August 2007
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PE cos team up with banks for returns

The word out on the street is that leverage — that great tool of boosting return on equity — is going to get really scarce for private equity (PE) guys. According to market data, the spread of European top-rated corporate debt over government bonds has moved from 38 to 53 basis points. But for private equity firms investing into India, the leverage party has just begun. One of the biggest PE funds operating in the country has recently made an investment using this method and another much smaller firm made such an investment a few months ago. Some PE firms are using ‘asset swap’ foreign currency convertible bonds (FCCB) to multiply returns on their investments, largely in listed companies. In such arrangements, the PE firm partners with a bank to capitalise an investment company that has debt from the bank and equity from the PE firm. For example, the bank will put a debt of $200 million while the PE firm puts in $100 million. This total sum of $300 million is now put into an Indian company either through preferred stock or an FCCB. […]

Carlyle emerges biggest PE investor in '07

US-based private equity fund Carlyle has made the highest PE investments in India in the first seven months of 2007. Its total investment of $416 million is the highest by any single PE investor, followed by Morgan Stanley and IL&FS realty fund. Carlyle invested this amount in a single deal — it invested in HDFC for 5.6% stake — through the Carlyle Asia Partners II fund. According to data compiled by research outfit Thomson Financial, Morgan Stanley Private Equity Asia invested $152 million while IL&FS realty fund invested $100 million. In the numbers game, Citigroup Venture Capital (CVC), IDFC Private Equity and Warburg Pincus occupy the No. 1 slot. The threesome signed four PE deals each in the first seven months. Home-grown PE fund ICICI Venture, through its India Advantage Fund V, made three investments worth $64 million. […]

ChrysCapital raises $1.25b from overseas

Homegrown private equity major ChrysCapital on Thursday announced closure of its fifth fund worth $1.25 billion (about Rs 5,000 crore), taking up its total asset under management to $2.25 billion. The money has been raised from 75 global investors from different parts of the world and it would be deployed in a span of two-three years, ChrysCapital senior MD Ashish Dhawan said. […]

TV18 to buy 50% in MTV India for Rs 200 cr

The Television Eighteen Group (TV18) is picking 50% equity stake in MTV Networks India (MTVI) for Rs 200 crore. MTVI, which is part of media giant Viacom, is engaged in marketing and distribution of TV channels — MTV, VH1 and Nickelodeon. This is one of the rare instances of an Indian company picking up equity in a hitherto wholly-owned subsidiary of a foreign major. The deal is part of the strategic alliance between Viacom and the TV 18 Group announced in May this year. That TV18 would directly pick up equity in MTVI was not disclosed at that time. As of now, the existing TV channels are being uplinked from Singapore. According to the plan, MTVI would uplink and broadcast Viacom branded TV channels apart from a new general entertainment channel in Hindi and a bouquet of non-news and non-current affairs channels. However, it will not set up any uplinking facility in India and will outsource it to a third-party service provider. […]

Punj Lloyd to acquire 25.1% stake in Pipavav Shipyard

Punj Lloyd Limited (PLL), a global EPC services provider in energy and infrastructure domains, has signed a Memorandum of Understanding (MOU) to invest Rs 403 crore for acquiring 25.1% stake in Pipavav Shipyard Limited (PSL). The investment is subject to receipt of corporate and statutory approvals and satisfaction of certain conditions precedent. This is a strategic investment by Punj Lloyd to support the growth of its business in the offshore sector. In view of the robust oil prices and the substantial E&P activities in the country, the opportunity for revamping existing offshore platforms and deploying new platforms by upstream oil and gas companies is expected to be significant. The proposed investment in PSL will provide Punj Lloyd access to capabilities to serve this market more effectively. PSL will provide Punj Lloyd access to fabrication facilities for platforms, SBMs, rigs and jackets to exploit the opportunities in this sector. Punj Lloyd is currently executing the Heera Field Redevelopment project for ONGC. The facility at Pipavav Shipyard can also be used for fabrication of vessels for petrochemicals and refineries. […]