Monday, January 29, 2007

Chennai-based IT company Teledata in a $200 mn buyout in Singapore

Teledata Informatics, a Chennai-based software company, may make its second acquisition in Singapore following its Jan 12 acquisition of IT services company Soltius Private Limited. The company is into systems integration; the deal is valued at around $150-200 mn. The name of the company has not been disclosed.

Teledata Informatics offers enterprise-wide solutions for marine, education and utility sectors, apart from providing e-learning training and solutions. Teledata had acquired Soltius through its Dubai subsidiary, Bitech International. Soltius offers technology business solutions and services that focus across horizontals such as enterprise resource planning (ERP), business-to-business integration, mobile solutions, systems integration and product implementation, among others.

Article in Business Standard.

UK’s Centric, Fox Mandal and the Hinduja Group to float LPO JV

UK-based contact centre Centric has entered in to an alliance with the Hinduja Group and leading Indian law firm Fox Mandal Little to set up one of India's largest legal process outsourcing (LPO) firms. The three-way JV, to be called Centric LPO, is likely to employ over 1000 lawyers initially and aims to make India an outsourcing hub for international legal practices. It will be 40% owned by the UK-based outsourcing major and 60% by the JV between Hinduja TMT Technologies and Fox Mandal, with Hinduja TMT holding the majority stake. Hinduja TMT had recently completed the acquisition of US-based BPO Affina. The Hinduja TMT-Fox Mandal JV will have four members on the LPO board while Centric will have two. Centric will use its existing customer base in these markets to woo clients for the new business. Similarly, Fox Mandal will provide the legal expertise while the Hindujas the process skills. The JV will become operational in the next two months and that Centric had already lined up business from UK and US clients. The LPO will focus on every legal aspect-from the low-end secretarial works to law firm accounting and high-end legal work. In two years, it will ramp up to 2000 people.

The LPO segment is poised to cross $6 bn by 2010 and $15-$20 bn by 2015. LPO customers include legal departments of multinationals, international law, legal publishing and legal research enterprises. As of now, it accounts for less than 11% of the $6.3-billion ITeS-BPO pie. Other prominent players in the Indian LPO space include Pangea3, OfficeTiger and Integreon, which is also a BPO player, and law firms such as AZB & Partners.

Read the article in The Economic Times.

UB's bid for Whyte & Mackay hit by price issues

United Breweries’ bid for scotch whisky major Whyte & Mackay seems to be running into problems with the British company believed to have raised the price tag to £600 mn. The UB Group and Whyte & Mackay were holding negotiations during the past six months, but the two have failed to reach a conclusion due to differences over the valuations. The UB Group had offered a little over £400 mn; Whyte & Mackay did not agree to this price, which was later upped to around £500 mn.

Whyte & Mackay is the seventh-largest Scotch maker in Scotland with a turnover of $283 mn. It owns major brands like Isle of Jura, Dalmore, Vladivar Vodka and Whyte & Mackay.

Read more in the article in The Economic Times.

Soros’ Quantum fund hikes stake to 5.1% in Reliance Capital

Legendary investor George Soros, through his Quantum investment fund, has hiked his stake in Reliance Capital from 4.8% to 5.1%. The fund has bought nearly 500,000 shares of Reliance Capital to take its total holding in the company to 11.3 mn shares worth about Rs. 700 crores. As of December-end, Quantum was holding about 10.8 mn shares in the financial services firm. Reliance Capital and George Soros could co-operate to launch an offshore real estate fund which would invest in the Indian realty sector. In addition to the 5.1% stake in Reliance Capital, George Soros also holds about 11% in Reliance ARC.

Read the article in The Times of India.

