Thursday, February 22, 2007

Infosys eyes UK-based SmartStream Technologies; deal valued at £100 mn

Indian IT behemoth Infosys may acquire UK-based SmartStream Technologies, a solutions provider for financial services sector, for over £100 mn. Headquartered in London, SmartStream has direct operations across Europe, New York, Sydney, Beijing, Singapore and Mumbai.

SmartStream has more than 70 of the world’s top 100 banks as its clients and has 38% share of the transaction lifecycle management solutions market. The acquisition of SmartStream will be Infosys’ second major one, after it acquired an Australian IT firm for $22.9 mn in 2003.

Buyout fund TA Associates holds 60% stake in SmartStream. TA acquired the company around 18 months back after the exit of 3i, which supported a management buyout in 2000.

Read more in The Economic Times article.

Changi Airport forms airport modernization JV with Tata Realty & Infrastructure

Singapore’s Changi Airport International (CAI) is entering into a joint venture company with Tata Realty & Infrastructure, a subsidiary of the Tata group, to pursue airport modernization projects in India. The two partners have signed a memorandum of understanding (MoU) to set a joint venture company in which Tata Realty will hold a majority 51% stake and CAI 49%, to invest in, develop and manage Indian airports.

The scope of the venture could include bidding for the impending modernization and operations of the Chennai and Kolkata airports, India’s third and fifth busiest airports respectively, which the government wants to develop as alternative hubs to Mumbai and Delhi. The venture could also extend to investments in some of the 35 smaller airports, as well as the proposed Rs. 4235 crore-Navi Mumbai airport project. Regarding Chennai and Kolkata airports, the government is expected to make a formal announcement of a privatization programme. Chennai handled 6.77 mn passengers and Kolkata 4.4 mn in 2006. The Navi Mumbai airport is expected to absorb 10 mn passengers a year in 2013, its first year of operation, and 40 mn passengers a year by 2030.

CAI is wholly owned by the Civil Aviation Authority of Singapore. It had earlier teamed up with telecom giant Bharti for the Mumbai airport modernization project but later pulled out citing lack of confidence in meeting tender conditions. Besides the Tata group, CAI is exploring the option of teaming up with hotel major Leela Group to develop Kannur airport in north Kerala. Though it had withdrawn from the Mumbai airport project, CAI has teamed up with GVK Group, the present developers of the Mumbai airport, to implement a 100-day improvement programme and assist them in reviewing their master plan.

Read the Business Standard article.
Related Post: Tata Group forms Tata Realty & Infrastructure with Rs. 4500 crore-fund

Bharti Enterprises to engage in PE activity

Bharti Enterprises, the parent company of Airtel, plans to get into the investments space by being strategic partners in new businesses. The company has roped in Mr. Prakash Nene, a senior ICICI Ventures executive as corporate director, investments and new opportunities to spearhead the initiative with the mandate to identify new business opportunities where Bharti Enterprises can invest. He would report directly to Mr. Sunil Mittal.

Bharti Enterprises is the parent company of the Sunil Mittal group with investments in Bharti Airtel, financial services venture Bharti-AXA and fresh food and vegetables distribution business Field Fresh. The group is making a foray into the retail business through a wholly-owned subsidiary Bharti Retail.

Bharti Enterprises has surplus cash and is looking at new investment opportunities to deploy these funds in an optimal manner. The company is clear that it does not want to be a mere financial investor and wants to invest with a long-term horizon and help the investee company or business in creating value. It is possible that the company may also incubate new businesses.

Bharti Enterprises will also look at investments in mutual funds and sundry other financial instruments. Bharti Enterprises move to enter the strategic investment space is in line with other business families and high net worth individuals who have branched out into private equity. Prominent examples include Azim Premji, who has started Azim Premji Investments, and Dabur’s Burman family who have made investments in their personal capacity in companies such as Punjab Tractors and Vishal Mega Mart. Bharti Enterprises will differentiate itself from others in that it will make direct investments as a company and play a far more active role.

Read more in The Economic Times article.

