August 2007
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Why are Indian firms hiking stake in group cos?

Indian promoters, from the Tatas to the Birlas are upping their stake in group companies. But are they really under threat? The Mahindras may soon follow the Birlas and Tatas in raising promoter stake in group companies. Keshub Mahindra, Chairman, Mahindra & Mahindra said, “We are thinking and will do it at an appropriate time. ” After the hostile takeover of Arcelor in June last year, the question everyone asked was, would Mittal do the same with Tata Steel, since the promoter holding is barely 26%. To which, Mittal, President & CEO, Arcelor Mittal said, “Why should Tata Steel be worried?” But Ratan Tata is not taking any chances. Tata Steel announced a 10% preferential allotment to its promoters Tata Sons last year to hike its stake from just above 20%. Ratan Tata, Chairman, Tata Steel said, “The vulnerability when the industry is trying to consolidate is considerable.” […]

Wipro buys US firm for $600 mn

Wipro Ltd, the country's third largest software exporter, on Monday achieved the distinction of making the largest overseas acquisition in the information technology space when it announced the acquisition of US-based, Nasdaq-listed outsourcing firm Infocrossing for approximately $600 million (around Rs 2,430 crore) in an all-cash deal. The acquisition will be conducted through a tender for all the outstanding shares of Infocrossing, followed by a merger of Infocrossing with a Wipro subsidiary. Institutional members have a majority holding (close to 10 per cent) in the company. Wipro is making an open offer at $18.70 per share, which — if fully subscribed — will cost close to $600 million. Wipro currently has cash reserves of $750 million and expects to close this acquisition by December 2007. The $232.44 million Infocrossing, with a net income of around $10 million, and its wholly-owned subsidiaries provide IT outsourcing solutions to companies, institutions and government agencies in the US. The company's enterprise value is around $510 million (on August 6) and its enterprise value/revenue (trailing 12 months) was 2.18 times. Founded in 1985, the New Jersey-headquartered Infocrossing went public in 1992. […]

PE funds take a liking for micro-finance institutions

Private equity funds with a special focus on micro finance institutions have lined up billions of dollars for the sector in India. For instance, Aavishkaar Goodwell, a micro finance private equity company, is building a $25 million portfolio across India, $2 million of which has already been invested into Share Microfin, a micro finance company with over a million clients. Funds such as Bellwether and Lok Capital have also lined similar plans. Private equity funds raise capital from financial institutions and banks and lend it to micro finance companies, mostly for equity. For example Deutsche Bank, Netherlands Development Finance Company (FMO) and International Finance Corporation (IFC) of the World Bank group have provided funds for Aavishkaar Goodwell. IFC and FMO have also invested in the $12 million Lok Capital fund. Some other private equity funds have lined up much bigger sums. “For India we are not talking millions but billions,” says Vikram Akula, founder of the new age micro finance company SKS. […]

Private equity investments in India can touch $15b in 2007

The total of private equity investments in India is set to cross $10 billion in the calendar year 2007 and may even touch $15 billion according to PricewaterhouseCoopers. In the last 18 months private equity investments in India have picked up pace. According to Pricewaterhouse in 2005 the total private equity investment was $3.8 billion, in 2006 it moved up to $7.9 billion and in the first half of 2007 it has already crossed $6 billion. […]

Sebi for dedicated infra fund

The Sebi-appointed committee on dedicated infrastructure funds (DIFs) to be launched by asset management companies, has proposed that DIFs should have the flexibility to invest its entire corpus in unlisted companies, including equity and debt instruments. The committee has also proposed that these funds should be allowed to own the 100% paid-up capital of a company, if they so desire. However DIFs’ exposure to listed companies should not exceed 10% of the net asset value (NAV) at the time of investments. The product, once approved, will allow retail investors an exposure to unlisted companies in the infrastructure space. So far, it is the deep-pocketed venture capital funds who have been buying stakes in unlisted companies in the infrastructure sector. Retail investors on most occasions are unable to meet the minimum investment requirements of these funds, thus missing out on a portion of the company’s growth phase prior to the listing. With this product, retail investors can buy units of this product from mutual funds, which will invest the proceeds in shares or debt of unlisted companies. […]