Deloitte launches dedicated private equity practice in India

Deloitte Touche Tohmatsu India Private Limited is launching a dedicated private equity practice in India, to be called as Deloitte Corporate Finance Services India Private Limited. Deloitte Corporate Finance will work closely with the Asia Pacific regional practice, UK & US member firms of Deloitte Touche Tohmatsu and the rest of the DTT network.

Deloitte Corporate Finance will address the needs of the growing private equity market and provide investors with transaction-related services across the complete deal cycle from origination to completion. The team comprises professionals with significant experience in the global mergers and acquisitions and private equity services business and is led by Sandeep Gill, Managing Director and Bimal Modi, Director, who prior to transferring to India, were part of the corporate finance practice of Deloitte & Touche in London.

Deloitte Corporate Finance plans to address the needs of the fast-growing private equity market in India by providing specialist services which include due diligence, bid support,
sale and purchase agreement advisory and completion accounts work.

Read the pres release here.

JM Financial’s Infinite India to invest $400 mn in Indian real estate

Infinite India Investment Management, a private equity initiative anchored by the JM Financial Group, has launched a real estate fund. The fund plans to invest $400 mn in residential, commercial and retail sectors. Kartik Sharma, the Chief Investment Officer at Infinite India reveals that his decision is based on the fact that fundamental demand drivers in the realty sector are very strong, with respect to job creation and housing demand.

Kartik Sharma’s view of the Indian real estate market and opportunities:

On avenues of investment – Tier I and Tier II markets, where they have already made 5 investments; with capital being relatively tight in the market, in terms of debt capital and IPO action likely to be relatively slow for a little while, optimistic about private equity funds in providing finance for various real estate development projects

On direct participation in projects or backing existing companies planning to come into IPOs –done both so far and will actually continue to do both; invested in both project level investments as well as entity level deals

Time horizon for completely investing $400 mn and kind of returns expected – to invest the capital in the next 2-3 years; since investing in an emerging market illiquid security, expecting reasonable returns somewhere in the neighbourhood of 30%

On being bullish on the real estate sector given the inflationary pressures and the regulatory problems – fundamental demand drivers in terms of job creation and in terms of housing demand are very strong; also nascence of the Indian market with lots of pockets of inefficiency as well as in-house good expertise in terms of deal structuring

Ahmedabad-based Global Network signs JV with Michael Porter’s OTF Group

Ahmedabad-based Global Network is forming a joint venture company in India with US-based OTF Group, promoted by strategic management specialists Michael Porter and Michael Fairbanks. OTF Group is a management consulting firm specializing in providing frameworks and technology for building competitive clusters, especially in developing countries.

The joint venture will use the expertise and cluster development models of OTF and replicate similar models in the Indian small and medium enterprise (SME) sector. The JV will also provide technology for cluster development, including analysis, foreign marketing research and cluster selection and integration of data. The JV will help OTF to communicate with the government and identify the clusters and the areas to be developed. Under cluster development, the JV will try to create global and regional markets, instead of protected markets, with micro-economic focus, flexible and meritocratic organizations and informed investment choices with support from development partners.

Article in Business Standard.

IL&FS Investment Managers invests $100 mn in real estate startup QVC Realty

IL&FS Investment Managers Limited (IIML), the private equity arm of IL&FS, has invested $100 mn in QVC Realty, a real estate startup, making it the first venture capital-backed real estate start-up in India. QVC Realty is promoted by Prakash Gurbaxani, who was heading the real estate joint venture between Tishman Speyer and ICICI Ventures.

The initial investment has already been deployed to buy a 100-acre plot near Gurgaon. QVC will develop a township on this land in the next three years. Talks are also in an advanced stage for setting up another township of similar size in Bangalore’s periphery. In four years, the combined capital value of the two projects is expected to touch Rs. 3000 crores. The two partners have not yet decided on a fixed profit sharing ratio. However, the management (QVC and IIML) may take their respective stake on delivery of projects. IIML has also committed to partner QVC in all its future real estate projects.

IIML’s investment in QVC will be modular. Depending on the evaluations of the project, IIML will arrive at how much stake will be swapped and the profit sharing ratio. Currently, the equity raised will be used to finance the purchase of land. For the further development, QVC may take the debt route.

