Wednesday, February 7, 2007

UTV, Future Group in talks for retail JV

Entertainment and media company UTV Software Communications and Future Group (Pantaloon Retail) are in talks to float a retail venture together. The blueprint for the project is to open Cafe Lounges as a brand extension to UTV’s upcoming youth centric channel in June. The Cafe Lounges targeted at the youth will be a fusion of entertainment, gaming and a lounge where youngsters can relax. While UTV will use its strength in the entertainment and broadcasting space, the Future group will use its expertise in the retail domain to jump start this venture.

The Cafe Lounges will be a brand extension of UTV’s youth centric initiatives and will use these to attract the youth both in terms of footfalls to these outlets as well as to ensure eyeballs on the channel. Work on this front has already begun, and placement agency sources also confirmed that UTV has started recruiting people from the retail and cafe space. The retail outlets planned would act as entertainment zones encompassing all the youth initiatives including the channel. Twenty two cities have been identified, and currently locations for the outlets are being tied up. The partnership between UTV and the Future Group would either be a lease and profit sharing model or a joint venture company, still being discussed by both parties.

Read The Economic Times article.

Temasek to invest $300 mn in TV channel; in talks with US PE funds, Reliance and media professionals

Temasek Holdings, the private equity arm of the Singapore government, is in talks with a clutch of Indian media professionals and business houses to set up a TV broadcasting company. The proposed company could rope in former CEO of Star TV Peter Mukerjea and Mukesh Ambani, the latter through his personal investment companies, as well as some US-based equity funds. The venture will operate news and current affairs as well as entertainment channels. Ambani, Temasek and US investors are to get 26% each and the remaining portion will be divided among Mukerjea and other professionals who join later. The channel would look at an investment of around $300 mn (roughly Rs. 1400 crores) in the next two to three years.

Read the Business Standard article.

Syndicate Bank to raise Rs. 240 crores in Tier-II bonds

Syndicate Bank is raising funds to the tune of Rs. 240 crores from the bond markets by issuing upper-tier bonds with a 15-year maturity. It will have the right to call back the bonds after 10 years.

Syndicate Bank will exhaust its capacity to raise Tier-II bonds this fiscal if it raises Rs. 240 crores. The bank is eligible to raise upto Rs. 150 crores through hybrid perpetual bonds which qualify for Tier-I capital. The bank’s Rs. 240 crore-issue includes a Rs. 140 crore-green shoe option. The bank has fixed the coupon at 9.3% for the first 10-year period. After the 10-year period, if the bank decides against exercising the call option, it will step up the coupon by another 50 basis points (bps).

The bond issue proceeds would help Syndicate Bank fund its business growth and augment long-term resources. After the fund-raising, the bank’s capital adequacy ratio, currently at 11.34% will increase by 20-30 bps. The issue is being managed by AK Capital Services, Citibank, Darashaw, HSBC, IDFC, Standard Chartered Bank and UTI Bank. Syndicate Bank, with government holding of 66.5%, will also have the option of going public with a follow-on offer next year. It can offload government stake by another 14.5%.

Read The Economic Times article.

SEBI prohibits Gammon Infrastructure IPO for a year

The Securities and Exchange Board of India (SEBI) has blocked the Rs. 450 crore-public offer of Gammon Infrastructure, restraining the company from tapping the capital markets for a year. This follows the December 21, 2006 order barring the parent company of Gammon Infrastructure, Gammon India from accessing the capital markets.

SEBI had stopped Gammon India and four others including promoter-chairman Abhijit Rajan and two companies controlled by him, from accessing the capital markets for a year for routing Gammon funds to subscribe to its rights issue in 2001. However, back then, it had not named Gammon Infrastructure Projects in the order. Gammon India will now appeal against the SEBI order with the Securities Appellate Tribunal (SAT). The SEBI has communicated to Gammon India that since the parent company holds significant stake in Gammon Infrastructure, the one-year prohibition on Gammon India would be applicable to Gammon Infrastructure as well.

At present, Gammon India holds 82.5% in Gammon Infrastructure, which following the IPO was supposed to come down to 20%. US hedge fund Och-Ziff also owns 12.5% in Gammon Infrastructure. The company is debt-free and has around Rs. 100 crores cash and sees no funding issues to delay its ongoing projects.

Read the article in Business Standard.

M&M, Escorts vie for stake in Punjab Tractors; Actis, Burmans to sell out

Mahindra and Mahindra (M&M) has put in a non-binding bid for acquiring stake in Punjab Tractors. The Burman family, which holds a 14.5% stake in Punjab Tractors, is interested in selling its stake in the company. Private equity firm Actis which is another major stakeholder in Punjab Tractors has also put in its 29% stake in Punjab Tractors on the block. The Burmans, promoters of Dabur India, are reportedly interested in selling their stake to the buyer of Actis' stake in the company. Escorts also has shown interest in buying stake in Punjab Tractors, but has not put in a formal bid yet.

Read the Business Standard articles – 1 2.
Related Post: M&M, TAFE eye Actis’ 29% in Punjab Tractors

IFC to assist private companies in railway operations

International Finance Corporation (IFC), the private equity arm of the World Bank, is interested in participating in the new public-private partnership (PPP) framework of the Indian Railways. Private operators interested in entering the container train business and the dedicated freight corridor project of the Indian Railways and IFC seeks to assist private players in fulfilling their financial commitments. The Railway Ministry has already asked IFC to consider investing in the dedicated freight corridor as well as the container train segment. IFC already has investing experience in the railways of Latin America and Europe.

