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A study on private equity investment in public equity (PIPE) of infrastructure companies in India undertaken by SMC Investment Solutions & Services found that the recent slump in the equity market wiped off Rs 2,428 crore of private equity capital. Though the domestic infrastructure sector is regarded as the engine of the country's economic growth, experts say higher valuations at the time of investing and readjustment of the Indian financial markets to global economic environment has impacted the calculations of private equity players. For example, as many as 10 private equity investors, including Eton Fund LP, CITI Group, T Rowe Price and Deutsche Bank, had invested Rs 3,841 crore in in GMR Infrastructure at the rate of Rs 240 per equity share in 2007. The share price of GMR has plunged by 56 per cent to Rs 105.55. As a result, the market value of private equity investment in the company has halved to Rs 1,690 crore. Similarly, Carlyle Group, which invested Rs 158.4 crore in Great Offshore Ltd for Rs 860 per equity share, has witnessed the market value of its holding fall by 30.26 per cent. The stock of Great Offshore last closed at Rs 599.75. […]
With venture capital (VC) and private equity (PE) investments in India growing, investment banks are emerging as an important link matching companies seeking funds and firms vying for investment opportunities. Experts say up to 40% of investment opportunities are helped by such intermediaries. “Investment banks are crucial as you need a third party during negotiations,” says K.P. Balaraj, managing director, Sequoia Capital India Advisors Pvt. Ltd. Investment banks with large operations such as local arms of the US financial houses such as Merrill Lynch and Co. Inc. or the likes of home-grown Motilal Oswal Securities Ltd typically look for large deals—say, above $20 million (Rs86 crore) each. Professional services firms such as Ernst and Young and KPMG International, too, have large corporate finance teams. And, Yes Bank Ltd, IDBI Bank Ltd and ICICI Bank Ltd are among a growing breed of lenders with their own investment arms. But, it is the boutique investment banks and specialists such as Spark Capital or Veda Corporate Advisors Pvt. Ltd that are gaining custom from start-ups and firms with small investment needs. Others active in the PE and VC business include Avendus Capital, Edelweiss Capital Ltd, Cipher Capital Advisors Pvt. Ltd, Mape Advisory Group and o3 Capital Advisors Pvt. Ltd. An investment bank’s job begins with screening companies, which are then introduced to VC and PE players. […]
Balmer Lawrie is set to acquire a 50% stake in a travel and tourism company with a national presence. Though the company remained tight-lipped about the target company, it has appointed SBI Caps to carry out a due diligence exercise. Talking to newspersons on Monday, Balmer Lawrie managing director S K Mukherjee said, “We want to grow our travel and tourism business in a significant way. We are looking at acquisitions and have identified a company. SBI Caps is doing the due diligence and we hope to complete a deal in the current fiscal.” Balmer Lawrie has set aside Rs 100 crore for organic as well as inorganic growth in areas such as travel and tourism, logistics infrastructure and services and greases and lubricants. […]
Transport Corporation of India (TCI), one of India’s largest logistics operators, is all set to dilute promoter holding by about 10% to raise capital for its expansion plan. This is the second time the company is looking at fund managers to finance its growth plans. Last year, Fidelity picked up 6-7% stake in the company. With this dilution, promoter holding in the company is expected to be around 57% at the end of the current fiscal. “The company plans to raise between Rs 50-75 crore in the third quarter of financial year 2008-09. The company plans to use the funds to expand its shipping fleet and trucking fleet and developing more warehousing centres across the country,” TCI executive director Vineet Agarwal said. A 10% divestment is expected to go at 15% premium and will raise about Rs 68 crore for the company at the current market rate, a senior industry analyst tracking the firm said. […]
Reliance Industries Ltd is in talks with Jet Airways Ltd to buy a 6-7 percent stake in the private airline, the Mint daily said, citing a source familiar with the development. The newspaper said on Tuesday Reliance was keen to buy a minority stake as it wanted to be associated with the domestic carrier's proposed cargo airline. “The mode of Reliance Industries' investment is not finalised. It could be issue of fresh shares or diluting promoter equity,” the daily said. Spokesmen for Reliance, India's leading petrochemical maker and a refiner, and Jet were not immediately available for comment. […]
