HCL, SABA looking at a tie-up for enhanced IT services

Global IT services company HCL and human capital management (HCM) and software services provider Saba have tied-up to strengthen their services and relationship in the Asia Pacific, Europe and North America. They'll be aligning their marketing efforts to provide coordinated software and IT services to mutual customers in several vertical markets including media and entertainment, healthcare, financial services, retail, life sciences and manufacturing.

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.

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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JP Morgan to set up asset reconstruction business in India

Zensar Technologies forms JV with Japan-based EZA

IT and BPO solutions provider Zensar Technologies Limited is forming a joint venture with Tokyo-based IT firm EZA Limited to create Zensar Advanced Technologies to further strengthen its footprint in the emerging Japanese market. The transaction would involve the transfer of all EZA’s existing order book, employees, technology, and intellectual property to the newly formed joint venture.

EZA was incorporated in 1996 and had a turnover of $4.2 mn in 2006, and brings in over 10 years of strong industry experience in Japan. The company has over the years developed products in media server, digital appliances and security space. Its customers include NEC, Japan Railways and Unisys and other retail customers. Having gained technology and domain expertise pertaining to mobile terminals over the years, EZA is now focusing to enter the digital home appliances and security markets.

Read the article in Business Standard.

Hershey forms JV with Godrej Foods; acquires 51% stake in latter

Renowned US-based chocolate maker Hershey has announced a joint venture with Godrej Beverages and Foods Limited, a subsidiary of diversified conglomerate Godrej Industries. The JV, named Godrej Hershey’s Foods and Beverages Limited, would manufacture and distribute confectionery, snacks and beverages across the country.

Under the deal, Hershey will acquire 51% stake in Godrej Beverages and Foods for $60 mn. The parent company Godrej Industries and Hershey will hold 43% in the new venture, and the remaining 6% will be held by JV CEO A Mahendran. Hershey is acquiring 40% from IL&FS which is exiting the venture. Hershey would license to Godrej Foods some of its trademark rights for $2 mn, in addition to royalty payments of less than 5% for domestic sales and 8% for exports. Hershey may also use the facilities of GBFL as a manufacturing base for the company in India. The new entity would get two of Godrej Foods’ existing manufacturing facilities at Mandideep and Chittur.

Read more in The Economic Times article.
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Hershey to buy 51% stake in Godrej Beverages & Foods

Chennai-based Xtenza Solutions to form JV in Malaysia with Petrogold

Chennai-based software company Xtenza Solutions has formed a IT JV with Malaysian trading company Petrogold to tap the growing IT market in Malaysia. Petrogold would hold 51% stake in the joint venture.

Xtenza is a subsidiary of US-based Softnet Solutions, which picked up 50% stake in the company from its promoters who now hold the remaining stake. Softnet is headed by an Indian settled in the US and with about 70 employees, has revenues of about $10 mn. It offers solutions that make an organization’s supply chain more efficient by automating some of its transactions with suppliers, logistics providers, dealers and finance agents. Its major domestic customers include Hindustan Zinc, Sterlite, Eicher and L&T.

The joint venture would be based in Kuala Lumpur and would also target Singapore, Brunei, China and Indonesia, with initial thrust coming from Malaysian companies. The company is set to go on-stream by third week of April.

Read The Economic Times article for more details.

SCA and Godrej Consumer Products form JV for hygiene products in India

Swedish consumer and paper goods company SCA and Indian FMCG major Godrej Consumer Products Limited are forming a 50:50 JV, christened as Godrej SCA Hygiene Limited, for the manufacturing and marketing of absorbent hygiene products such as sanitary napkins and baby diapers, in India, Nepal and Bhutan. The joint venture is being set up with an equity capital of Rs. 20 crores through equal investments by both the companies.

For more details, read the press release here.

ASK calls off JV with Raymond James

The ASK-Raymond James JV is no more. Brothers Asit and Sameer Koticha-owned ASK Investment & Financial Consultants has bought out the 50% strategic stake from Raymond James Financial, Inc. for an undisclosed amount. Raymond James will not have any presence in India post-deal. The Kotichas have kept their options open on having financial partner or strategic investor in the future.

