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The word out on the street is that leverage — that great tool of boosting return on equity — is going to get really scarce for private equity (PE) guys. According to market data, the spread of European top-rated corporate debt over government bonds has moved from 38 to 53 basis points. But for private equity firms investing into India, the leverage party has just begun. One of the biggest PE funds operating in the country has recently made an investment using this method and another much smaller firm made such an investment a few months ago. Some PE firms are using ‘asset swap’ foreign currency convertible bonds (FCCB) to multiply returns on their investments, largely in listed companies. In such arrangements, the PE firm partners with a bank to capitalise an investment company that has debt from the bank and equity from the PE firm. For example, the bank will put a debt of $200 million while the PE firm puts in $100 million. This total sum of $300 million is now put into an Indian company either through preferred stock or an FCCB. […]
US-based private equity fund Carlyle has made the highest PE investments in India in the first seven months of 2007. Its total investment of $416 million is the highest by any single PE investor, followed by Morgan Stanley and IL&FS realty fund. Carlyle invested this amount in a single deal — it invested in HDFC for 5.6% stake — through the Carlyle Asia Partners II fund. According to data compiled by research outfit Thomson Financial, Morgan Stanley Private Equity Asia invested $152 million while IL&FS realty fund invested $100 million. In the numbers game, Citigroup Venture Capital (CVC), IDFC Private Equity and Warburg Pincus occupy the No. 1 slot. The threesome signed four PE deals each in the first seven months. Home-grown PE fund ICICI Venture, through its India Advantage Fund V, made three investments worth $64 million. […]
Homegrown private equity major ChrysCapital on Thursday announced closure of its fifth fund worth $1.25 billion (about Rs 5,000 crore), taking up its total asset under management to $2.25 billion. The money has been raised from 75 global investors from different parts of the world and it would be deployed in a span of two-three years, ChrysCapital senior MD Ashish Dhawan said. […]
The Television Eighteen Group (TV18) is picking 50% equity stake in MTV Networks India (MTVI) for Rs 200 crore. MTVI, which is part of media giant Viacom, is engaged in marketing and distribution of TV channels — MTV, VH1 and Nickelodeon. This is one of the rare instances of an Indian company picking up equity in a hitherto wholly-owned subsidiary of a foreign major. The deal is part of the strategic alliance between Viacom and the TV 18 Group announced in May this year. That TV18 would directly pick up equity in MTVI was not disclosed at that time. As of now, the existing TV channels are being uplinked from Singapore. According to the plan, MTVI would uplink and broadcast Viacom branded TV channels apart from a new general entertainment channel in Hindi and a bouquet of non-news and non-current affairs channels. However, it will not set up any uplinking facility in India and will outsource it to a third-party service provider. […]
Punj Lloyd Limited (PLL), a global EPC services provider in energy and infrastructure domains, has signed a Memorandum of Understanding (MOU) to invest Rs 403 crore for acquiring 25.1% stake in Pipavav Shipyard Limited (PSL). The investment is subject to receipt of corporate and statutory approvals and satisfaction of certain conditions precedent. This is a strategic investment by Punj Lloyd to support the growth of its business in the offshore sector. In view of the robust oil prices and the substantial E&P activities in the country, the opportunity for revamping existing offshore platforms and deploying new platforms by upstream oil and gas companies is expected to be significant. The proposed investment in PSL will provide Punj Lloyd access to capabilities to serve this market more effectively. PSL will provide Punj Lloyd access to fabrication facilities for platforms, SBMs, rigs and jackets to exploit the opportunities in this sector. Punj Lloyd is currently executing the Heera Field Redevelopment project for ONGC. The facility at Pipavav Shipyard can also be used for fabrication of vessels for petrochemicals and refineries. […]
