The differences between the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have stalled foreign venture capital real estate funds from setting up shop in India. The RBI is insisting that funds floated by foreign venture capital investors (FVCIs) be brought on a par with real estate funds coming through the foreign direct investment (FDI) route for regulatory purposes.
At present, the FDI in the real estate sector is permitted through the automatic route and does not require the Foreign Investment Promotion Board (FIPB) nod. But fund houses have to adhere to certain project and financial restrictions.
The rules governing venture financing are liberal and allow funds to park money and withdraw it at their will. But financial conditions governing FDI rules require these funds to stay here for a minimum three years. Repatriation of any of the initial investment by funds before the stipulated period requires FIPB approval. The project conditions governing FDI rules prohibit sale of undeveloped land – a developer may purchase undeveloped land but must develop it before selling it. Also, it states that at least 50% of the project must be completed within five years from the date of obtaining statutory clearances.
Nearly 20 FVCI applications to invest in the Indian real estate sector are pending with the RBI, but have been approved by SEBI. Investments in the pipeline are estimated to be worth around $2 bn.
Article in The Financial Express.
Monday, February 12, 2007
HCC to raise Rs. 5000 crores for real estate business
Hindustan Construction Company (HCC), a construction company is planning to raise Rs. 5000 crores for investing in HCC Real Estate Limited, its real estate arm through a combination of private equity participation, FCCB issue and a possible IPO. The company is also mulling setting up its own real estate fund for India.
The funds will be used to expand the company’s real estate business in India, which will include developing a land bank of about 5000 acres, building IT parks and other commercial spaces and large townships.
HCC has been traditionally into mega power projects and tunnels. It has recently started giving more thrust to its real estate, roads and infrastructure projects. Over the years, the company’s margins have been declining due to the dwindling share of power in its order book, and rising cost of raw materials. The company at present has six hydro power projects in its portfolio. Real estate, on the other hand, presents an exciting opportunity, with higher purchasing power and an economy growing at a fast pace.
The company will focus on developing townships outside Mumbai and start developing IT parks in Mumbai, Navi Mumbai and Thane, apart from the ongoing project to develop 2 mn sq. ft. of IT park in Vikhroli. With an investment of Rs. 500 crores in developing the IT Park, the company is expecting revenues worth Rs. 100 crores a year. Within the city, the company will also undertake slum redevelopment projects covering an area of 4 mn sq. ft. in Maharashtra in the Mumbai Metropolitan region.
Read The Financial Express article.
The funds will be used to expand the company’s real estate business in India, which will include developing a land bank of about 5000 acres, building IT parks and other commercial spaces and large townships.
HCC has been traditionally into mega power projects and tunnels. It has recently started giving more thrust to its real estate, roads and infrastructure projects. Over the years, the company’s margins have been declining due to the dwindling share of power in its order book, and rising cost of raw materials. The company at present has six hydro power projects in its portfolio. Real estate, on the other hand, presents an exciting opportunity, with higher purchasing power and an economy growing at a fast pace.
The company will focus on developing townships outside Mumbai and start developing IT parks in Mumbai, Navi Mumbai and Thane, apart from the ongoing project to develop 2 mn sq. ft. of IT park in Vikhroli. With an investment of Rs. 500 crores in developing the IT Park, the company is expecting revenues worth Rs. 100 crores a year. Within the city, the company will also undertake slum redevelopment projects covering an area of 4 mn sq. ft. in Maharashtra in the Mumbai Metropolitan region.
Read The Financial Express article.
Vodafone buys Hutchinson-Essar for $19.3 bn
UK-based telecom giant Vodafone has made the winning bid for the 67% stake in Hutchison Essar (HEL) at an EV of $19.3 bn (Rs. 86,000 crores). This is the largest acquisition in India. Videocon has approached Essar to remain invested in Hutch with its 33% stake as the Indian partner.
