Tuesday, January 23, 2007

Goldman, Unitech to set up real estate SPV

Global investment bank Goldman Sachs and real estate company Unitech are jointly setting up a special purpose vehicle (SPV) for investments in the real estate sector. The special purpose vehicle is expected to have a corpus of Rs. 900 crores. Goldman Sachs is likely to have 33% equity valued at Rs. 300 crores. The balance Rs. 600 crores will be brought in by Unitech, in the form of cash as well as land bank.

Unitech is particularly bullish on developing real estate projects in the National Capital Region (NCR), areas around Mumbai, near Bangalore’s under-construction international airport and some areas in close proximity to various ongoing special economic zone (SEZ) projects. The SPV may also look at investing in greenfield residential and commercial projects in tier II and III cities. The deal is expected to be signed in the next one month.

Unitech is the largest listed real estate company in India with a market capitalization of Rs. 37,406.62 crores. The company has real estate projects, both residential and commercial, across the country. Unitech is also developing two SEZs in West Bengal and Haryana. Last year, Goldman Sachs had announced that it would make investments of $1 bn in private equity, real estate, private wealth management and other businesses in India for its institutional clients in the next couple of years. As part of its India strategy, Goldman Sachs had announced that it will start its own investment banking, asset management, and securities businesses. The financial services giant recently got a license from SEBI for its retail broking operations.

Read The Economic Times article.

UK-based Argos, K Raheja may form retail JV

Argos is signing a JV deal with the K Raheja Group to open stores in India. Argos is Britain’s leading catalogue retailer and sells general merchandise and products for the home from over 670 stores throughout the UK and Republic of Ireland, online and over the telephone. In the last financial year, Argos sales topped £3.8 bn. Argos serves over 130 mn customers a year through its stores and takes 4 mn orders either online or over the phone. Argos is owned by the Home Retail Group. Real estate and retail major, the K Raheja Group owns Shoppers’ Shop, a department store chain and HyperCity, a fledgling hypermarket chain.

Read more details in The Economic Times.

Government to notify 5% of pension funds to be invested in stocks

The Central Government would notify an interim investment pattern for funds collected under the New Pension Scheme (NPS) that will allow 5% investment of the corpus in the capital markets. Under NPS, the Centre and the states have collected about Rs. 1500 crores till date. The interim scheme would also have a provision to invest all the NPS money in government bonds. The proposal has been backed by 19 states.

The initiative has been designed so to allow more funds to flow into the capital markets and provide an opportunity for better returns to NPS subscribers. The NPS corpus earns only 8% interest at present. The government plans to appoint fund managers to handle the investments and the first one is likely to be from the public sector. The decision is being opposed by the Left parties and Left-ruled states of West Bengal, Kerala and Tripura who have rejected the proposed investment pattern. They feel that subscribers should not be subjected to risks associated with stock market investments.

Read more details in The Economic Times.

Wipro on the lookout for acquisition of BPO firms in $20-50 mn range

Wipro is looking for buyouts of up to $50 mn in healthcare, travel, and finance and accounting space. Within the BPO space, after Spectramind, the company now wants to look at acquisitions in the range of $20-50 mn, particularly for transaction processing work. The company wants capabilities in two verticals, namely, healthcare and travel, and amongst the horizontals the targets are finance and accounting (F&A) as well as procurement.

Wipro had acquired Spectramind eServices in 2002 for over Rs. 400 crores. At that time, Spectramind’s annual business was $11 mn with 2500 employees. In case of healthcare and travel, Wipro is looking at the US market for an acquisition. For other segments, the acquisitions could also be in the Indian market.

At present, telecom and finance related transaction processing work accounts for 60% of Wipro BPO’s overall transaction processing revenues. The BPO unit operates in verticals, including banking and financial services, insurance, health and life sciences, telecom, and travel and transportation. Its horizontal offerings span finance and accounting, procurement, loyalty services and HR services. For the third quarter of the current fiscal, Wipro BPO unit reported revenues of Rs. 235.8 crores.

Read The Economic Times article.

IL&FS, Sabre Abraaj invest Rs. 125 crores into Ramky Infrastructure

Hyderabad-based Ramky Infrastructure Limited has received private equity funding of Rs. 125 crores from IL&FS Investment Managers (IIML) and UAE-based Sabre Abraaj Private Equity Fund I. Rs. 75 crores was put in by Sabre-Abraaj, while Rs. 50 crores was infused by IIML. Members from the two companies will join the board of Ramky. The investment of Rs. 125 crores amounts to 13.5% of equity placed with the two investors while the remaining 84.5% is held by the promoters. About 1.1 mn shares of Ramky Infrastructure have been placed with the investors at a price of about Rs. 1146 per share, taking the EV of Ramky at Rs. 925 crores.

Ramky Infrastructure has been undertaking several BOT projects including roads, highways, industrial parks, irrigation canals and residential projects. The order book position of the company stands at Rs. 2300 crores. The investment will be used to bid for larger construction projects, investment in BOT projects and working capital requirements. The company will also look at the option of entering the capital markets in the next one year to raise funds.

IIML’s investment in Ramky is part of its $1 bn funds planned for the year. Of the $1 bn planned for investment, at least $250 million has been invested in infrastructure firms. This is also the first investment of Sabre Abraaj Private Equity, a 50:50 JV between Sabre Capital Worldwide, Inc. and UAE-based Abraaj Capital. Recently the two investment firms launched the Sabre Abraaj India Private Equity Fund I and the first recipient of funds is Ramky (See Related Post).

Read The Economic Times article.

