November 2007
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Tata Sky to raise up to $200 mn from PE players

DTH major Tata Sky is now considering a second round of funding of $150-200 million and is in conversation with various private equity players such as Providence, Carlyle, Blackstone, Goldman Sachs and Apax Partners. Tata Sky is looking at diluting about 10% stake. The current holding structure of Tata Sky looks like this: 20% with Star (FDI), 10% with Temasek (FII) and 70% with the Tata’s. By law, a DTH operator in India has to be have a minimum holding of 51% by an Indian entity. Singapore-based PE player Temasek had bought about 10% for about $56 million. The valuation of the company in three months has risen more than two-fold. “We have been approached by several private equity players. If and when we decide to go in for a second round of funding, we will let you know,” said Tata Sky CEO Vikram Kaushik. [...]

HSBC set for PE play in India

The billion dollar private equity club is growing. Notwithstanding the presence of pure play PE majors, banks are also raising $1 billion India-focused funds through their PE arms. Hongkong and Shanghai Banking Corporation (HSBC), which has global assets running into trillions of dollars, is the latest one to come into India with an estimated $1.1 billion for growth stage companies and real estate ventures. According to company officials, HSBC India has recently raised a $500 million realty fund, which will run parallel to the growth fund investments in the range of $600 million. Naina Lal Kidwai, group general manager and country head, HSBC India, said, “At the Asia PE fund level, of which India is an arm, we have recently closed a $1.5 billion fund. According to our estimates, 40 per cent of that is expected to be committed to India.” [...]

Amtek may buy UK co for Rs 600 crore

Delhi-based auto component group Amtek is close to acquiring a UK-based automotive machinery company Triplex Ketlon Group. According to automotive industry sources, the size of the deal is pegged at an estimated Rs 600 crore ($155 million). When contacted by ET, group CMD Arvind Dham and CFO Santosh Singhi declined to comment. Triplex Ketlon was acquired by the UK-based Barr family in September 2003. According to the company’s website, Triplex, it has three manufacturing sites — at Hereford, Stratford-upon-Avon and Paddockwood. The company supplies fully-machined components and sub assemblies to passenger car makers, commercial vehicle makers and tier-I manufacturers. The auto component sector has seen some aggressive deal making in recent times with Bharat Forge, M&M and Amtek being the most active in the deal space. M&M sealed two deals this year (German forging company Jeco and Schoneweiss) and has reportedly emerged highest bidder for a third-Italian gear maker, Metalcastello. As more and more vehicle manufacturers look at sourcing from India, local auto component makers are looking to scale up through both domestic and overseas acquisitions. [...]

India overtakes China in PE funds

Private equity (PE) investment in India has overtaken China this year to emerge as the biggest Asian destination (excluding Japan) for PE funds. Investments have crossed $10 billion between January-October as against $8.3 billion recorded in China in the same period, says a report from investment advisory firm IndusView. China received $13 billion worth of PE investments in 2006 compared to $7 billion in India during the same period. The equation has, however, changed since then with India leading the Asian charts this year. Real estate and infrastructure emerged as the top sectors attracting PE investment in India this year accounting for half of the total PE money flowing into India through 52 deals. Out of this, real estate received $2.6 billion through 32 deals. Real estate as a sector was closely followed by telecom with $ 2.1 billion worth of PE investments. [...]

Videocon to buy Planet M

You know Venugopal Dhoot for his consumer durables empire. But he now wants to be the retail rajah. Dhoot's first consumer durables retail venture Next is already a hit and now NDTV has learnt that Videocon is getting into music retail by picking up majority stake in Planet M. Planet M stores were owned by Bennett Coleman and Co Ltd which was set up in 1999. It has 150 stores across the country and has been planning to open 500 stores in the next four years across metros, mini metros and Tier II cities. Planet M has been growing at 40 per cent over the last four years. Even though no official announcement has been made yet sources say that the deal was sealed last weekend. What is interesting is that BCCL itself is a strategic investor in Videocon. But with Dhoot looking at the retail space aggressively, it makes a strategic fit. According to the sources, the deal could be worth around Rs 125 crore-Rs150 crore. [...]

Unitech promoters may buy up to 40% stake in Orissa Sponge

The promoter family of Unitech is close to acquiring up to 40% of Orissa Sponge Iron and Steel (OSISL). Prakausli Investment — a closely-held investment company owned by the Chandra family — has acquired 15% stake in the company, through a preferential allotment, triggering a 20% open offer to buy the shares of other shareholders. In addition, the investment company would also convert another 27,50,000 warrants into shares, accounting for an additional 4.13% stake in Orissa Sponge. Sources say Prakausli Investment is shelling out about Rs 82 crore for the 19.42% stake and it will have to pay extra for the open offer. If the open offer is fully subscribed, the investment company of the Unitech promoters will own around 40% in OSISL. Before the expansion of the company’s equity base, the majority 51% stake in Orissa Sponge was held by Torsteel Research Foundation in India, and its managing director BK Mahanti, a local entrepreneur. In addition, George Soros’ Quantum Fund, and IDFC, who are both shareholders in Unitech, have each bought a 2.5% equity stake in the company. Sources close to the deal say the Unitech promoter family is making a strategic investment in the loss-making OSISL as a backward integration exercise for the promoters of the country’s second-largest real estate company. [...]

