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Just a week after the State Bank of India (SBI) announced a $2 billion (Rs8,100 crore) infrastructure fund with Australia’s Macquarie Group, the nation’s largest lender is set to tie up with an affiliate of Unitech Ltd, the country’s second biggest publicly traded real estate company, to float a private equity (PE) real estate fund. A senior SBI executive said the state-run bank has signed a preliminary agreement with New Delhi-based Unitech Realty Investors Ltd for the proposed fund, but the bank is yet to get the board approval. The executive didn’t want to disclose the size of the fund. SBI’s anchor investment in the real estate fund is yet to be decided. “We want to be in areas where we are not,” said Deepak Chawla, a deputy managing director at SBI, in charge of corporate strategy and new business. Unitech Realty Investors manages Rs3,000 crore of money under three domestic funds and one foreign fund. The company invests only in Unitech’s developments. Mint couldn’t ascertain whether the SBI-Unitech fund will invest only in Unitech’s developments or in those of other companies too. Prior to the infrastructure fund with Macquarie Group, SBI had bought a 20% stake in February in Mumbai-based Sage Capital Fund Management, which is tapping investors for a $250 million special situations fund. […]
With the Indian real estate market slated to grow 35-40% in value terms over the next two years, private equity (PE) players are lining up significant investments in the segment. Led by Blackstone and the PE arm of Deutsche Bank, a host of players—including Red Fort Capital Advisors, Starwood Capital and Walton Street—are expected to invest close to $12 billion combined in homes, offices, townships, hotels and other projects. Red Fort Capital is preparing to invest Rs 3,500 crore, mainly on budget hotels, while Starwood is committing Rs 800 crore to Chennai-based Shriram Properties. Deutsche Bank will help Suncity Projects raise Rs 1,500 crore, and the Blackstone Group has said it would invest around $18 million (around Rs 73 crore) in Synergy Property Development Services. Kuldeep Chawla, director, Red Fort Capital, said, “We will focus on developing a chain of budget hotels by associating with local developers. About 400 budget hotels with 60,000 hotel rooms are expected to come up in India. We will look at investing in a diversified portfolio of properties.” […]
The private equity (PE) industry is likely to witness a slowdown by as much as 50% by 2010, say industry experts. After riding on a boom and witnessing stupendous growth year-on-year, PE players such as Baring Private Equity Partners, ChrysCapital, India Value Fund Advisors and Kotak Private Equity Group among others have indicated that they will soon take a conservative approach towards investments. According to Baring, PE firms are overexposed in India. While valuations on the country’s share market have more than quadrupled over the last five years, corrections too are slated to happen. “After fuelling a boom, PE investments will witness a slowdown. India will see half the number of investments in the next couple of years,” Baring Private Equity Partners (India) managing partner Rahul Bhasin told ET. According to industry experts, export-oriented sectors such as IT and ITeS and real estate will witness lesser number of deals in the next two years. Also, the global slowdown will have some impact on the economic growth in India and that in turn could impact the demand for growth capital. […]
India’s current market situation and the dynamics of its economy are likely to result in continued private equity growth in the coming years, said a study by Boston-based research firm Boston Analytics. “A correction in the stock market, leading to 21 per cent decline in the benchmark index BSE Sensex, in the first two months of 2008, has eased valuations of target companies for private equity investments,” said the study titled “The Private Equity Landscape in India.”The high GDP growth, projected to be 8.4 per cent in 2008, favourable demographics with roughly half of the population under the age of 25, a high domestic savings rate of more than 30 per cent and a comfortable foreign exchange reserves position worth $301 billion in February 2008 also augured well for the private equity investment, it said. […]
Sandalwood Partners, an early stage VC firm has invested in luxury mobile phone company with an initial capital of $2 million. It plans to invest around $10 million over a period of time. Mr Kondamoori said that luxury mobile phone market in India may see a slow uptake and firm plans to sell around 10,000 units in the first year of operation. Globally, there are a few luxury mobile phone brands, some which are part of the handset manufacturers, others as standalone entities. Nokia’s luxury division, Vertu, has handsets in the price range of $310,000, which are available in very limited pieces of 8-10. Others like SonyEricsson, Motorola have handsets priced at $300,000 and $51,800, respectively. Besides, there are other models which are priced in the range of $1,900 to $2,700. India is also the home to around 150 million mobile users and is one of the fastest growing market globally. It is estimated that this market will cross 500-million users by 2010-11. […]
With India’s foreign exchange reserves at over $300 billion and growing, there has been renewed interest in establishing a sovereign wealth fund (SWF), using a part of those reserves. An SWF is a separate pool of assets, primarily (but not exclusively) invested outside the country, and controlled by governments to achieve economic, financial, and strategic objectives. While there are well-established conservative international norms for investing forex reserves, this is not the case with the SWFs, which can engage in more aggressive risk-management practices. India is a significant recipient of investments by SWFs from abroad. […]
Trent Ltd, the Tata group firm which is in the business of retail, has acquired the 24% stake it already didn’t own in retail chain Landmark Bookstore that was held by co-founder Hemu Ramaiah. The deal, for an undisclosed amount, was signed on Wednesday. Ramaiah, the CEO of Landmark, confirmed the deal and said that she had resigned from her post. She is now in the process of starting a retail consulting firm called Shop4Solutions. In 2005, Trent acquired a majority 76% stake in Landmark and its subsidiaries— 75% from Nataraj Ramaiah, Hemu Ramaiah’s brother, and 1% from the latter — for Rs103.6 crore. Trent runs the Westside and Star Bazaar chains. After the acquisition, Himanshu Chakrawarti, a Trent executive, was named COO of Landmark. It wasn’t immediately clear whether he would be named CEO. Chakrawarti said he was not the right person to comment on the subject. An executive at Trent declined to comment on the issue and the firm’s head of marketing Neeti Chopra did not respond to telephone calls and an email from Mint. Ramaiah declined to comment on the value of the deal although a person familiar with the transaction said it was at least Rs100 crore. […]
Indian steelmaker Essar Steel Holdings Ltd. said it would buy U.S. steel producer and distributor Esmark Inc. in a cash offer of $17 a share, deepening its global reach and providing it with a large integrated steel producer and customer base in the U.S. The total value of the deal is about $1.1 billion, according to Esmark officials. If the deal goes through, Essar Steel — a unit of Essar Global Ltd. — will own Wheeling-Pittsburgh Steel, a 2.5-million-short-ton integrated steel mill in West Virginia, and a Midwest distribution network. Along with the cash payout to shareholders, Essar Steel agreed to lend Esmark $110 million to refinance debt and provide needed liquidity.The deal continues the aggressive expansion by cash-rich Essar Steel, which last year bought Canada's Algoma Steel Inc. for $1.6 billion and iron-ore reserves in Minnesota for $1.65 billion, and this month broke ground on a 2.5-million-metric-ton mill in Trinidad. Essar Steel had been looking for an integrated producer in the U.S. and bid for the Sparrows Point steel mill in Maryland but was beat out by Russia's OAO Severstal. […]
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