Wednesday, March 7, 2007

TV18 group firm Web18 buys movie ticketing firm Bigtree Entertainment

Web18, the Internet arm of the TV18 Group has acquired around 60% stake in movie and entertainment ticketing company Bigtree Entertainment for $3-4 mn. Bigtree Entertainment is a comprehensive entertainment ticketing applications and solutions provider and services across 35 cities in India. The company provides ticketing applications to cinemas and entertainment venues via a complete suite of software products like box office ticketing, concessions management, web ticketing, loyalty management software, film programming, bar code ticketing, voucher management and others. Bigtree provides the necessary software, processes, systems, door delivery options, cash collection, warehousing and accounting services. It currently handles over 2.5 mn ticketing transactions annually for all major exhibition chains across the country.

The latest acquisition strengthens Web18's position in the e-transactions space, both on the PC as well as mobile phones. It had acquired a significant stake in travel portal Yatra.com and placement portal Jobstreet.com India a few months ago. Web18 already owns popular portals like cricketnext.com and products comparison site compareindia.com.

Read the article in Business Standard and The Economic Times.

Geodesic Information Systems to buy Chandamama for Rs. 10.02 crores

Software firm Geodesic Information Systems Limited will acquire 94% in children’s magazine publisher Chandamama India Limited for Rs. 10.02 crores. The cash component of the cash-cum-stock deal would amount to Rs. 1.6 crores. Geodesic is planning a makeover of the 60-year old magazine whereby the content would also be available on the Internet and mobile media.

Geodesic provides content over its universal instant messaging system, which is available on desktops, mobile devices and also over Internet radio. Chandamama, with a monthly circulation of around 200,000 copies, will continue to have its own identity. There have been reports in the past of Walt Disney planning to acquire a stake in Chandamama. Geodesic expects to complete the acquisition by March-end, and the consolidation of the accounts will commence from April 1, 2007.

Read more in the article on Reuters.com.

Singapore Stock Exchange takes 5% stake in BSE for $42.7 mn

Singapore Stock Exchange (SGX) has picked up 5% in Bombay Stock Exchange (BSE). SGX is the second overseas bourse after Germany's Deutsche Borse to buy a stake into the BSE. SGX has paid Rs. 5200 per share of BSE, totaling to a sale of $42.7 mn. This is the same amount paid by Deutsche Borse, which values the exchange at $855 mn. The BSE stake is the first foreign acquisition by the SGX, which is Asia's third-largest listed bourse. Earlier, the New York Stock Exchange (NYSE) had acquired 5% in National Stock Exchange (NSE) for $115 mn valuing NSE at $2.3 bn.

Read the article in The Economic Times.
Related Post: Deutsche Borse buys 5% stake in BSE for Rs. 189 crores

Sherwin Williams pursuing business options with Nitco Paints

US-based paints company Sherwin Williams is believed to be in advanced stages of talks with Nitco Paints, an associate company of Mumbai-based Nitco Tiles, for a possible business tie-up. Nitco Tiles is engaged in the building business. Sherwin Williams is pursuing various options like joint venture, buyout and a joint holding company.

Sherwin Williams is the second-largest paint company in the world. Its entry in India is expected to change the dynamics of the colour space in the country, which is currently dominated by biggies like Asian Paints, Berger, Kansai Nerolac, ICI Paints and Shalimar. The paints segment in India is growing at an average 15%.

Read the article in DNA Money.

In a related development, Nitco Tiles Ltd also plans to spend $25-30 mn to acquire stake in a Chinese tile manufacturer within the next two months. Nitco will use the capacity in China to cut costs and to export tiles to other countries directly. The acquisition will be financed out of a proposed Rs. 250 crore-issue of securities to overseas investors or to qualified institutional buyers. The company has already obtained shareholder approval for the issue.

Read more on this in The Economic Times.

Textile firm RSWM planning acquisitions in India, Europe

LNJ Bhilwara group company Rajasthan Spinning and Weaving Mills Limited (RSWM) is planning to make two acquisitions in the next three months: one in India and the other abroad. RSWM is close to acquiring a specialized yarn maker in Europe for €6 mn and a domestic spinning having capacity of 100,000 spindles for Rs. 200 crores. Senior company officials are believed to be in Europe as part of negotiations to seal the European deal.

