Millennium India Acquisition Company, Inc. to acquire stake in SMC Group

Millennium India Acquisition Company, Inc. announced that it would be picking up a minor stake in SMC group of companies worth A$39.97 mn.This would give the company a 14.9% control in what is one of the heavyweights in the finanial services industry in India.

This deal values SMC Group at $228 million, or approximately 8.6 times FY2008 projected earnings.

The capital realized from this investment will be used by SMC Group to expedite its expansion plans

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Geogit Financial sevices to partner BNP Paribas

The BNP Paribas-Geojit financial services partnership which was ascertained in March 2007 is being renamed as 'Geojit BNP Paribas Financial Services Limited' in India.

BNP Paribas picked up a stake of 27.18% in March which will go up to 34.35%.Investors of Barjeel Geojit Securities LLC, a leading UAE-based provider of financial services of which Geojit Financial Services is the parent company, are to benefit by way of best practices, global products and technology as a result of this partnership.

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ICICI plans India's biggest Public Offering;to be worth $4.3 bn

ICICI Bank Ltd. has filed documents with the market regulator SEBI seeking a public offer speculated to be worth 17,500 crore which may go up to 20,100 crore depending on the demand.

The bank which has hired Goldman Sachs and Merill Lynch to manage the offer said it would meet its next 3 years requirements assuming the banking system grows at 25%.It proposes to use the proceeds to meet the strong credit growth and also to usher the bank's inorganic growth ambitions.

Enam Financial Consultants and JM Morgan Stanley are also hired to see the deal through.

Source: www.livemint.com

Big names gear up to pick up stake in Reliance MF

Big private equity and asset management firms have lined up for a small stake in Reliance MF. Blackstone, the big US PE firm which has operations in India will look to build a relationship base with what is the biggest Asset management company in India and has Assets Under Management(AUM) which are scaling new heights, recently surpassing the 50,000 crore mark.
Reliance MF which is eyeing a valuation of 1.2 billion dollars (10% of the total AUM) is also on the radar of Schroder’s, the British fund with assets of about $260 bn after speculation that it wants to enter the Asset Management business in India and one of the units of US based Capital.
If this deal does go through it will help the foreign investors to cement a relationship with one of the biggest money mangers in the world .The industry’s AUM has witnessed a growth of almost 85% over two years starting 2005 April, and with the future looking bright these foreign firms could not have possibly found a better opportunity to build on a base starting with the leader in the Indian Markets .On the other hand it’s a win-win situation as far as Reliance Capital is concerned as it will give the company valuable know-how and technical proficiency in the Financial Services industry with the biggest names on its board. Valuations are also going crazy with the firm hitting a new high on the BSE.
Even if the offer is not accepted it has showcased the potential for the growth of the industry, with the American and the European markets approaching perfection and that these investors are finding it hard to outperform the markets there, they are looking at offshoring their business to low cost and high return destinations on the long term like India.
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Sharekhan to sell stake to private equity players

Sharekhan, the retail broking arm of the Mumbai-based SSKI Group, is raising funds from private equity players to finance its expansion. A few private equity players have already started due diligence on Sharekhan. However, there seem to be conflicting reports as to how much stake will be diluted.

As per Business Standard reports, the retail brokerage company may dilute close to 15% stake, as per Shripal Morakhia, promoter of Sharekhan. This will result in a dilution of stakes of all existing shareholders. The company is not disclosing the amount it is planning to raise. At present, the Morakhias hold 37% stake in Sharekhan, while its employees hold 15% and the rest is held by General Atlantic, Intel Capital and a group of funds advised by HSBC Private Equity India. In April 2006, General Atlantic invested about Rs. 144 crores ($31 mn) in the company through a combination of primary and secondary investments through buying out the entire shareholding of First Carlyle Ventures. Sharekhan is looking at expanding its presence in the country through organic growth. It is among the top five retail brokerage outfits in the country with over 100 branches across 150 cities.

Meanwhile, The Economic Times says that the promoters of Sharekhan are looking to dilute a majority stake (around 51%) to a strategic investor. The company is valued at around Rs. 750-850 crores and a 51% stake will be valued at Rs. 375-425 crores. The company is said to be in talks with a few investors and is considering all options including selling a majority stake to an investor or selling the entire company, according to Sharekhan CEO Tarun Shah. It is being said that Credit Suisse is one of the interested parties.

