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Providence has emerged as the biggest private equity(PE) investor in the first half of this year in India while ICICI Venture, Sequoia and Citigroup have been the most active firms in terms of number of PE transactions announced. The period, which coincided with the first major prolonged market correction over the last three years, also saw PE activity dipping in volume terms for the first time year-on-year. In all, there were 186 deals worth $7.09 billion during H1 2008 against 195 transactions with a value of $6.77 billion during the first half of last year. Moreover, even as new PE firms set shop in the country, the number of funds striking at least one deal has dropped considerably from 125 funds in H12007 to 90 in H12008, according to data compiled by advisory firm Grant Thornton. Says Grant Thornton, partner, specialist advisory services, CG Srividya, “Last year, the flow of PIPE deals was very strong, but this has come down due to the market crash. Secondly, some large global banks have become more cautious in striking deals, which has affected transaction volume.” […]
After infusing money into real estate projects, Red Fort Capital Advisors is now planning a new infrastructure fund with corpus in excess of $600 million by 2008-end. Red Fort Capital – which manages three active funds under its aegis including an offshore and a domestic fund for Indian real estate market, as well as a hedge fund for listed Indian entities – is already in talks with some of its existing investors for floating the new fund, which would invest in infrastructure projects in the country. It may also rope in new investors to the proposed fund. “The new fund is likely to be over $600 million and will focus on projects such as ports and power, amongst others. In fact, some of our existing investors approached us for a fund in the infrastructure, a sector whose risk profile is very different than the real estate segment. Globally, the returns for infrastructure projects are in teens whereas in India it averages at about 20 per cent,” Mr Subhash Bedi, Director and Partner, Red Fort Capital Advisors, told Business Line. […]
Swan Telecom, which has received licences to operate mobile phone services in 13 out of the 22 telecom circles in India, is in talks with foreign companies for diluting 26 per cent of its equity for around $470 million. “Arrangements are being worked out for selling a 26 per cent stake in the company,” said Shahid U Balwa, managing director, Swan Telecom. The talks are happening considering a total equity value of the company around $1.8 billion. Including debt, the company's enterprise value is pegged around $2.2 billion. Meanwhile, real estate major Unitech's talks to sell 26 per cent stake in its mobile operations have picked up pace, with the company holding several rounds of talks with three international players for the deal this week. The company holds the licences through several unlisted subsidiaries. […]
Mumbai based BSE listed, Greycells, that operates EMDI vocational institutes in India and middle-east announced its acquisition of 26% stake in another Media and Entertainment vocational education company: AAT. According to FICCI Pwc 2007, Indian Media and Entertainment industry is growing at a CAGR of 24% and will be Rs. 51900 cr by 2010. Currently 4 of the top 10 career aspirants choose Media and Entertainment. Also the gross enrolment in higher studies is expected to double to 12% in a decade from the present 7%. This presents a great opportunity to vocational education specialists like Greycells and AAT. Both the institutes, at present, have combined student strength of 1800. They have aggressive plans to increase to 10,000 levels in next couple of years. […]
Mobile WiMax products and professional services provider Soma Networks on Friday said that it has secured an additional $51-million of equity financing. Investors include Daiwa Securities Group, Daiwa Securities SMBC Principal Investments Company, Ridgeway Capital Partners and India Knowledge Fund and SBICAPS, amongst others, a press release issued here stated. India Knowledge Fund is a private equity fund of Japan-based SBI Holdings Inc. The financing has been earmarked for continued expansion of international operations and deployments, including ongoing support of the industry's largest WiMax network with Bharat Sanchar Nigam Ltd (BSNL). Earlier this year, BSNL and Soma had announced an agreement to roll-out a mobile WiMax network across three of India's fastest-growing circles–Gujarat, Maharashtra and Goa and Andhra Pradesh, the release said. […]
Dutch-based Rabobank on Friday announced the launch of a $100-million private equity fund that would target investment opportunities in food and agri-business sectors in India. This private equity fund — India Agri Business Fund — is an offshore fund based out of Mauritius, said Mr Rajesh Srivastava, Chairman and Managing Director, Rabo Equity Advisors, which will be the investment manager for the fund. Rabobank, which has sponsored the fund, would provide $25 million towards the fund. International Finance Corporation, FMO, a Dutch development bank, and DEG, member of the German KfW Group, will each invest $20 million, with the balance to be tied up with private investors. […]
Venture capitalists have found new ways to side step stringent Sebi laws. If market sources are to be believed, VC funds are registering themselves as PMS (portfolio management service) providers — a step that will enable these fund-pools to invest across asset classes. A PMS fund manager said: “It is relatively easier to get approvals for PMS services than VC funds. With a PMS registration, these funds will be able to invest in listed and unlisted companies without really having to disclose much about their investments.” Violating relevant Sebi PMS rules, most of these funds are targeting live real estate projects, which are facing tough times as a result of lower sales and higher borrowing costs. […]
Reliance Communications (RCOM) and South Africa’s MTN on Friday announced that merger talks between the two telcos have ended. Anil Ambani-owned RCOM has become the second Indian telco in as many months to fail in pulling off a merger with MTN. Bharti Airtel and MTN were close to a merger in May but the Indian telco called off the talks after the two companies failed to agree on the corporate structure of the combined entity. “Owing to certain legal and regulatory issues, the parties are presently unable to conclude a transaction. Accordingly, it has been mutually decided to allow the exclusivity agreement to lapse,” Reliance Communications said in a statement. MTN too issued a similar statement to Johannesburg Stock Exchange News Service late Friday evening, adding: “Accordingly, it has been mutually decided to allow the exclusivity agreement to lapse and caution is no longer required to be exercised by shareholders when dealing in MTN securities.” […]
The twists in the MTN saga brought together three of India’s corporate czars, both the Ambanis and Sunil Mittal, and provided them a unique, if unwanted opportunity, to determine each other’s destiny. RCOM chairman Anil Ambani had pulled off a coup when he landed an agreement for exclusive talks with MTN within 24 hours of Bharti Airtel pulling out of negotiations with the South African telco in late May. Mr Ambani had seemed to have pulled the rug from under the feet of his arch rival Bharti Airtel chairman Sunil Mittal. But seven weeks down the line, it is another Ambani, older brother Mukesh, who seemed to have handed a second chance to Mr Mittal as Bharti looks to re-engage with MTN. The wheel seems to have come full circle from late May. Mukesh seems to have done to Anil what the latter did to Sunil earlier. Whether RCOM entered into negotiations with MTN once talks with Bharti had failed, or whether it was its eagerness to explore all options with MTN which resulted in the collapse of talks between the South African firm and Bharti, is a matter of conjecture. Yet some industry sources share the view that that it was Anil’s offer of a ‘better’ deal that led MTN to call off its proposed merger with Bharti after both companies had signed a term-sheet. […]
The current downturn in the equity markets has made exits difficult for private equity (PE) players. While earlier, exits through IPO route were common due to a buoyant market, the current slowdown will make such exits a thing of the past. “The environment for exits is terrible,” says ChrysCapital senior managing director Ashish Dhawan. Most private equity firms invest in mid-cap companies, where liquidity has dried up, he explains. Numbers, too, point to a slowdown on exits through IPOs. Data from Venture Intelligence for the first half of 2008 suggest that PE players made six exits through IPOs. Last year, 16 exits took place via IPOs while the number for 2006 was 19. […]
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