Vodafone has also made similar offers to Analjit Singh and Asim Ghosh, the other existing shareholders and retain their combined stake of 12.26%. Vodafone has paid a price of around $794 per subscriber to clinch the deal. The valuation is in line with the $33 bn market capitalization of Bharti Airtel, the country’s largest private mobile services operator, and the $22 bn market capitalization of Reliance Communications, the second largest operator.
The acquisition will give Vodafone, which has over 200 mn subscribers globally, a strong presence in the fastest growing market for mobile services: Hutchison Essar has close to 24 mn customers.
In a related development, Vodafone has sold its 5.6% direct stake in Bharti Airtel to promoter Sunil Mittal for $1.6 bn. The deal was on a deferred payment basis. Vodafone will continue to hold an indirect 4.4% stake in the company, as a financial investor and will not have any representation on Bharti Airtel's board nor any management rights.
Read The Economic Times and Business Standard articles.
Vodafone has also made similar offers to Analjit Singh and Asim Ghosh, the other existing shareholders and retain their combined stake of 12.26%. Vodafone has paid a price of around $794 per subscriber to clinch the deal. The valuation is in line with the $33 bn market capitalization of Bharti Airtel, the country’s largest private mobile services operator, and the $22 bn market capitalization of Reliance Communications, the second largest operator.
The acquisition will give Vodafone, which has over 200 mn subscribers globally, a strong presence in the fastest growing market for mobile services: Hutchison Essar has close to 24 mn customers.
In a related development, Vodafone has sold its 5.6% direct stake in Bharti Airtel to promoter Sunil Mittal for $1.6 bn. The deal was on a deferred payment basis. Vodafone will continue to hold an indirect 4.4% stake in the company, as a financial investor and will not have any representation on Bharti Airtel's board nor any management rights.
Read The Economic Times and Business Standard articles.
The Tata Group may hive off water business
The Tata Group may spin off its bottled water business into a separate company. The group’s bottled water business currently includes a 30% stake in US’ third largest bottled water company Energy Brands, Inc. (Glaceau). The group is also believed to be in talks to acquire Dadi Balsara’s Himalayan water brand. Energy Brands is an associate company of the group. Tata Tea holds a 25% stake in it, while the remaining 5% is held by a subsidiary of Tata Sons, the Tata Group’s holding company. The ideal combination is to develop a complete spread of offerings, from tea and coffee to water, under a single company, to cover the entire spectrum of beverage consumption.
Article in Business Standard.
Article in Business Standard.
Govt contemplates Rs. 100 crore-venture fund for IT SMEs
The Ministry of Communications and Information Technology is considering creating a national venture capital fund to support small and medium enterprises in the IT segment. The fund is to be established by Software Technology Parks of India (STPI) and the Ministry has asked for a grant of Rs. 100 crores for the same. The VC fund would also mobilize resources from state governments and financial institutions.
The proposal has been sent to the Planning Commission for consideration. The initial corpus of the fund will be determined after the partners of the fund are finalized. The proposal comes as a follow up of the success of the Rs. 15 crore-Karnataka Information Technology Venture Capital Fund (KITVEN) created by the Small Industries Development Bank of India (SIDBI) and the Karnataka state government.
Earlier, the Ministry had contributed to the National Venture Fund for Software and IT Industry (NFSIT) set up by the Small Industries Development Bank of India (SIDBI) in 1999. The fund is likely to operate till 2009. NFSIT has invested in 30 small and medium IT enabled and software services and products companies.
Read The Economic Times article.
The proposal has been sent to the Planning Commission for consideration. The initial corpus of the fund will be determined after the partners of the fund are finalized. The proposal comes as a follow up of the success of the Rs. 15 crore-Karnataka Information Technology Venture Capital Fund (KITVEN) created by the Small Industries Development Bank of India (SIDBI) and the Karnataka state government.
Earlier, the Ministry had contributed to the National Venture Fund for Software and IT Industry (NFSIT) set up by the Small Industries Development Bank of India (SIDBI) in 1999. The fund is likely to operate till 2009. NFSIT has invested in 30 small and medium IT enabled and software services and products companies.
Read The Economic Times article.
