Funds Hunt For Land To Ride Commodity SuperCycle

While Equity Markets globally have taken a tumble, commodities are riding on a SuperCycle. Global money is now chasing direct farmlands in search of alpha. Investment banks and hedge funds are mopping up vast tracts of agricultural land around the world, hoping to ride the so-called "commodities supercycle" that has lifted prices of everyday agricultural commodities such as wheat, rice, soybeans and corn to record highs.

U.S. investment bank Morgan Stanley has bought several thousand hectares of land in Ukraine, Europe's grain basin.Morgan Stanley declined to comment, but industry executives say many other big banks are looking at land. Barclays Capital, the investment bank arm of UK bank Barclays Plc, is actively searching.

Fund manager BlackRock has a hedge fund that invests in agricultural land. International estate agents Knight Frank is setting up one to buy agricultural land in the UK.

"Over the next five years, you will have 2 billion more people eating bread, eating noodles, drinking coffee ... There is no way in this world that the supply side can catch up with the demand side," says Badung Tariono, an Amsterdam-based fund manager for ABN AMRO.

Goldman enters commodities trading through Shriram

We had mentioned Goldman's India Bet a couple of days back in a post here. The NBFC & commodities brokerage part of it they have implemented by picking a 20% stake in Chennai-based Shriram Credit (an NBFC) for Rs 300 crore, making an indirect entry into equity and commodity brokerage business in India. GS reserves the right to further hike it to 25%.
The Indian group is transferring its brokerage and distribution services business to Shriram Credit and bringing in Goldman Sachs as a significant minority partner. The deal values the firm at Rs 1,500 crore ($375 million). Goldman Sachs is routing the deal through its 100% Mauritius-based subsidiary GS Strategic Investments.
Foreign investment norms currently do not allow direct investment in a commodity brokerage firm. However, foreign companies can invest in a firm, which in turn owns a separate commodity brokerage entity. The funds would be used for expansion of its existing and proposed businesses of Shriram Credit.
Read the full article on Economic Times

Piramal to demerge R&D - to invite equity partner

Nicholas Piramal India Ltd. will demerge its R&D into a separate company early in March. The partner, likely a pharma MNC with interest in drug discovery, will have at least 10% equity in the research unit, said a senior executive, preferring anonymity.

The research company, which will be known as Piramal Life Sciences Ltd, is valued at about $500 million (Rs2,025 crore) by financial and equity research firms such as Lehman Brothers, Enam Securities Pvt. Ltd and Kotak Securities Ltd.

The promoters will dilute around 10% in Piramal Life Sciences to the partner, “but it will happen only after the company gets listed on the stock exchanges, because we will have an absolute valuation only then”,said Nicholas Piramal chairman Ajay Piramal.

The new unit’s valuation is predominantly based on three new drugs under advanced development in the company’s discovery portfolio. Nicholas has one cancer drug that has almost cleared early-stage, or phase I, trials in Canada and some other international markets. It has two anti-inflammation molecules in advanced development stages.

For detailed intreview read Mint

L&T-GreatOffshore-Blackstone for ICICIVenture's Tebma Shipyard

According to a ToI article, L&T, shipping company Great Offshore and private equity funds Blackstone, Abraaj Capital and Apax Partners are eyeing a stake in the south-based Tebma Shipyards.

Tebma Shipyards is India’s third largest private ship-building firm after ABG and Bharati Shipyard. Owned largely by ICICI Venture, Tebma, as part of expansion strategy, plans to build a facility in West Bengal.

The 150 acres Rs 500 crore project ($125 million) will be funded by Debt & . ICICI Venture has been approached by various players.Ship-building players earn operating margins of 20-25% helped by 30% export subsidy

The West Bengal shipyard will be Tebma’s third facility, in addition to its Chengalpattu (70km from Chennai) and Malpe in Karnataka. The company will issue fresh equity to the investor and accordingly, ICICI Venture’s stake in Tebma Shipyards will come down, market sources said. The new shareholder is likely to get upto 26% stake for $100 million in Tebma Shipyards. The Rs 400 crore Tebma has an order book position of $400 million.

Similar to publishing firm Infomedia and heat resistant cement products maker ACE Refractories, Tebma too has been a buyout deal by ICICI Venture. Last year, the private equity arm of ICICI Bank bought a 33% stake in Tebma Shipyards and increased its holding to 53% by acquiring additional shares through open offer. Several small investors hold the remaining shares in the company.

The second largest shareholder is Balan, founder of Tebma, who holds about 9% stake.

Two India Centric Funds from Baer Cap

Dubai-headquartered Baer Capital Partners is planning to launch two India-dedicated hedge funds this year.

The two funds - Beacon India Opportunities Fund with a corpus of $400 million and the $100 million Beacon India Growth Fund - will invest in listed companies. Baer is in the process of securing the regulatory approval for foreign institutional investor (FII) licence.

Sub-Prime Benefits Indian MidCap Companies

This Business Line article reports that Indian Midcap companies have a hit a good time in their Deal Intentions in the US. Reduced profitability, crunch for working capital requirement (this requires a second look though..) & distressed assets on the block are all adding up to increased acquisitions.

This cross sector trend has seen Bangalore-based Kavveri Telecom Products and Pradot Technologies Pvt Ltd, the Ahmedabad-based Azure Styx Infotech, the Hyderabad-based FXLabs Studios, the Indore-based Plethico Pharmaceuticals, the Aluva-based Kerala Ayurveda Ltd and the Vadodara-based Minal Jewels figure among the mid-cap firms that have bought out US companies post-November 2007.

According to Virtus Global Partners’ estimates, deal sizes of less than $25 million accounted for 76 per cent of the US-bound acquisitions by volume in 2007, followed by transactions in the $25 million-50 million range ( eight per cent). “Deal sizes in the $50 m-100 m, $100 m-500 m, and greater $500 m range each accounted for less than six per cent of the 2007 transactions,” an analyst said.

For a list of deals below $25 Mn. read the complete article on Business Line