August 2007
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Reliance denies discussions with Maxis over Aircel

India’s second largest cellco by subscribers, Reliance Communications, today denied a newspaper report it was in talks with Maxis Communications to buy a controlling stake in the latter's Indian unit Aircel Cellular, according to Reuters. ‘There is no proposal or discussion for acquisition of either a controlling or minority stake in Aircel by Reliance Communications,’ a company spokesman said.(Telegeography)

TPG Capital looking for stake in IndiGo

Leading global private equity fund TPG Capital (formerly Texas Pacific) is talking to Indian budget carrier IndiGo. It intends to pick up a 10 to 15 per cent stake in the airline. If it materialises, the deal will be closed within the next few months, said investment banking sources. But Rahul Bhatia, managing director of InterGlobe Interprises, which owns the airline, said that the company was not looking at any dilution of promoters' equity. InterGlobe Enterprises and the former president and chief executive officer of US Airways, Rakesh Gangwal are joint promoters of IndiGo. Sources close to TPG maintain, however, that the private equity firm is exploring investment opportunities in the aviation sector in the country and Indigo is one of its target companies. “Airlines were forced to reduce fares even as aviation turbine fuel (ATF) prices went up and, valuation of the industry came down in 2006. Now it's time for consolidation, and global PE firms have a major role to play,” said a Lehman Brothers analyst. [...]

PE buyouts arrive in India

Private equity major Blackstone’s acquisition of 50% stake in Gokaldas Exports is significant in that it is the first major buyout of a listed company. With a takeover of Patni Computers likely soon, PE players operating in India have started doing what they do abroad, acquiring controlling stakes in listed companies. So far the great majority of PE investments in Indian companies have been more akin to portfolio investments. The change agent, however, is the willingness of at least some Indian promoters to sell out and not a sudden increase in risk appetite of PE players. For PEs this makes sense. The value proposition, to use some jargon, that PEs bring to the table are primarily superior management skills. This includes perceived skills at cost cutting, improved supply-chain logistics and the ability to find clients using their global networks. [...]

JSW acquires 3 US steel firms for $900 mn

Sajjan Jindal-controlled JSW Steel Ltd has bought three steel firms in the US controlled by his elder brother Prithvi Raj Jindal for $900 million. The three firms are Texas-based Jindal United Steel Corp, Saw Pipes USA and Jindal Enterprises LLC. JSW will acquire 90 per cent stakes in these companies, while some of the existing shareholders will retain the remaining equity. The company will fund the acquisition through a recourse debt of $380 million to be raised against the guarantee of JSW Steel, and a non-recourse debt of $560 million which will be raised in the acquired companies. In a non-recourse loan, the borrower does not have direct personal liability, although there is a collateral. “The total enterprise valuation is $900 million and we are taking 90 per cent. So we will be paying $810 million for the 90 per cent stake, and we are investing $130 million towards the working capital of these companies,” JSW Vice Chairman and Managing Director Sajjan Jindal said. JSW has formed a 100 per cent subsidiary in US and Netherlands to raise finances to fund the acquisition. [...]

Cobra set to pick up 76% in Regal Breweries

NRI millionaire Karan Billimoria’s Cobra Beer is taking 76% stake in Regal Breweries, a joint venture with local partner NV Group promoted by prominent bottler and distributor Ashok Jain. Regal Breweries is coming up with a greenfield brewery at Patiala in Punjab with an initial investment of Rs 70/80 crore. This will be UK-based Cobra Beer’s first equity investment in India. The Patiala plant will have an initial capacity of 3.5 lakh cases monthly, but could ramp up later. Cobra Beer of Indian origin, a growing brand in UK made popular through the curry restaurants, has banked on contract bottling tie-ups for servicing the local market. Cobra Beer India COO Poonam Chandel confirmed the move to pick up 76% stake in a JV with Ashok Jain’s NV Group. Mr Jain is a spirits bottler with plants in Maharashtra, Goa and Haryana catering to MNC drinks giants like Diageo and Bacardi. The deal with Cobra marks his foray into beer. Meanwhile, Cobra is expanding its contract filling network. After starting with Mount Shivalik Group in Rajasthan, it has extended the bottling arrangements to Impala Brewery in Goa, Iceberg in Patna, Manav Breweries in Agra and Mikal in Orissa. Cobra is claiming monthly volume depletion of around 3 lakh cases and is projecting overall sales of over 2.5 million cases in FY08. [...]