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The IPO route of exit by a private equity (PE) player is seen as the most efficient way of exit, but in India, irrespective of a vibrant primary market, the number of exits through the IPO route is less compared to other exit options available. Data from Venture Intelligence shows in 2007, PE firms exited in 65 Companies, of which only 16 were through IPOs, while 2006 saw 19 exits through the IPO route from a total of 37 PE exits. The year 2005 saw 42 exits, but IPOs’ share was just 17. Experts attribute this to flexibility available to PE firms to exit through more lucrative routes than an IPO. Dhanraj Bhagat, partner, specialist advisory services, Grant Thornton, said, “While IPO exits may be less, many exited through strategic sales via the exchange after listing. They would have expected better returns post-listing. Also in the past few years, many Companies preferred strategic sales i.e. sale to financial investors, competition & joint venture partners, which is not possible in an IPO. Also, a presence of quality investors like PEs makes an issue more saleable. Many Companies in the past years opted to divest some stake during the IPO and some, post-listing.” Though PE firms exited 170 Companies since 2004, only 58 cases, or 34%, were through IPOs; the others took the M&A route or sold back shares to the promoters. The year 2007 saw 95 maiden share offers, while 2006 and 2005 saw 73 and 50 such offers, respectively. […]
Reliance Communications, controlled by Anil Ambani, has agreed to buy the entire business except Vanco Direct USA, which is being sold separately. The parent, Vanco Plc, goes into administration today. Trading in Vanco’s shares was suspended at the beginning of the month, when the company gave a serious profit warning. Allen Timpany, the company’s founder and chief executive, who bought the company for £1 in 1988, resigned on the same day. Cable & Wireless had confirmed that it was talking to the company, and BT and T-Systems, a division of Deutsche Telekom, were also considered to be contenders. At its peak two years ago Vanco was worth almost £400 million, but its shares have tumbled over the past year and by the beginning of the month it had run out of cash. Analysts estimated that the group had burnt through £60 million in five weeks. […]
CRH, an Irish building materials company, bought a 50 per cent stake in the Hyderabad-based cement manufacturer My Home Industries (MHIL) for Rs 1,875 crore. The Irish company paid about $235, or Rs 9,414 a tonne, according to a Kotak Mahindra Bank executive who advised on the transaction. It had earlier rejected bids valuing its cement operations below $200 a tonne. MHIL has a production cement capacity of 3.2 million tonnes and plans to expand this to 4.2 million tonnes by 2009. Industry analysts said the sale price is higher compared to the prevailing market valuation of $150 a tonne for a cement plant in India. Holcim, the world's largest cement maker, paid $200 a tonne for buying Ambuja Cements in 2005, while Cimpor paid $162 a tonne for Shree Digvijay Cement in 2007. Samba Shiva, director finance and commercial, MHIL, confirmed the sale, but declined to give further details. […]
Stock broking firm Geojit Financial Services on Friday said the company's board has approved the offer from French banking major BNP Paribas to acquire a 35 per cent stake in one of its subsidiaries. BNP Paribas would acquire a 35 per cent stake in Geojit Technologies, which is into software development. “The Board of Directors of Geojit Financial Services has in principle decided to surrender its membership in various commodity exchanges held by its wholly-owned subsidiary. “This is to enable BNP Paribas to get approval from RBI for the open offer subsequent to their acquisition of 27.18 per cent stake in March 2007,” the firm said in a filing to the Bombay Stock Exchange. Further, the board has accepted the offer of compensation of Rs 40 crore by BNP Paribas for surrendering memberships in various commodity exchanges. During 2007-08, Geojit Technologies had started developing software for the French firm for some of its European operations. […]
India-based Gaja Capital Partners, a private equity firm, has launched Gaja Capital Fund I, which will take equity and equity-related investments in high growth companies whose principal business is in India. Gaja Capital Fund I has a target size of US$200 million and will invest between US$5 million to US$15 million across 10 to 15 deals in the services and manufacturing sectors. The International Finance Corp. is committing up to US$15 million in the fund.(Fin Alternatives) […]
Diversified business group Videocon is talking to U.S.-based Motorola for acquiring the latter’s mobile handset business. However, these talks are at ‘initial’ stages. It is also studying General Electric’s invitation for bid for its appliances division, which produces refrigerators, air-conditioners and ovens. Revealing this, Venugopal Dhoot, Chairman and Managing Director of the Group, said, “The talks with Motorola are at very initial stage.” He, however, did not spell out a deadline for finalising the deal. In the wake of Motorola’s plans to separate its mobile business from other operations, consumer electronics major Videocon had made a bid to acquire Motorola’s mobile handset business which is stated to be worth about $3.8 billion and account for 15 per cent market share globally. […]
Bharti has decided to disengage from the ongoing talks with the South African telecom major, MTN, to explore the possibility of a merger between the two “emerging markets” telecom giants. Bharti has already conveyed its decision to pull out of the talks to the MTN board, after discussions that continued till late last night could not achieve a breakthrough. According to a statement issued by the Bharti group, the decision to pull out of the talks was prompted by its consideration that the new structure proposed by the MTN board would not have been in the interest of Bharti Airtel's minority shareholders and in its plans for growth as an Indian telecom multinational. A few weeks ago and at the invitation of MTN board, Bharti had entered into exploratory discussions on the possibility of combining the two 'emerging market' telecom giants. A number of structures were discussed and evaluated between the lead bankers on both sides. An in-principle agreement was also reached on May 16 and a term sheet was initialled between the two lead bankers. […]
U.S.-based venture capital firm Battery Ventures plans to invest upto $100 million in Indian companies over the next 3-5 years, a top official said on Friday. The company manages eight funds worth $3 billion and has a presence in United States, Israel and now India. It will invest mainly in technology, media and financial companies, General Partner Mark Sherman told Reuters. Battery will aim for an average return of around 40 percent from each investment, which would be anywhere between $2 million and $50 million, he said. […]
With the Indian real estate market slated to grow 35-40 per cent in value terms over the next two years, private equity (PE) players are lining up significant investments in the segment. Led by Blackstone and the PE arm of Deutsche Bank, a host of players -including Red Fort Capital Advisors, Starwood Capital and Walton Street – are expected to invest close to US$ 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 US$ 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.” In 2006, markets regulator SEBI opened up the real estate market to PE investments. The first year was a learning period. “The following year saw a real correction in the market, with large incremental growth rather than dramatic growth, where stock market money went into special purpose vehicle-level investments,” says Arun Natarajan, founder & CEO, Venture Intelligence India, which tracks the PE segment. […]
UTI Asset Management Company has raised USD 600 million for private equity investments in infrastructure companies and projects across the country, reports Economic Times. The AMC has raised the money through its subsidiary UTI International, in association with Shinsei Bank and HSH Nordbank. The investments will be made in companies across the market cap spectrum, but the main focus will be on projects like ports and airports. (My Iris) […]
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