Thursday, February 15, 2007

Citigroup, Blackstone, IDFC, IIFC tie-up for $5bn India Infrastructure Financing Initiative fund

US-based financial services giant Citi and private equity major Blackstone have joined hands with infrastructure finance companies IDFC and India Infrastructure Finance Company Limited (IIFC) to set up a $5 bn (Rs. 22,000 crores) fund to finance the India Infrastructure Financing Initiative. According to government estimates, infrastructure development in India would require $320 bn in the next five years. The India Infrastructure Financing Initiative will have equity and quasi-equity of $1 bn and $3 bn long-term debt. The equity financing programme will be managed by IDFC and the fund will be invested in greenfield, brownfield and operating projects. Debt financing will be channeled through IIFC, in several tranches over the next three years for projects appraised by IDFC, certain banks and financial intermediaries. IDFC, Citi and Blackstone will together invest $250 mn while the balance is expected to come from reputable international investors as well as select domestic institutional investors, including IIFC.

Read the article in Business Standard and The Economic Times.

Mitsubishi UFJ Securities opens office in India

Reuters.com reports that Mitsubishi UFJ Securities, the investment banking and brokerage arm of Japan's Mitsubishi UFJ Financial Group, has set up its Mumbai office in India to offer corporate finance and capital market-related advisory to Indian corporates. Mitsubishi UFJ will focus on areas such as mergers and acquisitions, corporate finance, asset management and fund raising in Japanese capital markets for Indian companies. Lat year, Mitsubishi UFJ Securities had signed a Memorandum of Understanding with ICICI Bank to explore a non-exclusive alliance. Mitsubishi UFJ Securities also offers the PCA India Infrastructure Equity Fund in Japan, which has funds of $516 mn.

Singapore-based real estate firm Ascendas to raise $1 bn fund for India & China

Singapore office and industrial parks landlord Ascendas is in talks with potential private equity investors to raise a combined $1 bn for two private-equity funds it is setting up for its expansion in India and China. The initial size of the India investment fund, which will focus on developing land into industrial parks, will be $500 mn. Ascendas has assets valued at $640 mn in its India properties representing about 3.6 mn square feet. Ascendas already manages an office real estate investment fund in India fund that invests in information technology (IT) parks. General Electric (GE) Commercial Finance Real Estate, a unit of conglomerate GE, is one of the investors in the India fund. Ascendas is in talks with banks for a Singapore listing of the first India fund.

Article in The Business Times, Singapore.

Gitanjali Gems acquires second US-based jewellery company Tri-Star Worldwide

Diamond and jewellery manufacturer and retailer Gitanjali Gems has purchased a majority interest in New York-based Tri-Star Worldwide proprietor and marketer of the Canadia branded diamonds and diamond jewellery.

Tri-Star is also a BHP Billiton direct customer and a licensee of CANADMARK. Along with Tri-Star founding partner Beny Sofer & Sons, Gitanjali plans to expand Tri-Star and the Canadia brand. The new partnership will allow Canadia Diamonds to market to leading jewelers of the world, an exclusive network of top US independent jewelers, and to the existing Gitanjali customer base of 1200 independent retail jewelers. Tri-Star Worldwide was founded by Beny Sofer & Sons in 2002. The company started out by selling branded loose diamonds from the recently discovered rich diamond resources in the north-west territories of Canada and was one of the first to offer country of origin certification, along with comprehensive marketing support.

DTC site-holder Gitanjali Gems is based in Mumbai owns the brands Nakshatra, Asmi, Gili, D’Damas, Sangini, Collection G, Gold Expressions and Vivaha Gold. The company is also playing a key role in developing two SEZs, including one across 200 acres in Hyderabad, one of the largest of its kind for jewellery.

