Friday, February 9, 2007

Avendus Advisors forms $200 mn PE fund with Mayfield Fund; to invest in the outsourcing sector

Domestic investment bank Avendus Advisors will invest in the outsourcing sector in knowledge-oriented and outsourcing companies in the areas of legal processes, financial services and equity research. The boutique bank will invest out of its $200 mn fund which was formed in December 2006 in association with US-based venture capitalist Mayfield Fund. Avendus is still tying up the finances.

Investments will be done in companies with revenues of Rs. 80 crores to Rs. 100 crores and with a track record of 3-5 years.

Avendus is also advising on mergers and acquisitions for software technology and auto component companies. It has recently announced a tie-up with European investment bank and management consulting outfit goetzpartners (See Related Post).

Read The Financial Express article.

AK Capital Services wins India Bond Award 2006 from IFR

AK Capital Services has won International Financing Review (IFR) Asia’s India Bond Award for the year 2006. AK Capital has won the award for structuring and placing Rs. 1500 crores worth of perpetual bond issuance from UCO Bank in March 2006.

The UCO Bank transaction was India’s first perpetual bond issuance, after Reserve Bank of India issuing guidelines for same. These instruments are eligible for inclusion as Tier-I capital of banks. AK Capital, one of India’s leading debt arrangers, received this award in Hong Kong on February 5, 2007.

The Rs. 1500 crore-bonds of UCO Bank, rated ‘AA’ by CRISIL and ’AA-‘ by CARE, were perpetual in nature with a call option at par at the end of 10th year from the Deemed Date of Allotment. The bonds carried an interest rate of 9.50% pa, payable semi-annually, for the first 10 years and step-up coupon rate of 10.00% pa, payable semi-annually for all the subsequent years if call option is not exercised by the Bank at the end of 10th Year from the Deemed Date of Allotment. The bonds listed on the WDM segment of National Stock Exchange were reckoned as a part of Tier-I Capital of UCO Bank.

Read the release on Moneycontrol.com.

Tatas offload 0.84% in TCS for Rs. 1000 crores

Tata Sons, the holding company of the Tata Group, has raised more than Rs. 1000 crores by selling 0.84% of its equity stake in group company and software major Tata Consultancy Services (TCS). This has taken the total amount raised so far to about Rs. 2800 crores (about $622 mn). It is believed that the proceeds could be used for part-funding Tata Steel’s $12.1 bn-acquisition of Corus.

Tata Sons has sold about 8.1 mn equity shares of the software company to an undisclosed buyer. This is the third time in three months that the holding company has diluted its equity stake in TCS, which on December 31, 2006, stood at 78.3%. On February 6, Tata Sons sold 6.9 mn equity shares raising Rs. 900 crores. In a similar transaction in November 2006, Tata Sons raised another Rs. 900 crores by diluting 0.86% of its stake in TCS. A bulk of it was sold to Mauritius-based HSBC Global Investment Fund.

Read the article in The Economic Times.

Rain Calcining to merge with Rain Commodities

Hyderabad-based Rain Commodities will merge Rain Calcining with itself in an effort to bring together the group’s calcined petroleum coke (CPC) and cement businesses for better viability. The merger, effective April 1, will create the world’s largest CPC making company with assets in India, Kuwait, the US and Argentina. It will enjoy nearly 28% of the total CPC sales in the Western World.

Under the merger plan, Rain Industries’ cement business will be transferred to Rain Commodities, while Rain Calcining’s CPC and power generation businesses will be transferred to Rain Industries. Rain Industries is the cement making unit of Rain Commodities. Rain Commodities will appoint financial and legal advisors for determining the share exchange ratio. The merger decision is a reversal of an earlier proposal to amalgamate Rain Industries with Rain Commodities.

Rain Calcining makes 480,000 tonnes of anode and industrial grade CPC per annum. CPC is a key process input used in the aluminium and steel industries. Earlier this week, Rain Commodities said it would acquire assets of Toronto-based Great Lakes Carbon Income Fund’s wholly-owned subsidiary Carbon Canada, Inc. for Canadian $ 437 mn (See Related Post).

Read article in Business Standard.

L&T, EADS form JV to tap aerospace & defence markets

Larsen & Toubro (L&T) and European aerospace and defence group EADS have formed a JV for joint exploration of business opportunities in defence and aerospace.L&T and EADS have signed a Memorandum of Understanding (MoU) to establish a “long-term, profitable and stable relationship” to better address the needs of the aerospace and defence markets in India and around the world. The signing took place at the Aero India 2007 exhibition in Bangalore.

Read the Business Standard article.

India emerges as the most favoured PE destination, as per AVCJ

With investments worth $1.23 bn in the first moth of the year itself, India has emerged as the most favoured private equity destination, according to a report by Asian Venture Capital Journal (AVCJ). India ranks top in terms of PE investments in January-February following Asian giants like China at $609 mn and Japan at $980 mn.

