approximately Rs. 100 crores) and Euro Ceramics (Rs. 90-100 crores).

Read more on this news in The Economic Times.
Related Post: Key senior people exit Avendus Advisors to float boutique investment bank

Redington India to hit the capital markets, to raise Rs. 125-150 crores

Redington India is planning to come out with a public offering of around 13 mn equity shares of Rs. 10 each in the price band of Rs. 95-113 through a 100% book building process to raise around Rs. 125-150 crores. The issue comprises 16.99% of the fully diluted post-issue capital of the company. The issue opens on January 22 and closes on January 25.

Redington India is a leading distributor of IT products. Redington proposes to utilize funds to establish four automated distribution centres (ADCs) and 68 service and repair centres (SRCs) in India, set up an ADC in Dubai and install an enterprise resource planning (ERP) system for operations in the Middle East and Africa through investment in its wholly-owned subsidiaries, Redington Gulf FZE and Cadensworth (India).

The company’s standalone net profit from its India operations has increased from Rs. 14.92 crores in 2003-04 to Rs. 29.12 crores in 2005-06 with a CAGR of 39.72%. In India, Redington has 10,474 partners, 35 sales office, 53 warehouses, 43 service centres and 40 partner centres. It has presence in 16 countries with channel strength of 2755.

Read the article from Business Standard.

International Tractors to divest 5% equity

International Tractors (ITL), makers of the Sonalika brand of tractors, is in for a fourth tranche of private placement by selling a 5% stake in the company to an undisclosed financial investor. This follows ITL privately placing 5% equity with JM Financial for around Rs. 125-150 crores. In March 2006, it placed 10% stake each in two group companies – ITL and utility-vehicle maker International Cars & Motors (ICML) – with UK-based private equity firm 3i for an estimated Rs. 300 crores. The 10% ITL stake netted around Rs. 200 crores for Sonalika, the balance coming from the 10% ICML stake. Before 3i, Citigroup and Yanmar had also bought stake in the group. The company had sold 10% stake in ITL and 20% in ICML to Citigroup in 2005.

Read the article in The Economic Times.