Rajan Raheja-promoted Hathway Investments buys 39% in ING Vysya Mutual Fund

The Economic Times reports that Hathway Investments, a company promoted by realtor Rajan Raheja, has bought out ING Vysya Bank’s entire 39% stake in ING Vysya Mutual Fund for an undisclosed sum. Post this deal, ING will hold 42.5% in the fund, Hathway 39%, and existing Indian shareholder Kirti Equities, will retain 18.5%. The fund would be renamed as ING Mutual Fund. The asset management company’s total assets under management as on March 31, 2007, were close to Rs. 3630 crores. For the year ended March 2006, the AMC had reported a net loss of Rs. 21 crores. This could have depressed the valuation of the fund house, which usually ranges from 4-6% of assets. Hathway, which earlier held a 25% stake in Franklin Templeton, is estimated to have pocketed around Rs. 300 crores from the sale of its stake, less than six months ago.

Barclays Capital appoints Sanjay Mathur as Director

The Economic Times reports that Barclays Capital, the investment banking arm of global financial group Barclays, has appointed Sanjay Mathur from UBS as Director, Rates Research for its Asian operations (excluding Japan). Mathur would lead the firm's coverage of macro-economic research on the Indian subcontinent, Malaysia and Singapore. Prior to this, Mathur was working as Executive Director in the regional economic team of global financial firm UBS.

IIFC to raise $500 mn through the ECB route; Standard Chartered appointed as lead arranger

India Infrastructure Finance Company Limited (IIFC) will raise $500 mn through the external commercial borrowings (ECB) route. Standard Chartered Bank will be the lead arranger to the issue. The funds are being raised for a period of 10 years. The resource will be used for financing some major infrastructure projects in the country.

During 2007-08, IIFC, a wholly-owned special purpose vehicle of the Indian government for core sector lending, intends to sanction some 46 projects, aggregating Rs. 15,000 crores and disburse nearly Rs. 3000 crores. A major chunk of this Rs. 3000 crores funding requirement will be met through overseas borrowings.

IIFC’s paid-up capital is Rs. 100 crores. It sanctions loans up to 20% of the project cost. Out of the 46 projects which are under the IIFC’s consideration, 31 are road development ventures, 12 are power projects, 2 are port-related infrastructure ventures, while 1 is an airport project. To ensure proper usage of funds, IIFC has appointed ICRA to work out a detailed business roadmap. ICRA is expected to submit the report within a month. It will also recommend an HRD strategy suited to IIFC’s needs.

Apart from some of major infrastructure projects, IIFCL is also working with the municipal corporations and urban local bodies to develop urban infrastructure projects. IIFC has tied up with IDBI, Canara Bank and IL&FS to create a Rs. 3000 crore-pooled municipal debt obligation (PMDO) facility. The fund will be channelized for urban infrastructure development.

Read more in The Economic Times article.
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Calcutta Stock Exchange facing problems in demutualization

The Calcutta Stock Exchange (CSE) seems to be facing a huge problem in its demutualization scheme. After having failed its original deadline for soliciting expressions of interest (EoIs) on March 23, it has again failed in its efforts to rope in strategic investors, as it has received insufficient response to the revised deadline of March 5. It is now further extending the date for submitting EoIs to April 30.

The CSE and its consultant-advisor PriceWaterhouseCoopers are conducting road shows within India and overseas to hard-sell the benefits of picking up a stake in CSE. PriceWaterhouseCoopers has already made presentations to leading bourses in Asia. Some of them are interested, but the main hindrance is the 5% limit in investment

As per SEBI guidelines, all exchanges have to divest 51% to financial institutions (FIs), foreign institutional investors (FIIs) and corporate bodies other than broking outfits before August 2007. The guidelines state that no individual investor, be it FIs, FIIs or corporates, can hold more than 5% in an individual capacity in any stock exchange. The collective holding of the non-brokers would be 51%, whereas brokers would hold 49%.