Article in The Economic Times.
Related Post: Gitanjali acquires US-based Samuels

JP Morgan, AIG to launch mutual funds in India

JP Morgan Asset Management, a manager of over $1.013 trn assets across the world, and the AIG group that manages $670 bn will be launching their mutual funds for local investors in India. Both have received the Securities and Exchange Board of India (SEBI) approval for opening shops in India. Fidelity Investment in early 2005 was the last big global player that entered the Indian mutual fund space. Aegon Global, Dawnay Day, Nikko Asset Management, a JV between Ambit Capital and Nikko AMC of Japan, Bharti-AXA, another JV between Bharti Enterprises and asset management firm AXA of France are some of the other players wanting to float funds in India. Currently, the domestic mutual fund industry has 30 players managing Rs. 339,000 crores of assets. JP Morgan plans to start the domestic business with an initial net worth of Rs. 45 crores, AIG has earmarked $20 mn. The Indian regulator requires asset management companies to have a minimum net worth of Rs. 10 crores.

JP Morgan is headed by Krishnamurthy Vijayan, who was heading the JM Financial Mutual Fund for five years. Nandkumar Surti, also of JM Financial, will be heading JP Morgan’s fixed income business in India. Similarly, Saurabh Sonthalia, who heads AIG Global Investment Group, was earlier with DSP Merrill Lynch Mutual Fund. On the investment management side, Tushar Pradhan, who was earlier with HDFC Mutual Fund, will be the Chief Investment Officer, Equities at AIG.

Read the article on livemint.com.

Investment banking fees in India touch $200 mn from Jan-Feb 2007

Investment banking houses in India have generated a deal fee of around $200 mn in the months of January and February in 2007, as compared to $150 mn for the total year of 2006. Total fees earned during 2006, including equity and debt capital for India, was around $500 mn. Of the $500 million, equity capital markets could have contributed around 60% while around 10% could be the debt capital market fees. The M&A transactions have contributed the remaining $150 mn. Equity and capital market deals entail issuance of shares and bonds by companies to raise money.

For multi-billion deals above $10 bn, advisory fees range from 0.1% to 0.2% of the deal size or anywhere between $10-25 mn. Global i-banks charge a minimum of $1 mn. For small-sized deals, the fee could be around 3.5% of the deal size. With corporates looking at big-ticket deals which require large syndication ability of banks, a commitment fee is also now being levied. This would ensure a minimum payment to i-banks from the deal, even if the corporate eventually loses out in the bidding battle. As deals turn complex, i-banks have also started levying ‘drop dead’ fee or non-refundable fee in case of failed transactions. This is simply to compensate for their time and effort. The bigger chunk of the fee collected by i-banks is garnered from financing and structuring the deal. This fee could range anywhere between 0.50% and 1.25% of the deal size. Fees are higher for equity transactions.

In most of the recently announced deals, European banks have been the lead advisors as Europe has been the destination for the maximum number of acquisitions by Indian corporates. In case of Tata Steel, it was ABN-AMRO, Deutsche Bank and NM Rothschild, while in case of Vodafone and Hindalco, UBS was the sole advisor.

Read more in The Economic Times article.

Clariant, DIC, Ciba race for Asahi Songwon stake

Major foreign chemical companies are vying for a stake in Ahmedabad-based pigment manufacturer Asahi Songwon Colors Limited (ASCL). Specialty chemical majors Clariant, DIC and Ciba are said to be holding talks with ASCL for a stake sale. Clariant already holds a 9.39% stake in Asahi. A stake in ASCL would give the buyer access to cost-effective and reliable supplies of raw materials.

ASCL soon will be raising Rs. 44 crores from its initial public offering to fund the expansion project at its Vadodara plant at a cost of Rs. 52 crores. The company has already received a term loan of Rs. 8 crores from the State Bank of India. ASCL’s turnover for FY05-06 was Rs. 24.5 crores and net profit at Rs. 2.6 crores. Unaudited results for the six months of FY 06-07 show a turnover of Rs. 31 crores and the net profit at Rs. 4.6 crores.

Read more in the Business Standard article.

Amitabh Chakraborty joins Religare Securities as president of the equity business

Amitabh Chakraborty, who was heading the research team at BRICS Securities, has now joined Religare Securities Limited, a Ranbaxy group company, as President, Equity Business. He will be based out of Mumbai.

Mr. Chakraborty has been mandated for setting up the equity research team and spearheading the equity related initiatives to drive the high profile equity broking business at Religare.

Mr. Chakraborty was earlier with BRICS Securities. Prior to BRICS, he was heading the research team at Kotak Securities, from where he was sacked for an undisclosed internal code of violation.

Read the press release on Moneycontrol.com.