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

Goldman Sach's Long bet on India with AMC,NBFC, PE & Wealth Management

After severing it's Kotak ties in 2006, Goldman Sachs is getting 30 year long on India according to GS India's MD & CEO L. Brooks Entwistle. “This is not an outpost. We are here building businesses with a view of the next 30 years.”

GS (India) team of 100 is readying a launch of AMC, followed by Primary Dealership, an NBFC to compete with GE Money & Citi Financial in loans business.

The $770Bn AUM leader is also preparing for Private Wealth Management & Commodities research. It already advises Oil Companies on hedging while it awaits regulatory clearances for Commodity trading.

On the PE front Goldman Sachs has begun chasing Blackstone & Temasek with investments close to $2 billion (Rs8,060 crore) in some 40 Indian firms including OnMobile Global Ltd (recent IPO, Sudhir Gensets Ltd, IRB Infrastructure Developers Ltd and Sigma Electric Manufacturing Corp., besides the NSE Ltd and NCDEX Ltd.

With its research team now closely tracking 75 Indian stocks, its sales force in London, New York, Singapore and Tokyo is aggressively selling Indian equities. L. Brooks Entwistle has appointed HK based Adam Broader as CFO to head the AMC and awaiting SEBI approvals. In the run-up to the AMC launch, GS is in the process of floating Goldman Sachs India Fund, an offshore fund, some time this month.

Read the full story on Mint

Private equity investors to buy 24% in NDTV Networks

A number of private equity investors including Lehman Brothers, Goldman Sachs, Credit Suisse, etc. would acquire nearly 24% stake in NDTV Networks, a wholly-owned subsidiary of NDTV India, for $120 mn. NDTV Networks is a UK-based company and has five companies in its fold. It holds 100% in NDTV Labs, which will develop market and sell software and technology products; NDTV Imagine, which will operate a non-news Hindi mass entertainment channel; NDTV Lifestyle, which will provide content to TV channels in India and abroad; and NDTV Convergence, which would house all dotcom and mobile properties of the group. NDTV Networks also owns 50% in NDTV Media Services with Genpact for media process outsourcing.

NDTV India controls news channels, NDTV 24x7, NDTV Profit, among others. The company is also believed to have scrapped its initial public offer for the moment and may reconsider it later.

Read the Business Standard article.

Goldman Sachs to buy stake in Hyderabad-based Pennar Cements

Global investment bank Goldman Sachs may buy a strategic stake in the Hyderabad-based Pennar Cements. Pennar Cements has a cement capacity of 4.4 mn tonnes and has been valued at Rs. 2000 crores. Goldman Sachs is reportedly eyeing a stake in Pennar Cements due to the potential of the sector which is poised for explosive growth in the next 3-5 years. Established in 1994, Pennar Cements has two plants with a capacity of 1.7 mn tonnes each. The company also has a 1 mn tonne plant at Nalgonda to primarily cater to demand in the south and south-eastern parts of the country.

Read the Hindustan Times article.

ICSA not to sell 14% stake to CVC International; may sell the same to Goldman Sachs

ICSA, a Hyderabad-based embedded technology and electrical infrastructure solutions provider, which was reported to have raised $52 mn from CVC International and Goldman Sachs, now, seems to have excluded CVC International from its investor list.

ICSA will sell 14% equity to global investment bank Goldman Sachs, which will infuse the entire $52 mn to be pumped into the company, part of it for the equity and the rest in foreign currency convertible bonds (FCCBs).

ICSA will not sell equity to Citigroup Venture Capital International Growth Partnership Mauritius (CVC). The company has cited non-fulfillment of regulatory and technical conditions for not going ahead with CVC. The venture capital firm had a 45-day due diligence period, but could not complete the proceedings in time. CVC had sought an extension, but failed to get it from the market regulator SEBI. ICSA was also not in favour of extending the deadline.