Currently, there is very little trading which happens on the CSE, which was once India's third largest bourse with a daily turnover in excess of Rs. 1000 crores.

Read the article in The Times of India article.
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Citigroup in talks to buy to hedge fund Old Lane for $600 mn; fund boss Vikram Pandit may get to head Citi’s alternative investments unit

Global banking giant Citigroup is in talks to buy Old Lane, a hedge fund firm co-founded by ex-Morgan Stanley senior executive Vikram Pandit. If such a deal happens, Mr. Pandit would probably be on his way to heading the bank’s alternative investments unit, and probably, also the top job at the world’s largest bank.

The purchase price for Old Lane is estimated to be around $600 mn. Old Lane is thought to have more than $4 bn of assets under management. The alternative investments unit is the smallest of Citigroup's four main businesses. In 2006, profit at the unit fell 11% to $1.28 bn, and revenue dropped 15% to $2.9 bn. The unit at year-end oversaw $49.2 bn of assets, including $10.7 bn of Citigroup's prop money.

Vikram Pandit is a former head of Morgan Stanley's institutional securities division. Once considered a potential successor to former Morgan Stanley chief executive Philip Purcell, Pandit left the investment bank in March 2005 as part of an exodus of senior bankers and traders. He later founded Old Lane with his Morgan Stanley colleagues John Havens and Guru Ramkrishnan.

Read more in The Economic Times article.

Major financial houses in race to acquire UTI Securities stake

Major international financial powerhouses Citigroup, Macquarie Bank, Standard Chartered, Societe Generale and Kuwait-based Global Investment House are in the race to acquire 49% stake in UTI Securities. UTI Securities is currently owned by the Securities Trading Corporation of India (STCI).

STCI had bought 100% stake in UTI Securities for Rs. 265 crores in 2006 from the Specified Undertaking of UTI (SU-UTI). It is now looking to sell 49% stake to a strategic partner. As per the deal, STCI has a minimum lock-in of 51% stake in UTI Securities for three years, which will end in 2008.

The company will now divest 49% stake to a strategic partner, preferably a foreign investor, considering the expertise they would bring in. The talks were at an advanced stage and a prospective strategic partner would be short-listed soon.

Read more in the Business Standard article.

JP Morgan to form asset reconstruction business with Yes Bank, Bank of Baroda, Bank of India and Union Bank

JP Morgan is setting up an asset reconstruction company in India along with public sector banks Bank of India, Bank of Baroda, Union Bank of India and private sector bank Yes Bank. The group has applied to the Reserve Bank of India (RBI) for its approval. JP Morgan will act as the knowledge partner in the joint venture, which will have an initial capital of Rs. 100 crores. If and when the RBI's approval is received, the four India banks will form a company in which JP Morgan will pick up a 27% equity stake. For this, it will have to get the permission of the Foreign Investment Promotion Board, since the investment will be treated as foreign direct investment. At present, the cap on FDI in asset reconstruction companies is at 49%.

Union Bank was earlier supposed to partner Standard Chartered Bank in the latter’s ARC set-up. However, due to delays, Union Bank has now switched over to the JP Morgan side of the business.

Read more in the Business Standard article.
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ICICI Bank re-jigs i-banking operations

India’s largest private sector bank ICICI Bank has restructured its investment banking division, giving it a ‘global’ appellation and new functional lines. The reason cited for the exercise has been the global opportunities emerging through Indian corporates, and the bank’s need to grow beyond trade finance and working capital to corporate advisory, deal origination and M&A funding. Investment banking provided roughly 30% of ICICI Bank’s profit of Rs. 2285 crores in the nine months to December 31, 2006.

The restructuring of i-banking operations has been as follows: Corporate Products & Investment Banking Group has been renamed as the Global Investment Banking Group (GIBG). ICICI Securities, the existing wholly-owned investment banking arm of ICICI Bank, will now focus only on equity markets and research. The investment banking business of I-Sec will shift to GIBG, while the retail equity brokerage part of ICICI Bank, called ICICIDirect.com, is now a part of ICICI Securities. GIBG will have three groups under it: Global Structured Finance & Advisory Group (GSFAG), Financial Institutions and Syndications Group (FISG) and International Syndications Group (ISG).