Article in DNA Money.

Trent partners PE real estate firm Xander for retail expansion

Trent, a Tata group company, has tied up with global private equity investor Xander for developing real estate properties for its various retail ventures. As per the agreement, Xander will invest in the development of an institutional retail real estate portfolio in the country. Trent will have anchor tenancy rights and manage the portfolio with Xander. Currently, Xander invests in the Indian real estate market through Xander Master Fund, a real estate fund.

Xander Real Estate Partners, part of the Xander Group, recently bought a 20% stake in a joint venture between Reliance Industries and the Maker Group, to develop commercial, residential and retail real estate in Bandra-Kurla Complex in Mumbai. The 20% stake was reportedly valued at over $100 mn.

Read more in The Economic Times article.

Morgan Stanley to acquire 20% in Indian hospitality company IHHR Hospitality for $35-40 mn

Global investment bank Morgan Stanley is close to picking up 15-20% stake in IHHR Hospitality for $35-40 mn. IHHR owns the Ananda and Ista brands of spas and hotels. It is currently in the process of expanding its footprint in Delhi, Hyderabad, Pune and Ahmedabad with plans to have nine properties under the Ista brand over the next three years. Morgan Stanley will have a position on the board of the company,

The company first set up its flagship property Ananda in the Himalayas in 1998. The second spa resort, Shanti Ananda Maurice, was opened in Mauritius late last year. IHHR forayed into the business hotel segment in April 2006 by opening Ista Bangalore.

Read more in The Economic Times article.

Macquarie Bank planning a $1 bn India infrastructure fund

Australia-based Macquarie Bank is setting up a $1 bn India-centric infrastructure fund. Macquarie is one of the largest managers of infrastructure funds in the world, and manages infrastructure assets worth $22 bn worldwide. It is likely to set up the fund through its infrastructure subsidiary, Macquarie Infrastructure Group (MIG). Though the bank is yet to make a formal announcement regarding the fund, it has reportedly already started evaluating deals and projects.

Macquarie is the second global financial services provider looking at an India-dedicated infrastructure fund. The first has been announced by Citigroup which is rolling out a dedicated infrastructure fund in partnership with IDFC and the backing of the Ministry of Finance.

Macquarie Bank started its Indian operations in 2005 and is currently focusing on its securities and research business. The proposed fund would mark its foray in asset management in India. While Macquarie’s infrastructure funds are listed on the Australian Stock Exchange, its proposed India-based entity may not list on the Indian bourses. The company recently started its infrastructure funds in Singapore and Korea both of which are listed on the local bourses.

Read more in The Economic Times article.
Related Post:
Citigroup, Blackstone, IDFC, IIFC tie-up for $5bn India Infrastructure Financing Initiative fund

Hindustan Lever sells Sangam Direct to Spinach promoter Wadhawan Food Retail

Unilever India Exports, a 100% subsidiary of Hindustan Lever, will sell is direct selling business Sangam Direct to Wadhawan Food Retail, for an undisclosed sum. Sangam Direct is a non-store home delivery retail business, while Wadhawan Food Retail operates the Spinach chain of food and grocery stores.

The Sangam business was conceptualized by Hindustan Lever in 2001 to experiment with the direct-to-consumer channel combining the twin benefits of convenience and value. The idea was to test market it in Mumbai under the brand Sangam Direct before taking a decision to extend it across the country. The decision for a larger roll-out was put on hold since Hindustan Lever felt it was not in its strategic interest to continue to be present in this format of organized retail.

Wadhawan Food Retail, is currently present in Mumbai through Spinach, which has about 23 outlets in the city. The Wadhawan Group has diversified business interests including Dewan Housing Finance Limited, a private sector housing finance company.

Read the Business Standard article.
Related Post:
Wadhawan Food Retail close to acquiring HLL’s Sangam Direct

Indian Hotels to acquire US-based Hotel Campton Place for $60 mn

Indian hospitality major Indian Hotels, which manages the Taj Group of Hotels, Resorts and Palaces is acquiring US-based Hotel Campton Place for around $60 mn (Rs. 264 crores). Union Square, San Francisco-based Hotel Campton Place is a 110-room luxury boutique hotel situated on the west coast of the US.