Goldman Sachs is believed to have evinced interest in acquiring the 14 per cent stake at higher amount. The deal with CVC was at around Rs. 950 per share, while Goldman Sachs’ offer is at Rs. 1250 per share. This is in addition to Goldman Sachs’ commitment of $22 mn in ICSA through FCCBs.

Goldman Sachs will now hold 14% stake in ICSA and FCCBs to the tune of $22 mn. ICSA is convening a board meeting on March 17 to consider the Goldman Sachs offer.

At present, foreign institutional investment holding in ICSA stands at 25.37%. The company was looking at the investments to meet its working capital requirements, for inorganic investments and R&D related expenses.

Read the Business Standard article.
Related Post:
ICSA Limited attracts $52 mn foreign investment from Citigroup and Goldman Sachs

Goldman Sachs propose to buy stake in Multi-Commodity Exchange

Goldman Sachs has put in a proposal to buy a stake in India’s largest commodity bourse, the Multi Commodity Exchange (MCX). Goldman Sachs already holds a 7% stake in the National Commodity and Derivatives Exchange Limited (NCDEX). The MCX stake would be considered as an investment and not a strategic acquisition. The New York Mercantile Exchange, London Metal Exchange and The Tokyo Commodity Exchange have also initiated talks with MCX. The talks were being initiated ahead of the publication of final guidelines on foreign shareholding in Indian commodity exchanges. The idea is to firm up plans in readiness for the guidelines. The Forward Markets Commission has told all commodity exchanges not to change shareholding patterns until the new guidelines are issued. The shareholders of MCX include Financial Technologies Limited, State Bank of India and its associates, National Bank for Agriculture and Rural Development (NABARD), National Stock Exchange of India, Fidelity International, Corporation Bank, Union Bank of India, Canara Bank, Bank of India, Bank of Baroda, HDFC Bank and SBI Life Insurance.

Read the Business Standard article.

Genpact plans largest IPO on US markets by an Indian company at $500-600 mn

Genpact, India’s largest BPO company has finalized its IPO in the US markets as it plans to raise between $500-$600 mn and will list on the New York Stock Exchange. This will be the largest IPO by an Indian company in the US. The Genpact board has approved the issue and has appointed merchant bankers Morgan Stanley and Goldman Sachs for the issue.

The public issue is important as Genpact is the largest BPO company in India, and the issue will fulfill the huge demand for Indian BPO shares in the US market. The issue will also affect the valuations and demand for two other Indian BPO firms that went public last year: WNS, which got listed on NYSE, and EXL Services on NASDAQ. Both WNS and EXL saw a huge demand for their shares when they went public and even after the issue, they command very high valuations.

Genpact is owned by General Atlantic and Oak Hill Capital, who jointly control 60% of the equity of the company. The two funds had picked up the stake in Genpact in 2004 and in two years, have increased the value of their holding by five to six times. This is a fairly high rate of return for the investment made by a private equity funds. The remaining 40% is owned by US conglomerate GE.

The IPO is not likely to see a huge sale of shares by the existing shareholders. Bulk of the issue will be fresh issue of shares and the funds will be available for Genpact to fund growth. While the private equity funds Oak Hill Capital and General Atlantic are not expected to sell their holding, the value of their stake will go up substantially.

Read more in The Economic Times article.
Related Post: Oak Hill Partners may merge portfolio companies Genpact and Vertex; merged entity to be listed

Deutsche names Sanjay Sharma head of India equity capital markets

Investment banking in India is bearing witness to many high-profile people movements of late. After Citigroup’s investment banking head Surojit Shome’s move to Lehman Brothers India, we now hear of Merrill Lynch old hand Sanjay Sharma quitting Merrill to lead Deutsche Bank’s Indian equity capital markets operations. Sharma’s vacancy is being filled by Sumeet Puri, who will be moving from his post as Asian equity syndicate head from Hong Kong (See Related Post).

Indian equity capital markets volume jumped 22% to more than $19 bn last year, as total investment banking revenue hit a record $413 mn. Indian stocks rose more than 45% in 2006. Deutsche ranked second in investment banking revenues behind Citigroup, with $42 mn in revenues from underwriting stock and bond deals and advising on mergers.