RSWM is a leading integrated player in the textiles sector. It is also contemplating entering the retail sector and has plans to double yarn capacity to 400,000 spindles. RSWM is also eyeing the high-end denim market in India and overseas for its new product line in denim. The company will invest Rs. 900 crores over the next three years to establish a power plant, enhance yarn capacities, set up a state-of-the-art 27 mn metres per annum denim operations and other initiatives.

The company fabric production is exported to 60 countries, including the Middle East, Europe and the US. It has registered a turnover of Rs. 770 crores in the last fiscal.

Read the article in DNA Money.

Mastek ends IT services JV with Deloitte Consulting

Mid-sized information technology vendor Mastek Limited is selling out its joint venture with Deloitte Consulting. Mastek had established a 50:50 IT services JV with UK’s Deloitte Consulting in 2001 to offer services like application development, systems implementation and integration and other outsourcing services.

As Deloitte shifted its focus to consulting from IT services, revenues stagnated around the Rs. 100 crore-level for the past three years. Margins, at around 4%, are also significantly lower than Mastek’s own. The company has refused to disclose the valuation of the JV. The viability of the JV was also a question since Deloitte has set up its own centre in the country.

In the last quarter, Mastek had bought out its business process outsourcing JV partner Carreker in their loss making non-voice BPO JV. Last year, Mastek sold its stake in another BPO venture in favour of partner Capita to remain a minority financial investor.

Read more on Mastek in the DNA Money article.

Carrefour said to be in talks with HDFC Group for Indian retail venture

Carrefour is reportedly partnering with the HDFC Group for it Indian retail operations. The actual entity could be a private equity arm.

In a somewhat complicated yet a highly complicated structure, HDFC could float a separate holding company, most likely a PE fund, which would, in turn, tie up with a third entity for getting Carrefour’s franchising rights for India. Meanwhile, it is understood that Carrefour will completely retain the back-end wholesale operations, as 100% FDI is allowed in cash-and-carry segment. Even though Carrefour cannot invest in the equity of the retailing business, it will get its own people to spearhead the venture. Details of the exact arrangement and modalities that the two companies are looking at could not be found. Both Carrefour and HDFC have declined to comment on the issue.

It is to be noted that Carrefour cannot do business in India in general retail on its own as foreign direct investment is not allowed in the sector. At the same time, RBI regulations prohibit HDFC or HDFC Bank from getting into retailing.

Carrefour has particularly evinced interest in HDFC because of obvious real estate considerations. For retailers like Carrefour, who generate most of their business from large format hypermarkets, getting viable real estate is the prime concern. HDFC, on its part, has a separate realty fund, which has access to a huge land bank in various parts of the country. In addition, this fund has an equity stake in some large scale projects of prominent real estate developers, such as Ansal API, Pune based realtor Vascom Engineers and L&T Urban Infrastructure. The holding company could leverage its relationship with these developers in getting access to prime real estate for the retail business.

Read The Economic Times article.

Fidelity National Information Services picks up Second Foundation

Fidelity National Information Services (FIS), a provider of core processing solutions for financial institutions, has acquired Second Foundation, an IT services company headquartered in California, for close to $20 mn. The buyout is in line with Fidelity’s expansion plan in its offshore presence in India. Second Foundation is a provider of offshore global information technology services. With this FIS’ wholly owned subsidiary, Fidelity Business Solutions now gets a foothold in Bangalore and Chandigarh, where Second Foundation has significant presence.

Avendus Advisors was the exclusive advisor to Second Foundation. The company has extensive experience in a multitude of areas, including outsourced product development, quality assurance and business intelligence services as well as implementation services of third-party software applications. The Second Foundation team will continue to support its existing clients and augment current global delivery capabilities.

Prior to the acquisition, FIS operated in India, through its Indian partner Covansys Corporation, an IT services company. FIS will continue its relationship with Covansys Corporation, which will be primarily dedicated to internal software application management. Also, since the operations of Covansys were essentially BPO oriented, FIS wanted to look at an IT services company that has expertise in other areas as well. Currently, FIS has processing and technology relationships with 35 of the top 50 global banks, including nine of the top 10. Approximately 50% of all US residential mortgages are processed using the FIS software.

Second Foundation, which was incepted in 1997 has reached significant scale, and is looking and getting on to the global platform, leveraging on FIS’ international presence. The company specialises in business intelligence, software security, and web services solutions. Last year, the company embarked on a major expansion in Europe and established development centres and sales offices in Prague, and Liverpool. The company has projects underway in major corporations in the UK, Czech Republic, France and Norway.

Read The Economic Times article.