SingTel keen on acquiring Vodafone's 10% stake in Bharti

SingTel has formally conveyed its interest in Vodafone’s 10% stake in Bharti Airtel to the British company and its advisors UBS. Vodafone has initiated talks with SingTel, Singapore’s largest telecom group, to sell its 10% stake in Bharti Airtel. As per law, Vodafone would have to dilute its holding in Bharti Airtel, if it wins the $18 bn auction of Hutchison Essar. At present, SingTel owns 30.5% stake in Bharti Airtel. Bharti Airtel is India’s biggest mobile operator with more than 30 mn customers. India is the world’s fastest growing mobile market. Analysts forecast the country will have 500 mn users by 2010.

Read the article in The Economic Times article.

SEBI investigates structured deals in IPO allotments

The Securities and Exchange Board of India (SEBI) is investigating all public issues in the past three months after it found in the offering of Nissan Copper that allotments and subsequent sale of shares to some foreign institutional investors (FIIs) were actually structured deals. It has been discovered that at least three portfolio investors have sold all the shares they purchased in the IPO on the first day of their listing. SEBI was also looking at the role of merchant bankers in these issues. SEBI investigators have also asked stock exchanges for details of public offers and first few days' trading of Shree Ashtavinayak Cine Vision, Minar International, and Cairn India. The regulator is probing whether merchant bankers or the companies themselves helped some investors to use the FII route to corner shares without directly participating in the IPO process.

Read the complete article in The Times of India.

India Infoline, BoB enter e-broking deal

The Economic Times reports that Mumbai-based broking firm India Infoline (IIL) has entered into an alliance with Bank of Baroda (BoB) to offer e-broking services to the bank’s customers. The alliance aims to provide various products and services under wealth management, along with research and analysis services to the bank’s customers. The service has been named as ‘Baroda e-trading’. It includes multiple options to customers for trading in equity shares (online and off-line) on both exchanges, in the cash as well in derivatives segments. The tie-up will help IIL reach out to the large customer base of the bank in states like Gujarat and Maharashtra. IIL has a daily traded turnover of Rs. 1000 crores and annual traded turnover of about Rs. 250,000 crores. It has a client base of 200,000 and employee strength of over 12,000. Currently, it is earning revenues of about Rs. 1 crore daily.

VC firm ePlanet Ventures plans $500 mn fund for India, China markets

ePlanet Ventures, an early stage-focused venture capital firm is planning to raise its second global fund worth $500 mn in the next three months. The fund is looking at areas like technology in healthcare services, auto components, hospitality in addition to IT and internet. ePlanet has set up offices in Bangalore and New Delhi to focus on the emerging Indian market. ePlanet’s first $650 mn fund, in affiliation with Draper Fisher Jurvetson, has invested in India in Bangalore-based online DVD rental company Seventymm.com. In China, its portfolio companies include some big-ticket names like the Chinese search engine Baidu, flat-screen delivery commercial advertiser Focus Media, Kong Zhong and Chinese handset designer Long Cheer. ePlanet will invest in the range of $2-20 mn in companies in the country. While the average deal size could be $9-10 mn, there could a few late stage investments as well. The VC firm is looking at investments in the US, Europe and Asian countries including India, China, Korea and Japan for its second fund.

Read The Economic Times article.

Indiabulls’ overseas real estate arm raises Rs. 1200 crores from LSE’s AIM

Indiabulls Real Estate’s overseas arm, Dev Property Development has raised Rs. 1200 crores from the London Stock Exchange’s AIM market. Investors include LN Mittal, Fidelity, Capital Research and the Singaporean government having picked up large stakes in the IPO. The company's shares will start trading on the exchange from Monday. The Dev Property IPO was managed by Deutsche Bank, Citigroup and UBS. The lead marketing agent of the issue was CLSA and KPMG is the statutory auditor of Dev Property Development.

Dev Property Development will buy minority stakes in the projects of Indiabulls through a secondary sale of shares by the latter and by investing fresh equity capital in Indiabulls' projects for a total consideration of Rs. 1055 crores. Indiabulls had received Rs. 437 crores by partial sale of its stake in Jupiter Mills and Elphinstone Mills development projects. Dev Property has also invested Rs. 618 crores in subsidiary companies of Indiabulls undertaking real estate projects. It would also have the right to co-invest along with Indiabulls in its future real estate projects.