The report was on Asia-Pacific emerging as the most attractive region for private equity investment and says that the total Asian private equity capital under management rose by almost 30% in 2006 to $158 bn as compared to $122 bn in 2005.

India is also among the top 10 PE destinations last year, with the country witnessing a whopping growth of 252% with investment as high as $7 bn for 2006 as against just $1.9 bn in 2005.

The top 10 PE destinations in the Asia-Pacific includes Australia with $24.9 bn worth investments, China $7.7 bn and Japan at $10.35 bn. Fund raising for Australia rose 88.9% during the year followed by China at 72.1%. India posted decent increase of 37.6%.

Read The Times of India article.

GHCL eyeing second soda ash acquisition in Romania

GHCL is considering acquisition of Romanian soda ash maker Uzinele Sodice Govora (USG). This transaction, once materialized, will be GHCL’s second buyout in that country after its takeover of a 300,000 tonne soda ash company SC Bega Upsom SA in December 2005. USG is a 200,000 tonne soda ash producer. It has mortgaged its assets with GHCL to tide over its financial crisis. The proposed acquisition is part of the company’s target to quadruple its capacity to 4 mn tonnes by next year.

The company is also in talks with soda ash companies in China and the US which are likely to be over by June. In addition to soda ash, GHCL is also eyeing acquisition of home textile retail chains in Europe and the US to become an integrated home textiles company with presence across spinning, weaving, designing, sourcing and distribution.

In the last one-and-a half years, GHCL has spent about $165 mn (Rs. 730 crores) on foreign buyouts. The list includes UK-based largest home textile retail chain company Rosebys with 300 stores, and the US-based textiles company Dan River.

Read the article in Business Standard.

AFL, Dachser form cargo services JV

Air Freight Limited (AFL), the logistics and express service provider, has hived off its cargo arm into a JV with Dachser, a leading logistics major. Dachser is a German logistics company with a turnover of €2.8 bn in 2005 and operates in the air, sea and food logistics segment. Both partners have a 50% stake each in the new entity christened as AFL Dachser. However, the actual size of the JV and investments put in by both players have not been disclosed as both are family-owned businesses.

Read The Economic Times article.

Videocon makes revised bid for Daewoo Electronics

The Videocon Industries-led consortium has submitted a revised bid to the creditors of South Korean electronics major Daewoo Electronics for buying their stake in the company. The other strong contender for Daewoo’s assets is South Korean equity fund MBK Partners. Last month, the Videocon-led consortium had lost its preferred bidder status after the creditors of the ailing company rejected its proposal to acquire Daewoo for a lower price following due diligence as the Videocon consortium had asked for a 13% discount on the initial bidding price of $730 mn to acquire a 97.5% stake in the company.

Read the Business Standard article.

Singapore Stock Exchange leads race for BSE stake

The Singapore Stock Exchange (SGX) has emerged is in the lead for picking up a 5% stake in the Bombay Stock Exchange ahead of its initial public offer in May. SEBI has stipulated that a single investor can pick up a maximum of 5% in an Indian stock exchange. The Bombay Stock Exchange has received offers that value the exchange at $600-800 mn. The offer by SGX was on the higher side of this range. Recently, the NYSE Group, General Atlantic, Goldman Sachs and Softbank Asian Infrastructure Fund each acquired 5% in the National Stock Exchange (NSE), for a price that put NSE’s enterprise value at $1.20 bn. Other contenders for the Bombay Stock Exchange include the Deutsche Borse, NASDAQ and the London Stock Exchange. The Bombay Stock Exchange will also have to give shares to private equity players, for which Temasek, GIC and a German private equity player are in the running. The valuations they have offered are not yet known.

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

Pawan Ruia makes open offer for Dunlop India and Falcon Tyres

The Pawan Ruia Group has made an open offer for Dunlop India and Falcon Tyres. This follows its indirect acquisition of these two outfits from the Jumbo Group in December 2005. The group had used a special purpose vehicle incorporated in Singapore called Wealth Sea Private Limited for the acquisition of Dil Rim & Wheels (DRW). DRW owns 74% stake in Dunlop India and close to 69% in Falcon Tyres.

The Ruias have announced an open offer for 20% in Dunlop at Rs. 10 per share. The open offer for Falcon would be at Rs. 151 per share. The total estimated outgo of the group for these twin offers would be Rs. 27.5 crores – Rs. 18 crores for Falcon Tyres and around Rs. 9.5 crores for Dunlop. The Ruia group already holds a 74.5% stake in Dunlop and over 70% in Falcon Tyres. The group has appointed Kolkata-based Microsec Capital as the manager to the offer. The group outfits Wealth Sea and Manali Properties would spearhead the open offer opening on March 24.