GSFAG will be responsible for banking products across India and all international markets. FISG will work with GSFAG and ISG for domestic syndication, and with the Balance Sheet Management Group for resource-raising and securitization. It will handle the needs of financial institution clients. For deals where the approving authority requires an amount of the facility to be sold-down or syndicated in the domestic market, the FISG will approve the terms of the facility. It will also originate deals for sell-downs directly, along with GSFAG. FISG will include the Capital Markets Division and the Global Custodial Services Group of the bank. ISG will work with GSFAG and FISG for all international syndications of corporate issuances for Indian as well as international clients. It will approve terms for sell-downs / syndications in the international market and also, along with GSFAG originate deals directly for the specific purpose of sell-downs.

Read the article in DNA Money.

Saraswat Co-operative Bank planning to acquire 4 regional banks

After its successful merger with Mandvi Co-operative Bank in October 2006, Saraswat Co-operative Bank is eyeing four other banks to merge with by June 2007. The banks under consideration are Murgha Rajendra Co-operative Bank and Annasaheb Karale Bank based in Sangli, and the Nashik People Co-operative Bank and Kolhapur Janta Sahakari Bank based in Nashik and Kolhapur, respectively.

Saraswat has already signed a deal with Murgha Rajendra and Annasaheb Karale, whereas the due diligence is on for Nashik People and Kolhapur Janta Sahakari Bank. 11 branches each of Annasaheb Karale, Murgha Rajendra and Kolhapur Janta and 14 branches of Nashik People will be taken over. Saraswat Bank will absorb 200 employees from Murgha Rajendra and 160 employees from Annasaheb Karale.

Read the article from DNA Money.

Financial Technologies sells 1% in Dubai commodity bourse for $12.5 mn

Indian IT company and MCX promoter Financial Technologies has sold a 1% stake in its Middle East-based venture, the Dubai Gold and Commodities Exchange (DGCX), to its partner, the Dubai Multi Commodities Centre (DMCC). The size of the deal is around $12.5 mn valuing the year-and-a-half old DGCX at $1.25 bn. Financial Technologies would now hold a 49% stake in DGCX.

DGCX is an electronic futures and options exchange which utilizes trading, clearing and settlement technology developed by Financial Technologies. The exchange lists futures contracts in gold, silver, currencies and fuel oil. It has recently announced the imminent launch of futures contracts in steel and options contracts on gold. DGCX has also foreshadowed the future listing of various agricultural, metal, and energy products.

Read the article in Business Standard.
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Central Bank to come out with IPO; issues 5 merchant bankers for the issue

Mumbai-based public sector bank Central Bank of India is coming out with an initial public offering of Rs. 1000 crores, expected by end-May 2007. The bank has finalized five merchant bankers for the issue. The bank has appointed IDBI Capital Markets, Kotak Securities, ICICI Securities, Citigroup Global Markets and Enam Financial as the lead managers to the issue.

The bank has received all regulatory clearances for converting about 71% of its large equity base into preference shares. The proposal for conversion of shares, which was stuck at the Reserve Bank of India (RBI), was recently cleared by the government. The bank is negotiating with the government for the coupon rate on the preference shares. The government wants a floating coupon rate of 100 basis points above the RBI’s repo rate, which is currently at 7.75%.

Of the Rs. 1124.14 crores equity capital, Rs. 800 crores would be converted into preference shares. The conversion will lower the bank’s paid-up equity capital to Rs. 324.14 crores. Central Bank, which had planned to get listed in the fourth quarter of 2006-07, as on December 31, 2006, had a total business of Rs. 121,301 crores, comprising deposits of Rs. 74,974 crores and advances of Rs. 46,327 crores.

Read the article in Business Standard.

Sequoia Capital invests $11.5 mn in Indian MFI SKS Microfinance

Leading Indian microfinance institution SKS Microfinance has received $11.5 mn of venture capital funding from Sequoia Capital. This is "the first pure for-profit private equity play" ever seen in the micro-lending world, according to SKS Microfinance CEO Vikram Akula, in an interview with CNBC. Sequoia's investment makes SKS the largest for-profit microfinance institution in the world. Sequoia's investment also makes it SKS' lead investor. Other stakeholders include Unitus Equity.

