September 2007
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Sarovar Hotels to raise Rs 300 cr

Sarovar Hotels is exploring the option of going in for an initial public offer (IPO) or a second round of private equity funding to raise Rs 250-300 crore for funding its domestic expansion plans. The hospitality company, in expansion mode, is setting up 23 new properties at an investment of over Rs 500 crore. Sarovar's own commitment has been to the tune of Rs 150 crore. Anil Madhok, managing director, Sarovar Hotels, told DNA Money, “At the moment, we have Rs 200 crore of investible funds. But, we are weighing the option of an IPO or private equity placement to raise Rs 250-300 crore.” More than a year-and-a-half ago, the company had raised $8.5 million from US-based Bessemer Venture Partners and New Vernon through an equity dilution of about 24 per cent. […]

Piramal’s Indiareit to raise $750 m

Ajay Piramal-controlled real estate private equity fund Indiareit will raise close to $750 million overseas to invest in the real estate sector. The company is managing a real estate fund with a corpus of Rs 1,300 crore. Global private equity firms have already committed over $3 billion worth of investments in the Indian real estate space. “This will be our second overseas fund raising. We are going to raise about $500 million and will have a greenshoe option of $200-250 million,” Ramesh Jogani, managing director and chief executive officer, Indiareit Fund Advisors, said. […]

TPC to buy 15% stake in power exchange

TATA Power Company (TPC) has decided to pick up a stake in the spot power exchange being planned by the leading commodity exchange NCDEX and National Thermal Power Corporation (NTPC). The board has given an in-principle approval to become one of the promoters of the exchange. TPC may pick 15% stake in the exchange. Power Grid Corporation of India (PGCIL) and Power Finance Corporation (PFC) have decided to become strategic promoters of the exchange. Both the companies have given their in-principle approval letters to become part of the consortium, which also includes National Hydroelectric Power Corporation (NHPC), said sources. “We have got the board approval to become one of the promoters in the spot power exchange being planned by NCDEX and NTPC. We understand that initial promoters will take equal shares and the exact percentage is under finalisation,” said a senior TPC official. The NTPC and NCDEX-led power exchange has filed its application before central electricity regulatory commission (CERC) and the hearing is likely to take place by September-end. […]

Will the subprime mess affect Indian PE?

The financial crisis triggered off the by the US subprime mortgage meltdown, is already impacting Private Equity (PE) investing in North America and Europe. And depending on how our public equity markets react, it will impact the PE scene in India too. But, the nature of the impact is likely to be very different from that in the US and Europe. Because, PE in India is quite different from Private Equity in the Western world. While (unfortunately) there are many definitions of Private Equity, PE in the US and Europe is commonly used to refer to buyout investments and especially, leveraged buyouts (LBO) which involve taking on significant portions of debt to acquire (often) publicly listed companies – with a view to improving profitability and taking them public again (or selling them off) a few years later. With the sub-prime crisis raging, PE firms will find it very difficult to access cheap debt from banks – and reports have emerged on how the financing for several mega deals in the US and Europe have been placed on hold. In India, on the other hand, buyouts (let alone large LBOs) form a very small part of the PE market. Out of the 302 PE investments in India that Venture Intelligence had tracked in 2006, only 14 investments (i.e., less than 5%) were of the buyout variety. And only one of these deals – the KKR-led buyout of Flextronics Software – was valued at over $100 million. Even without including the 22% of PE investments which went to listed companies, an overwhelming 75% off all PE investments in India went into unlisted companies in various stages of their growth. […]

