April 2008
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A 26-week hitch clogs PIPE deals

A technical factor seems to be hindering PIPE (private investment in public enterprises) deals or private investments in public enterprises, which should have been a no-brainer with shares of listed companies now quoting at eye-catchingly attractive valuations. According to rules set by the Securities and Exchange Board of India (SEBI), the preferential allotment of shares (which is necessary to consummate a PIPE deal) have to be done at a price, which is higher of the following two: 26-week average of the weekly high and low closing prices of shares as quoted on the stock exchanges where the shares of the target company are most frequently traded or average of the daily high and low prices of shares during the two weeks prior to the date of the preferential allotment. With such a clause, the price that private equity players have to shell out for stakes in companies is still relatively high. […]

Dabur Pharma to sell majority stake to Fresenius

Indian drug maker Dabur Pharma Ltd said on Saturday its founders and other shareholders have agreed to sell 73.27 percent in the company to Fresenius Kabi (Singapore) Pte Ltd, at 76.50 rupees a share. The Singapore firm is a unit of European healthcare firm Fresenius SE . The Indian firm, which makes anti-cancer drugs, had earlier this year denied it was in talks with a German drug maker for a partnership or sale. The deal with Fresenius values it about 10 percent higher from its market capitalisation of $273 million. Last year, the company had sold its non-oncology drugs business to local rival Alembic to focus on cancer treatment drugs.(Reuters) […]

Nakoda to sell 10 percent stake to PE player

Nakoda Textile Industries, the country's largest player in the fully drawn yarn (FDY) segment, is in talks with a London-based private equity player for equity dilution. Investment banking sources said the company will sell around 10% equity for Rs 30 crore to fund its expansion plans. The deal is likely to be sealed this year. The company plans to invest Rs 325 crore for enhancing capacity. It will raise Rs 225 crore as debt, Rs 30 crore through sale of promoters' equity and the rest from internal accruals, apart from PE funding. Babubhai Jain, chairman and managing director, Nakoda Textile Industries told DNA Money, “We are looking for PE funding, but nothing has been finalised yet.” […]

Premji launches $1 bn PE fund

Wipro chairman Azim Premji, among the richest Indians, is casting his net wider. Known as an astute investor who picked stocks in his personal capacity across an array of undervalued but promising companies, Mr Premji is now launching a private equity fund with an investible corpus of at least $1 billion. The fund, PremjiInvest, is expected to be sector-agnostic. And if insiders are to be believed, it may even shun pure-play IT services companies. As a first step, Mr Premji named Sudip Banerjee, who till recently was president of the enterprise solutions business, as director on the advisory board of PremjiInvest. This is probably the biggest private equity play by a domestic corporate honcho. However, there are India-origin funds that are bigger—ICICI Ventures, for instance. With about 80% stake in Wipro, Mr Premji’s wealth in terms of market capitalisation is pegged at around Rs 68,000 crore. And the 61-year-old promoter is believed to be taking home well over Rs 500 crore in dividends and salary annually. […]

Reliance Retail, M&S ink retail JV

Britain's leading retailer Marks and Spencer Group (Marks & Spencer) announced its joint venture with Mukesh Ambani-promoted Reliance Retail on Friday, involving an initial investment of £29 million (Rs 230 crore), with plans to set up 50 stores over the next five years. M&S plans to pick up majority stake of 51% in the joint venture, Marks and Spencer Reliance India Pvt Ltd, while the balance will be held by Reliance Retail, once its application is cleared by the Foreign Investment Promotion Board. The UK-based clothing and food retailer expects to increase sourcing from India and bring into the country a wide range of products from its global portfolio through its proposed stores. “We intend to open bigger stores, selling a wider range of products at lower prices, including a growing number of products sourced from local suppliers,” Marks and Spencer Reliance India CEO Mark Ashman said. […]