The government is planning to amend the Banking Regulations Act so as to facilitate the route for foreign banks to acquire undercapitalized private banks. The government has on its agenda the tabling of the Banking Regulations (Amendment) Bill as well as the Pension Fund Development and Regulatory Authority Bill in the Budget session to push further financial sector reforms
The amendments to the Banking Regulations Act were expected to help foreign banks acquire undercapitalized private Indian banks. “Undercapitalized” refers to those category of banks that have not been able to raise their net worth to the minimum required Rs. 300 crores.
The Reserve Bank of India’s (RBI’s) roadmap on banking consolidation allows only “weak” banks to be acquired but the central bank has neither defined what a weak bank is nor ever identified a weak bank. The RBI’s roadmap proposes to open up the banking sector to foreign banks from 2009.
Consolidation among public sector banks is expected to gather momentum in 2007 as even some Indian banks have shown interest in buying undercapitalized banks, he added. The amendment to the Banking Regulations Act will align the voting rights of foreign and domestic shareholders with their shareholding. Apart from public sector banks, the government will also be selling some of its stakes in public sector undertakings. The proceeds of these sales will accrue to the National Investment Fund. This money will be used for social sector programmes and also for the revival of ailing public sector utilities.
Some of the banks having net worth under Rs. 300 crores as on March 31, 2006, and are thus potential takeover targets include the Catholic Syrian Bank (Rs. 216 crores), the City Union Bank (Rs. 286 crores), the Dhanalakshmi Bank (Rs. 134 crores), the Lakshmi Vilas (Rs. 291 crores), and the Ratnakar Bank (Rs. 54 crores).
Read more on this in the Business Standard article.
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Thursday, January 18, 2007
UB to acquire Whyte & Mackay for £500 mn
The United Breweries Group is close to acquiring Glasgow-based distillers Whyte & Mackay for nearly £500 mn (Rs. 4350 crores) by January-end. This will be the largest outbound acquisition by an Indian company.
United Spirits, a part of the group flagship United Breweries, might be the investment vehicle for the acquisition of Whyte & Mackay.
Citigroup advised Whyte & Mackay, while United Spirits was advised by UBS.
The acquisition follows United Breweries’ attempt to acquire Taittinger, the world’s sixth largest champagne company, for £400 mn.
Read more in the Business Standard article.
United Spirits, a part of the group flagship United Breweries, might be the investment vehicle for the acquisition of Whyte & Mackay.
Citigroup advised Whyte & Mackay, while United Spirits was advised by UBS.
The acquisition follows United Breweries’ attempt to acquire Taittinger, the world’s sixth largest champagne company, for £400 mn.
Read more in the Business Standard article.
Star to buy 20% stake in radio company MBPL
Rupert Murdoch-controlled Star Group will pick up 20% equity in radio company Music Broadcast Private Limited (MBPL) from private equity firm India Value Fund Advisors (IVFA). MBPL runs its radio service under the brand 'Radio City', which is operational in major cities like Mumbai, Delhi, Bangalore, Lucknow, Hyderabad, Chennai and Jaipur. The company also won licenses in the second round of FM radio bidding and has plans to launch services in cities like Nagpur, Surat, Ahmedabad and Baroda.
The two companies had technically approved the deal and now Star would be seeking governmental approval to make the investments. Star will be approaching the Foreign Investment Promotion Board (FIPB) to seek permission for making the investments.
This will be Star's second coming in the Indian FM radio business, after its stint with MBPL earlier where it was responsible for content supply and ad-sales, though without putting in equity. Star did not have any stake in the company at that time as the Government had not opened the sector to FDI. However, with the government allowing 20% equity in private FM radio as well as laying down a favourable policy regime, in the form of a revenue share regime, Star has made a comeback in the segment through equity participation.
Read the article in The Financial Express and The Economic Times.