LIC may join race to buy 26% in IFCI

Insurance major Life Insurance Corporation of India (LIC) is evaluating the option of bidding for IFCI. The Delhi-based term-lending institution has invited bids for a 26% stake in the company. The bids are slated to close on September 14, 2007. Speaking to ET, LIC managing director DK Mehrotra said, “We have not yet submitted a bid. But we are considering it.” Mr Malhotra declined to give further details. Meanwhile, sources said the stake buy would provide LIC an opportunity to build its asset base. According to sources, the country’s largest insurance company has been approached by a number of private equity firms and hedge funds to bid for the IFCI stake as a consortium. However, senior officials from LIC said that they would prefer to bid alone. IFCI has said that a consortium of four members can apply for 26% stake, but each consortium should nominate a lead member. Private equity funds and hedge funds are keen on LIC or IDBI as their lead member. Among Indian entities, Punjab National Bank (PNB) has shown interest in acquiring 26% in IFCI. Similarly, several foreign banks and private equity firms have approached IDBI to bid as a consortium for IFCI. “We are not very keen to bid as this juncture,” said a senior official from IDBI. Even as many foreign entities have shown interest in IFCI, sources said the Central government is very keen that the controlling stake continues with Indian financial firms. “Further, the management of IFCI, too, is keen on inducting an investor who is serious, and would enable IFCI to emerge as a stronger institution,” said a senior IFCI official. […]

Blackstone eyes 30% in nuclear tech firm MTAR

US private equity (PE) giant Blackstone is learnt to be close to picking up a 25-30% stake in Hyderabad-based nuclear and space science components company MTAR Technologies for around Rs 300 crore. If the deal goes through, it will possibly be the first PE investment in the defence and nuclear space in India. The privately-held MTAR makes critical components and products for nuclear reactors. The transaction, which comes in the backdrop of the Indo-US nuclear deal, is taking place in a company which was subject to US sanctions following India’s nuclear tests of 1998. According to investment banking sources, Blackstone is expected to acquire MTAR shares from a fresh equity issue as well as from the promoters’ kitty. Repeated attempts by ET to reach MTAR chief executive V Sreeramulu and managing partner P Ravindra Reddy proved futile. An email to Blackstone India chief Akhil Gupta failed to elicit any reply. MTAR is believed to have high profit margins and it is said that PE major Carlyle too was interested. In the last three months, Blackstone, the world’s largest PE firm, has announced the management buyout of business process outsourcing company Intelenet Global Services and garment manufacturer Gokaldas Exports, in addition to picking a minority stake in Nagarjuna Constructions. […]

Corporates line up for MSE pie

The 70-year-old Madras Stock Exchange (MSE), with the consent of SEBI, has successfully completed the allotment of equity shares to the corporates and high net worth individuals under its disinvestment programme. With this, MSE has complied with the demutulisation programme of the regulator, which required offering new shares through a bidding process. Sources said MSE received an overwhelming response from bidders to the extent of 87% of the expanded equity. MSE’s strong fundamentals and sentimental factor influenced the good response from listed corporates across the country and HNIs, exchange officials told ET. Leading corporates — listed and unlisted — who have been allotted shares include: Amalgamations group (Bimetal bearings and Simpsons), Kalpathi Suresh of SSI, Orchid Chemicals, Polaris Holdings, Venture Tech solutions (Megasoft), Sonata Investments (Reliance energy-Anil Ambani group), Tidco, TCP (Udayar group). Besides, MSE has issued shares to HNIs. Though MSE was required to divest 51% or more to new investors, Sebi has approved allotment up to 72% of the expanded equity. This has raised the disinvestment level to 57%. The Rs 10 paid-up share of MSE was placed at a premium of Rs 490, based on the estimated enterprise value of Rs 676. The exchange has mobilised Rs 9 crore from the disinvestment process. Apart from this, on the expanded equity of Rs 36 lakh, it has built reserves of Rs 11 crore. […]

ICICI to Set Up $2 Billion India Infrastructure Fund

ICICI Bank, India's biggest bank by market value, said it's setting up a $2 billion overseas fund to invest in roads, ports and utilities in the world's fastest- growing major economy after China. The Mumbai-based bank is meeting global investors and expects to close the fund in about three months, Chanda Kochhar, deputy managing director at ICICI Bank, said today in an interview. “There's a lot of demand for funds from sectors like power, airports, roads and telecoms,'' Kochhar said. The fund will have a lifetime of more than 10 years, she said. India's government plans $320 billion of infrastructure projects to ease bottlenecks that are constraining growth. Gross domestic product has expanded at a record 8.6 percent average pace since 2003, faster than any of the world's 20 biggest economies except China. […]