Glenmark to acquire a Central European pharma company for Rs. 100 crores
Glenmark Pharmaceuticals is planning to acquire a front-end pharmaceutical company for about Rs. 100 crores to mark its foray in the European market. The target company is in Central Europe with a strong marketing force and some approved products and the deal is likely to be through before the end of March. The name of the company has not been disclosed. As of now, Glenmark just has an office in the UK for business development.
Read The Economic Times article.
Read The Economic Times article.
Hindalco Industries buys US-based metal major Novelis for $6 bn
Hindalco Industries, the AV Birla Group’s flagship company and India’s largest aluminium producer, will acquire US-based aluminium company Novelis for $6 bn. The deal envisages a payment of $44.93 per share, which is 16.5% more than its last closing prices to Novelis shareholders amounting to a total of $3.5 bn. In addition, Hindalco will take on its books Novelis’ debt of $2.4 billion. The acquisition would help Hindalco get access to large customers like Coca-Cola, Ford, General Motors, Eastman Kodak and Thyssenkrupp. The acquisition is expected to be completed by the second quarter of 2007. The Novelis board has recommended the offer to its shareholders, largely financial institutions. The Novelis management will remain unchanged after the acquisition.
Novelis was spun off from Alcan, Inc. to meet anti-trust concerns after acquiring France’s Pechiney SA for about $4 bn in February 2004. it controls 19% of the world’s flat-rolled aluminium production. It is also the global leader in recycling of aluminium cans. The company operates in 11 countries and has 12,500 employees.
To finance the deal, Hindalco will contribute $450 mn from its treasury operations, while a closely held group company, Essel Mining & Industries, will invest another $300 mn. UBS is the financial advisor to Hindalco for the acquisition.
Novelis has about $3.2 bn in debt and loans outstanding. In November 2006, it reported a loss of $102 mn, or $1.38 a share, in the third quarter. In 2005, the company had reported net sales of $8.4 bn but incurred a loss due to contractual obligations. It is expected to turn profitable in 2010.
Read the article in Business Standard.
Novelis was spun off from Alcan, Inc. to meet anti-trust concerns after acquiring France’s Pechiney SA for about $4 bn in February 2004. it controls 19% of the world’s flat-rolled aluminium production. It is also the global leader in recycling of aluminium cans. The company operates in 11 countries and has 12,500 employees.
To finance the deal, Hindalco will contribute $450 mn from its treasury operations, while a closely held group company, Essel Mining & Industries, will invest another $300 mn. UBS is the financial advisor to Hindalco for the acquisition.
Novelis has about $3.2 bn in debt and loans outstanding. In November 2006, it reported a loss of $102 mn, or $1.38 a share, in the third quarter. In 2005, the company had reported net sales of $8.4 bn but incurred a loss due to contractual obligations. It is expected to turn profitable in 2010.
Read the article in Business Standard.
Anchor Electricals in talks to sell 49% stake to Matsushita Group
Anchor Electricals is in advanced talks with National Matsushita, part of the $69 bn-Matsushita Group of Japan. Anchor is the Indian electrical market leader in switches and accessories. National is the worldwide leader in the development and manufacture of electronic products for consumer, business and industrial needs. Anchor’s senior management is in negotiations with National to divest a 49% stake in Anchor for Rs. 2000 crores.
Matsushita is negotiating for a controlling stake, which the promoters of Anchor, the Shah family, are unwilling to give. The Japanese major is looking at buying a 70% stake in the company, giving them direct access to the Indian electricals market. Anchor enjoys a market share of close to 60% in India. Prior to talks with National Matsushita, Anchor was also speaking to Schneider Electric India and Siemens. However, the talks fell through due to valuation and management control differences.
The Anchor acquisition would give National Matsushita a strong foothold in the overall switches, sockets and miniature circuit breakers (MCB) industry pegged at Rs. 2000 crores. In the Rs. 1000 crore-switches-and-sockets market, Anchor Electricals is the market leader with 30% share followed by MK Electric and Havell’s with 20% share each.
Read The Economic Times article.
