November 2007
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PEs seek a slice of stake in SEZs

After IT and telecom sectors, special economic zones (SEZ) have caught the fancy of private equity (PE) companies, with most firms looking at acquiring a minimum 10 per cent stake in SEZs. Global PE firms such as Goldman Sachs, Deutsche Bank, Blackstone Group, Lehman Brothers and others have already initiated talks with domestic real estate companies that are setting up these zones. Not to be left behind, Indian PE companies such as Kshitij Real Estate Funds (a Pantaloon Group company) and HDFC Realty are also scouting for opportunities in this sector. Even though no deals have been signed so far, the industry expects some to come through in the next two to three months. “Real estate developers setting up SEZs are getting a lot of queries from investment companies. This sector being a booming one, companies are looking at making an investment that could yield returns at a later point in time,” said Ashutosh Pathare, vice-president (commercial sales and business development) of the real estate company, Shapoorji Pallonji. [...]

PE firm to invest in Leela

A US-based private equity (PE) major is investing Rs 5,000 crore into Hotel Leelaventure, the parent company of one of India's leading hotel chains – Leela Palaces, Hotels and Resorts. Industry sources said the PE firm is most likely Blackstone. “Leela and Blackstone have been in talks for a while,” they said. This would be one of the biggest private equity investments in an Indian company. Speaking to TOI, chairman of the Leela Group, Capt C P Krishnan Nair confirmed the investment. “We have got close to Rs 5,000 crore worth of funding, which will be spent on our ongoing projects and for expansion purposes,” he said. But he declined to divulge the name of the PE firm or state how much equity dilution had taken place. Leela has four properties across the country and has six more in the pipeline – in Chennai, New Delhi, Hyderabad, Pune, Udaipur and Jaipur. [...]

PE groups ready clean tech funds

Several private equity (PE) groups are creating funds exclusively for investing in clean technology in India, adding momentum to a sector where no funds currently exist. These groups include the Nevada-based Arvco Capital Research Llc., Washington, DC-based Global Environment Fund, Hyderabad-based New Ventures India, New Delhi-based Sun Group and Mumbai-based Yes Bank Ltd. These are in addition to the increasing number of PE funds chasing the same segment from their general funds. The capital pool is estimated at $500 million (Rs1,970 crore), not including the general funds, which is almost equal to the sum of all disclosed investments in Indian clean technology from 2001 until now. The funds could close in the next nine months to three years and would be deployed over the next one to seven years. Interest in India is strong as many perceive the country as having the right talent fordeveloping technology and the additional incentive to do so be-cause of its growing power needs—and shortages. [...]