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Private Equity Is Having An Identity Crisis

Investors may be worried that big buyout firms are changing their investing style, but it’s not stopping them from turning over more money to the asset class. With credit markets at a standstill and the pace of private equity deal-making having slowed dramatically, almost three-quarters of institutional investors worry that private equity firms will stray into less familiar strategies or geographies in the quest to find a home for all of the capital raised in recent years, according to Coller Capital’s just-released Global Private Equity Barometer, a semi-annual survey of institutional investors. The survey included 103 institutional investors from North America, Europe and Asia. They have good reason to worry about this so-called “style drift”; many of the biggest private-equity firms are already getting creative with their investment strategies. Some are taking minority stakes in public companies, such as TPG Capital’s recent investments in Washington Mutual and UK-based lender Bradford & Bingley. Others are pumping money abroad, particularly into emerging markets such as China, India or even Africa. […]

Indian cos leveraging PE funds’ expertise to gain global edge

Indian firms are increasingly warming up to the idea of tapping global private equity (PE) funds. Going beyond just raising capital, they are increasingly utilising the PE firm to develop a global edge, to gain inroads into international markets and develop strategic tie-ups with foreign partners. Noida-based Phoenix Lamps Ltd, in which UK-based Actis bought a controlling stake last year, is cashing in on a slew of global tie-ups with international lighting firms, aggressive forays into international markets including Europe and West Asia, and rapid ramping up of capacity. Aurangabad-based Endurance Technologies, in which Standard Chartered Private Equity Fund picked up stake a couple of years ago, has been on a roll since, acquiring three European firms and opening a Detroit office. Gokaldas Exports, India’s largest garment exporter, decided to sell out to Blackstone Group for $165 million in August last year to leverage Blackstone’s financial muscle and contacts in the key US market. […]

Idea to buy Spice for Rs 2,200 cr

Idea Cellular is set to acquire BK Modi’s 40.8 per cent stake in Spice Communications for around Rs 2,200 crore at Rs 77.50 per share. A top industry source confirmed that the two companies have finalised the deal at Rs 77-78 per share, a premium of 45 per cent to Spice’s closing share price of Rs 53.2 on Monday. The deal pegs the valuation of Spice Communications at Rs 5,347 crore. The company is likely to make an announcement in the next few days. After buying out the Modis, Idea Cellular will make the mandatory open offer for 20 per cent stake in Spice that is currently held by the public. The two companies will be subsequently merged, said a source. Telekom Malaysia, which currently holds 39.2 per cent in Spice Communications, will be given a proportional stake in the combined Idea-Spice entity, sources said. […]

IDFC to list $1.25 bln India infrastructure fund

Infrastructure Development Finance Co plans to list a $1.25 billion infrastructure fund, a source said on Tuesday, underlining the country's need for cash to modernise its power and transport. A source with direct knowledge of the fund, which would be India's first listed infrastructure fund, said it has raised over $500 million so far. He said the fund will likely list in India, but declined to give a timeline. “The fund will buy assets such as ports, roads, airports and oil and gas pipelines that can generate steady, predictable returns for investors,” said the source, who declined to be identified because the fund raising was still ongoing. Investors are increasingly looking for firms with stable earnings prospects as they seek refuge from recent turmoil in financial markets. […]