Matsushita is negotiating for a controlling stake, which the promoters of Anchor, the Shah family, are unwilling to give. The Japanese major is looking at buying a 70% stake in the company, giving them direct access to the Indian electricals market. Anchor enjoys a market share of close to 60% in India. Prior to talks with National Matsushita, Anchor was also speaking to Schneider Electric India and Siemens. However, the talks fell through due to valuation and management control differences.
The Anchor acquisition would give National Matsushita a strong foothold in the overall switches, sockets and miniature circuit breakers (MCB) industry pegged at Rs. 2000 crores. In the Rs. 1000 crore-switches-and-sockets market, Anchor Electricals is the market leader with 30% share followed by MK Electric and Havell’s with 20% share each.
Read The Economic Times article.
Suzlon Energy bids $1.3 bn for German company REpower
Suzlon Energy, India’s largest wind power company is in talks to acquire Germany’s REpower. Suzlon has made a public bid of €126 per share for REpower, in a counter-bid to Paris-based nuclear major Areva’s bid of €105 per share. Suzlon’s bid values the deal size at about $1.3 bn.
The bidding process is likely to continue for 4-6 weeks. Suzlon would fund the acquisition through a mix of debt and internal accruals. Areva is the No. 1 maker of nuclear reactors and has offered €105 per share for 70% of the German company. Suzlon’s bid is being made in partnership with Martifer, a unit of Portugal-based Mota-Engil SGPS. Martifer owns a quarter of REpower.
REpower is Germany’s third-largest maker of wind-power equipment after Vestas Wind Systems and Enercon. It reported a 9-month profit of €1 mn compared to a year-earlier loss of €8.3 mn. Martifer has a joint venture with REpower in Portugal. Suzlon and Martifer have signed a legally binding agreement, which sets out the terms for this offer. The offer will be made through BidCo, in which Suzlon holds 75% and Martifer 25% of the capital. Suzlon will finance the offer and Martifer will support it. Suzlon will seek the support of the REpower management along with Martifer for the offer and has claimed a strong interest in working with REpower’s existing management in the future.
Suzlon would retain Hamburg as the headquarters of REpower, and would create 100-200 highly qualified R&D jobs in Germany. REpower has operations in France and elsewhere in Europe, and is planning expansions in China, India and North America. Suzlon Energy is the market leader in Asia and the world’s fifth largest wind turbine manufacturer by annual installations. It is currently on a mega-expansion drive in the international market. It bought Belgium-based Hansen for $565 mn in March 2006. Suzlon is being advised on the acquisition by Yes Bank and ABN-AMRO.
Read the Business Standard and The Economic Times articles.
The bidding process is likely to continue for 4-6 weeks. Suzlon would fund the acquisition through a mix of debt and internal accruals. Areva is the No. 1 maker of nuclear reactors and has offered €105 per share for 70% of the German company. Suzlon’s bid is being made in partnership with Martifer, a unit of Portugal-based Mota-Engil SGPS. Martifer owns a quarter of REpower.
REpower is Germany’s third-largest maker of wind-power equipment after Vestas Wind Systems and Enercon. It reported a 9-month profit of €1 mn compared to a year-earlier loss of €8.3 mn. Martifer has a joint venture with REpower in Portugal. Suzlon and Martifer have signed a legally binding agreement, which sets out the terms for this offer. The offer will be made through BidCo, in which Suzlon holds 75% and Martifer 25% of the capital. Suzlon will finance the offer and Martifer will support it. Suzlon will seek the support of the REpower management along with Martifer for the offer and has claimed a strong interest in working with REpower’s existing management in the future.
Suzlon would retain Hamburg as the headquarters of REpower, and would create 100-200 highly qualified R&D jobs in Germany. REpower has operations in France and elsewhere in Europe, and is planning expansions in China, India and North America. Suzlon Energy is the market leader in Asia and the world’s fifth largest wind turbine manufacturer by annual installations. It is currently on a mega-expansion drive in the international market. It bought Belgium-based Hansen for $565 mn in March 2006. Suzlon is being advised on the acquisition by Yes Bank and ABN-AMRO.
