April 2008
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PE deals fall apart in M&A Street

No one’s burning rubber up the asphalt these days, at least not on deal street. With a string of deals falling through in the past few months, dealmakers at India Inc seem to be cooling their heels, at least for the time being. Compared to the corresponding period last year, M&As have dried up and their announced valuation in the first three months of this year coming down by almost 71%. And though PE deals have hit the road again after an initial stutter, the buzz in investment banking circles is depicting a different story, that of deals not going through. Sample this: Recently, the retail arm of the Future Group, Kshitij Advisory Services, which formed a strategic JV with CapitaLand, Asia’s largest property group, to form Kshitij CapitaLand Mall Management Co, has been called off. Subsequently, a deal announced in January this year by Mumbai-based shipping major Great Offshore, to acquire the UK-based SeaDragon Offshore for $1.4 billion, is said to be now under review. […]

Realty players warm up to PE

Faced with a liquidity crunch, real estate developers are bracing up for more private equity (PE) investments as a source of long-term capital. What’s more, they are today more realistic and flexible about valuations and financing structures than they were even three months ago. That’s because other sources of funds have dried up, be it stock markets, debt, London Stock Exchange’s Alternate Investment Market or the possibility of listing real estate investment trusts (REITS) abroad. Developers prefer public capital as they do not have to give up management control. Two developers secured $101 million (Rs 400 crore) from two private equity firms last Thursday. The Delhi-based Parsvnath Developers received $47 million (Rs 186 crore) from two Saffron Group funds to develop a residential and shopping complex on a now-defunct bus depot at Kurla in central Mumbai. The Mumbai-based Lodha Group got $54 million from a HDFC-sponsored, Mauritius-based fund. The fund will take a 45 per cent stake in a special purpose vehicle, which will develop projects in Hyderabad, Lodha said in Mumbai on Thursday. […]