Knight Frank has valued Indiabulls' real estate projects at Rs. 21,569 crores and Indiabulls' stake in its projects at Rs. 15,125 crores. Indiabulls' real estate business has been de-merged to Indiabulls Real Estate and its shares are expected to start trading in February. All shareholders of Indiabulls Financial Services received one share of Indiabulls Real Estate for every share they held in Indiabulls Financial Services. In December, Indiabulls Infrastructure, a subsidiary of Indiabulls Real Estate, had sold 13.3% stake to LN Mittal and Farallon for a consideration of Rs. 447 crores.

Read The Times of India article.

JM Financial’s PE fund referred to CCEA; approved by FIPB

JM Financial Trustees Company’s proposal to set up a Rs. 900 crore-private equity fund has been referred to the Cabinet Committee on Economic Affairs (CCEA). The Mumbai-based trust will mobilize funds in the domestic and the overseas markets to make private equity investments in Indian companies. The Foreign Investment Promotion Board (FIPB) has already provided an in-principle approval to the fund.

The fund plans to invest in IT and IT-enabled services, manufacturing, pharmaceuticals, healthcare and media through separate schemes (and not through units of equity shares). Since such investments are not permitted through the automatic route, the application was first submitted to the Board and then referred to the CCEA. The trust has sought approval to float an offshore fund which would raise monies from high net-worth individuals, NRIs / PIOs, corporate and financial institutions from countries such as the US, the UK, UAE, Qatar, Saudi Arabia, Hong Kong and Singapore. The fund will be established in Mauritius and will be a global business license-category I company.

The proposal has attracted Schedule 5 of the Foreign Exchange Management Act (FEMA) notification of 2000. Accordingly, the fund can make the proposed investment but is restricted between equity and debt instruments in a 70:30 ratio. Also, if the FII plans to invest 100% in dated government securities, including treasury bills or non-convertible bonds and debentures, it will have to form a 100% debt fund registered with the Securities Exchange board of India (SEBI).

Article in The Economic Times.

The Blackstone Group invests $275 mn in Hyderabad-based media company Ushodaya Enterprises

The Blackstone Group, one of the world’s biggest private equity firms, has invested $275 mn in Ushodaya Enterprises Limited (UEL). UEL owns Eenadu, ETV and Ramoji Film City. The investment in the Hyderabad-based media house is touted to be the biggest in the Indian media sector. Blackstone will get board representation in Ushodaya. The investment is a part of the fundraising that Ushodaya has initiated upon. The company intends to raise $465 mn of which Blackstone has made an initial investment of $275 mn while the balance $190 mn will be by way of bank financing. The transaction is now subject to regulatory approvals from the Foreign Investment Promotion Board (FIPB) and the Ministry of Information and Broadcasting. Kotak Investment Banking was the sole investment banking advisor to the transaction.

Read the press release here.

UBS acquires the Indian arm of Standard Chartered Mutual Fund

UBS Global Asset Management has agreed to acquire Standard Chartered’s Indian mutual fund management business for a total consideration of CHF 147 mn (around Rs. 516 crores). The Indian unit of Standard Chartered Mutual Fund is India’s ninth-largest mutual fund and will add to CHF 4 bn to UBS’ assets under management (AUM). It had 4% share of the domestic market

The transaction is structured as the acquisition of a 100% interest in Standard Chartered Asset Management Company Private Limited, and Standard Chartered Trustee Company Private Limited, the manager and the trustee, respectively, of the mutual funds offered by the company. The move remains subject to regulatory approval, as well as to a price adjustment linked to assets under management at closing. The acquisition included 16 mutual funds, 10 of which were fixed income, 2 involving asset allocation and 4 in equities.

The total size of the Indian mutual fund market is just short of $100 bn and has grown by around 26% a year since 2001, and surged 62% last year.

Read the article in Business Standard.