NEA-IndoUS Ventures invests in India

NEA-IndoUS Ventures has made two investments in India. The firm has put in money in the proposed Indian operations of US-based mobile payments company Obopay and personalized search engine firm Minekey, which was incubated in IIT-Kharagpur. NEA-IndoUS Ventures is being led by Vinod Dham, of Intel Pentium fame, and Silicon Valley serial entrepreneur Vani Kola. While financial details on the investments were not given, sources said that they run into a few million dollars.

The investments have been made from the India specific fund currently being raised by the firm, reportedly in the $105-150 mn range. It is partnering with US VC firm New Enterprise Associates (NEA) in branding and sharing of best practices. The two will also partner for joint investments in BPO / KPO large deals.

The investment focus of the fund will be on technology and IT-enabled services for early and mid stage companies, in sectors like mobile services, digital media and content, telecom & enterprise, BPO/KPO, semiconductor, software products & services, education, engineering design services and healthcare. A majority of the investments would be in $1-10 mn range.

Read The Economic Times article.

Inter-Continental Exchange eyes ICICI Bank’s NCDEX stake; LSE, SGX approach Inter-connected Stock Exchange for stake

Inter-Continental Exchange (ICE), an exchange for energy derivatives wants to buy ICICI Bank’s stake in the National Commodities and Derivative Exchange (NCDEX). ICICI Bank is one of the promoters of NCDEX, along with the National Stock Exchange (NSE), Life Insurance Corporation (LIC) and agricultural refinance bank, the National Bank for Agriculture and Rural Development (NABARD). ICICI Bank is reportedly looking for a buyer for all or part of its 8% stake.

This comes in the wake of a massive consolidation in the domestic stock exchanges. Already, The New York Mercantile Exchange (NYMEX) is discussing the possibility of acquiring equity in the Multi-Commodity Exchange (MCX). The NSE has brought in New York Stock Exchange (NYSE) as a partner with 5% equity. Meanwhile, the Bombay Stock Exchange (BSE) is discussing a strategic partnership with Deutsche Bourse, SGX and NASDAQ. BSE is also negotiating for a stake in the Ahmedabad-based on-line exchange NMCE (the National Multi-Commodity Exchange) to gain a presence in commodity futures trading and improve its valuations. NMCE, in turn, may issue new shares to BSE to get additional funds for expansion.

Read the Business Standard article.
See Related Posts:
NYSE, Goldman Sachs, General Atlantic, SAIF to buy 26% in NSE
Deutsche Borse, Singapore Stock Exchange in race to acquire BSE interest

In a related development, the London Stock Exchange (LSE), Singapore Stock Exchange (SGX) and some top private equity players have shown an interest in The Inter-Connected Stock Exchange of India (ISE), an exchange floated by a group of small exchanges, which is fast completing its revival strategy to attract global peers. The exchange will soon be presenting a proposal to SEBI about the future plans and product initiatives of the exchange. ISE has received a one-year extension to complete its corporatization till September 15, 2007. There is a possibility for this to happen as the SEBI plans to provide a third stock exchange platform to investors, especially for small and medium enterprises, which are located in tier-III or tier-IV cities. The valuation process of the exchange is expected to be over within three to four weeks. The ISE is promoted by 13 regional stock exchanges, which include bourses from Bangalore, Cochin, Bhubaneshwar, Hyderabad, Jaipur, and Mangalore. ISE has a network that covers nearly 134 cities across 25 states.

Read the Business Standard article.

JSW Energy to acquire mining company in Indonesia

JSW Energy, an unlisted subsidiary of the JSW Steel Group, is close to acquiring a significant equity stake in an Indonesian mining company. The move is in line with the company’s strategy of owning coal mines and lowering operating costs. JSW Energy is believed to have completed the due diligence and would complete the transaction soon. The company has declined to comment on specifics such as the percentage of equity and the size of coal reserves. Indonesia is known for having huge reserves of thermal coal used in power plants. The move is part of JSW Steel’s plans to meet raw material needs. Also on the anvil for a possible buyout is a coalfield in Mozambique and steel units with manufacturing capacities of 1-2 mn tonnes in Europe or North America. JSW is also eyeing coal assets in other African nations. With a view to facilitate its overseas buyouts, JSW has floated a subsidiary in the UK with a capital of £1 mn. On Monday, the board decided to further capitalize the UK subsidiary, set up to acquire steel companies overseas, by raising it to £7.5 mn. During this quarter, the company also registered JSW Natural Resources in Mauritius to be the pivot to acquire foreign coal assets.

The company is only looking at smaller capacities abroad. It is looking at 3-4 proposals in the downstream and service centre sectors that can service the requirement of global auto majors in the advanced markets. It is also a suitor for Sesa Goa, where Japanese trading major Mitsui plans to sell 51% and Mittal Steel is reported to be among the suitors (See Related Post).

Read the articles in The Economic Times and DNA Money

Reliance Capital picks up 31% stake in logistics firm BLR

Reliance Capital has picked up a 31% stake in BLR India, one of the top five logistics companies in India, for an undisclosed amount. Reliance Capital already owns a 44% stake in the courier and cargo business of DTDC.

BLR offers manifold transport and logistics services and is among the largest players in corporate surface transportation. It owns over 250 vehicles including a truck fleet of more than 130. It contracts another 800 on a daily basis. It has a network of more than 50 offices across the country.

BLR’s specialized services include over-dimensional cargo (ODC) and export-import transportation as well as government-approved bonded warehousing and bonded trucking services. The company is expected to use the funds raised through this transaction for investing in warehouses, trucks and trailers. Tower Capital was the investment advisor to the deal.

For more details, read DNA Money.