February 2008
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US firm in talks with PFC to sell 25% stake in $12 bn fund

US-based private equity firm Clear Trade is in talks with five entities including PFC to sell up to 25 per cent stake in its newly-launched $12 billion India-focused power and infrastructure fund. Clear Investments Power Infrastructure Fund, which starts with an initial corpus of $1 billion, would invest in the country's upcoming power and infrastructure projects. According to Clear Trade CEO Palak Jain, the firm is in talks with five entities including Power Finance Corp, Morgan Stanley and Axis Bank-promoted Axis Private Equity to dilute up to 25 per cent in the fund. Apart from Jain, the fund would be promoted by Clear Trade Managing Director Deepak Kavadia and Philip Ho, Managing Director of US-based private equity fund Cornell Capital. “We plan to liquidate 25 per cent stake in the fund to two of the five entities,” she told media over phone. […]

FM may clear $5 bn fund for India Inc's M&A play

The government is considering a sovereign investment fund with an initial corpus of $5 billion to acquire companies abroad. The investment fund may also be used to bolster the country’s energy security by acquiring coal mines and oil and gas blocks abroad. Prime minister Manmohan Singh has issued a directive to the finance ministry in this regard, and an announcement is likely in the Budget, an official said. According to officials, one of the options available to the government is to create a special purpose vehicle (SPV), which will borrow funds from RBI in the form of long-term securities in foreign currency and lend the same to Indian companies at lower rates. Thus, RBI and the government will be able to earn more on forex reserves, which currently fetch average returns of 3.5-4%. The new fund will be on the lines of the infrastructure SPV being set up in London. It is learnt that the decision to form a fund was taken at a recent meeting of the PM’s council on trade & industry. Along with industry leaders, Planning Commission deputy chairman Montek Singh Ahluwalia, finance minister P Chidambaram and commerce & industry minister Kamal Nath were present at the meeting. The sovereign fund is part of the government’s plan to maintain high economic growth. Kuwait Investment Authority, the Government of Singapore Investment Corporation and Temasek Holdings are examples of such sovereign funds. Last September, China floated a $200-billion sovereign wealth fund, China Investment Corp. […]

Indian govt may scrutinise investments by foreign private equity funds

Indian government's Department of Industrial Policy and Promotion (DIPP) is likely to start tracking the duration of investment, entry and exit patterns of private equity in India, the Economic Times reported, quoting unnamed sources. It however quoted a DIPP source as saying it will not resort to regulatory measures as this could send a wrong signal to investors. Many foreign private equity funds take over company managements rather than staying as only financial investors, with 10-15 pct stake, and the government will monitor the outcome of such management takeovers on the health of the company, the daily added. SEBI had earlier said overseas funds picking up controlling stake in listed Indian firms through the secondary market can lead to asset stripping as identities of many of the foreign investors involved with such funds are not disclosed and the ultimate source of funds is not verifiable, the paper noted. Private equity deals announced in 2007 amounted to 19.03 bln usd, of which Temasek accounted for 2.5 bln usd, the paper said. As many as 386 private equity deals were struck last year with major funds including Temasek, GIC, Blackstone Group , Warburg Pincus, Carlyle Group and Actis Capital the paper said.(Forbes) […]

Disney to take controlling stake in UTV Software

Disney will acquire an additional 17% for around Rs8.05bn. Disney presently holds 14.85% in UTV Software. It will also make an open offer for 20% more Shares of UTV Software Communications Ltd. climbed on Monday after Walt Disney Co. said it would acquire a majority stake in the Indian media and entertainment company. The US media major is also likely to pick up a minority stake in UTV's new broadcasting venture. As per the agreement, Disney will acquire an additional 93,52,500 shares of UTV Software at a price of Rs860.79. The total investment by Disney in UTV Software would be around Rs8.05bn. Disney presently holds 34,00,000 shares, representing 14.85% of the equity share capital of UTV Software. UTV will also issue on a preferential basis of 45,32,000 warrants convertible into equal number of equity shares to Unilazer Exports & Management Consultants Ltd., one of the promoter group entity at a price of Rs860.79. The total investment by Unilazer in UTV Software would be around Rs3.9bn. UTV Software will issue shares against warrants, subject to receipt of the FIPB approval. […]