February 2009
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PE investment in India to fall by a third in 2009

Private equity investment in India in 2009 is expected to tumble by more than a third to $5 billion to $7 billion, similar to the fall in 2008, as investor aversion rises and asset owners stick to high price expectations, industry players said. PE firms will also be busy tending to Indian portfolios battered in the stock market meltdown, speakers at a private equity conference in Mumbai said on Thursday. “The sustainable private equity deal volumes in this market would be just about 50 percent of the last couple of years,” Puneet Bhatia, managing director at PE firm TPG, said at the conference. “The price of being prudent and diversified has just not delivered,” he said, referring to the sharper fall in developing market indices than in major industrial markets. [...]

Panoramic eyeing PE funding to fuel pan-India expansion

With a view to have a pan-India footprint, hospitality major Panoramic Universal is planning to develop two exclusive properties in Hyderabad and Jaipur and is in talks with private equity players for raising Rs 50 crore. “We plan to raise Rs 50 crore and are in talks with private equity players and institutional investors. The deal should be sealed soon,” Panoramic Universal's Senior Vice President (Finance & Operations) Utpal Parekh told PTI here. Initial discussions with several investors have already been done, he said, adding, “We will dilute at the right valuation.” Panoramic Universal has adopted the inorganic route for expansion and recently acquired three hotels in the country taking its total chain to 11 across India, US and New Zealand. The company acquired a controlling stake of a semi-finished hotel in Hyderabad called Sri Vatsa Hotels for Rs 20 crore last year. It intends to convert this property into a 90-room four star hotel. [...]

CDC Group Pumps $30 Million Into Microfinance Funds

CDC Group plc (“CDC”), the UK government-backed private equity emerging markets fund of funds investor, is making new commitments totalling US$30m to two private equity funds which will invest in microfinance institutions (MFIs). By investing in MFIs the funds aim to give people on low incomes access to a range of financial services, including credit, savings and fund transfers. The commitments are: US$15m to India Financial Inclusion Fund, managed by Caspian Capital Partners. The fund provides growth capital and strategic support to existing and start-up MFIs to help them grow. The fund focuses solely on India, with an emphasis on towns in rural areas with low microfinance penetration. US$15m to Catalyst Microfinance Investors. This fund will invest in a network of highly efficient, rapidly growing greenfield microfinance institutions in countries such as India, Pakistan, Nigeria and Ghana. The fund will aim to help MFIs accelerate their expansion and provide capital to low-income groups and micro-enterprises located in poor communities. [...]

Gammon India denies report on Maytas acquisition

The report was earlier stated that the logicGammon India denies report on Maytas acquisition of the takeover bid is that Maytas-a virtual damsel in distress now-has lots of projects, both inside and outside the state. Gammon India has clarified that company is not in process to acquire Maytas Infra, the infrastructure company promoted by the erstwhile Satyam family. Earlier, the report stated that company was keen for acquiring Maytas Infra. The logic of the takeover bid was that Maytas-a virtual damsel in distress has lots of projects, both inside and outside the state. (India Infoline) [...]

Private-Equity Firms Form Syndicates for India Acquisitions

Set back by the economic downturn, foreign and domestic private-equity firms in India are spreading the risk of investing in assets by banding together. Firms are resorting to clubbing together to form a syndicate when acquiring stakes to limit both funding requirements and risk. “Over the next 12 months, there will be much more syndication of deals and the insistence (by the lead investor) of having other co-investors to bring additional risk bearing capacity,” said Jasmin Patel, Managing Director, FIL Capital Advisors (India), Fidelity's India-focused private equity and growth capital fund. “The capital required to get a funded firm to a certain maturity point has gone up, so the presence of another investor from a growth perspective and the amount of capital required is becoming a prerequisite,” Mr. Patel said. Syndication is where two or more private equity firms participate in investing in a company, each putting in part of the total equity package for proportionate amounts of equity — usually with one private equity firm acting as lead investor. [...]

