Friday, February 2, 2007

Tata Chemicals, Total Produce enter fresh produce distribution JV

Business Standard reports that Tata Chemicals and Europe’s largest fresh produce firm Total Produce Plc have entered into a 50:50 JV to set up distribution facilities for fresh fruits and vegetables across in India. The venture will initially establish facilities in North and East India at a cost of Rs. 26 crores. It would leverage the company’s association with farmers through 500 Tata Kisan Sansar agri-services centres.

IL&FS Investment Managers to invest Rs. 130 crores in Ansal SPVs

IL&FS’ PE arm IL&FS Investment Managers (IIML) will invest in two special purpose vehicles (SPVs) being floated by Ansal Properties and Infrastructure (APIL). IL&FS will reportedly get 49% equity in the SPVs with an investment of about Rs. 130 crores.

The two SPVs will develop projects in Gurgaon. While the first SPV is being floated for an integrated township, the second SPV will develop an IT special economic zone (SEZ). IL&FS is the second private equity fund to commit investments in an APIL SPV in the last six months. Earlier, HDFC Realty Fund had taken 33% equity in an APIL SPV for developing an SEZ in Greater Noida.

In recent times, APIL has also attracted private equity investment in the holding company by diluting promoters’ stake. The company had raised Rs. 175.8 crores through a 5% private placement with Citigroup in October last. Later, in November, George Soros had bought close to 1% equity in the company for Rs. 25 crores through the secondary market.

Read the article in The Economic Times.

SEBI to issue guidelines for real estate mutual funds

The Securities and Exchange Board of India (SEBI) is planning a number of moves for growing the real estate mutual fund (REMFs) business in India. It is moving towards enforcing a minimum closing period of three years for REMFs. SEBI also plans to allow such funds to announce their net asset values (NAV) every quarter instead of daily as is currently the practice. A tax regime for real estate mutual funds is also being worked on, based on the US model, and will be announced in the next budget. The US model allows the trusts exemption from tax provided they share 90% of their taxable income as dividends with investors. SEBI would most likely be guiding REMFs to invest 70 to 80% of their funds in real estate projects directly, and the rest in real estate companies.

Read more in the article on Indianrealtynews.com.

Software testing company up for sale by stakeholders ICICI Ventures and Acer Technologies

Bangalore-based independent software testing company RelQ has been put up for sale by ICICI Ventures and computer-maker Acer Technologies of Taiwan, the majority shareholders of the company. UBS is working on the mandate of bringing in the potential buyer. Companies such as KPIT Cummins, NIIT and CGI have already shown interest in buying RelQ.

RelQ is present in test automation, game testing and embedded software testing and has invested around $3 million towards infrastructure and test labs. RelQ is growing at a CAGR of 40% with revenues of $21 mn for the FY 2005-06 and estimated revenues of $33 mn for the FY 2006-07. It has a major presence in Bangalore with offices in the US, Europe and Singapore and a headcount of around 800. It has already acquired two companies, one in France and in the UK each.

The global market for testing services is estimated to be at $15 bn, of which $2-6 bn is expected to be outsourced to India by 2007. The CAGR for the independent outsourced testing market is estimated to be over 60%. Maveric and Thinksoft in Chennai and AppLabs in Hyderabad are some of the prominent independent testing companies in India.

Read the article in The Economic Times.

Holding company model suggested for BSNL, MTNL merger

A holding company model is being considered by the Department of Telecommunications (DoT) for the merger of public sector telecom companies Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL). ICICI Securities, ABN-AMRO, Rothschild, AF Ferguson and Desai & Diwanji were the consultants to the DoT.

The consortium of consultants has suggested that the holding company structure would be a “good immediate-term measure to try and achieve the benefits and synergies of a unified operation of BSNL and MTNL”. A professional management structure, with a board that includes government and industry nominees and employee-participation from of the merged companies, would ensure this model.

Read the article in Business Standard for more comments by the consultants.

Air Deccan seeks $75-100 mn private equity; hires Edelweiss for PE syndication

Air Deccan is planning to raise around $75-100 mn for its expansion plans, and has reportedly approached the Reliance ADAG Group and a Delhi-based conglomerate for the same. Investment bank Edelweiss Capital has been mandated by the low-cost airline to help raise private equity. Texas Pacific Group, Carlyle Group, Standard Chartered Private Equity, Macquarie Capital, ChrysCapital, Lehman Brothers, General Atlantic and GIC of Singapore are some of the investment firms that have been sounded out. The process is expected to be completed over the next three months.

Additionally, Air Deccan is also looking to raise money by securitizing its future receivables or by issuing bonds, and is in talks with global players like International Lease and Finance Corporation (ILFC) and GE Commercial Aviation Services (GECAS).

Read the complete article in The Economic Times.

UB to look at potential targets to offset probable Whyte & Mackay deal failure

The UB Group has initiated discussions with a clutch of smaller independent Scotch whisky distillers, in case the deal with Whyte & Mackay fails to materialize. Ian Macleod and Macduff International are some of the names that are being mentioned as possible acquisition targets.

UB is working on alternative strategies even as Whyte & Mackay chairman Vivian Imerman is expected to get back on UB’s estimated bid of around £470-480 mn in the next 10 days. Accordingly, UB is looking at buying 2-3 independent distillers with sizable Scotch malt bases valued in the £80-150 mn range. The other potential buyers for Whyte & Mackay are William Grant and Caribbean entity CL Financial who have valued Whyte & Mackay at £300-350 mn.

Read the article in The Economic Times.
Related Post: UB’s bid for Whyte & Mackay hit by price issues

REL, Tata Power looking at Indonesian coal company Bumi

The Economic Times reports that power sector majors Reliance Energy and Tata Power are looking at buying an equity stake in Bumi Resources, an Indonesian coal firm, to meet the fuel requirements for their power plants in India. International companies such as Mitsubishi Corporation, South Korean power company Kepco and a Glencore subsidiary have also shown interest in Bumi. Bumi Resources is Indonesia's largest coal producer and exporter with reserves of 52 mn tonnes, and has put a reserve price of $1 bn for around 30% stake. Acquiring coal mines would help the companies in assuring fuel supplies. Also, Indonesian coal has lower ash content and higher calorific value than Indian coal, resulting in higher power generation with less fuel.

RBI to divest its stake in SBI to the Indian Government

The Union Cabinet has approved the transfer of Reserve Bank of India’s (RBI) shareholding in State Bank of India (SBI) to the Indian Government by June 2007 with a view to let the RBI focus exclusively on regulation, the Cabinet has also assented for the transfer of RBI’s stake in the unlisted National Bank of Agriculture and Rural Development (NABARD) and National Housing Bank (NHB) to the government at book value by June 2008.

The estimated acquisition cost of RBI's 59.7% stake in SBI to the government is likely to be around Rs. 40,000 crores, at a price of Rs. 1300 per share in an all-cash deal. It is to be noted that a bill is likely to be approved in the forthcoming budget to amend the SBI Act to reduce the minimum holding of the government or RBI from 55% to 51%. The move is aimed at giving the bank leeway to divest more equity to public to raise capital to fund growth. The follow-on public offer of SBI is likely to come after the majority share transfer to the government.

Read the article in Business Standard.