The acquisition cost includes estimated transaction costs and the hotel is intended to be acquired in partnership with financial investors. The board of directors of the Indian Hotels company have approved of the acquisition subject to necessary statutory regulations. The sale-purchase agreement was signed yesterday and the transaction is scheduled to be completed on April 30, 2007.

Indian Hotels has been very active on the acquisition front with regards to its American business strategy. Last year, Indian Hotels had signed an agreement to purchase the Ritz-Carlton Boston for $170 mn. Besides, in 2005, Taj Hotels entered into a 30-year management contract agreement to operate and manage the Pierre on New York's Fifth Avenue at a lease price of $5 mn a year.

Article in Zee News.

CVC International allowed investing in Flemingo Duty Free Shops by FIPB

Citicorp Venture Capital International’s proposal to acquire 15% stake in Flemingo Duty Free Shops Private Limited (FDSPL) has been approved by the Foreign Investment Promotion Board (FIPB). Flemingo Duty Free runs duty-free shops at various airports and seaports. The deal is valued at more than Rs. 100 crores. The Ministry of Finance had already given the go-ahead to the investment. However, the proposal was awaiting approval pending with the FIPB.

Flemingo would initially issue 1 mn convertible preference shares to CVC International for about Rs. 1000 each, total amounting to Rs. 100 crores. These preference shares would then be converted into equity at a later date for a premium. Citicorp’s shareholding in Flemingo would be up to a maximum of 15% of the paid-up equity of the company.

The current shareholding structure of Flemingo Duty Free Shops includes 51.22% equity stake held by Flemingo International, a company based in British Virgin Islands, and a 24.87% stake held by various NRIs. After conversion of Citicorp’s preference shares; Flemingo International, NRIs and Citicorp would respectively hold 43.54%, 21.14% and 15% in FDSPL, taking the total FDI to 79.68%.

Read more in The Economic Times article.
Related Post:
Flemingo Duty Free Shops sells 15% stake to Citigroup Venture Capital International; awaits regulatory nod

ADM Capital to invest $107 mn in textile firm S Kumar's and retail arm Brandhouse

Hong Kong-based private equity firm ADM Capital is investing $107 mn into textiles firm S Kumar's Nationwide Limited and its retail arm Brandhouse Retail. ADM will invest $82 mn to acquire a 10% stake in S Kumar's and $25 mn will be invested in Brandhouse Retail for another 10% stake in the company. S Kumar's will issue convertible warrants to ADM Capital. The deal values the S Kumar's share at Rs. 82.5, while the Brandhouse Retail share has been valued at Rs. 85. S Kumar's will utilize $30 mn to repay lenders, while $52 mn will be used to fund capital expenditure plans.

S Kumar's is a Mumbai-based Rs. 1000-crore textiles and apparel conglomerate. It operates in the worsted, ready-to-wear, consumer textiles, home textiles segments. Brandhouse Retail, which was de-merged from S Kumars, will utilize the entire $25 mn to fuel growth plans. It is also expected to be listed on the exchanges as a separate entity by August. Brandhouse will invest Rs. 400 crores to open 1000 stores across the country over the next three years. It owns and operates S Kumar's apparel and textile showrooms and manages international brands such as Dunhill, Escada and Stephens Brothers.

Read more in the DNA Money article.
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Kotak PE invests Rs. 100 crores in logistics firm DRS Logistics, $12 mn in Home Solutions Retail

Kotak Mahindra Bank, through its private equity fund, the India Growth Fund, has invested Rs. 100 crores in Hyderabad-based DRS Logistics, better known by its brand name Agarwal Packers and Movers. The funding would be used to set up logistics parks across six cities where land has already been acquired.

The Rs. 200 crore-company has also applied to the director general of civil aviation (DGCA) to kick off an air cargo airline in the country. Besides, it is in talks for leasing two aircrafts to operate services in six sectors, covering the four metros and Bangalore and Hyderabad.

DRS owns warehousing infrastructure in Gurgaon, Hyderabad, Mumbai and Chennai totaling 1.5 mn sq ft in space, and is looking to add an equal amount of space next year expanding to a total of six cities to set up logistics parks. The company plans to invest Rs. 150 crores on this.

Read the DNA Money article.

