Monday, February 19, 2007

Tata Group forms Tata Realty & Infrastructure with Rs. 4500 crore-fund

The Tata Group has promoted a real estate arm, Tata Realty & Infrastructure, which will invest in infrastructure and real estate projects. The company has a corpus of Rs. 4500 crores. Dinesh Chandiok, the former CEO of Ansal Properties to head Tata Realty, will lead the initiative.

Apart from the Tatas, foreign investors too would be sponsors of the fund. There would be different fund schemes for different projects in phases. International Consultancy firm KPMG has been involved in strategizing the Tatas' real estate business. Tata Realty would look at investing in housing complexes, special economic zones and construction of bridges, ports and airports.

Read more in The Times of India article.

Vornado, Uppal Group to finance Rs. 5000 crore-SEZ

New York-based Vornado Realty Trust, a leading operator of office buildings in the US, and Uppal Group, an Indian real estate player is forming a joint venture to fund a 263 acre-tax-free enclave in Gurgaon. The enclave will require a massive investment of Rs. 5000 crores and house information technology and other exclusive service businesses. Vornado will acquire a 50% stake in the project. The project will be paid for through a number of debt, internal accruals, and equity from both companies.

Read the article in Indianrealtynews.com.

Apollo Hospitals to buy UK-based healthcare unit

Apollo Hospitals is looking at acquiring a UK-based hospital chain estimated to be valued upwards of £1.2 bn, in partnership with private equity players. Apollo will provide its management expertise in such deals.

Apollo Hospitals has already expressed an interest in the British unit of Swedish healthcare company Capio that is owned by private equity groups Apax and Nordic Capital. The private equity owners of Capio were considering the sale of Capio's British unit in response to antitrust concerns.

Apollo has also been looking at other hospitals including The Priory Group, owner of the famous rehabilitation centre for pop stars and fashion models. Priory Healthcare's major shareholder ABN-AMRO has appointed Morgan Stanley to conduct a strategic review.

Read the Moneycontrol.com and Reuters.co.uk articles.

Indian Government to announce an incubation fund for entrepreneurs

The Indian government is proposing to set up an incubation fund which could be announced in the forthcoming Budget. The fund will help graduates from leading technical and management institutes with the seed money to float their ventures. The initiative will be on the lines of private venture capital funds. The fund will provide capital support and interest subsidy for a project. The proposal is being worked out on the basis of recommendations made by a committee under the Planning Commission.

While the government may provide seed money for the fund by way of token provision for the next fiscal, the industry may also be asked to take it forward. The industry may be involved in the identification and implementation of viable projects. Incubatee entrepreneurs may be allowed certain concessions. Besides, contributions to the fund by business houses could earn them deductions from income tax.

A Planning Commission committee on technology innovation and venture capital has suggested that all technical institutions should set up profit-sharing Enterprise Incubation Units to provide advisory services, help in filing patents and protecting commercially valuable intellectual property. The committee also has suggested that these incubation units should get grants of up to 50% of their expenditure and exemption from tax as long as returns are used for further innovation. The committee has also suggested that enterprises being developed at incubation centres should also be categorized a priority sector for extending concessional bank credit.

Read The Economic Times article.

Bank of India forms life insurance JV with Dai-Ichi Mutual Life Insurance and Union Bank

Bank of India has formed a life insurance JV with Japanese company Dai-Ichi Mutual Life Insurance Company and Union Bank of India. Bank of India will hold a 51% stake in the JV, while 26% will be held by Dai-Ichi and 23% by Union Bank of India. The bank is also contemplating a joint venture in Zambia soon. It has also entered into a strategic alliance with Union Bank of India and IDFC for loan syndication, international business, cash management, cheque collection and training.

Article in The Economic Times.

Tata Tea to divest stake in tea plantations to IFC, IL&FS, workers

Tata Tea will divest 80% in its North Indian Plantation Operations (NIPO), and will spin it off to a number of investors and workers. The value of Tata Tea’s 80% stake in NIPO, which consists of 24 estates in West Bengal and Assam, is pegged at Rs. 290 crores, with the entity’s total valuation at Rs. 359 crores. The separation of NIPO will be effective April 1, 2007.