Read The Economic Times article.

Escorts seeks SEBI approval to launch Escorts Gold ETF

Escorts Mutual Fund is planning to launch a gold fund and has approached the Securities and Exchange Board of India for its approval to launch gold fund. To be named as the Escorts Gold Exchange Traded Fund will offer returns in line with domestic price of gold by investing in physical gold as well as gold as an underlying security. The scheme will also have a provision to invest up to 10% of the corpus in money market securities. The open-ended scheme will list on the National Stock Exchange. Minimum application in the scheme is Rs. 5000 and in multiples of Rs. 1000 thereafter. The scheme would not levy entry load during new fund offer. On closure of the new fund offer, the scheme would charge 1% entry load. The exit fee would not exceed 0.5%.
Read the Business Standard article.

In a similar fashion, Benchmark Mutual Fund has launched an open-ended Gold Exchange Traded Fund. Minimum application in the scheme is Rs. 10,000 and in multiples of Rs. 1000 thereafter. The scheme levies a maximum entry load of 1.5% during new fund offer. On closure of the new fund offer, the scheme would charge no entry or exit load. There is no exit fee. The fund would trade on the National Stock Exchange. New Fund Offer period is from 15th February 2007 – 23rd February, 2007.

BT Telecom India acquires Mumbai-based i2i Enterprises; faces regulatory challenges

BT Telecom India is acquiring Mumbai-based i2i Enterprises for an undisclosed amount. i2i is an internet protocol-based global managed network service provider. With this acquisition, BT also gets to acquire i2i's four licenses for NLD, ILD, ISP and IP Telephony services, in addition to a 200-strong workforce and gross assets worth $22.5 mn. BT Telecom India is a JV between British Telecom and Jubilant Enpro of New Delhi,

The acquisition makes BT Telecom India's biggest foreign global carrier. However, the acquisition faces certain regulatory challenges. BT has already signed LoIs for its own NLD / ILD licenses and also has paid up the license fees and bank guarantees. In the light of these facts, the deal attracts regulatory scrutiny on many fronts, especially guidelines that restrict a company from cross-holdings across identical licenses in same service areas, either via an equity deal or acquisition. This means a company cannot hold two ILD or NLD licenses. Also there is no known precedent of a refund of license fees to any company, implying that BT may have to forfeit Rs. 5 crores it paid as license fees along with performance and financial bank guarantees if it abandons its LoIs.

Additionally, i2i is required to seek written consent of the licensor of their NLD / ILD licenses before it either directly or indirectly assigns or transfers its licenses to a third party or enters into an agreement for sub-license and / or partnership relating to any subject matter of license to any third party. BT Telecom India management say that they will examine these issues.

Read the article in Business Standard and The Times of India.

Ambit RSM up for sale; may tie with UK-based accounting firm BDO International

Ambit RSM Advisory, one of India’s largest private tax and advisory services companies, is looking out for tying up or merging with a global tax and advisory firm.

Ambit RSM is the largest after the Big Four accounting firms in India. It is reportedly in talks with the UK-based BDO International for a possible merger or alliance. BDO is the fifth largest global accounting firm with more than 600 offices across the world. RSM’s services include taxation and business advisory, transaction support services, services related to indirect taxes and transfer pricing. It has some of the world’s biggest clients such as GE, Wal-Mart, Microsoft, Sony, British Airways, the Bayer group, VISA, Dell Computer, and the Tata Group companies from India. In addition to BDO, some of the Big Four firms, which include E&Y, KPMG, PWC, and Deloitte & Touche, are also said to be interested.

It has been learnt that more than 15 senior executives have left Ambit RSM in the past 12 months, prompting speculation that the departure of key people is leading the company to scout for alliances. Apart from an outright sale, Ambit RSM management could also exercise the option to sell its divisions separately to different firms. The group companies include Ambit Corporate Finance, RSM Advisory Services, Axis Risk Consulting, Ambit Capital and India Value Fund.

Recently, Niko Asset Management Co and Ambit RSM agreed to form an asset management joint venture in India. Niko would hold about 75% in the JV, with Ambit owning the remaining (See Related Post).

More in the article in The Economic Times.

EMC Corporation buys Hyderabad-based data security company Valyd Software

US-based IT firm EMC Corporation has acquired Hyderabad-based Valyd Software for an undisclosed sum. Valyd is an unlisted, IP-driven, enterprise data security company. It will now become part of EMC's security division. Valyd's products will be integrated to EMC’s global product offering. Valyd will bring to the board two specific enterprise data protection products, namely, the file security manager and the data security manager. These will come under the fold of RSA, a key global acquisition made by EMC in the information security domain.

Valyd was founded in 1998 and came out with its products in 2001. Post acquisition, Valyd founders Srinivas Sreeramaneni and Anil Meka will continue to oversee operations at Valyd. The company has over 50 engineers in the security software solutions space and the EMC acquisition will lead to a quick doubling of headcount by the end of 2007.

Read the article in The Economic Times.