UTI Ventures and Argonaut Private Equity invest Rs. 44 crores in Chennai-based IT company Zylog Systems

Private equity firms UTI Ventures and US-based Argonaut Private Equity are investing around Rs. 43.8 crores (around $10 mn) in Chennai-based Zylog Systems Limited (ZSL). The investment will be done through preferential share allotment. ZSL is a 12-year old IT services and outsourcing solutions company with around 750 employees in India, the US and Europe, offering services in web application, mobile computing and enterprise infrastructure management. It has a specialized product called DP Online, a depository operations and a financial accounting system.

The investments will facilitate the company’s access to clientele in new target markets. For the year ended March 2006, ZSL’s revenues stood at Rs. 257.8 crores, a 75% growth over the previous year, and its post-tax profits were at Rs. 37.13 crores.

Argonaut Private Equity has a corpus of over $2 bn and is present in India since 2003. It has invested over $75 mn in Indian companies, predominantly in the IT and other technology sectors. UTI Ventures has substantial investments in the technology and IT services sector, including Subex Systems. This is the second time that the two private equity firms have come together to invest in a single entity. Earlier, the two funds invested a total of $16 mn (Rs. 72 crores) in Koutons Retail, a Rs. 450 crore-menswear retailer.

Read The Economic Times article.

DLF forms life insurance JV with Prudential Financial

A day after HSBC, Canara Bank and Oriental Bank of Commerce announced their three-way life insurance tie-up, real estate giant DLF has joined hands with US-based financial player Prudential Financial, Inc. (PFI) for a foray in life insurance business. The two partners will invest about $250 mn (Rs. 1000 crores) over the next ten years in the venture. Under the terms of agreement, Prudential will have 26% stake and the remaining 74% will be held by DLF Group in the JV. The joint venture has been christened as DLF Pramerica Life Insurance Company Limited. Pramerica is a brand name used in select countries by Prudential Financial. The company will initially have a paid-up capital of Rs. 100 crores, including Rs. 26 crores by Prudential. Both the partners would have representatives on the Board, while Prudential would take care of the operations. The company would be based in New Delhi

The company is applying for a license from the Insurance Regulatory and Development Authority (IRDA), and hopes to start operations by early 2008. Prudential is in talks with several banks and non-banking finance companies (NBFCs) to distribute its insurance products, apart from having its own distribution products.

Prudential Financial has about $616 bn of assets under management by December-end 2006 and operates in the US, Japan, Mexico as well as in many countries of Asia and Latin America.

Read articles in The Economic Times and Business Standard.

Ashok Leyland, M&M lead Punjab Tractors bid race; TAFE, Tatas back out, Tata Group buys plant in South Africa

Ashok Leyland Limited and Mahindra & Mahindra Limited appear to be the frontrunners in the race to acquire a stake of around 43% in Punjab Tractors Limited. The 43% stake has been put on the block by owners, Delhi-based private equity fund Actis and the Burman family, promoter of Dabur. According to unconfirmed reports, Ashok Leyland has placed a higher bid in the range of Rs. 320-380 per share. The Ashok Leyland bid demands some guarantees from the management. Details of M&M’s bid were not known.

If it does eventually manage to acquire the share, Ashok Leyland will have to make a mandatory open offer of another 20% of Punjab Tractors and would eventually become a majority shareholder of the company. An announcement on the stake sale is expected shortly. However, it is still not clear whether Leyland has also managed to acquire the 14% stake Punjab Tractors holds in group company Swaraj Mazda Limited and the 33% stake in Swaraj Engines Limited through the bidding process.

Punjab Tractors has strong brand equity in the tractor market, especially in the northern part of India and the winning bidder could enter the fast-growing tractor segment through this acquisition.

In a related development, of the four front-runners, the Tata Group, uncomfortable with the valuation of the deal, has backed out of the bidding process, while Tractor and Farm Equipment (TAFE) is also believed to have pulled out of the race. The final bids have seen the list of bidders for Punjab Tractors coming down significantly. That list includes Sonalika (International Tractors), Escorts, Italian tractor company Same Duetz-Fahr and a private equity consortium that was backing Punjab Tractors’ former boss Yash Mahajan.

Meanwhile, the Tata Group has acquired a car making plant in Pretoria in South Africa for an undisclosed amount, which will be used as a base for Tata Motors exports to Europe, besides catering to the South African market.

Read the articles in DNA Money and Business Standard.
Related Post: Actis and the Burmans seek re-bids for Punjab Tractors