Investment banks like Lehman Brothers, Goldman Sachs and UBS are expanding their
India teams as the country’s companies become bigger global players. Lehman last month poached Citigroup’s Surojit Shome as head of investment banking for India. Bankers, particularly non-resident Indians, are keen to move to Mumbai and New Delhi as top salaries approach the same levels as those in Singapore and Hong Kong, and the market yields increasingly large and interesting transactions. However, intense competition between banks has taken a bite out of fees, with equity deals only paying an average of 1.6%, compared with 2.3% for Hong Kong offerings and up to 7% for initial public offerings in the United States.

Read the article in Reuters.com.

Goldman, Unitech to set up real estate SPV

Global investment bank Goldman Sachs and real estate company Unitech are jointly setting up a special purpose vehicle (SPV) for investments in the real estate sector. The special purpose vehicle is expected to have a corpus of Rs. 900 crores. Goldman Sachs is likely to have 33% equity valued at Rs. 300 crores. The balance Rs. 600 crores will be brought in by Unitech, in the form of cash as well as land bank.

Unitech is particularly bullish on developing real estate projects in the National Capital Region (NCR), areas around Mumbai, near Bangalore’s under-construction international airport and some areas in close proximity to various ongoing special economic zone (SEZ) projects. The SPV may also look at investing in greenfield residential and commercial projects in tier II and III cities. The deal is expected to be signed in the next one month.

Unitech is the largest listed real estate company in India with a market capitalization of Rs. 37,406.62 crores. The company has real estate projects, both residential and commercial, across the country. Unitech is also developing two SEZs in West Bengal and Haryana. Last year, Goldman Sachs had announced that it would make investments of $1 bn in private equity, real estate, private wealth management and other businesses in India for its institutional clients in the next couple of years. As part of its India strategy, Goldman Sachs had announced that it will start its own investment banking, asset management, and securities businesses. The financial services giant recently got a license from SEBI for its retail broking operations.

Read The Economic Times article.

Credit Suisse to raise a $1bn fund to tap Indian realty

Credit Suisse, the Zurich-headquartered financial powerhouse, is planning a dedicated $1 bn fund for investing in the booming real estate sector in India, to be announced in the next financial year. Already, US-based investment banking giants Morgan Stanley and Goldman Sachs have invested heavily in the real estate market in India, with Morgan Stanley Real Estate Fund recently having struck the largest real estate investment deal worth Rs. 675 crores with Mumbai-based Oberoi Constructions. Goldman Sachs is also planning an investment of $1 bn. Credit Suisse’s $1-bn investment in real estate will be brought in a phased manner by 2010 and will focus on commercial space. High on its priority list are large-format retail malls, two-star and three-star business hotels, healthcare and multi-use office-cum-residential complexes. Sources said the fund will primarily pick equity in ongoing big-ticket projects or those looking for second round of funding to complete their partially operational projects. The fund is unlikely to park money in start-up projects. The fund is also keen on acquiring management stake in some projects post-completion.

Read more in The Economic Times.

ICSA Limited attracts $52 mn foreign investment from Citigroup and Goldman Sachs

ICSA Limited, an embedded technology provider, has attracted foreign investment of around $52 mn through two different deals. The company has made a private placement to Citigroup Venture Capital International Growth Partnership Mauritius Limited (CVC), for a sum of $30 mn, while investment banking firm Goldman Sachs has invested $22 mn in the company through the FCCB route.

Citigroup has acquired 14% stake in ICSA by investing $30 mn at a price of Rs. 950 per equity share. With the Citigroup's investment the level of FII holding in ICSA would go up from 25.37% at present to 30.4%. Citigroup will also nominate a member to the board of ICSA. Since the equity picked up by Citigroup is through a fresh issue the promoter stake in the company will continue to remain at 20.5% after conversion of warrants. The sum raised will be used to fund working capital needs and for investments in R&D.