The company will detach itself from plantation management with the divestment. A couple of years ago, Tata Tea handed over the management of its south Indian plantations to its workers. The management of the company will be vested with the workers and Tata Tea will handle the marketing and distribution of NIPO’s produce. World Bank PE arm International Finance Corporation (IFC) and ILFS will each pick up a 20% stake in NIPO. This will be IFC’s first overseas investment in the plantation sector.

Globally Managed Services (GMS), a firm promoted by Mumbai-based Assamese consultant Ranjit Barthakur may pick up 10-15% and the workers of the 24 estates another 15%. The balance will be held by a couple of agri-companies. The agri-companies are being roped in to cash in on Tata Tea’s multi-cropping activities, so that NIPO emerges as an agricultural company with tea as its mainstay.

IFC and ILFS may likely pay nearly Rs. 72 crores each for their acquisition, while GMS will pay Rs. 36-54 crores, depending on the size of its shareholding. The workers will have to shell out Rs. 54 crores; the amount is planned to be raised through loans from the company spread over 5-10 years.

Read more in the Business Standard article.

Spanish firm Gestamp to acquire 37.5% stake in TACO

Spain-based Gestamp Servicios SL will acquire 37.5 % stake in Automotive Stampings & Assemblies Limited, a Tata Group company for a consideration of around Rs. 36.31 crores. Gestamp would acquire up to 37.5% of the paid-up equity share capital of the company from one of the promoters, Tata AutoComp Systems Limited (TACO), and partly through an open offer to the shareholders at a price of Rs 94.96 per share.

Post acquisition, Gestamp along with TACO and Tata Industries Limited would become the promoters of the company. Yes Bank is acting as the financial advisor to Gestamp Servicios. After completion of the sale of shares as above, the company would become a joint venture of TACO and Gestamp. Gestamp and TACO would eventually have a 50:50 equity stake in the company.

Read The Economic Times article.

Indian Tourism Infrastructure acquires Gem Tours for Rs. 400 crores

Mumbai-based Indian Tourism Infrastructure Limited (ITIL) has taken over city-based Gem Tours & Travels Private Limited for a consideration of Rs. 400 crores. Gem Tours will get a 26% stake in ITIL. Gem Tours is acquiring 1000 acres of land in Mandangadh and 1400 acres in Sindhudurg along the Konkan coastline. ITIL plans to establish special economic zones, especially for tourism, at Mandangadh and Sindhudurg. The company proposes to apply for necessary permissions for these proposed SEZs.

ITIL plans to purchase luxury yachts, helicopters and create the necessary tourism infrastructure. The company is planning a time share concept for yachts for the first time in India. Besides, it would start 40 hotels across the country and set up a convention centre, which can accommodate 10,000 people at a time. ITIL plans to recruit 10,000 agents all over India to carry out diverse business interests like packaged tours, air tickets, time share vacations, real estate, hotel chains, chartering of private jets, helicopters, cruise sailing, and yacht hiring. ITIL may enter the capital markets soon.

Read the Business Standard article.

ICICI Bank raises $500 mn via five-year bond

ICICI Bank has raised $500 mn (Rs. 2205 crores) through dollar-denominated five-year bond overseas. The bank will pay a coupon of 62 basis points above the London Inter-Bank Offered Rate (LIBOR). Road shows for the issue were conducted in London, Singapore, Hong Kong, and Paris. Barclays Capital and Deutsche Bank AG were the lead managers to the issue. This is the second time that ICICI Bank is tapping the overseas market in 2007. In January this year, ICICI Bank had raised $2 bn through a bond issue in three tranches.

Read the article in Business Standard.

GE’s India lighting brand CEMA bought by US-based Saratoga Partners

Saratoga Partners, a New York-based buyout investment firm, is buying out GE’s consumer lighting business in India, including the CEMA brand and the manufacturing facility in Gujarat. The financial details of the transaction are not available. Saratoga Lighting Holdings has also entered into an agreement for using the GE brand in the domestic consumer lighting business. CEMA and GE brands together account for over 2% of the domestic consumer lighting market estimated at Rs. 2500 crores.

CEMA Electric Lighting Products India Private Limited, the new legal entity formed during the acquisition, will function as a subsidiary of Saratoga Lighting Holdings. Saratoga Lighting is a portfolio company of Saratoga Partners, a US-based private equity firm that manages a group of investment limited partnerships. It focuses on the global lighting industry and has operations in several countries including USA, China and India.

Read The Economic Times article.