The Industrial Finance Corporation of India (IFCI) may get a strategic partner if the Indian Government has its way. The distressed organization has been forced to stop its lending activity, having accumulated losses of over Rs. 4000 crores. This has been a result of a combination of aggressive lending in the early part of the last decade, which later resulted in a good deal of the portfolio turning into bad loans, and higher cost of borrowings.
According to senior government officials, a proposal is being considered to bring on board a strategic investor which could even be a foreign or a local bank. The track record of the investor, including its lending business would be a key deciding factor in divesting the stake. The government has already been sounded out by a couple of top foreign banks operating in India, as well as an overseas firm specializing in recovering distressed assets. However, it is a given that such asset recovery firms or private equity funds would not be encouraged to partner the institution.
IFCI still has control over some good quality assets besides the fact that it has several subsidiaries or associates in various business segments. These include the credit rating agency-CARE, Tourism Finance Corporation of India (TFCI), an asset reconstruction firm —ACE, a factoring firm—Foremost Factors, IFC Venture Capitals, IFCI Financial Services besides equity holding in SHCIL, DFHI, NSE, OTCEI and LIC Housing Finance.
In the last quarter, IFCI reported profit after tax of Rs. 115.83 crores against a total income of Rs. 325.47 crores. Recovery of bad loans (which have shrunk to Rs. 667 crores in 05-06) has improved and the proceeds are now being parked in deposits of top rated firms. IFCI has also started lending in a limited way to finance firms which have a AAA rating.
Read the article from The Economic Times.
Wednesday, January 3, 2007
Endurance Group buys German auto ancillary company
Pune-based auto components company Endurance has acquired Amann Druckguss GmbH and Co KG, a German aluminium die casting manufacturer, in the range of Rs. 180-200 crores.
Amann Druckguss supplies to premium auto-makers such as DaimlerChrysler, Porsche, Audi and Behr. Endurance will supply engine, drive train and chassis components to them. Endurance has acquired Amann Druckguss from private equity firm Granville Baird Capital Partner Advisers.
This is the Pune-based company’s third overseas acquisition in the past one year. It acquired a 51% controlling stake in Nova Renopress of Bologna, which brought in customers like Honda, Bosch and Siemens, and a 40% stake in Paioli Meccanica SpA.
In August 2006, Standard Chartered Private Equity invested Rs. 150 crores in Endurance Technologies. The group is already scouting for another acquisition in the European market by March-end 2007, especially in the Italian, German and French for the acquisition of a Rs. 175-235 crore company.
Read The Economic Times article.
Amann Druckguss supplies to premium auto-makers such as DaimlerChrysler, Porsche, Audi and Behr. Endurance will supply engine, drive train and chassis components to them. Endurance has acquired Amann Druckguss from private equity firm Granville Baird Capital Partner Advisers.
This is the Pune-based company’s third overseas acquisition in the past one year. It acquired a 51% controlling stake in Nova Renopress of Bologna, which brought in customers like Honda, Bosch and Siemens, and a 40% stake in Paioli Meccanica SpA.
In August 2006, Standard Chartered Private Equity invested Rs. 150 crores in Endurance Technologies. The group is already scouting for another acquisition in the European market by March-end 2007, especially in the Italian, German and French for the acquisition of a Rs. 175-235 crore company.
Read The Economic Times article.
Mexican cement company Cemex may acquire Deepak Cements
The $15 bn Cemex SAB de CV, the world’s third-largest cement company, is in talks with Ahmedabad-based Deepak Cements and Chemicals for a possible acquisition of the latter’s operations in Kutch. Cemex is a Mexico-based company. It had earlier attempted to acquire B K Birla group-owned Mangalam Cement some years ago but had failed. Cemex’s holding company in Asia, Cemex Asia Holding may be the vehicle for the acquisition.
Deepak Cements already has a small plant in Kutch and proposes to set up another 3 mtpa unit costing Rs. 1300 crores in the same region with an initial capacity of 2000 tonnes per day. Cemex may buy the existing plant and could also enter into a joint venture for the new project.
The cement sector in India is seeing lot of action in the recent past. France’s Lafarge, Swiss giant Holcim, Germany’s Heidelberg and Italy’s Italcementi Group have all entered the Indian cement market through acquisitions. French cement maker Vicat is also on the hunt for acquisitions in India.
Read the article in Daily News and Analysis.
Deepak Cements already has a small plant in Kutch and proposes to set up another 3 mtpa unit costing Rs. 1300 crores in the same region with an initial capacity of 2000 tonnes per day. Cemex may buy the existing plant and could also enter into a joint venture for the new project.
The cement sector in India is seeing lot of action in the recent past. France’s Lafarge, Swiss giant Holcim, Germany’s Heidelberg and Italy’s Italcementi Group have all entered the Indian cement market through acquisitions. French cement maker Vicat is also on the hunt for acquisitions in India.
Read the article in Daily News and Analysis.
Brindco to buy 20% stake in wie maker Grover Vineyards
India’s largest wine importer Brindco is about to acquire 20% stake in premium domestic wine maker Grover Vineyards. Grover is a Bangalore-based company. The deal is estimated to be at an EV of Rs. 80-100 crores. Brindco will take over the marketing and distribution of the Grover Vineyard brands as well.
This is a second such investment in Grover, the first being made by Mphasis founder Jerry Rao to pick up 15% stake in the vintner. The deal with Brindco is considered to be strategic in nature as it unlocks the untapped distribution potential of Grover wines. Grover recently unveiled its economy-priced portfolio under the Sante range and is set to appoint a resident French wine maker, touted as a first in the domestic wine industry.