ICSA has been developing technology solutions for power, water, oil and gas sectors to identify transmission and distribution losses and monitor consumption. ICSA is also looking at expanding its global operations and is looking at acquisitions in the utility sectors like water, gas and power where the utilities can be provided with the products of the company. Overseas markets contribute to 25% of the revenue, which the company expects to go up to 50% in the next few years.

Read The Financial Express article.
Related article: Citigroup plans $1 bn PE spend

Goldman Sachs to pick up 5% stake in ITNL for Rs. 90 crores

Goldman Sachs is about to pick a 5% equity stake in IL&FS Transportation Networks (ITNL) for around Rs. 90 crores. ITNL is a vehicle promoted by IL&FS to spearhead its initiative in transportation infrastructure development.

This will be the second private placement in ITNL in the last three months. In October 2006, US-based private equity fund Trikona Capital bought 2.5% stake in the company for around Rs. 40 crores. Trikona also announced a $100-mn partnership with parent company IL&FS for investments in real estate and infrastructure.

ITNL is the promoter of the Noida toll road project and owns 22.6% equity in Noida Toll Bridge Company. Noida Toll Bridge is listed on the AIM market in London Stock Exchange. ITNL currently has a portfolio of 10-11 road sub-sector projects, which are in the development phase and a pipeline of such projects in the planning phase. The company, which has got road projects in Ahmedabad, Rajasthan, has recently won an annuity contract in Chhattisgarh. Incorporated in 2000, IL&FS has domiciled most of its transport sector investments and resources in ITNL for its surface transportation projects. The company also intends to participate in green field projects and provide advisory services. Already, the holdings of IL&FS and existing financial investors in the IL&FS sponsored projects are being transferred to ITNL.

Last week, Goldman Sachs bought a 5% stake in the National Stock Exchange. IL&FS was one of the deal makers in the transaction.

Read The Economic Times article.

Texas Pacific pulls out of investing in SpiceJet

Private equity giant Texas Pacific Group is pulling out of its $30 mn investment in low-cost airline SpiceJet. Reasons cited are as varied as differences over valuation to the US-based fund having expressed its inability to participate in this round of fund-raising by the low-cost carrier as its top management was busy with an ongoing $11 bn deal for buying out Australian airline, Qantas, by a consortium of private equity players.

In its current round of fund raising, SpiceJet has raised around Rs. 300 crores by divesting around 25% stake, giving the company a valuation of around Rs. 1200 crores. The Tata Group, through two of its investment arms, is picking up 7% stake for Rs. 75 crores. Existing shareholder, Istithmar, Dubai government’s private equity arm, is putting in another $25 mn for increasing its stake from 3% to 11%. BNP Paribas will invest $15 mn for a 4% equity stake, while Goldman Sachs is picking up 1.5% stake for around $5 mn. A clutch of small investors will hold another 4% stake between them.

The company is holding its EGM on Thursday to ratify the preferential allotments. The shares were offered at an average price of Rs. 51.36 per share. After this round of dilution, the stake of the promoters including those of the UK-based Kansagra family, director Ajay Singh and associates, will come down from around 18% to 15%.

Read more in The Economic Times article.

NYSE, Goldman Sachs, General Atlantic, SAIF to buy 26% in NSE

The New York Stock Exchange (NYSE) and US-based global investment banking giant Goldman Sachs are among a group of institutional investors who are about to buy around a 5% stake each in National Stock Exchange (NSE), India’s biggest bourse. The NYSE, Goldman Sachs, General Atlantic Partners and Softbank Asian Infrastructure Fund have entered into an agreement with ICICI Bank, IFCI, IL&FS, PNB and GIC for the purchase.

NSE shareholders IL&FS and IFCI are selling 5% each of their holdings in the exchange to Goldman Sachs and NYSE in two separate deals expected to be signed soon. The two shareholders currently hold 7.1% each in the exchange. IDBI and ICICI Bank, the two other institutional promoters, are also expected to offload part of their holdings in the exchange in subsequent deals. The valuation of the NSE is expected to be over $2 billion.

