Monday, December 10, 2007

Angels to the rescue

Heres an article in the Hindustan Times which talks about the irony in the PE/VC space in India. It says "While the country is awash with foreign money flowing into private equity, early stage funding, what many believe to be the essence of venture capital, is not quite abundant. But successful Indian entrepreneurs who have been there and done that are trying to solve this problem in their own way with a network of “angels” — individuals who provide seed capital and some hands-on advice and help to boot, often by sitting on the boards of start-ups."

We hope the band of angels is always on the increase. Read the complete article on HT online

IDFC PE to raise $600 million in third fund by March 2008

IDFC Private Equity, the private equity investment arm of infrastructure financing firm Infrastructure Development Finance Co. Ltd (IDFC), is raising a $600 million (Rs2,364 crore) fund, its third since it set up operations as the country’s first pure play infrastructure PE investor in 2002. The proposed fund has an upper limit of $700 million on the final corpus and is expected to close fund-raising in March 2008 as reported by Mint.

Separately, IDFC PE’s parent, the state-owned IDFC is itself in the process of closing first-round commitments for a mega $5 billion mega infrastructure fund, which includes debt and equity. With the proposed $600 million fund, total funds raised by IDFC PE till date stand at $1.2 billion. Its first fund, India Development Fund, had a corpus of $192 million and was the first to raise capital entirely from domestic institutional investors. The second fund, dubbed, IDFC Private Equity Fund II, raised $440 million of which over 70% came from overseas investors.

The firm has invested in 22 companies till date, which includes three airports and 31 roads and bridges. It typically picks up stakes between 10% and 50% in each of its portfolio companies and invests across the spectrum in power, oil and gas, transportation, telecom, urban and rural infrastructure and social infrastructure

Nutek gets 25 cr funding from a US fund

Gurgaon-based telecommunication solutions company, Nutek India Ltd, said that it was close to sealing a Rs 25-30-crore infusion from a leading US-based fund by end-this month. "We are in the final stages of closing this deal," Nutek India Managing Director Inder Sharma told reporters here.

The US-based fund will be picking up an around 10 per cent stake in Nutek, Sharma said, however without disclosing the identity of the US-based fund. The sale price is expected to be in the range of Rs 170 per share. Earlier, Atherstone Capital had invested Rs 10 crore in the company for an around 8 per cent stake. Atherstone Capital had been sold the company's shares at Rs 87 per share, Sharma said. This transaction took place nearly two years ago.

Post the fund-infusion expected to be completed by end-this month, the promoters' holding in the company would come down below 80 per cent from the present around 90 per cent, Sharma said.

Nutek's core expertise lies in the breadth of services it provides to its customers in the telecom infrastructure market. It provides turnkey infrastructure creation and installation for telecom sites which includes passive infrastructure like towers, telecom shelters, power plants, back-up power, DG sets, electrical infrastructure and earthing stations, among other services.

Source: Economic Times

3i makes its second India investment in Soma Enterprise

3i India Infrastructure Fund, part of the London-based private equity and venture capital company 3i Group Plc, has invested $101 million (Rs 398 crore) in Hyderabad-based infrastructure company Soma Enterprise.

Though the companies have not disclosed the exact stake the fund picked up, Avinash Bhosale, joint managing director, Soma Enterprise said, “3i has got minority stake; the stake figure is in mid-teens (between 13% and 17%).” This figure values the company at over Rs 3,400 crore.

Soma will use the money for expansion. Hyderabad-based Rajendra Prasad Maganti and his family owns majority stake in the infrastructure firm. Pune-based flamboyant real estate developer and hotelier Avinash Bhosale is the other promoter.

Soma, with revenues of Rs 1,100 crore, has an order book of Rs 6,400 crore. The company is also planning a public issue next year.

The company has divided its business in six verticals. Theses include real estate, urban infrastructure, irrigation, transportation, tunnel and hydro power. Along with IL&FS, Soma is bidding for phase II of the Mumbai metro rail project.

3i India Infrastructure fund targets to invest about $1bn in the country. Soma Enterprise is its second investment in the country. In October this year, it had invested $227 million for a minority stake in Adani Power, a subsidiary of Adani Group.

Source: DNA Money

RE funds eyeing township projects

Integrated townships seem to be the preferred investment option for private equity (PE) players in India. In fact, a Cushman and Wakefield (C&W) report finds that 28% of PE investors favour investment through this route in the real estate market.