Tata Group ups stake in TTML by 3.5%

The Tata Group has raised its stake in Tata Teleservices Maharashtra (TTML), its publicly listed telecom company. TTML provides telecommunication services in the states of Goa and Maharashtra. The group’s holding in the company has now gone up from 65.5% to 69%. Tata Sons has picked up the unsubscribed portion of TTML’s recent rights issue, thereby increasing its stake by 11%, from 7.86% equity to 18.68%. Tata Teleservices, the Tata Group’s flagship telecom company and the single largest shareholder in Tata Teleservices Maharashtra did not subscribe to the rights issue. Consequently its holding has now decreased from 46.98% to 39%. The other group companies including Tata Power, Tata Investment Corporation and Panatone Finvest have maintained their equity stake by subscribing to the rights issue.

Of late, the Tata Group has been quite in news for such corporate moves where it has raised stake in some group companies including Tata Tea and Tata Coffee. The total indirect foreign holding in TTML would also go down as Tata Teleservices, the parent company of TTML, has foreign equity holding from Singapore government’s private equity arm Temasek Holdings. The board of TTML had approved a rights issue of the size of Rs. 491.14 crores on January 12, 2007 through an aggregate of 288.91 mn equity shares at a price of Rs. 17 per share. The date of allotment of the share was January 17, 2007.

Read The Economic Times article.

S Kumar’s retail venture to go public in 3-4 months

Brandhouse Retail, the retail venture of S Kumar’s Nationwide Limited (SKNL), is planning to go public in the next 3-4 months. This follows the SKNL board decision to buy Brandhouse Retail for a consideration of Rs. 12.95 crores and then hive it off as a separate entity. The company was also open to the idea of diluting a stake to private equity investors.

Brandhouse Retail manages exclusive brand outlets for SKNL brands as well as key international brands coming to India. Brandhouse Retail is in the midst of a Rs. 400 crore-expansion which would see a total of 1200 outlets being set up by 2010. The company plans to cross 100 outlets by the end of this fiscal and 400 by the end of next fiscal. Out of the total of Rs. 400 crores needed as per the capex plans, Rs. 100 crores would be raised from internal accruals and promoters. The rest would be funded through a mix of debt and equity.

Read The Economic Times article.

REC to raise $200 mn in ECBs; StanChart gets mandate

The Rural Electrification Corporation (REC) is planning to raise up to $200 mn of yen-denominated loans from the Japanese market in external commercial borrowings (ECBs).
Standard Chartered Bank has been given the mandate for syndicating the loans.

This is the first time that REC will raise funds through the ECB route. REC had earlier raised funds from multilateral funding agencies like Japan Bank for International Co-operation (JBIC) and Germany’s KfW Bankengruppe. But this is the first time that the mini-ratna will borrow directly from the overseas market on commercial terms. The Reserve Bank of India (RBI) has recently cleared the corporation’s overseas borrowing plans.

The funds would be raised at 47 basis points (bps) above the yen-linked six-month LIBOR currently at around 0.60%. The total cost of borrowing including the administrative cost of raising the loan will be around 61 bps over yen-LIBOR. Funds raised through ECB will be used for REC’s core activity to finance and promote rural electrification projects across the country. REC also provides financial assistance to state electricity boards and state government departments.

Read the complete article in The Economic Times.

M&M fails in its bid to buy Tractorul

Mahindra & Mahindra Limited’s (M&M) bid to buy Romanian tractor maker Tractorul Brasov SA has failed due to the Romanian government rejecting debt guarantees as sought by M&M. M&M has acquired a number of tractor companies and auto-parts companies overseas in the past as it seeks to gain technology and tap bigger markets. The Mumbai-based company plans to spend Rs. 400 crores ($90 mn) over the next two years on expansion and developing new models. The company plans to make more acquisitions outside India this year.

Read Anand Mahindra’s comments in the article in Business Standard.

