May 2008
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MindTree set to buy Aztecsoft for Rs 400 cr

In the largest deal in the domestic information technology (IT) space, MindTree Consulting is set to acquire mid-tier outsourcing product development (OPD) and testing player, Aztecsoft, for around Rs 400 crore. Both are Bangalore-based firms. The deal is expected to be concluded in a couple of days, according to sources familiar with the situation. Both Aztecsoft and MindTree spokespersons, when contacted, declined to comment on the issue. Yes Bank is the banker for the deal. MindTree will be buying the 34 per cent stake held by private equities, e4e and Canaan Partners, and then make an open offer under the Takeover Code. The non-institutional public shareholding is 46.27 per cent, while institutional public shareholding is around 17.5 per cent. The promoters hold 36.21 per cent. The acquisition is expected to kick off consolidation of mid-tier IT firms in India, which are feeling the heat of a rising Indian rupee, a US slowdown and a dip in global IT spends. Moreover, while it will lend the much-required scale to MindTree, the synergies between the two companies are evident. [...]

Strong PE investments in India likely: Report

Private equity investments, which ballooned to nearly 25 billion dollars over the past four years are likely to continue strongly through 2010, driven by robust economic growth and attractive market valuations, a latest report says. According to a study by global consulting firm, Boston Analytics, around 903 private equity investments worth 24.8 billion dollars in value were made in India from 2004-2007, with more than 45 of those deals exceeding 100 million dollar. In 2003, private equity investments were just 56 with an average size of 8.4 million dollars but it increased rapidly in the past four years to 387 deals worth on average of 36.8 million dollars by 2007. According to the report titled 'Private equity landscape in India', demographic and economic factors spurred this rapid growth. The liberalisation of India's economy coupled with a middle class that grew to more than 300 million provided an increasingly diverse skill base awash with more and more disposable income thereby resulting in a large consumer base and a need for a variety of different services. [...]

SBI, Unitech mull PE realty fund

Just a week after the State Bank of India (SBI) announced a $2 billion (Rs8,100 crore) infrastructure fund with Australia’s Macquarie Group, the nation’s largest lender is set to tie up with an affiliate of Unitech Ltd, the country’s second biggest publicly traded real estate company, to float a private equity (PE) real estate fund. A senior SBI executive said the state-run bank has signed a preliminary agreement with New Delhi-based Unitech Realty Investors Ltd for the proposed fund, but the bank is yet to get the board approval. The executive didn’t want to disclose the size of the fund. SBI’s anchor investment in the real estate fund is yet to be decided. “We want to be in areas where we are not,” said Deepak Chawla, a deputy managing director at SBI, in charge of corporate strategy and new business. Unitech Realty Investors manages Rs3,000 crore of money under three domestic funds and one foreign fund. The company invests only in Unitech’s developments. Mint couldn’t ascertain whether the SBI-Unitech fund will invest only in Unitech’s developments or in those of other companies too. Prior to the infrastructure fund with Macquarie Group, SBI had bought a 20% stake in February in Mumbai-based Sage Capital Fund Management, which is tapping investors for a $250 million special situations fund. [...]

Real estate to see $12-bn PE funds

With the Indian real estate market slated to grow 35-40% in value terms over the next two years, private equity (PE) players are lining up significant investments in the segment. Led by Blackstone and the PE arm of Deutsche Bank, a host of players—including Red Fort Capital Advisors, Starwood Capital and Walton Street—are expected to invest close to $12 billion combined in homes, offices, townships, hotels and other projects. Red Fort Capital is preparing to invest Rs 3,500 crore, mainly on budget hotels, while Starwood is committing Rs 800 crore to Chennai-based Shriram Properties. Deutsche Bank will help Suncity Projects raise Rs 1,500 crore, and the Blackstone Group has said it would invest around $18 million (around Rs 73 crore) in Synergy Property Development Services. Kuldeep Chawla, director, Red Fort Capital, said, “We will focus on developing a chain of budget hotels by associating with local developers. About 400 budget hotels with 60,000 hotel rooms are expected to come up in India. We will look at investing in a diversified portfolio of properties.” [...]

PE industry to witness slowdown by 50% by 2010

The private equity (PE) industry is likely to witness a slowdown by as much as 50% by 2010, say industry experts. After riding on a boom and witnessing stupendous growth year-on-year, PE players such as Baring Private Equity Partners, ChrysCapital, India Value Fund Advisors and Kotak Private Equity Group among others have indicated that they will soon take a conservative approach towards investments. According to Baring, PE firms are overexposed in India. While valuations on the country’s share market have more than quadrupled over the last five years, corrections too are slated to happen. “After fuelling a boom, PE investments will witness a slowdown. India will see half the number of investments in the next couple of years,” Baring Private Equity Partners (India) managing partner Rahul Bhasin told ET. According to industry experts, export-oriented sectors such as IT and ITeS and real estate will witness lesser number of deals in the next two years. Also, the global slowdown will have some impact on the economic growth in India and that in turn could impact the demand for growth capital. [...]