November 2007
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GTL acquires Malaysia network firm for $25 mn

Network services major GTL has acquired a Malaysia-based network planning and optimisation company, ADA Cellworks, in an all-cash deal of $25 million (around Rs 100 crore). The acquisition will conclude in the next few weeks. “With this, we have progressed on our inorganic growth strategy and strengthened our presence in the high value segments of network planning and optimisation,” GTL Chairman and Managing Director Manoj Tirodkar said. The acquisition will also result in access to markets in China, Indonesia and South-East Asia. This will also strengthen relationships with leading telecom technology providers such as Nokia Siemens Networks, Alcatel Lucent, Motorola, Ericsson and Huawei, he added. [...]

Media high on PE funds` list

To measure media growth, advertising spends as a ratio of private consumption rather than GDP (gross domestic product) is a much better indicator. In the next five years, India’s ad expenditure as a ratio of private consumption will be 1.2 per cent,” according to Akhil Gupta, chairman and managing director of Blackstone Advisors India Private Limited. Gupta was speaking at a conference organised by the International Newspaper Marketing Association in New Delhi. Traditionally, all markets measure advertising expenditure as a ratio of GDP and India’s current ad spends, at .34 per cent of GDP, are much below the one per cent average clocked by developed countries. According to Gupta, India’s media industry is at an inflexion point and is expected to see an explosion in advertising. “For private equity investors, the media is right at the top and a favoured investment opportunity only after infrastructure,” he said, adding that the challenge will be to grow print media’s share from the current 45 per cent of total advertising. [...]

PTC may sell 40% in fin services arm to PE firms

Power trading firm PTC India’s proposal to rope in foreign investors for its financial services arm is expected to come up for Foreign Investment Promotion Board (FIPB) approval during the board’s next meeting on November 16. It’s understood that the PTC proposal includes allowing two private equity (PE) majors — Goldman Sachs and Macquarie — to acquire 40% equity in PTC Financial Services (PFS). PTC would retain the remaining 60% in PFS. Though the names of the two players have been kept under wraps by PTC, pending FIPB clearance, sources said both the PE players would pick up 20% stake each in the company. The deal is expected to be in the region of Rs 120 crore. An agreement on the terms and conditions of the deal has already been reached, but a formal announcement is expected only by the month-end. ET first reported about the deal with private equity players last month. [...]

UTI Ventures invests $8 mn in Pesco Beam

In a sign that environment-protection businesses in India are becoming attractive for investment, venture capital firm UTI Ventures has invested $8 million in Pesco Beam Environmental Solutions, a company involved in waste oil recycling and alternate energy systems. The investment comes even as oil nudges close $100 a barrel and alternative energy sources are becoming more critical globally. The 18-year-old Pesco ((Pragmatic Environmental Solutions Co) builds plant and machinery for companies that are into waste recycle management and manufacture of alternate fuel such as ethanol. It has offices in the US and in Chennai in India. “Investors are chasing these opportunities. Globally, many clean energy funds have been raised to invest in this sector,” said Raja Kumar, CEO and MD, UTI Ventures. The clean technology sector received more than the usual share of interest this week when Nobel Peace prize winner and former US vice-president Al Gore joined Silicon Valley venture capital firm, Kleiner Perkins Caufield & Byers (KPCB), on Tuesday. Vinod Khosla of KPCB has also backed clean technology enablers in India and picked up stake in Praj Industries, which makes equipment for ethanol manufacturers, early last year. [...]

IndusInd Bank seeks strategic partner

Indusind Bank needs to raise (tier-I) capital and its Managing Director & CEO, Mr Bhaskar Ghose, says the board would prefer to do so by issuing shares to a “strategic partner”. “Our intention is to get a foreign bank as a strategic partner,” Mr Ghose said, adding that the bank’s “Plan B” for raising equity would be a follow-on GDR issue. He practically ruled out a regular follow-on public or rights issue. The bank’s capital adequacy ratio, as at end-September, was 11.77 per cent. While the bank has headroom to raise about Rs 300 crore by way of tier-II capital (long term debt), Mr Ghose feels tier-II capital would be expensive. In an informal chat with journalists here today, he said that such fund-raising would be completed this financial year. Regulations do not permit a bank to pick up over 5 per cent stake in another bank, but Mr Ghose says that many foreign banks are willing to invest up to 5 per cent. “A lot of foreign banks are interested in establishing a base in India before the markets are opened up (for equity participation by one bank in another),” he said. Mr Ghose was here in connection with an announcement of a tie-up with the Chennai-based Cholamandalam MS General Insurance Company to sell the insurer’s products. [...]