Integrated townships — as a low risk investment avenue due to their diversification benefits and low entry cost — are a highly attractive option. Agrees Sandeep Singh, national head, capital markets, C&W, “In today’s high land price scenario, integrated townships offer higher value creation opportunities due to low entry costs for land and synergies created by mixed-use development within them.

Industry players also feel that it is only natural for investors to look at this asset class as a lucrative option. “Only integrated townships have the capacity to absorb a significant amount of capital that is raised ...this also means that in the years to come, this asset class is bound to grow by leaps and bounds,” feels V Hari Krishna, CIO, Kotak Real Estate Fund. Moreover, a mix of various services in these townships such as hospitals, recreation, education etc makes them win an edge over the other models.

The report also finds that investments in the market have spread rather evenly over three broad investment vehicles. While majority of the investment still remains either at the portfolio and SPV level partnership, at 40% and 36% respectively, the number of entity level partnerships formed 26% of the total investment in the sector.

Source: Economic Times

UBS India Investment Banking is stepping on the gas

UBS will nearly double its investment banking staff in India to up to 180 (from 100 now) in the next year as it prepares to offer more services and retain its share of the increasingly competitive business, the head of UBS in India said.

UBS tops the merger and advisory table so far this year, up from seventh spot last year, data from Thomson Financial showed, leapfrogging rivals including Morgan Stanley , Citigroup , JPMorgan and Merrill Lynch.

Our challenge and our desire is to remain among the top three investment banks in India," Manisha Girotra, managing director and chairperson for UBS India, told the Reuters India Investment Summit on Thursday. The competition extended to staffing. Hiring and retention of talent were the biggest challenges, Girotra said, and took up 30-40 percent of her time.

UBS, the world's largest wealth manager, is also awaiting regulatory approval to offer additional services including fixed income, wealth management and high-end retail banking in India.
Globally, UBS has had a turbulent year. It closed Dillon Read Capital Management in May and in October announced its first group quarterly loss in five years. But it has said its wealth management business was poised for strong growth.

Source: Reuters

Its raining M&A's

The volume of overseas mergers and acquisitions (M&As) by India Inc has grown phenomenally in the first half of the current fiscal and is likely to reach further heights over the next one year.
In the fiscal year 2006, the outbound M&As from India had an aggregate value of $13.97 billion spread over 480 deals. However, the M&As in the first half of the current fiscal surpassed this figure and stood at $25.58 billion, according to the data available with KPMG.

“The average ticket size of these outbound M&A deals from India had also been growing from $25 million in 2005 to $39 million in 2006,” Mr Preet Mohan Singh, Director (Corporate Finance), KPMG India Pvt Ltd

The key drivers behind this growth are increasing global consolidation, cost of production and valuation arbitrage, customs/skill set acquisition.

Source: Business Line

400 PE, M&A deals under CBDT scanner

The spill-over effect of Vodafone’s battle with Indian tax authorities may prove costly for several other deal makers. The Central Board of Direct Taxes (CBDT) has reopened about 400 cases of big and mid-sized transactions that took place during the past six to seven years.

According to sources close to the development, the cases include foreign corporates and PE firms selling stakes of companies based in India, and not paying any capital gains tax. One of the first such cases that the tax department is currently probing is Montreal-based Alcan Inc’s selling of the controlling stake in Indian Aluminium Company (Indal) to Hindalco Industries seven years ago, sources in the finance ministry told SundayET.

Significantly, there were around 300 PE deals clocked in India in 2006 alone. The tax department had earlier slapped a notice on Vodafone Essar, demanding $2 billion as capital gains tax over its $1-billion acquisition of a majority stake in Hutchison Essar, India’s fourth largest mobile telephone company. The case is now locked in the Bombay High Court.

Source: Economic Times

Bharti, Idea and Vodafone Essar come together to form a tower company

GSM mobile operators Vodafone, Bharti and Idea Cellular will jointly set up an independent tower company, Indus Towers, to share passive infrastructure with all telecom players to enable lower cost and a more competitive operating environment .

Bharti and Vodafone will own 42 per cent stake each in the tower company, with Idea will hold the balance 16 per cent. Indus Towers will be an independently managed and operated company.

The mobile phone companies will merge their existing assets, and the new infrastructure company will have 70,000 sites, which will be shared in 16 circles. In addition to telecom companies, service providers such as broadcasters and broadband service providers would also share the infrastructure, Vodafone said in a statement.

"Indus Towers will enable optimisation of future tower rollout and enhanced operational efficiency leading to operational expenses and capital expenses savings for its customers," it said in the statement.

Source: domain - b