October 2008
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PE firms adopt alternatives for better returns

Private equity firms that are going through troubled times across the world, have resorted to various alternatives including diversification of their portfolio to adjust to the present economic constraints. PE firms are mainly diversifying into infrastructure assets, debt funds and energy technology investments, as institutional investors believe there would be stable cash flows into these sectors. “I think what you are going to see is a natural evolution of firms taking their networks and their brand into other fields where they can get a return,” global PE and investment advisory firm CVC Capital Partners Partner Marc St John said. PricewaterhouseCoopers in its Global Private Equity Report 2008 has said “private equity firms are taking advantage of financial turmoil to diversify either by buying new investment businesses from within troubled banks or by hiring experienced investment banking executives who can spearhead expansion into new asset classes and geographies.” […]

Unitech says close to telecom unit stake sale

Indian real estate developer Unitech Ltd is in talks with foreign operators to sell 26-45 percent stake in its nascent telecoms unit, and expects to make an announcement next week, a top official said on Friday. “We are confident that we will be able to shortly close the transaction,” Managing Director Sanjay Chandra he told reporters on the sidelines of a conference. He declined to identify the likely partner, how much it hoped to raise from the sale or confirm market talk that Norwegian telecom group Telenor was a suitor. […]

PE firms witnessed a significant dip

As the global credit crisis casts its spell on the private equity (PE) firms in India, fund-raising has witnessed a significant dip. India-dedicated firms raised $1.8 billion through five funds in the second quarter of this financial year, down 60% compared to the same period a year ago when 11 funds worth $4.5 billion were raised by PE firms. The total size of the funds raised during 2007 calendar year stood at $8.4 billion, according to a study by Venture Intelligence, a firm that tracks private equity and venture capital in India. […]

Wadias to buy Danone`s 50% stake in Britannia

Nusli Wadia Group is set to buy Groupe Danone`s 50% stake in biscuit major Britannia Industries with a committed USD 200 million funding from ICICI Bank, reports Economic Times. The group will buy Danone`s 50% equity in the UK incorporated holding company, Associated Biscuits International Holding (ABIH), backed by a five-year loan. The deal will end two-year-old acrimonious shareholder dispute between Wadias and Danone, with the French food giant walking out of a decade-long joint venture to chart independent course in India. ABIH will remain as Britannia`s holding entity after the transaction. ABIH holds 50.9% stake in India`s leading biscuit company by value. […]

PEs shift loyalty to not-so-hot sectors now

The uncertain future of the equity market seems to be paving the way for newer invesment opportunities. Private equity (PE) players have been quick to recognise these. Of late, their appetite seems to have shifted from the most-talked about sectors like real estate and financial services, which were the flavour of the season till some time ago, to sectors like education, healthcare, defence, logistics, warehousing and infrastructure. These not-so-talked-about sectors are now attracting big private equity players. Though some of these are the very basic sectors of the economy, it is only recently that investment interest has found a place in them. […]

Investors in PE funds dishonouring commitments?

Private equity firms had raised piles of capital when the going was good, but thanks to the global credit crisis, many of these firms are finding an increasing number of investors who aren’t honouring their capital commitments. While raising capital, private equity funds get commitments from investors such as pension funds, university endowments, hedge funds, fund of funds and high net-worth individuals. These commitments are drawn down as and when the fund makes an investment. This means that till the capital is deployed, its control rests with the investors, collectively referred to as limited partners (LPs). Because of the huge erosion in the market value of their fixed income and equity exposure, many of these LPs, especially the pension funds and endowments, could suddenly find themselves overexposed to private equity, an asset class that is not marked to market. If they decide to reallocate assets, private equity funds may find themselves in a situation they last faced during the dotcom bust, when many LPs pulled out and funds were left with little capital to “draw down”. Another problem could arise from hedge funds or institutions who have been taken over by larger institutions. […]

Koor denies in talks to sell MA Inds stake to UPL

Israeli holding company Koor Industries on Sunday denied it was in talks to sell a large stake of generic agrochemicals maker MA Industries for more than $1 billion. On Saturday, India's Business Standard newspaper reported that United Phosphorus Ltd (UPL), India's largest pesticide maker, was in talks to buy about 39 percent of MA for some $1.1 billion from Koor, which owns 40 percent of MA. The report sent shares of MA up more than 9 percent by early afternoon trading in Tel Aviv. “We are denying it. It is not true at all,” said a Koor spokeswoman in Tel Aviv, without elaborating further. […]

Helion and TVS Shriram Growth Fund

Helion Ventures and TVS Shriram Growth Fund have invested $7.5 million in 9.9 Mediaworx Pvt Ltd, a diversified media company focused on niche consumer, business and professional communities. Sanjeev Aggarwal, MD of Helion, and Gopal Srinivasan, CMD of TVS Capital, will join the 9.9 Media Board. Announcing the investment, Pramath Raj Sinha, Founder & MD of 9.9 Media, said, “We are fortunate to have such first-rate investors as Helion and TVS Shriram Growth Fund as partners in our journey to build a next-gen media company. In particular, we are excited that two seasoned entrepreneurs in Sanjeev and Gopal are joining our Board.” The funds will be utilised to fund growth and the launch of new products and services. “We are impressed with how much the 9.9 team has been able to achieve in a short period of time. At a time when media in India is expanding and growing rapidly, we see 9.9 Media as the ideal vehicle to extend our portfolio into the media space,” said Sanjeev Aggarwal, MD of Helion Ventures. […]

ic2 Capital launches $250 million Indian Mid-Cap Private Equity Fund

ic2 Capital, a private equity firm, has launched a $250 million dedicated India fund to provide growth capital to mid-cap companies. ic2 Capital, based in London and Delhi, is focused on growth capital investments of $5-$30 million in established mid-market companies in India. ic2 has identified hospitality, logistics, food, support services, media and defence as key sectors. This investment approach is underpinned by a commitment to work with management to build sustainable businesses which can operate to world class standards. ic2 Capital is in advanced stages of due diligence and execution on three proprietary investments in hospitality, logistics and food. ic2 expects to invest approximately $50 million by the end of 2008. ic2's prior investments include Bollywood media production and distribution company Eros International. […]

Emami buys out Parikh stake for Rs243 crore; raises Zandu stake to 50 per cent news

FMCG major Emami Ltd today acquired the entire Parikh family stake of 18.18 per cent in Zandu Pharmaceuticals for an estimated Rs243 crore. Emami also acquired an additional 37,417 shares of Zandu for about Rs5.4 crore in open market transactions, taking its total holding in the Mumbai-based company to 50 per cent. Under the deal, which ended months of hostility, Emami paid Rs15,000 per share and an additional non-compete fee of Rs1,500 per share for acquiring the 1,46,643 shares that the Parekh family held in Zandu. Emami can now offer to acquire another 20 per cent in Zandu, taking its holding further to 70 per cent. The acquisition makes Emami the largest shareholder of Zandu and the transaction effectively paves the way for Emami's acquisition of Zandu. […]