ICICI Venture seen in talks to buy out Shalimar

ICICI Venture has entered into discussions with the promoters of Shalimar Paints which may culminate in a buyout of the latter. Sources said the PE major was working on tabling a possible offer valuing the company at around Rs 450 crore. The domestic paint market is pegged at Rs 11,000 crore and is growing at about 14-15% annually. The company, with three plants at Sikandrabad, Nashik and Howrah, has an annual capacity of around 43,000 tonnes. The company’s stock price on BSE has climbed up from Rs 138 in March this year to a high of Rs 450 on November 12. On Wednesday, it closed at Rs 430, up 1.90%. When contacted, ICICI Venture declined to comment. Sandeep Sarda, executive director & CEO, Shalimar Paints, said: “If there is a proposal, we might examine it. But as of now, there is nothing before us. And we are unaware of any such developments.” However, sources said talks have taken place between ICICI Ventures and Shalimar on a possible deal. In fact, an international media report said private equity funds have shown interest in the company, and quoted a company official who did not rule out the possibility of divesting a majority stake. [...]

ICICI Venture, Baring PE set to buy 32% in Karvy for Rs 500 cr

Leading private equity investors ICICI Venture and Baring Private Equity Asia are set to invest around Rs 500 crore to pick up around 32% stake in Karvy Stock Broking Limited (KRBL), an arm of the Hyderabad-based Karvy Group. The deal puts the enterprise value of the securities firm at around Rs 1,500-1,600 crore. MAPE Advisory Group advised Karvy on the transaction. The valuation, however, is lower than that of other established stock broking and investment banking players like Edelweiss Capital, Indiabulls, Motilal Oswal Securities and India Infoline which took PE route in the past and raised funds from the primary market. ICICI Venture and Baring Private Equity are buying the 20% equity held by existing investor Pacific Century Group (PCG), while an additional 12% stake will be offered to them in the form of fresh equity, according to sources. The Hong Kong-based PCG had acquired the stake for Rs 83 crore in 2005, which had valued Karvy at around Rs 415 crore then. KRBL offers a wide range of financial services including stock, commodities and insurance broking, investment banking, mutual fund distribution and depository services to over 3.5 lakh retail investors. These services are offered through a strong network of over 580 branches spread across India. [...]

PEs shift focus to domestic education training institutes

Private equity (PE) players appear to have shifted focus to education firms targeting the domestic market. Thanks to a booming economy and talent shortage, PEs expect the demand for services from such firms to pick up. Already, the sector has seen a number of PE deals and the trend is likely to continue, observers say. Companies in the education segment usually offer online tutoring services for clients abroad or tap the domestic market by setting up vocational training and coaching centers. While the investment activity earlier centered on export focussed-education companies, the focus has shifted to training institutes that target the domestic market. For example, private equity firm Gaja Capital partners invested $8.25 million in education and career counseling entity Career launcher. Similarly, Helix investments pumped in $12 million into preparatory education company Mahesh Tutorials and SAIF partners invested $10 million in English training academy Veta, plus an undisclosed sum in another vocational training company, ICA Infotech. [...]

GE Energy buys 26% in Sayi Power

GE Energy Financial Services picked up 26% in Sayi Power Energy for an undisclosed sum, reports Business Line. Sayi Power Energy is a majority shareholder of power project developer KSK Power Venture. KSK Power Venture owns downstream energy assets in India and is listed on London Stock Exchange`s Alternate Investment Market (AIM). The company has eight projects, either in operation or under construction, representing 875 MW in capacity. Earlier this year, GE Energy Financial also invested USD 17 million in Binani Cement for construction of a 22.3-MW thermal power plant in Rajasthan. ( My IRIS) [...]

Blackstone to put $1bln in India in 2 years

Private equity firm Blackstone Group is looking to invest more than $1 billion in India over the next two years, the Economic Times said on Friday, citing the firm's country head. “We may make investments of $500-$600 million per year, and in two years may invest more than $1 billion dollars,” Akhil Gupta, chairman of Blackstone India, told the paper. “We are already much ahead of our target of $1 billion in five years and if we continue to find deals, then the allocation for India would also continue to increase,” he was quoted as saying. Blackstone, which recently paid $65 million for a reported 26 percent stake in Indian engineering firm MTAR Technologies, has said it had a huge pipeline of deals in India. It has made a series of investments this year, including in apparel firm Gokaldas Exports, $150 million in Nagarjuna Construction Co Ltd and $275 million in regional media firm Ushodaya Enterprises Ltd. (Reporting by Rina Chandran; Editing by Ranjit Gangadharan) (Reuters) [...]