CRISIL to relook ratings

CRISIL is taking a re-look at ratings it assigned to debt issued by Indian Arms of 27 global financial institutions.

The ratings here derived support from parent ratings in western markets, which have now undergone change. They need revision to reflect several downgrades in the western markets.

Some of the financial entities rated by Crisil for their domestic operations include ABN Amro Bank, ABN Amro Securities, Barclays Bank, Citibank, Citicorp Financial, Citicorp Capital Markets, DSB Bank, Deutsche Bank, DSP Merrill Lynch, GE Capital Services, JP Morgan, Rabo India, Standard Chartered Bank, Bank of Nova Scotia and HSBC. Reports ET

PE Funds Waiting For Bargains

Mint here is first with a story on what was expected. PE deals down, but funds sure that companies are undergoing customary 3-4 month valuation adjustments before they line up for funds.

Also, Richard Heald, partner and MD of NM Rothschild and Sons. “During this period (of declining stock valuations), there will be more PIPE (private investment in public equity) transactions happening globally.”

“Deal prices remain high,” said John Levack, MD,Electra Partners Asia Ltd, "we will stay away from the Indian market and concentrate on deal opportunities in some other Asian markets in the short term".

Manu Punnoose, chief executive of PE fund Subhkam Ventures, added that “PE will get larger stakes (in pre-IPO deals)…but the holding time will be longer, around 3-4 years”. Nitin Deshmukh, head of Kotak Private Equity Group. “From a momentum play, we are getting into a value play.”

For more opinions on PE trends go to Mint Article

West Asia Pulls The Plug On Indian Power Projects

India Inc's effort to raise $6Bn. of funding from West Asian countries doesnt seem to be working.

According to a Central Govt. official,"After one & half year it's going nowhere with they not intrested in equity participation and Indian company's not interested in the interest rates demanded".

NTPC Ltd, National Hydroelectric Power Corp. Ltd, and Power Grid Corp. of India Ltd were targeting investments from West Asia backed by power ministry’s initiative to politically and economically engage these countries on PMO's direction.

The move would have ensured supply lines, especially . The initial focus was to attract investments from Saudi Arabia, Qatar, United Arab Emirates and Kuwait; Bahrain and Oman were to be targeted later.Each of the three companies was given an investment target of $2 billion.

However the SWFs of these nations have been busy with "better opportunities". Add to this a probable reluctance of these countries to expose themselves to Energy Demands (in their own investments) in current tight environment, has meant GoI's plans not working.

Read the article on Mint

HDFC to raise $1Bn. for buying HDFC bank equity

This Business Standard article reports HDFC raising $1 Bn. debt finance for it's stake purchase in HDFC Bank over 18 months.

Fresh equity issuance being ruled out, raising debt remains only recourse.

HDFC Bank acquired Centurion Bank of Punjab in an all-stock deal. Following this, HDFC Bank announced a private placement of equity to HDFC to enable the mortgage lender to maintain its stake at the current level of 23.3%. This entails an investment of almost $ 1 billion by HDFC.

I hope market liquidating financing mechanisms are avoided (e.g Orchid Chemicals)

Cairn raises 2534 Cr. with 5.37% stake sale

Cairn India, Indian arm of British O&G co. Cairn Energy decided to sell 5.37% to Malaysian Petronas, and Singapore-based Orient Global Tamarind Fund for Rs 2,534 crore ($625 million) for funding Capex.

Of the 113Mn. shares, 63.3 Mn shares go to Petronas & 49.7 Mn to Tamarind at Rs.224.3 each with a 1 year lockin. Funds will be utilised for capex at Mangala, Rajasthan, by next year.

For details of Cairn Operations read Business Standard.

No bidder for BKC Plot

MMRDA failed to get bids for two of the five plots that it auctioned in the Bandra-Kurla Complex (BKC).

For a commercial plot with a total developable area of 24,000 sq metres, the authority received around Rs 3.4 lakh per sq metre, only 14 per cent more than the reserve price of Rs 3 lakh per sq metre. Jet bought this bought as a sole bidder, to build its global headquarters. This is in mighty contrast to Rs 5.04 lakh per sq metre, the highest in the country to date, by Mumbai-based developer Wadhwa Builders for an MMRDA plot in November 2007.

Read BS article for more indication of sweet slowdown in realty.

Baring acquires 12% in Sharekhan

Baring Private Equity beat Merill Lynch to acquire 12% stake in Sharekhan for Rs.240 Cr.

The transaction is mixed secondary sale by Citigroup Venture Capital and additional infusion of capital.Last year, CVC along with IDFC had invested around Rs 650 crore to pick 85% stake in Sharekhan.CVC owns 75% in Sharekhan while IDFC holds 10% and the management and employees hold the remaining 15%.

Last year, CVC and IDFC together had acquired 37% equity owned by Sharekhan promoter Shripal Morakhia while 48% was acquired from other shareholders including GE, Intel Capital and some funds advised by HSBC PE India.

A private equity firm holding substantial equity stake in an unlisted company would be classified as a promoter. If that company goes public, the PE firm’s shares would have a lock-in period and cannot exit for a certain period. This could be one reason why CVC intends to dilute its stake, though it could not be verified independently (We suspect a hole in the books was discovered during due delligence and the promoter asked to make up. I would try to do some molework)

Baring earlier took exposure in the sector picking 44.8% in JRG Securities for $35 million (Rs 140 crore) about a year ago.

Go to Economic Times here