The state-run term lender`s Board will meet on August 4 to begin the process of inviting bids from potential suitors. Barclays is reportedly offering a huge premium. Financial daily reported that the public sector term lender's Board would meet on August 4, to consider inviting bids for the proposed stake sale. IFCI proposes to sell up to 26% stake in the company, and the process is expected to be completed in six months. The newspaper also reported that British bank Barclays is willing to offer a huge premium to yesterday's closing price of Rs52.35. At 11:47 p.m., the stock was quoting at Rs56.65 after hitting a high of Rs57.50. […]
Janapriya Engineers Syndicate, a closely held firm credited with building 21,000 units in the affordable home segment in its 20 years of existence, is planning to divest 25 per cent equity to a US-based privately-held real estate private equity company, which is making its maiden entry into India. The offer of stake translates to around $40 million (over Rs 150 crore). The deal is expected to be finalised by next month, according to Janapriya officials. “We have decided to limit our offer to 25 per cent at this stage though the American firm was keen to hold much higher equity in the company,” K Ravinder Reddy, chairman & managing director, said. There has been a growing interest in the Hyderabad-based realty and infrastructure companies among overseas private equity firms in recent times. US-based Citi Venture Capital International (CVC) had recently invested Rs 150 crore in Indu Projects. […]
In a remarkable development, veteran Indian private equity player Anil Thadani has listed his private equity fund, Symphony International, in London. The IPO raised $200 million through the issue of 190 million new shares, including $11 million invested by Thadani and his management team. Turning to the equity markets for capital could be a shrewd move given the recent turmoil in the credit markets and the threat of higher future interest rates. Following the capital raising, Symphony will be capitalised at $340 million, taking into account the $140 million the fund is already sitting on. Merrill Lynch was sole bookrunner on the deal. This is the first time that an Asian fund has followed the example of US funds, such as Blackstone which raised $4 billion through an IPO, and KKR which raised $1.15 billion. (Although KKR's share price has since dipped below its IPO price.) […]
India has emerged the third largest destination for private equity in the Asia-Pacific region in 2007, next only to Australia and Taiwan, both in terms of value and volume of transactions. According to data compiled by research outfit Thomson Financial, PE investments in India during the year have touched $2.49 billion, as against $1.05 billion in Hong Kong , $1.47 billion in Singapore and $752.2 million for the Chinese market. The total PE funding in India is nearly equal to the PE funding that has come into Hong Kong and Singapore together. “The trend of India witnessing higher levels of PE funding than its Asian peers is just a reflection of its growing importance in the global economy. Going forward, we can expect continued buoyancy in both these markets as investors start seeing returns in the backdrop of abundance of high growth opportunities. However, with investors having figured out ways to secure exits from Chinese investments, China may just gain an edge over India,” said Srinivas Baratam, Director, UTI Ventures According to Thomson Financial , 29 PE deals have been struck in India this year, next only to Australia (67) in the entire Asia Pacific region. Though there were 28 PE deals in China, the size of the deals were much smaller. While the average size of the deals in India is $85 million, the deal size in China was only $26 million and $188 million for Australia. India is also a hot-bed for strategic buys, which include M&A activities, with $29.74 billion worth of strategic deals being struck, again the third highest in the Asia Pacific region. While Australia leads the pack with $76.07 billion of strategic deals, China reported $36.88 billion of such deals. There were a total of 331 M&A deals worth $44.34 billion in India in the first seven months of 2007, as compared to 328 M&A deals worth $10.36 billion in 2006. […]
ICICI Venture, the private equity arm of ICICI Bank, today signed an agreement with mining and mineral processing company Imerys to sell its 99 per cent stake in Ace Refractories. ICICI Venture acquired the refractory division from ACC in 2005 and subsequently changed its name to Ace Refractories Ltd. The transaction with Imerys is expected to close by month-end. Imerys will acquire the stake from ICICI Venture through its wholly owned subsidiary, Calderys. Both the companies declined to divulge the monetary consideration of the deal. Ace Refractories clocked revenues worth Rs 321 crore in 2006-07 and it is the second largest refractory company in the country. […]
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