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Once quoted at a price of Rs 542 per share, Satyam Computer on Monday went under the hammer for Rs 58 a share- about one-tenth of the level the IT company enjoyed about a year-ago, when no one had any inkling about the scam being perpetuated there. Tech Mahindra, which emerged as a winner in the race to acquire fraud-hit Satyam Computer, has bid the highest price of Rs 58 per share and would have to shell out an aggregate of about Rs 2,889 crore for 51 per cent stake in the company. Based on the bid price, market capitalisation of the expanded equity base of Satyam would be around Rs 5,600 crore. Months before the scam at Satyam had come to light with confessions of its founder and former chairman B Ramalinga Raju, the Satyam scrip had hit a 52-week high of Rs 542 in May last year. The IT firm's market capitalisation had been over Rs 36,600 crore at that time. […]
Private equity is under assault. The current reckoning that is unfolding is a dramatic contrast to the overconfidence that prevailed in large swaths of the private equity market as recently as a year ago. For over 20 years the best private equity managers delivered on this promise. They consistently outperformed public indexes by wide margins. This performance was accomplished by operating on the fringes of the financial system, as is logical for an asset class exploiting inefficiencies. In research published recently, Boston Consulting Group estimates that at least 50% of the private equity deals done in the recent past will default on their debt. Second, investors who were yearning for yield are over-allocated to private equity and reeling from the massive declines in the value of all asset classes. Finally, the liquidity crunch has changed the availability of cheap debt to the asset class for a long time. […]
PE investments in India declined for the 1st time in six years in CY’08, as entrepreneurs were not willing to settle for lower valuation despite the steep price correction in markets. PE firms invested $10.59 bn over 312 deals in India in CY’08, down 44.35%, from $19.03 bn invested across 405 deals in CY’07. There were only 28 deals of over $100 MM in CY’08 while in CY’07 there were as many as 53 such deals. Decline in PE transactions was mainly because there was less activity in H2CY’08 on account of global financial crisis; the value of PE deals declined to $3.5 bn compared with $7.1 bn in H1CY’08. ARC Financial Services have recently done an analysis on private equity activity in India. To get more details on the report please contact www.arc-fs.com . […]
The House of Tatas is on course to pilot a new venture funding structure in the Indian market. The private equity arm within Tata Capital, which is set to launch two to three funds this year, plans to leverage the expertise of a diverse pool of people working in nearly 100 companies that are part of the Tata group. Under the new model, apart from infusing money into companies selected by Tata Cap PE for funding, the PE arm will also try to bring in experts from within the group to help these portfolio companies grow faster. The PE fund could also try and test some of the technologies emerging from its portfolio companies with the group companies to check commercial viability before taking it to the market. In contrast, under the prevailing model, PE funds put money into companies in their portfolio and help partly with the management. In some other successful cases in India like in Bharti Airtel and Gujarat Ambuja Cements the venture funds just put money while the management was solely with the promoters. […]
Unitech Ltd, the country’s second-biggest real estate developer, plans to raise as much as $250 million (Rs 1,250 crore) through private placement of shares to qualified institutions, company officials said, to repay part of its debt of over Rs 8,000 crore. The New Delhi-based developer plans to raise the funds by the end of this month, a company official, said declining to be identified. The company is planning to reduce Rs 1,000 crore of debt on its books by June this year. Unitech Managing Director Sanjay Chandra and key officials of the company have been in Mumbai over the past couple of days to gauge investor sentiment. The real estate company has hired UBS and IDFC as arrangers for issue. A Unitech spokesperson declined to comment. […]
Zephyr Peacock, the India-focussed private equity fund of US-based Zephyr Management, is looking to raise $75 million (Rs 375 crore) as part of its second fund raising in India. Zephyr Peacock is seeking to raise the fund for equity and equity-related investments in growth capital opportunities in high-growth small and medium enterprise, including those outside the Indian metros — a relatively underserved segment of the market. According to Zephyr, the fund targets investments in financial services, education and consumer-related businesses, high value-added manufacturing and infrastructure-related services. Zephyr takes influential minority positions by investing $5 to $20 million in companies that have proven business models, strong financial performance and are led by strong management teams. […]
SEAF, a firm that invests in SMEs in emerging markets, is to launch a $75m fund focused on taking stakes in Indian agriculture businesses, according to reports. The SEAF India Agribusiness Fund, which has already raised $35m, is expected to hold its first close by April and its final close by the end of the year. According to reports, the fund will target small and mid-sized firms with revenue of INR300m ($6m) to INR3bn ($60m). […]
Global economic downturn has given rise to a new trend in the private equity scene, secondaries, wherein partners in a PE fund are preferring to liquidate their position to another party to meet redemption pressures. “Going forward we will see more secondary deals in the Indian private equity space. Now more such deals are coming to the fore as increased number of partners are looking at liquidating their position to meet prior commitments,” Venture Intelligence CEO Arun Natarajan said. Known as 'Secondary deals' in Private Equity parlance, 'secondaries' refer to a Limited Partner (LP) or the part owner of the fund selling its stake in the fund to another partner or a third party to seek an exit option. […]
Weak market sentiment continues to spook private equity funds. Private Equity players invested dramatically lower sums in India in the last three months, as risk aversion continued despite a steep decline in valuation. Private Equity deals have dropped a staggering 87% year on year and 56% sequentially, according to data from Venture Intelligence, a research service focussed on private equity and M & A transaction in the country. Not only has the deal pipeline slowed down, but the size of deals has also reduced. PE firms invested about $526 million across 36 deals during the quarter ended March 09, when compared to $3.9 billion across 133 deals during the same period last year. Sequentially, the previous quarter saw $1.2 billion struck across 63 deals. […]
The Wadia group is buying out 60.86 lakh shares of Britannia via Leila Lands, a subsidiary of Bombay Burmah based in Mauritius from its equal JV partner French foods giant Groupe Danone. Danone will sell its 25.48% stake in Britannia to the Wadias on April 14, the Wadias said this in a statement to the exchanges. The move finally resolves the two-year long dispute between the Wadias and the French company over control of the biscuit company and will now lead the Wadias to gain complete control over Britannia. (ET) […]
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