Read the Business Standard and The Economic Times articles.
HDFC makes a formal offer to buy out Chubb in non-life insurance JV
HDFC has formally offered to buy out its foreign partner Chubb from their non-life insurance JV HDFC Chubb General Insurance. HDFC holds 74% equity stake in the company, while Chubb has the remaining 26%. As of yet, no sale agreement has been reached due to price considerations. The transaction would also require regulatory clearance.
HDFC may rope in another partner by selling the stake it buys from Chubb at a premium. Though it has not found yet one, it is learnt that Ergo, the direct insurance arm of reinsurance giant Munich Re, has shown interest in tying up with HDFC.
Chubb and HDFC have been disagreeing on business strategy: HDFC wanted to adopt a more aggressive stance, keeping with its market leadership position in other group business, whereas, Chubb takes a very long-term view worldwide, waiting as long as six years in some markets before moving into a growth mode.
Read more in The Economic Times article.
HDFC may rope in another partner by selling the stake it buys from Chubb at a premium. Though it has not found yet one, it is learnt that Ergo, the direct insurance arm of reinsurance giant Munich Re, has shown interest in tying up with HDFC.
Chubb and HDFC have been disagreeing on business strategy: HDFC wanted to adopt a more aggressive stance, keeping with its market leadership position in other group business, whereas, Chubb takes a very long-term view worldwide, waiting as long as six years in some markets before moving into a growth mode.
Read more in The Economic Times article.
Havell’s may buy UK lighting company for Rs. 1000 crores
Electrical and lighting products firm Havell’s India is close to buying a UK-based lighting products company for Rs. 1100 crores. The British company has revenues of more than $400 mn and has manufacturing assets in Latin America. This will be the largest overseas acquisition by an Indian company in the electrical products space. The deal will include the brand and other assets of the UK company; the name of the company has not been disclosed. Havell’s would raise up to Rs. 675 crores through qualified institutional placement. Some of the funds raised would be used, along with debt, to finance the acquisition. This will be Havell’s first overseas acquisition. The acquisition will more than double Havell’s size to a Rs. 3000 crore-company and would give it significant presence outside India.
Read the article in The Economic Times.
Read the article in The Economic Times.
ChrysCapital sells Global Vantedge BPO to Essar-owned Aegis Communications
ChrysCapital has sold one of its portfolio companies, Global Vantedge, a credit and receivables management BPO to the Essar-owned Aegis Communications for around Rs. 100 crores. ChrysCapital had set up the Global Vantedge in 2001 and owned 75% in the firm. Global Vantedge is headquartered in the US and employs around 1500 people in two centres in Gurgaon. It specializes in credit and receivables management and its customers include credit card, telecom and auto companies, mostly in the US and UK.
Aegis has a turnover of around $180 mn and employs over 9000 people in India and USA, operating from 24 centres and 18 cities around the world. It offers multi-channel customer relationship management services including customer acquisition and customer services, back office services, as well as value-added services. These services are offered across verticals such as telecom, retail, financial services, energy, education and logistics. The credit and receivable management services of Global Vantedge will strengthen Aegis’ customer relationship management portfolio. Essar and Deutsche Bank had bought 80% share in Texas-based Aegis Communications for $28 mn in November 2003. Subsequently, the Essar Group increased its stake in the company.
Read The Economic Times article.
Aegis has a turnover of around $180 mn and employs over 9000 people in India and USA, operating from 24 centres and 18 cities around the world. It offers multi-channel customer relationship management services including customer acquisition and customer services, back office services, as well as value-added services. These services are offered across verticals such as telecom, retail, financial services, energy, education and logistics. The credit and receivable management services of Global Vantedge will strengthen Aegis’ customer relationship management portfolio. Essar and Deutsche Bank had bought 80% share in Texas-based Aegis Communications for $28 mn in November 2003. Subsequently, the Essar Group increased its stake in the company.
Read The Economic Times article.
Subscribe to:
Posts (Atom)