The Securities and Exchange Board of India (SEBI) had directed the Ruia group to make open offers for both the companies in November. The SEBI had said in its order that the indirect purchase of shares of Dunlop and Falcon in an overseas deal had violated the takeover code.

Read the Business Standard article.

IDBI plans raising Rs. 1500 crore-Tier II bonds

IDBI will raise around Rs. 1500 crores by way of Tier-II bonds in the coming 12 months. This is to support credit growth and Basel II norms and supplement for capital bonds that will be redeemed over next few months. Present capital base can support 20% annual growth in assets for next two financial years. However, the bank wants to provide adequate cushion for business expansion and Basel II compliance. Currently, IDBI has an outstanding Tier-II bond portfolio of Rs. 5000 crores. A part of this bond portfolio will mature soon. The new bonds may be issued in tranches depending on the business requirement over a year. The lower Tier-II bonds will have tenure ranging between 5 and 10 years and will carry slightly higher coupon rate than debentures. CRISIL has assigned an AA+ rating to the proposed issue. The public sector bank has raised Tier-II capital of about Rs. 1418 crores till date in the present financial year. The bank is adequately capitalized with CAR of 14.09% at end of December 2006.

Read more in the Business Standard article.

GVFL to invest in 4 companies in the IT and biotech sectors

Gujarat Venture Fund Limited (GVFL), the Ahmedabad-based venture capital fund, plans to invest in four companies at seed and early stage-level in information technology and biotech sectors. The investments would be made out of the Gujarat IT Fund (corpus – Rs. 20 crores) and the Gujarat Biotechnology Venture Fund (corpus – Rs. 50 crores).

GVFL is evaluating several proposals including those from the IIM-Ahmedabad incubator and NirmaLabs for making these investments. The deals are expected to be announced soon. The fund is also looking to divest its stake in some of its portfolio companies such as eInfochips, Icenet and Anupam Globalsoft this year as they have matured and are capable of giving optimum returns.

GVFL had divested from 6 of its investee companies in 2006 including Saraf Foods, Scicom Technologies, Parsec Loans, Broadcast Worldwide, Technology Media Group and Apex Electricals. These exits were made through strategic buyouts by promoters or other investors. Private equity player Baring Private Equity picked up part of GVFL’s stake in Gurgaon-based Parsec Loans for around Rs. 15-16 crores. In Noida-based Scicom Technologies, the promoters and employees of the company bought out GVFL’s stake.

GVFL had recently closed its Rs. 24 crore-first fund called the GVCF 1990 with substantial profits. The biotech fund, set up with help from Gujarat government, has invested Rs. 2 crores in Celestial Biologicals, an Intas Pharma subsidiary. Celestial Biologicals makes protein drugs by plasma fractionation. In the last 16 years, GVFL has raised five venture capital funds with a combined capital of Rs. 140 crores and has made investments in 58 companies.

Read The Economic Times article.

Avendus Advisors ties up with leading European i-bank goetzpartners

One of the fastest-growing domestic investment banks in India, Avendus Advisors, has entered into a JV with goetzpartners, a leading European corporate finance advisory and management consulting firm. The JV will assist Indian companies for M&A opportunities in Europe.

Avendus is ranked in the top tier of investment banks for M&As, is steadily increasing its share in the M&A business emerging out of India. It has also opened its IPO and corporate debt services divisions in order to provide a one-stop solution to its client’s investment banking needs.

The partnership with goetzpartners will enable Avendus to grow its business faster in countries like Germany, UK, France, Spain and Central and Eastern Europe. The JV would focus on high-growth verticals such as IT & ITES, pharmaceuticals and healthcare, media, automotive and knowledge manufacturing. The deal will help Indian companies wanting to expand in Europe and for European companies wanting to set up a beachhead in India.

Read the complete article in DNA Money.

JP Morgan to set up asset reconstruction business in India

JP Morgan is planning to set up an asset reconstruction company (ARC) in India and is seeking regulatory approval for the same. It has already identified and tied up partnerships for the proposed venture, but declined to name them. The company has already picked up around six distressed assets and is looking out for more.

JP Morgan has invested around $700-800 mn in distressed assets and principal investments in the Asian markets; it is not disclosed as to how much has been invested in the Indian market. The existing Indian assets might not be transferred to the new company immediately

JP Morgan is the second player in the recent months to announce the setting up of an ARC. Anil Ambani’s Reliance Capital has already approached the Reserve Bank of India for approval to promote an ARC, Reliance Asset Reconstruction Company. It has tied up with Corporation Bank, Indian Bank, General Insurance and some foreign players as equity partners. A number of foreign banks and funds have shown interest in the country’s bad loan market. US-based George Soros and US fund Blue Ridge have acquired 26% stake in Reliance Asset Reconstruction, while Barclays is close to picking up a nearly 10% stake in ICICI Bank-promoted ARCIL.

Read the article in Business Standard.