September 2007
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Reliance Industries buys majority stake in east Africa-based GAPCO

Largest private sector company Reliance Industries Ltd said it has acquired a majority stake and management control of east Africa-based Gulf Africa Petroleum Corp (GAPCO), through its wholly-owned unit Reliance Industries Middle East Dmcc. The company did not specify its exact stake in GAPCO nor the financial details of the deal. GAPCO, headquartered in Mauritius, owns and operates large storage terminal facilities and a retail distribution network in several countries in central and east Africa like Tanzania, Uganda and Kenya. It owns and operates large storage terminals at Dar Es Salaam, Mombassa and Kampala, depots in east & central Africa and over 250 outlets covering retail and industrial segments, a release from Reliance said. The demand for petroleum products in the east African countries where GAPCO operates is rising steadily and has mirrored the rapid GDP growth in these nations, Reliance added. The company expects import of petroleum products in these countries to rise in the near future and added that these markets provide a strategic fit for Indian exporters as they are easily accessible from India.( ABC Money) [...]

PE investment crosses $2.48 bn till July

Private equity fund investment in India has risen to $2.48 billion till July driven by the country's robust economic growth and investors are now likely to target opportunities in the core sector in the days ahead, a latest report says. The India fund pool, referring to the investments made by PE funds in the country, has already crossed USD 2.48-billion mark in the first seven months this year, compared to a total of $3.28 billion in 2006, data complied by Asia Private Equity Review (APER) shows. “In recent weeks, the closing of a number of funds brought in an additional $1.62 billion of fresh capital. With the additional $1.16 billion also currently being raised, the PE funds pool in India is set to swell to a new level during the year,” a report by UK-based global PE advisor Almeida Capital based on the APER data said. [...]

Origo Sino-India buys 20 pct stake in India's Roshini International Bio Energy

Origo Sino-India PLC said it taken a 20 pct stake in India's Roshini International Bio Energy Corp Ltd (RIBEC), extending a convertible note of up to 2 mln usd and retaining the right to invest an additional 6 mln usd in a pre-IPO private placement. The private equity adviser also said it has entered into definitive agreements with RIBEC to create an international joint venture focused on the renewable bio-energy sector. RIBEC reported earnings before interest, taxes, depreciation and amortisation of 4.4 mln usd for the year to end March on revenue of 5.87 mln usd, the company said in a statement.(ABC Money) [...]

Mergers on track for a record year

Forget about Henry Kravis and Stephen Schwarzman. Mergers and acquisitions may set a worldwide record of more than $3.57 trillion before this year ends without a megadeal from the kings of leveraged buyouts. Bankers specializing in mergers and acquisitions need to drum up only $486 billion in transactions during the next four months to boost fee revenue to more than $11 billion for the first time, data compiled by Bloomberg News show. Only once in the last seven years, during the takeover drought of 2002, have they failed to crack the $500-billion mark from September through December. As contagion from the U.S. sub-prime mortgage crisis sidelines Kohlberg Kravis Roberts & Co. and Schwarzman's Blackstone Group, overseas buyers are stepping in. Indian billionaire Ratan Tata and Dubai's Sultan Ahmed bin Sulayem are just two of the investors seeking to benefit while competition is scarce and the dollar is cheap. “Cross-border activity will keep the volume up for the balance of the year,” said Frank Aquila, a partner at Sullivan & Cromwell in New York, the top legal advisor on mergers this year. “Transactions are still being announced.” International buyers will spend more on takeover advice in 2007 than ever before, as higher borrowing costs constrain leveraged buyout firms. Investors from Saudi Arabia to Sweden already have announced $282 billion of mergers and acquisitions in the world's biggest economy, according to Bloomberg data. [...]

IFC to buy stake in Angel Broking

International Finance Corporation (IFC), the private sector funding arm of World Bank, is in talks with Angel Broking group to pick up a minority stake in its holding company. The group is in advanced discussions with four global investors and IFC is one of them. “We expect to finalise an investor soon,” said Angel Chairman and Managing Director Dinesh Thakkar. The new investor will be issued fresh equity in Angel Infin Private, a holding company of group. Angel expects to raise Rs 150 crore from the investors to fund its retail expansion, taking its branches from 80 to 260 in smaller cities. The multilateral agency discloses the investment proposal as part of its efforts to enhance the transparency of its activities. IFC said the proposed investment will help Angel introduce new products to serve its clients more effectively. [...]