Subsequent to the buyback, the 50% shares will remain with the two brothers-Asit and Sameer. In the new holding pattern, the two brothers will hold 75% shares and another 25% will stay with Bharat Shah, who will be heading the ASK Investment Managers Private Limited. The ASK Group also plans to enter mutual fund, real estate and NBFC businesses.

Read the Business Standard 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.
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SAIL and Jaiprakash Associates in cement production JV

The Steel Authority of India Limited (SAIL) has entered into a 26:74 joint venture with Jaiprakash Associates for producing 2,2 mn tonnes of cement. The venture will spend Rs. 600 crores to set up the new plant. SAIL will hold 26% stake in the venture while the balance will be held by Jaiprakash. The clinker and partial grinding unit of the plant would be located in Satna in Madhya Pradesh and slag cement would be made in Bhilai in Chhattisgarh. The project is expected to be completed in 37 months.

Two unique things about the project are that, firstly, this is the first of its kind public-private partnership in the cement sector. Secondly, SAIL’s foray into cement production is important as cement prices have shot up in wake of demand overshooting supplies. The country’s current cement production capacity is 165 mn tonnes. About 30 mn tonnes of new capacity is expected to be added in a couple of years. SAIL currently sells slag to cement companies through medium-term contracts but the exercise is not enough for a total disposal of its stocks. The JV would enable the company for more productive use of the waste generated by it while producing steel.

The JV would use slag generated from SAIL’s Bhilai Steel Plant as basic feed for cement production, and has already signed a 30-year agreement with the Bhilai Steel Plant for supply of slag. SAIL is also looking at using its slag generated from Bokaro Steel Plant for conversion to cement.

Read The Economic Times article.

Raymond James to buy out Indian partner ASK Investment Financial Consultants from ASK-Raymond James JV

US brokerage Raymond James Financial, Inc. may buy out the stake of its Indian partner, ASK Investment Financial Consultants. Competition in India's investment banking market has heated up dramatically, and foreign securities houses are now scrapping joint ventures to chase deals by themselves.

Last month, Morgan Stanley said it would spend a net $425 mn to split from its Indian partner, JM Financial. Merrill Lynch agreed to pay $500 mn to lift its stake in its DSP Merrill Lynch joint venture to 90% from 40% in December 2005. Goldman Sachs announced plans last year to set up its own Indian investment banking and securities business after selling its stakes in two joint ventures to partner Kotak Mahindra Bank.

Read The Economic Times article.

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.

Reliance Industries in JV talks with US-based Nova Chemicals

Apart from Dow Chemicals, it is learnt that Reliance Industries is said to be in advanced stage of discussions with North American plastics and petrochemicals major Nova Chemicals as part of its bid to spread wings to foreign shores. The possible alliance could include product swaps, infrastructure sharing as well as joint exploration of business growth opportunities.

Nova Chemicals has a market capitalization of about $2.5 bn, and has seven manufacturing facilities in the US, six in Canada and two others in South America, while it is also present in Europe through various joint ventures. It has an annual turnover of over $6.5 bn.

Read more in the Business Standard article.
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Reliance Industries giving shape to global ambitions; in talks with Carrefour, Dow Chemicals for strategic alliances

Sun Pharma to hive off R&D work into new company SPARC

Sun Pharmaceuticals will spin off its research and development (R&D) activities into a new company called Sun Pharma Advanced Research Company (SPARC). The transfer will include the company’s New Chemical Entity (NCE) and New Drug Delivery System (NDDS) programmes, which have an estimated 100 scientists.

Sun Pharma will infuse $45 mn into the new company, to enable it to sustain its operations until revenues from out-licensing deal start flowing in. The company could be looking at raising funds for its new company through equity or debt. It is planning to invest $60 to $65 mn in the new research company in the next three years. Research for generic drugs will remain with the main company.

The de-merger will offer investors an option to separately hold investments in businesses with different return characteristics, depending on their risk and return expectations. The new research company, SPARC, is being valued at more than $450 mn. Simultaneously, the de-merger of Sun Pharma’s innovative R&D business could significantly de-risk the company’s core business.