The concept of microfinance, which is providing small business loans to poor borrowers who lack credit, was made famous by Nobel peace prize winner Mohammed Yunus, founder of the not-for-profit Grameen Bank of Bangladesh. While the foundations are similar in concept, SKS' version of micro-lending provides loans that carry interest rates to its 600,000 members in 7200 villages in rural India.

However, it is to be noted that Sequoia's investment comes with a rider: in the next 3-5 years, SKS will either have an initial public offering or be acquired.

Magma Leasing to raise $15 mn from the Netherlands-based financial institution FMO

Magma Leasing Limited will make a private placement of $15 mn or around Rs. 65 crores of redeemable preference shares to The Netherlands Development Finance Company (Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden - FMO). This follows an earlier investment of Rs. 21 crores by FMO in Magma preference shares in February 2006. The investment will be treated as Tier-2 capital in the company, as per RBI guidelines. The funds raised would be used strengthen the balance-sheet and drive business volume growth.

Magma had received an investment of Rs. 105 crores in August 2006 from the UK-based Cambridge Place Investment Management and following its merger with Kolkata-based Shrachi Infrastructure Finance Limited, Magma now had a branch network at 154 locations and over Rs. 5500 crores worth of assets under management.

Magma finances commercial vehicles, cars, construction equipment, and multi-utility vehicles, and users in semi-urban and rural markets contribute a significant proportion of its business. It also has fee-based businesses like distribution of insurance and personal loan products.

Read the article in Business Standard.
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Mayfield Ventures to invest $15 mn in domestic i-bank Avendus Advisors

Mumbai-based investment bank Avendus Advisors has received a private equity investment of around $15 mn, for a stake of 20%, from US-based venture capital fund Mayfield Ventures. The fund is being infused as fresh equity, and the term sheets would be signed in a week’s time. Other details of the deal have not been disclosed. Avendus, founded in 1999, has been valued at around Rs. 330 crores. Before the equity sale, the three initial promoters, Ranu Vohra, Gaurav Deepak and Kaushal Aggarwal, and the employees of Avendus held around 70% stake, while Spanish institutional investor Americorp held 20% and entrepreneur-investor from California, Anil Godhwani held the remaining 10%. Once the deal is finalized, there will be corresponding reduction in the stake held by each promoter.

Mayfield has already partnered Avendus to raise a $200 mn offshore fund which would invest in Indian projects, and is expected to be set up by July-August. Avendus has seen a strong growth over last couple of years. Its annual revenues are expected to cross $12 mn in 2006-07. The organisation employs approximately around 40 professionals.

The investment bank focuses on wealth management, institutional broking and debt solutions. It is also offering private equity syndication, advice on M&As, and strategic advisory services to corporates and funds. It is now in the process of expanding its operations abroad by opening offices in New York and Munich. Avendus focuses on industries where Indian companies have a strategic growth advantage including IT services, IT-enabled services, pharmaceuticals and healthcare, media and consumer products and services. The most recent deal cracked by Avendus was to help AnandRathi Securities to dilute around 20% stake in favour of CVC International, for around Rs. 100 crores (See Related Post).

Read The Economic Times article.
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Marwadi Shares raises second round of funding from UK-based Caledonia Investments

Rajkot-based equity broking house Marwadi Shares & Finance Limited has completed a second round of private equity placement from another UK-based Caledonia Investments Plc, after its first phase of investment from India Capital Growth Fund Limited in December 2006. Caledonia Investments has picked up a 19.67% stake in Marwadi Shares for around Rs. 42 crores. Marwadi Shares and Finance is a decade-old financial services group offering stock broking and commodity broking firm on the NSE, BSE, NCDEX and MCX.

Marwadi Shares has emerged as the fifth broking house in the country and the first broking house from Gujarat to have private equity placement from a foreign player. It had initially planned a route into the capital markets and raise about Rs. 60 crores through and initial public offering, but postponed the plan and instead decided to raise funds through private equity placement. The company has now revised its equity raising pattern from Rs. 60 crores to Rs. 73.5 crores and has managed to disburse a 33% stake.

Read the article in Business Standard.
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