MapmyIndia raises venture funds, led by Qualcomm Ventures

MapmyIndia, India's leading digital maps and navigation services provider, today announcedthat Qualcomm Ventures has led a round of strategic investment in the companywith participation from existing investors Kleiner Perkins Caufield Byers, Sherpalo Ventures and Nexus India Capital. The investment will leverage Qualcomm’s worldwide leadership in wirelesstechnologies and MapmyIndia’s leadership in India’s digital maps,location-based services and GPS navigation, to empower the entire telecom,automotive and internet ecosystems. With the recent launch of 3G in India, andgrowing demand for rich data services, device manufacturers and mobileoperators can go-to-market quickly today with GPS navigation and advancedlocation-based services on handsets and Personal Navigation Devices (PND)powered by India’s most comprehensive digital map, data and solutions fromMapmyIndia. The automotive sector can look to enhanced in-car safety andinfotainment through next-generation GPS navigation and telematics productsfrom MapmyIndia and Qualcomm. Converged devices, which marry the internet withmobility, can benefit from MapmyIndia’s server platform to deliver maps andnavigation information across internet, mobile, in-car and digital TV. [...]

PE firms turn to FCCBs as stocks crash

As stock markets around the world continue to tumble, private equity (PE) players are sensing an opportunity in the foreign currency convertible bonds (FCCBs) issued by Indian companies. Most of the FCCBs are trading at a discount of 30 to 70 per cent now. And given the tight financial situation internationally, many investors could be desperate to raise cash by selling them. Some PE firms are looking at companies whose FCCBs are maturing in the near future. Vedika Bhandarkar, managing director and head of investment banking, JP Morgan India said, “If it is a fundamentally good company and the bond is available at a huge discount, it makes sense to go for it.” [...]

United Spirits may sell 15% stake to Diageo to cut debt

United Spirits, the Indian drinks giant controlled by flamboyant tycoon Vijay Mallya, may be prepared to sell a 15%-plus stake and give board representation to Diageo in a move aimed at reducing the Bangalore behemoth's debts, it emerged yesterday. However, both Mallya, often cited as India's version of Richard Branson, and Diageo, the world's largest alcoholic drinks group, insisted there was no certainty a deal would struck over talks that began between the two parties last year. In recent months, media reports have intensified claiming that Mallya would use the proceeds from the stake sale to reduce debts of around £835m largely from its near-£700m acquisi- tion of Glasgow-based distiller Whyte & Mackay in 2007. [...]

M&A value dips 5%, volumes fall by 17% in 2008

Mergers and acquisition (M&A) activity in the Asia Pacific region did not escape unscathed from the effects of global financial crisis that originated in the US. According to a study by ICICI Bank Global Investment Banking Group, overall M&A value dipped by 5% while deal volumes fell by almost 17% during 2008. During the year, Greater China dominated the M&A scene, closely followed by Australia, Japan and Hong Kong. Of the overall deals done in Asia-Pacific, China accounted for over 22% deals in the Asia-Pac region. Deal value for the region jumped from $101 billion in 2007 to $155 billion in 2008, making up more than 39% of the total deal value in Asia-Pacific. Indonesia also posted a strong gain, nearly quadrupling ts deal value to $19 billion. However, Japan (accounting for over 15% of overall deals), Australia (17%), India (6%) and Malaysia (1.5%) saw marked declines in deal values. [...]

VC Firm NEA invests USD 6 Mn in VAS

Mobile value added services (VAS) company ValueFirst Messaging has raised $6 million(Rs 30 crore) from the US-based venture capital firm New Enterprise Associates (NEA) to fund its expansion plans. ValueFirst, which currently offers SMS-based services, is planning to introduce internet and voice based services for the mobile platform in India. The quantum of stake picked by NEA in the Gurgaon-based company was not disclosed. “We have been in the business for five years and expanding rapidly. The funds will help us scale up our operations across India and abroad and recruit new heads,” said ValueFirst CEO Vishwadeep Bajaj. [...]