Kotak’s India Growth Fund is also investing $12 mn in Kishore Biyani’s Home Solutions Retail India Limited, which is set to roll out Home Town, its new format modeled on Home Depot. This is the second round of private equity investment in the company after ICICI Ventures invested $27.3 mn in October 2006.

Home Town will offer everything a customer would need to build, furnish and decorate a home including building material, paints, tiles, electrical and plumbing products and services, furnishings, furniture and consumer durables. According to estimates, the current home market in the country is estimated at between Rs. 75,000 crores and Rs. 100,000 crores which is largely serviced by the unorganized market.

The first Home Town is slated to roll out on March 31 from Noida and thereafter in six other cities within six to nine months in cities, including Hyderabad, Bangalore, Pune, Thane, Surat and Ahmedabad at an investment of Rs. 150-175 crores. Each of the Home Town formats, which will be spread over at least 125,000 sq. ft., will also incorporate e-Zone, the electronics lifestyle format and the Collection-i, furniture and home accessories formats.

Read the DNA Money article.

Credit Suisse forms JV with GE for emerging markets infra fund

Zurich-based universal bank Credit Suisse has entered into a joint venture with General Electric (GE) for an infrastructure fund. The fund will invest in emerging markets with a substantial portion devoted for investments in the Indian infrastructure sector. The size of the fund is estimated to be around a $ bn-plus. The fund-raising is currently going on. The announcement of the fund comes in the wake of the resumption of Credit Suisse’s institutional broking business in India, after a gap of six years. Credit Suisse was suspended from trading in India for two years from April 2001 to April 2003 by the Securities and Exchange Board of India (SEBI) for alleged price manipulation.

The bank has roped in the services of V Anantharaman as head of investment banking in India. Mr. Anantharaman was earlier the head of corporate advisory services at Standard Chartered Bank.

Read the Business Standard article.
Related Post:
Credit Suisse launches Indian brokerage operations

Nakheel, DLF form JV for infrastructure development projects worth $12 bn

Delhi-based real estate giant DLF is reportedly forming a joint venture with Nakheel, the largest property development company in the United Arab Emirates. The JV is being formed for mega infrastructure development projects at an estimated cost of $10-12 bn.

Each project, one near the National Capital Region and the other in Maharashtra, along the coastal region, would be spread over 20,000 acres, and would involve the development of industrial infrastructure and township components, including residential, commercial, retail and recreational centres. Each partner would bring around $3 bn to the table while the remaining would be financed through debt.

Nakheel is behind some of the most iconic projects in the Middle East such as The Palm, The Dubai World and Dubai Waterfront. Nakheel currently has 17 major projects, worth more than $30 bn under development.

Read more in The Economic Times article.

Andhra state government housing firm Deccan Infra to list; to raise Rs. 2000 crores

Andhra Pradesh Housing Board (APHB) subsidiary, Deccan Infrastructure & Land Holdings Limited (DILH) will raise up to Rs. 2000 crores through an initial public offering, most likely to come out in June – July. The company will divest 15-20% equity. The Government of Andhra Pradesh holds 49% equity and the APHB 51% in DILH. Deccan Infra is into the development of integrated townships and urban infrastructure either on its own or through JVs with other public bodies and private-sector companies. The managers to the issue are JM Morgan Stanley, DSP Merrill Lynch and SBI Capital Markets.

Based on the track record of its parent and armed with a land bank of about 8000 acres, Deccan is valued at over Rs. 12,000 crores on the lower side. Property consultants Trammell Crow Meghraj and Cushman Wakefield are carrying out a valuation exercise on the land bank.

Read the article in DNA Money.

Trinity Capital to pump in $10 bn to develop satellite towns around Mumbai, Delhi, Bangalore

Business Standard reports that the New York-based real estate investment fund Trinity Capital has lined up $10 bn, which may go up to $12 bn, to develop three satellite cities on the outskirts of Mumbai, New Delhi and Bangalore. Each of the satellite townships, to be built over a 1000 acre spread, will see an investment of $2 bn – $4 bn. Trinity is also in the process of lining up $2.5 bn for investing across 10,000 hotel rooms in the country over the next five years.

Reliance Industries giving shape to global ambitions; in talks with Carrefour, Dow Chemicals for strategic alliances

Reliance Industries is reportedly in talks with French retail major Carrefour as well as other global players for acquiring controlling stake in these companies to reach out to international consumers with its basket of Indian food produce.