The two companies had technically approved the deal and now Star would be seeking governmental approval to make the investments. Star will be approaching the Foreign Investment Promotion Board (FIPB) to seek permission for making the investments.
This will be Star's second coming in the Indian FM radio business, after its stint with MBPL earlier where it was responsible for content supply and ad-sales, though without putting in equity. Star did not have any stake in the company at that time as the Government had not opened the sector to FDI. However, with the government allowing 20% equity in private FM radio as well as laying down a favourable policy regime, in the form of a revenue share regime, Star has made a comeback in the segment through equity participation.
Read the article in The Financial Express and The Economic Times.
NVP invests $20 mn in KPO Adventity
Norwest Venture Partners (NVP) has invested $20 mn in Adventity, a provider of finance-focused strategic KPO and BPO services. Noted venture capitalist and managing partner at NVP, Mr. Pramod Haque, will join the company's board of directors. Adventity will use this funding to expand its market presence and infrastructure, further build out its innovative service offerings and increase business development efforts.
The NVP-led investment represents the first institutional round of funding for Adventity. Adventity's KPO solutions encompass quantitative capabilities such as financial modeling, comparable valuation analysis and data mining, as well as qualitative services such as broad researching and industry profiling. With more than 2000 employees globally, Adventity's clients include several global and investment banks, airlines, and some of the largest hedge funds.
Read the article in The Economic Times.
The NVP-led investment represents the first institutional round of funding for Adventity. Adventity's KPO solutions encompass quantitative capabilities such as financial modeling, comparable valuation analysis and data mining, as well as qualitative services such as broad researching and industry profiling. With more than 2000 employees globally, Adventity's clients include several global and investment banks, airlines, and some of the largest hedge funds.
Read the article 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
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
Govt to raise ECB cap from $22 bn to $18 bn
The government will now allow companies to raise more foreign loans. It has asked the Reserve Bank of India to raise the external commercial borrowing (ECB) ceiling for 2006-07 to $22 bn, instead of $18 bn at present.
The move is expected to help companies like Reliance Communications, whose applications to raise $4 bn is awaiting approval. The Reliance Communications board had cleared a proposal to let the company raise long-term resources including ECBs. The board had also approved raising $1 bn through foreign currency convertible bonds. Reliance Communications had filed three applications for raising $4 bn, with two of them seeking permission for loans worth $500 mn each and the third for $3 bn. Apart from Reliance Communications, India Infrastructure Finance Company Limited, the special purpose vehicle set up by the Centre last year, is also expected to raise a sizable amount to finance core sectors developed by PSUs and through the public-private partnership model. Another infrastructure finance company, IDFC, has already started the process to raise ECBs to finance projects.
With interest rates in India on the rise, more domestic companies are expected to opt for ECBs to lower interest costs. Till December, Indian companies raised $14.3 bn through ECBs, and with proposals for another $6-7 bn awaiting clearance by a high-level committee, the government had little choice but to raise the cap on ECBs.
Read the article in The Times of India.
The move is expected to help companies like Reliance Communications, whose applications to raise $4 bn is awaiting approval. The Reliance Communications board had cleared a proposal to let the company raise long-term resources including ECBs. The board had also approved raising $1 bn through foreign currency convertible bonds. Reliance Communications had filed three applications for raising $4 bn, with two of them seeking permission for loans worth $500 mn each and the third for $3 bn. Apart from Reliance Communications, India Infrastructure Finance Company Limited, the special purpose vehicle set up by the Centre last year, is also expected to raise a sizable amount to finance core sectors developed by PSUs and through the public-private partnership model. Another infrastructure finance company, IDFC, has already started the process to raise ECBs to finance projects.
With interest rates in India on the rise, more domestic companies are expected to opt for ECBs to lower interest costs. Till December, Indian companies raised $14.3 bn through ECBs, and with proposals for another $6-7 bn awaiting clearance by a high-level committee, the government had little choice but to raise the cap on ECBs.
Read the article in The Times of India.
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.
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.
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