Earlier, Fidelity had bought around 9% in MCX; later, Goldman acquired over 7% in NCDEX, the other online commodity exchange.

The proposed sale of stakes comes close on the heels of guidelines issued by the RBI on foreign investment in Indian stock exchanges. The RBI has allowed foreign investment up to 49% in stock exchanges, fixing foreign direct investment (FDI) cap at 26% and FII limit at 23%. Securities and Exchange Board of India (SEBI) has stipulated investment limit for single foreign investor at 5% beyond which an FII or any other investor like foreign stock exchange will not raise its stake in stock exchanges.

NSE has 21 promoters: an assorted medley of public sector banks, LIC, ICICI Bank, IL&FS and IDFC. ICICI holds 12.5% and IL&FS has 7.1%. NSE is an extremely profitable entity. In FY06, it had a net profit of Rs. 206 crores on revenues of Rs. 472 crores. In FY07 it is expected to report a profit of Rs. 250 crores. It has 70% share of all stock transactions in India.

Read more about the deal in The Economic Times and IndiaInfoline.com.

Core Projects gets equity infusion from Morgan Stanley, Goldman Sachs, Deutsche

Bulge bracket investment banks Morgan Stanley, Goldman Sachs and Deutsche Bank have picked up 10% stake in Mumbai-based software firm Core Projects and Technologies Limited (CPTL) at a combined investment of Rs. 39.76 crores. Morgan Stanley has taken the largest share at 4.03%. Goldman Sachs, through its investment arm Grants Investments Limited, has taken 3.46% and Deutsche Bank 2.59%.

Core Projects was recently in the news for its plans to acquire two US-based software firms. It is also setting up an offshore development centre in Navi Mumbai, to be completed by January-end 2007.

The stake was picked up following conversion of FCCBs issued in November 2006. FCCBs of the value of Rs. 15.90 crores still remain for conversion into equity shares.

Read The Economic Times and Business Standard articles.
Related Post: Mumbai-based software company Core Projects plans two US buyouts

Mumbai-based software company Core Projects plans two US buyouts

Core Projects, a Mumbai-based IT company involved in education projects, is about to acquire Aarman, an ERP software company and SkyBridge. Both companies are US-based. The deal size for Aarman is estimated to be around $8 mn; it has revenues of around $10 mn. SkyBridge may be bought for $8-10 mn. Announcements are expected in the first week of January. A third acquisition in the UK is said to be at a preliminary stage.

Core has raised funds for these acquisitions through a recent FCCB issue. The company had issued 1, 225 FCCBs of $10, 000 each in November 2006. The issue had collected Rs. 56 crores and the bonds have been listed on the Singapore Stock Exchange.

The company now has a kitty of Rs. 100 crores which includes FCCB proceeds and internal resources. Financial majors including Morgan Stanley, Deutsche Bank and Goldman Sachs have converted the bonds into equity and have picked up a 10% stake for $8.75 mn. The stake has been acquired following the conversion of the FCCBs by financial majors at Rs. 315 per share for Rs. 10 each, against the FCCB price of Rs. 310. The Core scrip closed at Rs. 469 on Thursday on BSE.

Morgan Stanley has the largest share at 4.03%, Grants (a Goldman Sachs subsidiary through which they will hold the stake) has 3.46% and Deutsche Bank has 2.59%. FCCBs worth $3.5 million still remain for conversion.

Core is present in verticals like education, pharmaceuticals and bio-science. The company, however, has a strong focus on education. It essentially maintains management information system for government-aided schools. Based on the data collected it devises solutions and analyses drop-out rates among students. Recently, it had bagged a Rs 25-crore project from the Jharkhand government to maintain education records of state government schools.

Read The Economic Times article.

OnMobile buys out ITFinity

OnMobile, a provider of ring tones and mobile-commerce services, has made a 100% buyout of ITFinity, reports The Economic Times. ITFinity is a specialist software company. The transaction value is around $15-20 mn.

