September 2011
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GMR Infra looks at PE funding for roads arm

GMR Infrastructure, the Bangalore-based infrastructure developer, is setting the stage to raise private equity in its road business. According to investment bankers, the company may be looking to raise around Rs 960 crore over a period to infuse equity in various new projects in this vertical. The roads vertical, dwarfed by the flagship airport and power verticals of GMR Infrastructure, is expected to win the bid for India’s largest highway project extending 555 km in connecting Ahmedabad in Gujarat to Kishangarh in Rajasthan. The project is worth Rs 7,000 crore. Speaking to Business Standard, GMR Infrastructure Group CFO A Subba Rao said they were awaiting a decision by the National Highways Authority of India. [...]

Mercator Lines buys 50% stake in Indonesian mine for $30 mn

Mercator Lines has acquired 50 per cent stake in a coal mine in Indonesia's Kalimanthan province for about USD 30 million (Rs 145 crore), a top company official said on Wednesday. India's second largest private sector shipping company Mercator Lines also said it plans to list its coal division in London in one year. “We have acquired 50 per cent stake in a mine in Indonesia's East Kalimanthan, which has reserves of 60 million tonnes (mt),” Mercator Lines Managing Director Atul Agarwal told PTI. [...]

R-Cap may sell 26% in general insurance firm

After roping in Nippon Life in the life insurance business, Reliance Capital is now looking to sell 26 per cent stake in Reliance General Insurance Company, its subsidiary. Reliance Capital, the financial service arm of the Anil Dhirubhai Ambani Group, has already started the due diligence process and is expected to complete this by the end of this financial year. Sources familiar with the developments say Reliance Capital is looking at a valuation close to what Nippon Life had given for taking 26 per cent stake in Reliance Life. “We have shorlisted a few foreign investors. The Nippon Life deal has shown there is a lot of interest for the Indian insurance sector. Reliance General is expected to report profits this year and, hence, it should fetch good value,” said a source close to the development. [...]

NMDC to buy 50% stake of Legacy Iron for Rs 93 crore

NMDC has reached an agreement with Western-Australia-based exploration company Legacy Iron Ore to acquire its 50 per cent stake for approximately $18.89 million (about Rs 92.98 crore). This is NMDC’s first investment outside of India. The Legacy board approved the proposal on Thursday. Now, it is subject to the approval of Legacy shareholders, who are likely to vote on the proposal in November. “We are awaiting the approval from shareholders. This amount would be mopped from internal accruals. Some of the Legacy mines are already developed and some need to be developed,” a senior NMDC official said. He declined to be identified. [...]

On PE Street, exit doors hardly open

The prolonged funk in the primary market has meant private equity players continue to stare longingly at the exit door. With three quarters of the calendar year gone, there have been only 86 exits valued at $2.1 billion so far, about half the 174 worth $4.5 billion seen in 2010, according to data from VCCEdge. Generally speaking, private equity firms head for the exit 3 to 7 years after investing in a company — with the most preferred route being initial public offerings. Partha Choudhury, managing director, SEAF India Investment Advisors, a private equity firm, said the refrain in 2010 was that the optimism of the IPO market will continue into 2011, but that was not to be. [...]

Franklin Templeton PE Invests INR 45 Crore in Symbiotec

nklin Templeton Private Equity Strategy (FTPES) said it has invested INR 45 Crore in Symbiotec Pharmalab. FTPES, a private equity portfolio managed by Franklin Templeton Asset Management India, was advised by Darby Asia Investors India, a private equity affiliate within Franklin Templeton Investments Group, while Systematix Capital Services was the exclusive advisor to Symbiotec for this transaction, a release from the company said. However, transaction details were not disclosed. “The domestic healthcare industry is expected to grow strongly helped by increased domestic demand and growing export potential. Higher per capita spending and greater health insurance penetration, along with increased outsourcing by global pharma companies augur well for companies such as Symbiotec Pharmalab,” Franklin Templeton India President Harshendu Bindal said. [...]

Coimbatore industrialists plan region-specific PE fund

A group of Coimbatore industrialists are planning to make their money work for them by setting up a private equity (PE) fund of at least Rs.100 crore. “Right now, most of us have cash cow companies,” said Annush Ramasamy, president of SPM Ltd, which runs some of the textile operations of the diversified nearly-$500 million (around Rs.2,450 crore) KG Group, whose flagship business is yarn and fabric manufacture. “Most of us are wondering where the next growth will come from,” said Ramasamy, who is spearheading the effort to set up the fund. Industry group-sponsored PE funds have so far been “a double-edged sword”, said K. Ramakrishnan, executive director of Chennai-based investment bank Spark Capital, which facilitates private equity investments. [...]

UFO Moviez picks up 26% more in digital cinema systems provider Scrabble Entertainment to take total stake to 52%

UFO Moviez has picked up 26% equity stake in Scrabble Entertainment, taking its total holding in the Manmohan Shettypromoted digital cinema systems provider to 52%. UFO, a joint venture between the Valuable Group and Apollo International, which is in the same business as Scrabble, had bought 26% stake in the company a few months ago. Both companies help exhibit movies in the digital format, which is replacing traditional film prints. Shetty, a Bollywood film producer who made a killing in 2007 when he sold his production house Adlabs Films to the Anil Dhirubhai Ambani Group, had launched Scrabble with 72% ownership the same year. Following the deal with UFO, his shareholding in Scrabble has fallen to 21%. [...]

Blackstone sells $1.3 bn India funds to Aberdeen

The Blackstone Group, one of the largest private equity groups globally, is exiting its biggest India-focused close-ended mutual fund scheme: India Fund Inc. The company will transfer the management of the fund to Aberdeen Asset Management Asia. The deal awaits stockholders’ approval on November 16. Another scheme, the Asia Tigers Fund of $60 million, is also being sold to Aberdeen. Besides the change in management, the deal size was not disclosed. India Fund Inc manages $1.22 billion and is managed by senior managing director Punita Kumar-Sinha since 1997 when it was under Oppenheimer. With the closure of the deal, Sinha will also exit Blackstone. “After managing the fund successfully for 15 years, I am content to exit, along with Blackstone. The time is right for me to pursue other opportunities,” said Sinha. [...]

New takeover guidelines hike open offer trigger to 25%

The threshold for making a mandatory open offer to minority shareholders has been upped to 25% and the acquirer will need to make an offer for at least an additional 26% of the equity of the company, according to the new takeover code. Earlier the trigger for making an open offer to small shareholders was 15% with the buyer offering to buy at least 20% of the outstanding equity. The new takeover code exempts inter se transfers of shares amongst promoters from making an open offer. The substantial acquisitions of shares and takeovers 2011, notified on Friday by the Securities and Exchange Board of India (Sebi) stipulates that open offer for acquiring shares, to be made by the acquirer and persons acting in concert with him, shall be for at least 26% of the total shares of the target company. [...]