February 2008
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Pvt equity funds betting big on Kolkata

Foreign private equity funds are queuing up for biting into the city's burgeoning real estate pie. Over the past 18 months, several large PE transactions have been concluded, in addition to an enterprise level hospitality exposure by Credit Suisse in Park Hotels. The inflow of organized private equity began with New Vernon taking exposure in an IT building project developed by Sureka Group in association with Bikram Dasgupta's Globsyn. UK REIT then invested a significant amount in residential projects being developed by the Eden group. The largest private equity exposure in terms of project size came from Starwood Capital and Walton Street into a 150 acre mixed use project being developed by the Sriram group in Hindustan Motors near Uttarpara. Both have pumped $50 million each into the development. “The PE funds have been scouting the turf for the last three years. We are very happy to witness that they are now concluding transactions and deploying money into projects,” said Abhijit Das, regional director, Jones Lang LaSalle Meghraj, the largest real estate consultancy firm in the country. […]

Prozone Liberty Cap eyes PE placement above Rs 450cr

Prozone Liberty Capital is the retail real estate arm of Provogue in India. It is a joint venture between Prozone and Liberty International listed REITs on the London Stock Exchange Prozone now plans to dilute a further 25% stake through an SPV, which will hold four major shopping malls. These shopping malls are planned in Aurangabad, Jaipur, Nagpur, and Indore. The company has received a valuation of Rs 1,800 crore. Jones Lang LaSalle Meghraj Property Consultants Pvt Ltd was the major valuator. They are now looking to raise Rs 450 crore. According to sources, large PE players who are interested include South Africa-based Old Mutual Property Investments; GIC, which is the fund raising arm of Government of Singapore; and Qatar Investment Authority. Most of these malls will be over a million sq ft. The Aurangabad mall itself is over two million sq ft and is already pre-leased to retailers like Shoppers’ Stop, Westside, Croma, and Reliance Home. The Indore mall is spread over four million sq ft and the deal is likely to be sealed by mid-March. Prozone also plans to develop 12 malls over the next 3-4 years. While they have received a valuation of Rs 1,800 crore for four malls, they have received a valuation of over USD 1 billion for the remaining eight malls, primarily in two tier cities like Mysore, Surat, and Raipur. […]

Saravana Global gets $25mn investment from Mauritius firm

Saravana Global Energy Limited (SGEL) today announced that the company has received equity investment from NYLIM Jacob Ballas India Fund III, LLC (“NYLIM JB India Fund”), a Mauritius based Private Equity investor. The USD 25 Mn funding was syndicated by MAPE Advisory Group. Commenting on the deal, Mr. Ajeeth P Challani, Managing Director, SGEL, said, “”We are pleased to be associated with investors of such a high pedigree. The investment is a significant milestone, and validates the strength of our company and potential of our business. Our relation with the investors will further enable us to achieve our vision of being a fully integrated, world class power equipment player” He further added that the investment would be utilized to finance the setting up of a new state of the art high voltage insulator manufacturing facility with a capacity of 24,000 tons per annum. The facility would help it to enter the hollow insulator segment. […]

ADB may sell its Petronet stake to L N Mittal

Asian Development Bank (ADB) is likely to exit Petronet LNG Ltd by selling its 5.2 per cent holding in the country’s biggest liquefied natural gas importer possibly to promoters or billionaire Lakshmi Mittal. ADB and German Development Bank KfW had recently approved a loan of $169 million to Petronet for its expansion projects at Dahej and a new terminal at Kochi. However, ADB’s internal norms prohibit it from having both debt and equity exposure in a company. “In 2004, ADB had sanctioned a loan of $75 million to Petronet. But once it took a 5.2 per cent stake for less than $8 million, ADB could not disburse the balance of the loan due to its internal regulations,” Petronet CEO and Managing Director Prosad Dasgupta told the Press Trust of India. ADB norms also stipulate that it must divest its equity holding in a company three years from the date of the company going public. Petronet had an initial public share sale in 2004 and ADB was to exit Petronet in 2007, but it was persuaded to stay on for a year. […]

Market meltdown hits PE flow

ICICI Venture’s cancellation of plans to invest $800 million (Rs 3,200 crore) in Jaypee Infratech and Kishore Biyani’s Indivision India Partners’ reluctance to go ahead with its $62.5 million (Rs 250 crore) investment in Dish TV are just two instances of a rather horrid picture for private equity deal flow in India. Industry sources say that there are a number of such deals where brakes have been slammed in the last minute due to the recent stock market meltdown. As a result, there’s a widening gap between what a private equity firm is willing to pay and what the promoters of the company are willing to accept. Blackstone and the private equity arm of Goldman Sachs are two firms that are said to have pulled deals, but DNA Money could not ascertain this. “I know of 8-10 other deals worth about $300 million that have fallen through,” said Gaurav Mathur, managing director, India Equity Partners, a $350 million India-dedicated fund that has made six investments so far. He was not comfortable disclosing names. […]