Reliance eyes 50pct in Kenya refinery

Reliance Industries Ltd is looking to buy a 50 percent stake in Kenya's sole refinery, half owned by Shell, BP Plc and Chevron, the Hindustan Times reported on Tuesday. The Kenyan government owns the remaining half of Kenya Petroleum Refineries and the newspaper, quoting industry sources, did not specify whose holding Reliance was eyeing. A successful acquisition will allow Reliance, India's biggest private sector company with a market value of over $67 billion, to source petroleum products for selling to European and American markets, the paper said. A Reliance spokesman could not be immediately reached for comment. The newspaper said a regional Web site, allafrica.com, had reported Reliance' interest in the refinery, which has a capacity to process about 60,000 barrels per day (bpd). [...]

PE funds remain bullish on India

Barring a minor “ripple effect”, private equity (PE) players do not expect the US subprime crisis to truncate inflows into India in the near term. Absence of leveraged buyouts (as in the US and Europe), abundance of India-dedicated funds and renewed interest among “long only” pension and endowment funds would provide the necessary cushion for PE funds operating in India, according to experts. The Reserve Bank of India, in its 2006-07 annual report, recently warned that PE funds, which are major investors in emerging market economies like India, could pull out in the face of continuing crisis in the US house mortgage market. “There should only be some ripple effect in the near term. Unlike in the US and Europe, Indian PE funds do not indulge in leveraged buyouts (LBOs),” said Venture Intelligence CEO & founder Arun Natarajan. “Secondly, unlike during the 2000 stock market scam, when PE players retreated in large numbers, there is an abundance of India-focused PE funds now. This negates chances of fund disbandment and pull out. Thirdly, (post the subprime scare) we are still seeing deals happening in the PE segment,” Mr Natarajan added. A peep into the available data for the past two months, since the beginning of the subprime scare, show that there has been no serious dip in the number of PE deals. About 47 deals worth $2,360 million were effected in July and August as against 68 deals worth $1,080 million during the same period in 2006. [...]

Paramount Communications to buy AEI Cables

AEI Cables has a turnover of about Rs5.33bn. It is a leading manufacturer of cables solutions to global markets and is a wholly owned subsidiary of TT Electronics. Paramount Communications Ltd. said on Tuesday that it will acquire the business of UK-based AEI Cables in an all cash deal. The company did not disclose the consideration to be paid for the acquisition. AEI Cables has a turnover of approximately £65mn (Rs5.33bn). Elara Capital Plc, a London-based mid-market advisor, was the sole corporate finance adviser to the company for this transaction. AEI Cables is a leading manufacturer of cables solutions to global markets and is a wholly owned subsidiary of the international electronic sensors and components group TT Electronics Plc, listed on The London Stock Exchange. The acquisition of AEI Cables will make the company the largest listed Indian company in the cable industry with an annual turnover of over Rs11bn, Paramount Communications said. It will significantly strengthen its product range for infrastructure segments in India and the UK, it added. [...]

VCs have put $433 million into ‘green’ businesses since 2001

Private equity (PE) investors, including early-stage venture capitalists, have poured more than $433 million (Rs1,775 crore) into environment-related businesses, primarily wind energy and clean fuel, in the country since 2001. The number, though minuscule in the context of the estimated $7 billion that was invested overall by PE investors last year, is a significant achievement for the cash-strapped sector. Investors and advocates said that closing investments in such businesses is still difficult but expect the pace to pick up in the next five years. So far, investors have put down an average of $33 million into companies that, for example, turn sugar into clean fuel or make cars that run on an electric battery. Overall, investments favoured wind energy, which saw four companies receive funding worth $224 million, and clean fuels, where five companies got $141 million (see accompanying table). A large portion of the investment dollars were focused on a handful of companies including Suzlon Energy Ltd, Aryan Coal Benefications Pvt. Ltd and Natural Bio-energy Ltd—two of which received more than one round of funding. A majority of the deals— 56%—were closed last year. This mirrors trends in the US market, where investments grew from $820 million in 2005 to $2.36 billion in 2006, according to Venture Power Newsletter on venture capital investment in clean energy. Most investors are driven by the domestic need for power and water in India, and making that energy supply sustainable as the country develops. “People are looking at India as a market for things, not as a source for things,” said Vineet Buch, principal at Menlo Park, California-based venture capital (VC) firm BlueRun Ventures. “Where there is a market, domestic supply will emerge.” But, there is also the potential for a broader market as the world continues to draws its attention to climate change and conserving the environment. [...]