Goldman Sachs has acquired a minority stake in Shapoorji Pallonji’s engineering arm Sterling & Wilson (S&W) for over Rs 200 crore. Confirming the development, Khurshed Daruvala, managing director of S&W, said the financial support from Goldman would enable S&W to accelerate “its growth plans both domestically and internationally. The company is planning to expand its operations in the Middle East market.” Currently, S&W has operations in other foreign countries such as Ghana, Mauritius and Vietnam. Avendus Capital was the financial advisor for the transaction. S&W is one of the leading mechanical, electrical and plumbing (MEP) contracting companies in the country, with revenue grossing Rs 1,000 crore. S&W is offering full MEP package as a one-stop solution provider. In the last 5 years, S&W registered a growth of 80%. Shapoorji Pallonji has 51% stake in the company. […]
KSK Power said its subsidiary KSK Energy Ventures, has successfully completed a pre-IPO placement of 1.73 crore equity shares at a price of Rs 240 per share, a company statement said. The company has issued shares to six financial institutions including Macquarie Bank (UK), Tree Line Asia Master Fund, Infrastructure Development Finance Company, Axis Bank, Universities Superannuation Scheme, UK and GE Capital (Mauritius). The two Indian entities IDFC and Axis Bank have invested Rs 75 crore and Rs 62.97 crore, respectively in the power projects firm. […]
Dutch financial services conglomerate ING Groep NV, among the top 20 companies in the world based on market capital, is looking to buy an established private equity, or PE, fund house in India, according to a company executive familiar with the development. New Delhi-based Avigo Capital Partners, a PE fund manger with a focus on small and medium enterprises (SMEs), is a potential candidate, this person said, asking not to be named as the target is not finalized yet. “We are looking to buy out a PE fund house or acquire strategic equity stake in one of them,” the ING executive said. The deal is being explored from ING’s Hong Kong office at One International Finance Centre on Harbour View Street, he added. But, Vivek Subramanian, a founding partner at Avigo, said the firm is not in talks tosellout the business. Small funds will not survive long in the PE business, which is “essentially a large capital play”, said Jon Schahinger, who heads ING’s PE business in Asia from its office in Australia. “As the market grows, small funds perish if they aren’t taken over by larger funds.” […]
A rumoured counter-bid by Pfizer for Ranbaxy is eerily similar to the US firm’s actions in November 1999 when it launched an aggressive bid to stop Warner-Lambert from being bought by American Home Products. To acquire Warner-Lambert, Pfizer ended up paying $20 billion more than what American Home Products offered. The jewel in Warner-Lambert’s crown was Lipitor — the cholesterol-fighting drug, in which Ranbaxy is the generic leader. The speculation now is Pfizer will go all out to outbid Daiichi. On November 4, 1999, hours after executives of the American Home Products and Warner-Lambert announced a $70-billion merger agreement, Pfizer scuppered the deal with a $82.4-billion hostile bid for Warner-Lambert. Though the Warner-Lambert board rejected the bid initially, Pfizer managed to acquire the company for $90 billion. The anti-cholesterol drug’s patent is on the verge of expiry in the US and European markets. Ranbaxy has entered into a legal battle with Pfizer to launch the drug in the US and European markets. Though Ranbaxy has not been greatly successful in its legal strategy, industry analysts feel that by acquiring Ranbaxy, Pfizer can control the generic market of Lipitor and the market for other blockbuster generic drugs. […]
After a long lull, the Reserve Bank of India (RBI) has allowed a string of foreign venture capital (VC) funds to invest in the country. While this decision could be driven partly by fears of a slowdown and drying capital inflows, the shift in mood may also have a lot to do with these funds changing their charter of investments and making upfront commitments to convince RBI. In the last two months, the central bank has cleared applications from as many as six foreign VC funds. Though many funds are still waiting in the wings, the industry perceives it as a positive development. Advisors to some of the funds say that among other reasons, this could have been achieved only after they changed their charters to insert a specific clause that there will be no investment in the real estate sector. Till now, the funds were only giving an undertaking, which is just a letter to RBI, stating that they will stay away from real estate – a simple declaration which the regulator thought was inadequate. There are other changes that foreign VCs are making to push their case. Significantly, they are refraining from making any mention of sectors which have certain sensitivity in terms of foreign direct investment. For instance, as funds spell out the segments they would be interested to invest in, there is no reference to industries like retail, non-banking finance companies and banking. […]
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