Reliance has created a war-chest of Rs. 100,000 crores and is looking to create international business arms for accessing global markets by leveraging on its supply chain that was put in place as part of the farm-to-fork project. Besides Carrefour, Reliance is also talking to Tier-2 companies like Salisbury and Marks and Spencer for food business.

Carrefour on its part has denied any sort of discussions with Reliance for either a controlling stake in the former or a joint venture. In a related development, Reliance is also in talks with Dow Chemicals and is expected to form a petrochemical JV.

3i in talks to invest $100 mn in Mantri Developers

UK-based private equity major 3i is in talks with Mantri Developers for investing up to $100 mn. Mantri and 3i have had several rounds of talks and the investment could be routed into a special purpose vehicle (SPV) for a specific project. Mantri Developers has already attracted private equity funding in an earlier round from Morgan Stanley Real Estate Fund for 10% stake for $68 mn, valuing the company at $650-680 mn in early 2006.

Some of the biggest PE transactions in the realty space include TPG-Axon investing $100 mn in DivyaSree Developers, Citigroup Property Investors tying up with Nitesh Estates to invest $100 mn to build the 250-room Ritz Carlton in Bangalore, UK-based Trinity Capital infusing £9.1 mn in Hyderabad-based Manjeera Construction, New York-based Och-Ziff Capital which picked up a 25% stake in Nitesh Estates for $ 51 mn and US-based Samsara Capital investing $32 mn in IDEB Projects.

So far, 3i has made seven direct investments in India, the latest being in Indiareit, the real estate fund of the Piramal Group. In the last 18 months 3i has invested over $200 mn in India, and plans to invest a further $1 bn in Asia over the next three years.

Read more in the article in The Economic Times.

Shapoorji Pallonji to raise $400 mn in private equity for real estate ventures

The 140-year-old construction firm, the Shapoorji Pallonji Group has been bitten by the private equity bug. It is raising around $400 mn from private equity investors to fund its real estate ventures. Three government-owned PE funds, Government of Singapore Investment Corporation (GIC), Dubai Capital and Abu Dhabi Investment Authority (ADIA), will pick up 30-40% equity in each project. The group is rolling out at least half-a-dozen projects in various cities with a total project cost of $1-1.2 bn.

Shapoorji Pallonji has a land bank of 2000 acres of prime land in cities like Mumbai, Pune, Chennai, Kolkata, Gurgaon, Nagpur and Mysore. It is currently developing around 550 acres (around 50 mn sq. ft.) of residential and commercial space. The projects include IT parks hotels, shopping malls and residential properties. All these projects are FDI (foreign direct investment)-compliant projects, and are located at prime areas, which will attract substantial premium. Each project is being developed by a different special purpose vehicle (SPV), and equity by SP group is expected to be rooted through one company.

Read The Economic Times article for more.

Flemingo Duty Free Shops sells 15% stake to Citigroup Venture Capital International; awaits regulatory nod

Citigroup Venture Capital International will acquire 15% stake in Flemingo Duty Free Shops Private Limited. Flemingo runs duty-free shops at various airports and seaports. The deal is valued at more than Rs. 100 crores, as per data available from Foreign Investment Promotion Board (FIPB).

Flemingo would initially issue convertible preference shares to Citigroup for about Rs. 100 crores. These preference shares would be converted into equity at a later date for a premium. Citigroup’s shareholding in Flemingo would be up to a maximum of 15% of the paid-up equity of the company.

Flemingo has sought FIPB approval to issue 1 mn convertible preference shares for Rs. 1000 each to Citigroup. The green signal from the Board is yet to materialize since the Finance Ministry plans to go into details of the deal.

FIPB had deferred Flemingo’s proposal pending completion of investigation and due action by revenue department. Currently, Flemingo International, a company based in British Virgin Islands, holds 51.22% equity stake in Flemingo while various NRIs hold 24.87% stake. After conversion of Citigroup’s preference shares, Flemingo International, NRIs and Citigroup would respectively hold 43.54%, 21.14% and 15% in Flemingo, taking the total FDI to 79.68%.

Read more in The Economic Times article.