Brindco’s move into wine making is significant as it comes at a time when the tariffs on imported wine are poised to fall in the coming months. Sources said the Centre was expected to slash duties and remove countervailing levies on imported wines, which is likely to usher in a larger play in the country’s international wine business. Further, the domestic wine consumption (over 9 mn bottles annually), which is growing at 30% year-on-year, has seen the entry of the big players like the Vijay Mallya-led United Breweries Group and Seagram with their play expected to gather steam in the next 12-18 months.
Read The Economic Times article.
This is a second such investment in Grover, the first being made by Mphasis founder Jerry Rao to pick up 15% stake in the vintner. The deal with Brindco is considered to be strategic in nature as it unlocks the untapped distribution potential of Grover wines. Grover recently unveiled its economy-priced portfolio under the Sante range and is set to appoint a resident French wine maker, touted as a first in the domestic wine industry.
Brindco’s move into wine making is significant as it comes at a time when the tariffs on imported wine are poised to fall in the coming months. Sources said the Centre was expected to slash duties and remove countervailing levies on imported wines, which is likely to usher in a larger play in the country’s international wine business. Further, the domestic wine consumption (over 9 mn bottles annually), which is growing at 30% year-on-year, has seen the entry of the big players like the Vijay Mallya-led United Breweries Group and Seagram with their play expected to gather steam in the next 12-18 months.
Read The Economic Times article.
Allcargo to pay Rs. 8.9 crores for Hindustan Cargo
Allcargo Global Logistics Limited is buying the air cargo subsidiary of travel and forex company Thomas Cook (India) Limited for Rs. 8.9 crores. Allcargo would make Hindustan Cargo its independent airfreight services subsidiary. The deal would be funded through internal accruals. Hindustan Cargo reported revenues of Rs. 32 crores and a profit before tax of Rs. 1.3 crores for the year ended October 2006.
The deal is the first major restructuring initiative undertaken by Thomas Cook India. Last year it had acquired LKP Forex, Travel Corporation of India and the visa business of TTK Enterprises.
Allcargo recently acquired 100% stake in ECU Line, the world’s second largest cargo consolidator having significant global presence.
Read the article from Business Standard and Economic Times.
The deal is the first major restructuring initiative undertaken by Thomas Cook India. Last year it had acquired LKP Forex, Travel Corporation of India and the visa business of TTK Enterprises.
Allcargo recently acquired 100% stake in ECU Line, the world’s second largest cargo consolidator having significant global presence.
Read the article from Business Standard and Economic Times.
Private equity investments at $7.5 bn in India for 2006
A record $7.5 bn was invested by private equity firms across 299 deals in India during 2006, according to a study by Venture Intelligence, a Chennai-based PE tracking firm. The final quarter witnessed PE companies investing $2.559 bn across 67 deals. Mega deals like Idea Cellular's pre-IPO placement and the KKR-Flextronics Software buy-out contributed significantly to the total. The year witnessed several large global PE companies - with appetite for large deals - making their first investments in India. There were 26 deals involving investments of $50m during 2006 compared to just nine such deals in the previous year.
Information Technology and IT-Enabled Services continued to remain the favorite industry among PE investors during 2006 accounting for $1.470 bn across 87 investments, followed by the manufacturing industry attracting 55 investments worth $962 bn. Other industries that attracted significant PE investor attention during the year included banking, healthcare and life sciences and engineering and construction.
Late-stage investments accounted for 36% of all deals while PIPEs accounted for 22% of the deals. Early-stage investments accounted for about 20% of deals during 2006.
Read the articles from The Economic Times, AltAssets.com and Reuters.com.
Information Technology and IT-Enabled Services continued to remain the favorite industry among PE investors during 2006 accounting for $1.470 bn across 87 investments, followed by the manufacturing industry attracting 55 investments worth $962 bn. Other industries that attracted significant PE investor attention during the year included banking, healthcare and life sciences and engineering and construction.
Late-stage investments accounted for 36% of all deals while PIPEs accounted for 22% of the deals. Early-stage investments accounted for about 20% of deals during 2006.
Read the articles from The Economic Times, AltAssets.com and Reuters.com.
Core Projects gets equity infusion from Morgan Stanley, Goldman Sachs, Deutsche
Bulge bracket investment banks Morgan Stanley, Goldman Sachs and Deutsche Bank have picked up 10% stake in Mumbai-based software firm Core Projects and Technologies Limited (CPTL) at a combined investment of Rs. 39.76 crores. Morgan Stanley has taken the largest share at 4.03%. Goldman Sachs, through its investment arm Grants Investments Limited, has taken 3.46% and Deutsche Bank 2.59%.
Core Projects was recently in the news for its plans to acquire two US-based software firms. It is also setting up an offshore development centre in Navi Mumbai, to be completed by January-end 2007.
The stake was picked up following conversion of FCCBs issued in November 2006. FCCBs of the value of Rs. 15.90 crores still remain for conversion into equity shares.
Read The Economic Times and Business Standard articles.
Related Post: Mumbai-based software company Core Projects plans two US buyouts
Core Projects was recently in the news for its plans to acquire two US-based software firms. It is also setting up an offshore development centre in Navi Mumbai, to be completed by January-end 2007.
The stake was picked up following conversion of FCCBs issued in November 2006. FCCBs of the value of Rs. 15.90 crores still remain for conversion into equity shares.
Read The Economic Times and Business Standard articles.
Related Post: Mumbai-based software company Core Projects plans two US buyouts
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