November 2009
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PE firms getting ready for the next round of action

Private Equity (PE) activity may have shuddered to a halt since late last year after the global financial turmoil and India’s economic slowdown put brakes on dealmaking, but a slew of funds are now quietly piling on ammunition to move in for the kill in an economy that’s slowly but surely on the mend. The PE industry in India spanning VC funds, new PE firms — some of them founded by high-profile executives now on their own — and established funds such as AV Birla PE, Reliance PE, Milestone Capital, Samara Capital, Kubera Capital, Tano Capital, Axis PE, ICICI Venture and India REIT plan to mop up over $8 billion over the next 12-18 months. The situation has worsened from Q3FY07 when India-specific funds raised commitments worth $4 billion. A hot area that’s attracting new capital is sustainability and clean technology. [...]

Unrealistic valuations hampering PE deals

Many entrepreneurs wanting to sell a stake have unrealistic valuations of their companies. This is a major block for private equity (PE) players to close a deal. Also, many do not have a second plan if talks fall apart, according to speakers at the Private Equity Conference at the Indian School of Business. KK Iyer, partner, India Equity Partners Fund, says many target companies have suspended their plans to seek PE funding during the year 2008-09 due to market conditions. Those that have taken the deals forward are now involved in number crunching. Many promoters are also emotionally attached to the companies and do not want to give up their stake and this hampers the growth plans, he says. [...]

TVS Cap buys 25% in Tata-owned bookstore chain Landmark

Chennai headquartered TVS Capital has bought a 25% stake in Tata-owned bookstore chain Landmark, report CNBC-TV18’s Divya Rajagopal and Komal Chowdhary. TVS Capital's private equity arm TVS Shriram has opened its cheque book and bought a 25% stake in Trent-owned bookstore chain Landmark for Rs 65 crore. This is the fund's first big deal and its second since its inception two years ago. Gopal Srinivasan, Chairman, TVS Capital Fund, says, ”From the beginning our approach has been that we have been very focused on our core thesis, which is to do, consumer driven opportunity and specialty retail was one area we looked at. We always focused on that as it represents the new India, modern large format retailing, very specialized in books and gifts.” [...]

MCX-SX to dilute stake to 5% by Sep 2010

Financial Technologies Group-promoted stock exchange MCX-SX on Monday said it will reduce its stake in the bourse to about 5 per cent by September 2010, to meet the requirement of market regulator Sebi. “We are working on it (dilution of stake), we have found some investors. We have been given time till September next year and we will definitely meet the target,” MCX-SX Chairman Ashok Jha told reporters on the sidelines of the India Economic Summit. As per Sebi's norms, no single entity can hold over 5 per cent in an exchange barring few stock exchanges and banking organisations that are allowed up to 15 per cent stake. [...]

ICICI, Temasek revive Firstsource stake sale

ICICI Bank, Singapore state investor Temasek and another large shareholder have revived plans to sell their stakes in back-office firm Firstsource Solutions in a deal valued at $285 million at the current market price, sources said. ICICI, Temasek's Aranda Investment and U.S.-based banking technology group Metavante together own 68 percent of Firstsource and have hired Citigroup to arrange the deal, the sources with direct knowledge of the deal, said on Monday. [...]

Reliance Industries eyes LyondellBasell

Reliance Industries is set to buy assets from stricken US petrochemicals group Lyondell-Basell in a deal that could be worth up to 6 billion dollars, a report said Monday. The purchase, which would signal that the cross-border acquisition market is picking up again after the global financial crisis, is under discussion and might be announced this month, The Economic Times reported. “The intent is certainly to make an announcement on the day of the AGM or very close to it but that depends on how the talks progress,” the paper quoted a person familiar with the transaction as saying. The AGM, or annual general meeting, of Reliance is scheduled for November 17. [...]

Blackstone Buys Stake in Indian Rail Freight Provider

Blackstone Group LP, the world’s largest private-equity company, acquired a stake in an Indian rail freight mover to tap increased movement of goods as growth in Asia’s third-largest economy accelerates. Blackstone GPV Capital Partners (Mauritius) V-H Ltd. will spend 3 billion rupees ($64 million) to buy a 37.5 percent stake in Gateway Rail Freight Ltd., a unit of Gateway Distriparks Ltd., an Indian shipping-logistics provider, according to a statement sent by Gateway Distriparks to the Bombay Stock Exchange. Blackstone and Warren Buffett’s Berkshire Hathaway Inc. are investing in rail freight providers as railroads become more competitive amid rising fuel prices. Blackstone’s latest purchase is the leveraged buyout fund’s second announced investment in an Indian logistic company in two months. [...]

PE firms target Indian investors to raise funds

Even as corporate groups and financial institutions in India are floating their own private equity funds, the downturn in the global economy has affected their fundraising plans indefinitely. However, by exploring new sources such as domestic institutions and high networth individuals (HNIs), a few PE firms have received commitments while a few others remain optimistic about completing fundraising soon. Avendus, the Mumbai-based merchant banking firm, and one of the latest entrants into the PE market, is expected to complete raising Rs 1,000-crore private equity fund next year. The PE firm has started talks with domestic sources for the purpose. [...]

Kingfisher expects $400 mln PE investment

Kingfisher Airlines Ltd said it is close to securing $400 million from private equity investors, as the cash-strapped carrier tries to cut its debt and interest burden. Chairman Vijay Mallya also said on Monday the airline would complete a $100 million rights issue and a $100 million global depositary rights issue by the end of the fiscal year next March. “I would certainly use a large part of that to reduce debt,” Vijay Mallya told reporters at the World Economic Forum. “Majorly into debt, to save the interest, so it is swapping debt for equity.” [...]

T. Rowe Price Group buys stake in UTI Asset

Mutual fund manager T. Rowe Price Group Inc. said Monday it is buying a 26 percent stake in Indian asset manager and mutual fund company UTI Asset Management Co. and UTI Trustee Co. for about $138 million. UTI serves at least 9.75 million investor accounts in India and offers a broad array of domestic fixed-income and equity mutual fund strategies. T. Rowe Price is buying its stake from existing shareholders. T. Rowe Price said India's asset management industry has strong growth potential. [...]