Sony Pictures company buys 51% in Chennai-based animation firm FrameFlow

Chennai-based FrameFlow, a three year-old animation and visual effects company has sold 51% stake to US-based Sony Pictures Imageworks (SPI) for a reported $5 mn. FrameFlow has been renamed as Imageworks India. Founded in the year 2003, FrameFlow has a state-of-art production facility in Chennai employing 80 people delivering solutions to the visual effects industry. SPI will invest in infrastructure and proprietary technology software, besides offering high-end training, and expect to generate revenues of $20 mn over the next three years.

Read The Economic Times article

Shell buys out BPCL’s 49% stake in Bharat Shell

Shell Overseas Investments has bought out Bharat Petroleum Corporation Limited’s (BPCL) 49% stake in Bharat Shell. Both companies want to focus on their own specific lubricants brands in the growing lubricants market in India. The financial details of the deal have not been disclosed. Bharat Shell was a 51:49 JV between BPCL and Shell Overseas and was incorporated in 1993 for marketing Shell’s lubricants in the country. The joint venture has an authorized capital of Rs. 250 crores and a paid-up capital of Rs. 200 crores. Bharat Shell also markets LPG to both domestic and industrial consumers.

Read more in the Business Standard article.

HDIL in talks with PE funds for pre-IPO stake sale

Mumbai-based real estate developer Housing Development and Infrastructure Limited (HDIL) is in talks with private equity and real estate funds such as ICICI Ventures, Kotak Realty and HDFC Realty for selling a 4% stake for about Rs. 550 crores. It is quite possible that these three firms together can subscribe to the pre-IPO portion.

HDIL is in the process of diluting 4% stake in the company as part of its pre-IPO placement. It plans to do an IPO to raise over Rs. 2000 crores some time soon. HDIL has developed approximately 72.8 mn square feet of saleable area and 5.5 mn square feet of rehabilitation housing area so far. The company is in the process of expanding its property development activities to other parts of India.

Article in The Economic Times.

LN Mittal to buy 49% stake in HPCL’s Bathinda refinery for Rs. 3300 crores

Indian-born British steel magnate LN Mittal will pick up a 49% stake in the Rs. 16,700 crore-greenfield refinery project at Bathinda in Punjab with an investment of around Rs. 3300 crores. The refinery is being set up by Hindustan Petroleum Corporation Limited (HPCL). This is the first foreign direct investment in the refinery sector. HPCL will sign a JV with Luxembourg-based Mittal Investments for the 9 mmtpa Guru Gobind Singh Refinery project and allied facilities at Bathinda. Mittal Investments is wholly owned by the Mittal family and is registered in Luxembourg. It holds 38% in Mittal Steel Company.

Earlier, on two occasions, HPCL failed to forge alliances with British Petroleum of the UK and Saudi Aramco of Saudi Arabia. HPCL and Mittal Investments will hold 49% equity each in the project, while the balance 2% will be held by financial institutions. It is expected that a formal agreement between the two partners will be signed during the proposed visit of Mr. Mittal on March 2. Public sector Oil India (OIL) may also join the project at a later date and may get a 10-15% stake in the project out of HPCL’s 49%. The HPCL board had cleared the JV proposal on Monday. The project is expected to be commissioned by 2010.

Read The Economic Times article.

Canaan Partners to invest in 3 companies; deals to close by year-end

Canaan Partners, a US-based early-stage venture capital firm, which was last year in the news for its $2.5 mn investment in online matrimonial portal BharatMatrimony.com, has short-listed three more such deals. These are likely to get funding by the end of the year. The company is also exploring options to bring an Indian adaptation of Shutterfly, a US-based photograph printing and publishing portal.

Canaan Partners is looking at investing $2-5 mn in the first phase and around $15 mn in the next stage. The companies identified are all technology-based; however, it is also looking at start-ups in the services and telecom space.

The VC firm has an office at Gurgaon and is planning to set up two more offices this year in Mumbai and Bangalore. Canaan Partners has a cumulative capital investment capacity of $450 mn. In 2000, the venture capital (VC) firm had invested in Aztec Software, a software development firm, and in e4e, a diversified business-outsourcing firm.

Read the Business Standard article.