PE biggies queue up for 32% in SET

A line-up of private equity investors, including the biggies, are in the race to buyout the 32% stake held by Indian promoters in Sony Entertainment Television (SET). Sources said Warburg Pincus, Blackstone and Standard Chartered Private Equity, among others, were exploring a possible deal after SET kicked off a stake divestment process to facilitate the exit of the Indian promoters and Capital International. It is believed the promoters are seeking an equity valuation pegged between $1billion and $1.5 billion for the company, valuing the local shareholding at around $300-400 million. Sources said some potential suitors may value the company at around $1 billion, and it is not certain whether it would meet with approval from the existing shareholders. Asked about Indian promoters being in talks with private equity investors, Kunal Dasgupta, chief executive officer, SET, said: “This is not an area that I comment on.” The five local promoters exploring exit include actor Jackie Shroff, Shemaroo Films managing director Raman Maroo, World Media group director Sudesh Iyer and MobiApps Holding’s Jayesh Parekh. An email sent to Ron Sato, vice-president of corporate publicity at Sony Pictures Television International, remained unanswered at the time of filing the story. [...]

PIPE deals popular even as markets soar

The Indian private equity (PE) industry’s fondness for private investment in public equity (PIPE) deals remains unaffected by soaring share prices. If anything, it has only grown stronger. Till September this year, PE firms announced 16 such deals worth an estimated $1.71 billion (Rs6,720 crore), against $1.25 billion across 36 deals for all of 2006. Overall, PIPE deals accounted for 21.5% of the estimated $7.92 billion worth of PE transactions announced between January and September. This, however, does not include deals announced by non-PE investors such as hedge funds and other financial institutions and the actual share of PIPEs could be much higher. Unconfirmed estimates put PIPEs at 40-60% of all deals announced this year. “The proportion of such investments in India is significantly higher compared to international levels,” says Biswajit Subramanian, managing director, Providence Equity Partners Llc. The firm opened shop in New Delhi in January and says it is agreeable to PIPEs under the right circumstances. There are some, however, who regard PIPEs as a strategy that goes against the basic objectives of PE investing. “The question is, as a PE investor, what kind of (shareholder) rights do you get when you take a minority interest in a public company?” asks Anil Ahuja, managing director and co-head, Asia, at 3i Group Plc. [...]

Bajaj buys into Europe’s No. 2 sports-bike maker

Bajaj Auto has bought a 14.5% stake in Austria’s KTM Power Sports AG, Europe’s second-largest manufacturer of sports-bikes, for over Rs 300 crore. The acquisition has been done through its subsidiary Bajaj Auto International Holdings BV. The stake and alliance allows Bajaj to manufacture KTM-branded bikes in the range of 125cc and 250cc at its Chakan plant, which will be sold in Europe. An added benefit: KTM’s platforms for 125 cc and 250 cc bikes will be used by Bajaj to design its own ones. But there will be no joint branding — Bajaj and KTM bikes will be sold separately, both in India and abroad. Bajaj will also distribute KTM’s entire range of motorcycles in India and the ASEAN region. These include top-end models such as the 990cc Super Duke, the 690cc Duke, and the 450cc executive model. Following the stake acquisition, Bajaj becomes the second-largest shareholder in KTM after its promoters. The company could consider increasing stake at a later date, sources said, though company officials declined to comment. S Ravikumar, vice-president (business development) told DNA Money that while it was too premature to dwell on production numbers, the first bike could roll out of the facility during 2009-10. “This is an integrated operation involving R&D, engineering and the supply chain of vendors and distributors,” he said. The 125cc and 250cc bikes could typically focus on discerning customers on the lines of the Bajaj Pulsar and, to that extent, will contribute to the ‘going up the value chain’ mantra. [...]

Enam Capital to buy 11.8% stake in Kolkata-based TIL

Enam Capital, an investment arm of Enam Group, is picking up an 11.76% stake in the proposed expanded capital base of TIL (formerly Tractors India). TIL is a 63-year Kolkata-based heavy engineering company, which has clocked a Rs 310-crore turnover in the first six months of 2007-08. Confirming the development, a senior official of Enam Securities told ET: “Enam Capital is a proprietary investment arm of Enam Group. It is picking up stakes in TIL.” Enam Capital is owned by Vallabh Bhansali and his family members. TIL managing director and CEO, Sumit Mazumder also said: “We are issuing warrants on private placement basis to the promoters and Enam Capital to raise Rs 97 crore. The board of directors cleared the proposal on November 4. It will be now placed before shareholders for their nod. We will convene an extra-ordinary general meeting for the purpose.” TIL’s present paid up capital is Rs 9.73 crore. This is proposed to be raised to Rs 13 crore. Currently promoters hold 44.3% in TIL, while financial institutions have 22.36%. Mutual funds and public hold 13.77% and 19.57%, respectively. According to a notice issued by TIL to the BSE on Monday, the company said that the board has approved private placement of some 29,93,842 warrants to the promoters and a “select group”, aggregating Rs 97.59 crore. The warrants would be converted to equity shares 18 months from the date of issue, at a price of “Rs 326 per equity share including premium of Rs 316 per share”. This would mean that each privately placed warrant would be converted to one equity share of Rs 10 each at a premium of Rs 316 per share. [...]