The investors of ITFinity represent a who’s who of the private equity world. These include Rajat Gupta of McKinsey & Co, Ashish Dhawan of ChrysCapital, Luis Miranda of IDFC, Mumbai-based Edelweiss Capital and Rajesh TS Reddy, former founder of Unimobile.

OnMobile has the backing of IT giant Infosys. In October 2006, Deutsche Bank, Goldman Sachs and Polygon Investment Partners acquired a 10% stake in OnMobile for about $27.8 mn, valuing the company at $270 mn.

Mumbai-based Rama Pulp and Paper acquires newsprint company

Mumbai-based cultural and specialty paper maker Rama Pulp and Papers is acquiring a newsprint company for Rs. 60 crores. The deal will be funded by an undisclosed foreign fund. Rama Pulp has declined to name the target company and the foreign fund owing to confidentiality clauses.

The fund will provide Rs. 50 crores for the acquisition while the rest will come from the company’s internal accruals.

Opportunities in newsprint and its low costs have attracted foreign players too, with majors such as Stora Enso and UBA mulling options to build a plant in India mainly to cater to the local market.

Of late, foreign funds’ interest in the Indian paper sector has been growing steadily. IFC, the investment arm of the World Bank is already in collaboration with West Coast Paper, JK Paper and AP Paper. Other firms like Goldman Sachs are more keen on picking up equity stakes in Indian paper companies as an 8% growth in the local economy makes paper all the more attractive.

Read the complete article from The Economic Times.

Ambani goes for the kill, to buy out Ruia's stake as well

Finally, Anil Ambani has made his intentions absolutely clear. Reliance Communications will buy out Hutch-Essar in its entirety. Nimesh Kampani, representing the Ruias is believed to have held meetings with Anil Ambani. Various parties as interested in buying out Hutchison’s stake in Hutch-Essar are doing the rounds of investment circles. These include Ruias themselves raising debt from banks and buying Hutch’s stake in the JV. Bharti’s Mittals are also heard to be interested in buying out the company. Even the name of the Tatas has been mentioned. Maxis, the Malaysian telecom company, is also set to bid for Hutch-Essar. The Ruias stand to gain around $4-5 bn if they sell their stake to Reliance Communications. Ruias are being advised by Morgan Stanley and Goldman Sachs. UBS is advising Ambani on the deal. Buyout funds like Blackstone, Texas Pacific, Carlyle and Kohlberg Kravis Roberts, among others, are supporting Reliance to structure the financing. With about $10 billion through cash to buy equity and around $2-4 billion as debt from major foreign banks, Reliance seems to be the frontrunner in getting the Hutch-Essar telecom business.

Read the article from Business Standard.

NYMEX initiates talks to acquire 9% stake in MCX

Multi-Commodity Exchange (MCX), whose IPO is one of the most looked forward to, is about to bring in a new strategic investor. The New York Mercantile Exchange (NYMEX) is said to be in discussions with MCX for a 7% stake. Earlier, Fidelity International had picked up 9% stake in MCX for $49 mn (Rs. 220 crores). Merrill Lynch is the advisor to MCX on the deal, as well as the manager to the issue. The deal may be valued anywhere upwards of $60 mn (Rs. 270 crores). Both exchanges have declined to comment on this issue. NYMEX had earlier tried to acquire ICICI’s 7% equity stake in NCDEX, which eventually went to Goldman Sachs. Founded by Financial Technologies India, MCX is India’s largest commodity exchange. It accounts for 56% of the total Indian commodity and futures market with an average daily turnover of about $1.5 billion. Indian exchanges are waiting for clarity on the FDI norms for exchanges, even as the government formulates the policy on foreign holding in Indian commodity bourses. SEBI recently issued guidelines for the BSE, proposing a cap of 49% on foreign holding, which includes 26% FDI and the balance 23% for FIIs. Industry anticipates that SEBI would maintain these norms for commodity exchanges in the country as well.

For more details, read the article from The Economic Times.