March 2008
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Italy's Eni in talks to takeover Cairn India's parent co

Investors added more than £290m to the market capitalisation of Cairn Energy yesterday when the shares surged 8% on renewed speculation that an oil and gas major was lining up a bid for the firm. Market traders said the movement was driven by talk that Italy's Eni was considering a bid to be pitched at more than £40 for each share in the Edinburgh-based independent. With both sides saying they they would not comment on speculation, there seemed to be nothing to distinguish the report from a series of bid rumours concerning Cairn which have come to nothing in recent years. Thanks to a number of bumper finds in India's Rajasthan state, the company is sitting on huge reserves. Analysts say these could make it a prime takeover candidate at a time when majors want to grow their resource bases. In October, BP was rumoured to be considering a £3.6bn bid for Cairn Energy. [...]

Logistics on top of PE favourite list

Logistic sector is the new favourite of private equity (PE) as Blackstone, IDFC, Reliance Capital are busy signing deals and acquiring stakes across logistics companies. Moreover, firms like Biyani's Future Capital and ICICI Ventures are also busy launching dedicated funds for investing in logistics. Future Capital's logistics fund worth $700 million to $1 billion will set up warehouses across India and ICICI Ventures' new fund of $3 billion is setting aside money for logistics companies. According to a report by Venture Intelligence, the investments in shipping and logistics accounted for 22 per cent of total deals by number and 11 per cent of the deal value in 2006-07. “There is a big demand for infrastructural development and transport is an integral part of it and returns too are good,” said Luis Miranda, President & CEO, IDFC Private Equity Co Ltd. [...]

PE players shun airlines, for now

Global equity companies have no plans to put their money in the Indian aviation industry even though the carriers are seeking $2.5 billion in cash for expansion. “We certainly would be looking to invest in airlines in India but we would like to wait and watch. The first round of consolidation for the industry is over and now we have three dominant players, which is great. We will wait to see how the benefits of merger, route rationalization and international operations shape up the airlines in India and when they would start showing stronger operational numbers, which is not happening right now,” said TPG Managing Director Puneet Bhatia. The Group has made investments into Asia-Pacific aviation of late, but Bhatia refused to give the details. He said the group would be looking to invest into large established players. [...]

PE co sees opportunity in drying IPO market

The near-shutdown in the market for initial public offerings (IPOs) this year will generate opportunities for funds investing in early-stage companies, a veteran Asia investor said Tuesday, as companies seek alternative sources of capital. While it takes time for unlisted firms to rein in valuation expectations after the long bull run, Baring Private Equity Partners chief executive Jean Eric Salata said the climate for making attractive growth capital investments is ripening as competition wanes. “The IPO markets are dormant right now, so taking companies public is challenging, but for us that’s really a pretty big opportunity,” said Salata, whose firm manages around $2.5 billion (Rs10,125 crore) and focuses on taking stakes in early-stage firms. [...]

PNB Housing Finance planning to rope in strategic partner

PNB Housing Finance Ltd, housing finance arm of Punjab National Bank, is in talks with some companies, including Standard Chartered, to divest up to 26 per cent stake. “We are examining the possibility of roping in a strategic partner or private equity firm as part of unlocking value,” PNB Housing Finance Managing Director V K Khanna said. The decision in this regard would be taken by June, he said. According to sources, Standard Chartered along with other companies is in talks with the housing finance firm to pick up stakes. However, there was no confirmation from PNB Housing Finance about Standard Chartered's interest in the company. PNB Housing Finance needs capital for scaling up operation, he said, adding that the fund has to come from either strategic investors or capital market. [...]

Goldman Sachs picks up 20% in Shriram Credit for Rs 300 cr

One of the world’s largest investment banking firms, Goldman Sachs, is picking up a 20% stake in Chennai-based Shriram Credit for Rs 300 crore, making an indirect entry into equity and commodity brokerage business in India. Shriram Credit is a non-banking finance company (NBFC) under the south India-based Shriram Group, which is engaged in lending activities. The Indian group is transferring its brokerage and distribution services business to Shriram Credit and bringing in Goldman Sachs as a significant minority partner. The deal values the firm at Rs 1,500 crore ($375 million). Goldman Sachs is routing the deal through its 100% Mauritius-based subsidiary GS Strategic Investments. This is one of Goldman Sachs’ major strategic moves after it broke ties with the Kotak Mahindra Group in 2006. The US-based investment banking firm has been present in India through its I-banking unit and has also been an active player in the private equity space. The partnership with Shriram Credit would allow Goldman entry into the brokerage and lending business. [...]

Future Cap invests Rs 100 crore in Centrum Capital

Future Capital Holdings (FCH), the financial services arm of the Future Group, has invested Rs 100 crore in two subsidiaries of Centrum Capital, which is into foreign exchange and wealth management businesses. FCH will invest Rs 75 crore into Centrum Direct, engaged in foreign exchange money changing business, for a 50.1 per cent stake. FCH will also invest Rs 25 crore into a new joint venture company, Centrum Wealth Managers, for a 50.1 per cent stake. Centrum Capital’s existing retail broking, portfolio management and financial products distribution businesses will be moved into Centrum Wealth Managers, FCH said. With the acquisition, FCH has gained access to the 68 strong branch network and over 5,00,000 Centrum customers in the fast growing foreign exchange and wealth management businesses. [...]

PEs invest $1 bn in SMEs in 2007-08

PE firms have invested Rs 4,000 crore ($1 billion) in small and medium enterprises (SMEs) in 2007-08 , an increase of 75% from the previous year. Pharmaceutical, infrastructure , transportation and manufacturing attracted most PE funds among the SMEs in the current financial year. Sunrise sector IT, which used to be a big draw for the PE funds, has lost its predominant position, according to a data compiled by Federation of Indian Micro and Small & Medium Enterprises (FISME). As per the estimates of FISME, the potential market for PE funding in Indian SMEs is worth Rs 20,000 crore ($5 billion). The average size of the deals during FY’ 08 was pegged between $12 million and $15 million. Says FISME secretary general Anil Bhardwaj, “Indian SMEs are growing at a rate of 30% year-on-year .” [...]