PE deals outnumber M&A transactions in Jan 2008: Study

Private equity placements are finding favour with India Inc with the number of such transactions surpassing that of merger and acquisition deals in the first month of this year. Indian companies announced as many as 60 private equity deals as against 56 M&A transactions, according to the data compiled by global consultancy firm Grant Thornton. However, the total value of PE deals was lower at 2.05 billion dollars compared to $3.01 billion in M&As transactions. During calendar year 2007, the total number of M&A deals announced stood at around 661, while there were as many as 386 private equity deals during the same period. The major M&A deals in January this year were Tata Chemicals Limited's acquisition of US-based General Chemical Industrial Products Inc, and Great Offshore's acquisition of SeaDragon Offshore. […]

PE players see more `realistic valuations`

With the secondary market witnessing a 25 per cent correction in January, private equity players are expecting valuations to become more realistic in the late-stage investments in India Inc, at least during this calendar year. The performance of secondary markets always acts as a benchmark for PE players to pump capital investment into a private company, or even a publicly listed company. Despite the unprecedented rally in the markets in the past few years, the share of PE investments in listed companies has shown a decrease since 2004. The PE investments in public enterprises (PIPEs) amounted to $4.2 billion across 80 deals, against a total PE investment of $17 billion, last year. […]

Event seeks to marry small and medium enterprises with PE cos : Livemint

On Saturday, Goa State Industries Association (GSIA) and private equity (PE) firm Lauris Capital Partners (HK) Ltd held the first of a two-part event to educate small and medium enterprises (SMEs) on PE and help them access investors. The event, Introduction to Private Equity and Private Equity Investment Process, preceded India Private Equity Fair, where 25 companies looking for investments ranging from $10 million to $200 million (Rs40 crore to Rs800 crore) will be on showcase to PE firms at Mumbai on Wednesday. These events are significant, because typically it is venture capital investors who hold showcases and workshops for start-ups. It seems that PE investors are working harder to access SME deals. And they are realizing that SMEs need a similar level of hand-holding through the investment process as start-ups, because they don’t have exposure to PE investors, nor the budget to educate themselves via investment bankers or consultants. This may be the start of a trend to help bridge the gap between SMEs (particularly in smaller Indian cities) and investors. On Saturday, 55 people listened as Hong Kong-based Harshawardhan Sabale, founder and head of Lauris Capital Partners, which does SME buyouts in India, demystified how funds are set up, how fund managers get paid and how they make investments. […]

ICICI venture, JP Infra PE deal is off

What could have been one of the largest private equity deals in India has come unstuck. ICICI Venture and Jaypee Infratech have terminated negotiations for the PE player buying close to 10-15% stake for $800 million in the infrastructure company, which is developing project worth Rs 1 lakh crore. The deal could have given Jaypee Infratech a valuation in excess of Rs 30,000 crore. “ICICI Venture is not investing in Jaypee Infratech. We were looking at getting a strategic investor in the firm, but have put our plan on hold for now,” Jaiprakash Associates (JAL) executive chairman Manoj Gaur told ET. Jaypee Infratech is a wholly-owned subsidiary of JAL and the original plan was for investors to acquire 44% stake in the company through allotment of new shares. But now JAL plans to invest up to Rs 440 crore to acquire 44 crore equity shares of Rs 10 each at par, in one or more tranches in Jaypee Infratech. The additional shares JAL is subscribing were originally meant for strategic investors, Mr Gaur said, adding that “since the strategic investment has been put on hold, JAL has initiated action to subscribe to these shares.” […]

Realty, hospitality sectors catch PE firms` fancy

With IT projects taking a backseat on the investment front, private equity (PE) funds are cosying up to residential, commercial and hospitality spaces in south India. Pragnya, a Mauritius-based private equity fund focussed on the real estate market in India, has so far invested about $40 million in realty projects, including an integrated township project by L&T in south India, and expects its investments to reach $100-110 million this year. It is also planning to come out with a $150-million Pragnya Fund 2, which will invest in realty and hospitality projects, particularly in the South. In December 2007, Red Fort Capital, a global real estate private equity fund, announced a Rs 400-crore investment plan for Chennai's realty market over the next six months. It has acquired 10 acres of land for a large residential project in Chennai. The company has already invested Rs 1,200 crore on projects in Bangalore and Hyderabad. […]