IFC to invest $300 mn in Indian ultra-mega projects; in talks with Tata Power

World Bank private equity arm, the International Finance Corporation (IFC), is in talks with Tata Power for providing long-term debt funding, along with other major ultra-mega power projects. Funding would be in the range of $200-300 mn. IFC is also looking at other infrastructure projects, especially in the road sector.

IFC is also looking at picking up equity stake and upper Tier-II instruments in the banking sector. It has recently invested $150 mn in ICICI Bank’s upper Tier-II bonds and $100 mn in HDFC Bank’s similar issue, and is open to more such investments in banks which will help them meet their capital requirements.

IFC already has a big-ticket exposure of over $100 mn in Tata Steel and Cairn Energy. It also has an RBI approval for raising $1 bn-equivalent of rupee funds. IFC has the fourth-largest exposure to India after Russia, Brazil and Turkey.

Read the article in The Economic Times.

Essar Group to de-list Essar Steel and Essar Oil

The Essar Group plans to de-list Essar Steel and Essar Oil following a similar move by the group on Essar Shipping last month. The proposed de-listing is aimed at gaining more flexibility in running the companies. The group has already de-listed its BPO subsidiary Aegis Communications and telecom arm Essar Teleholdings from the US and domestic bourses. The Essar Group is in the midst of organizational restructuring and might list its holding firm Essar Global with an overseas bourse, though not as of now. Six holding companies for six businesses, namely, power, steel, energy, shipping, communications and special economic zones, have been set up to handle the group’s interests across the globe.

Read the Business Standard article.

Avesthagen sells 20% stake for €25 mn

Bangalore-based integrated life sciences company Avestha Gengraine Technologies Limited (Avesthagen) has closed Series C of private equity fundraising of around €25 mn by divesting 20% equity to external investors. The investment values the company at € 115 mn (Rs. 667 crores). The investors in the company are Fidelity International (10%), the Limagrain Group of France (5%), Daninvest of the Danone Group (4.57%), and Bennett, Coleman & Company Limited (2.4%). The total foreign investment in the company is now over 31%. The existing investors of Avesthagen include ICICI Ventures, Cipla, Godrej Industries, Tata Industries and bioMerieux. The company has also commenced preparations for its initial public offering scheduled to hit the market by mid-2008.

The company commenced its operations as an agri-biotech company in 2001 and then moved on to become a healthcare technology company, pursing its vision of convergence of food, pharmaceuticals, and population genetics, leading to preventive personalized medicine. The other activity of the company has been agri-biotech product development of scientifically validated bioactive nutraceuticals, derived from Indian medicinal plants, as well as the development of bio-similar drugs. The company has four strategic business units: bio-pharmaceuticals, food for medicine (bio-nutritionals), seed for food (agri-biotech) and science and innovation. The company registered Rs. 1.1 crore in profit and Rs. 18 crore revenue in 2005-06.

The funds will be used for Avesthagen’s infrastructure expansion plans, including setting up of manufacturing units and research and development laboratories, and acquisition of technology companies to scale up production and marketing.

Read the article in Business Standard.

ACC exits Everest Industries; sells 8.2% stake in open market

ACC has sold off its residual 8.2% equity stake in Everest Industries in the secondary market, thus finally exiting from its majority equity holding in the company. The stake was put up for sale by Holcim following its acquisition of ACC in India two years ago. ACC had earlier tried to sell its 76% stake in the company to the Adani Group, who had also announced an open offer to acquire further stake as required by the takeover code. However, the offer failed to materialize due to Everest’s valuation-related issues. Finally, about a year back ACC sold off 50% stake to Eternit Finvest managed by the Mrinalini Trust of Gujarat Ambuja’s Narottam Sekhsaria. The stake sale would have fetched about Rs. 10-15 crores to ACC based on the market price.

Everest Industries is a building materials manufacturer and the oldest player in the roofing industry. The company is in the asbestos-based roofing materials business and has a turnover of about Rs. 250 crores. It sells its roofing products under the popular Everest brand while its interior products are sold under the brand E-Board.

Article in The Economic Times.