Read the article in The Economic Times.

German shipping major inks JV with Shipping Corporation of India

The Times of India reports that German shipping company Peter Dohle Schiffahrts KG, one of the largest privately held shipping company in the world has entered into a JV with India's largest shipping company, the Shipping Corporation of India (SCI). The 50:50 JV mainly entails jointly operating bulk carriers and container ships. The venture is likely to be kicked-off shortly with the formation of a company either in India or overseas. Initially, both companies plan to deploy bulk carriers in the joint venture company. A little later, the fleet will be expanded to more bulk carriers or container ships, depending on market conditions.

Sical Logistics to receive Rs. 110 crores private equity from IDFC; to hive off non-core activities

Sical Logistics Limited will receive private equity funding of around Rs. 110 crores from IDFC Private Equity from its IDFC Private Equity Fund II. The proposed investment would be through a preferential issue of equity shares. SSKI Corporate Finance was the advisor to Sical for the fund raising exercise.

Sical intends to become a pure play integrated logistics provider. It is now in the final stages of divesting its non-logistics businesses. As part of this process, Sical proposes to de-merge the non-logistics businesses comprising of trading undertakings, services undertaking and coffee plantations as per the de-merger scheme approved by the board. The ratio for issue of shares upon de-merger has been endorsed by Ernst & Young. Additionally, Sical is also hiving off some of the other non-core businesses including palm oil, refractory, auto, drums, agri-bio products, specialty chemicals and flexible shafts. Buyers have been identified and relevant due diligence exercises are currently in the last stages. It is expected that a significant portion of the hive off exercise will be completed within FY 2007.

Read more on Sical Logistics in Moneycontrol.com.

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.

Consulting firm Tholons partners US-based Baird Private Equity

Business Standard reports that investment, advisory and consulting firm Tholons has partnered Baird Private Equity, a global private equity group of investment firm, Robert W Baird & Company. The partnership allows Tholons to expand its footprints in the globalization of services consulting space by helping Baird Private Equity's portfolio companies leverage the benefits of global outsourcing. The partnership will enable Baird to establish its presence in the fast-growing offshore markets. Tholons will have dedicated resources for Baird to be located at its Bangalore centre. They will work exclusively with Baird Private Equity's portfolio companies, particularly those in the business services sector, to evaluate, develop and execute appropriate strategies in India. Several of Baird’s portfolio companies including HireRight, TrueAdvantage and Cerillion have a presence in India and stand to benefit from Baird’s presence there.

Domestic investment bank Allegro ties up with UK-based Close Brothers for cross-border opportunities

While the JM Financial-Morgan Stanley JV unravels, another one seems to be in the making. Allegro Capital Advisors, a domestic investment bank with a pan-India presence has tied up with UK-based investment banking firm Close Brothers for cross-border investment banking partnerships in South East Asia.

The alliance would enable Allegro to offer international investment banking services and deliver a global platform of M&A opportunities to Indian businesses. The firm claims to be already sitting on a number of cross border acquisition mandates from Indian corporates.

Close Brothers focus on the mid-market corporate segment. It is UK’s largest listed investment bank with a network of 450 investment banking professionals across 36 offices located in 20 countries.

Read The Economic Times article.

Uttam Galva ties up with UK-based Liberty Commodities for Ghana steel plant JV

Uttam Galva Steels Limited, one of India’s leading galvanized steel producers, will invest up to Rs. 450 crores to set up a galvanizing and cold-roll mill complex in Ghana in a joint venture along with Liberty Commodities, a UK-based trading major with interests in metals and oil. The JV firm, Ghana Iron & Steel, will initially invest about Rs. 270 crores. Uttam Galva will have a majority stake in the JV. The joint venture company is believed to have already acquired land for the project.

The complex will include a hot-dip galvanizing line with a capacity of 75,000-tonne-per-annum that will be functional in 18 months. Later, a 250,000 TPA cold mill will be set up to feed the galvanizing unit. Till then, cold rolled coils will be exported from India and Bangladesh. The initial investment of Rs. 270 crores will be made for the two units.

Read The Economic Times article.