New Enterprise Associates buys 40% in HFCL Infotel for Rs. 375 crores

US-based private equity firm New Enterprise Associates (NEA) has acquired a 40% stake in HFCL Infotel for Rs. 375 crores. The deal has been signed and the transaction is likely to close in the next few weeks. The deal values HFCL Infotel at around Rs. 950 crores. HFCL Infotel offers CDMA-based wire-line, fixed wireless and mobile services in Punjab.

The Silicon Valley-based NEA has over $8.5 bn under management. It is one of the oldest and largest venture firms in the world. NEA had been scouting for buys in India and has opened an office in Bangalore and more recently, in Mumbai (read press release). In February 2006, it created an Indian arm, NEA-IndoUS Ventures with plans to invest $150-200 mn in India.

HFCL Infotel was being eyed by several PE funds wanting a slice of India's telecom action. It is a loss-making unit of Himachal Futuristic Communications Limited (HFCL) incurred a loss of Rs. 25.6 crores during the quarter ended September 2006 and had accumulated losses of Rs. 70.25 crores, resulting in negative net worth of Rs. 8.54 crores.

The promoters now own 62% in HFCL Infotel, private corporate bodies hold just over 30% and 2.51% is held by the public. The private component is held between seven entities -- Masita Capital Services, August Trading, IDBI (with the largest share with a little over 12% stake), Oriental Bank of Commerce, MKJ Enterprises, Mantu Housing Projects and Micro Management.

Read The Economic Times article.
New Enterprise Associates to buy 50% stake in HFCL Infotel

Teledata Informatics buys majority stake in eSys Technologies for $105 mn

Teledata Informatics, a Chennai-based IT company has acquired a strategic majority stake in eSys Technologies for $105 mn. The promoter of eSys, Vikas Goel, would continue to hold 49%, in the company. eSys Technologies is a Singapore-based distributor of hard drives and PC manufacturer. eSys is a $2 bn-privately-held firm started by an Indian entrepreneur. Teledata provides software and solutions for the marine, education, telecom and utility sectors. Teledata has picked up the stake in the Singaporean company through a fresh infusion of capital.

eSys derives nearly 95% of its revenues from distribution and manufacture of hardware. It distributes hard disk drives and other computer components. It also produces personal computers, some under contract manufacturing, while it also sells under its own brand name. eSys now manufactures more than 2 mn PCs annually at its facilities in Singapore, India, US and the Middle East.

Read the article in The Economic Times.

Merrill Lynch may up stake in India Infoline from current 14.1%

Merrill Lynch may acquire an additional stake in equity brokerage and financial services company India Infoline, over and above the 14.1% stake currently in the company. Merrill presently is negotiating with the company’s promoters.

If Merrill buys a further stake in India Infoline and its shareholding goes above 15%, it will have to make an open offer to the brokerage firm’s shareholders to pick up an additional 20%. At present, the promoters hold 36% stake, which is valued at about Rs. 600 crores at current market prices. The current market capitalization of India Infoline is Rs. 1670 crores. The deal would mark the entry of Merrill Lynch into retail brokerage business in India.

Read The Economic Times article.

JM Financial and Morgan Stanley to go separate ways

In one of the biggest developments to have happened in the Indian investment banking space, the JM Financial Group and Morgan Stanley have called it quits on their Indian joint venture JM Morgan Stanley, one of the most prominent names in the investment banking and securities broking businesses in India. The joint venture, inked in 1997 and formalized in 1999, established a pre-eminent investment bank, equity broking, research, wealth management and advisory and securities distribution operations in India during the decade long relationship.

JM Financial will acquire the 49% holding of Morgan Stanley in JM Morgan Stanley, which along with the investment banking business will also include its subsidiaries engaged in fixed income, equity broking, wealth management, advisory and distribution businesses of the joint venture at around book value for $20 mn (approximately Rs. 88.5 crores). JM Financial will simultaneously sell to Morgan Stanley, their 49% holding in JM Morgan Stanley Securities, the institutional equity broking business for $445 mn (around Rs. 1970 crores).

The transaction is expected to close by the first quarter of FY2007-08.