August 2011
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PE investments surge 22% in year till date

Private equity (PE) investments into India have risen by around 22 per cent in 2011 till date over the corresponding period of last year, to $7,160 million (Rs 32,220 crore), and the number of deals rose by around nine per cent. According to data compiled by Venture Intelligence, from January to August (till date), PE firms had invested this amount across 246 deals, compared to $5,831 mn (Rs 26,235 crore), across 226 deals in the same period in 2010. In 2011, investments were led by manufacturing ($1,398 mn across 22 deals), followed by information technology and IT-enabled services ($1,029 mn, 70 deals), engineering and construction ($796 mn, 16 deals), BFSI (banking, financial services and insurance, $790 mn, 24 deals), energy ($684 mn, 19 deals), food & beverages ($275 mn, 10 deals), health care & life sciences ($186 mn, 15 deals), other services ($137 mn, 11 deals), education ($93 mn, 10 deals) and textiles and garments ($80 mn, eight deals). […]

Ascent Capital set to pump in $45 million for expansion of Karaikal Port

Ascent Capital, the Bangalore-based private equity fund, is set to pump in $45 million for expansion of Karaikal Port, located in the East Coast of India in the state of Tamil Nadu. The fresh infusion of funds will be as part of a Rs 700 crore expansion which Karaikal Port is embarking on to expand the capacity by as much as 6 times to 28 million metric tonnes from the current 5.2 MMT. The expansion is expected to happen over a period 12-18 months. Karaikal Port is controlled by Marg Ltd and this is the second round of private equity fund raising which the port is executing. The company had raised Rs 150 crore during early 2010 from IDFC Project Equity. The port majorly handles import of coal and also handles good quantity of cement and sugar exports. Raja Kumar, founder & CEO, Ascent Capital, confirmed that the deal is happening but declined to spell out more details. This is the third major deal which Ascent Capital is executing after investing in GMR Energy and IVRCL from the fresh $350 million fund it raised during early 2010. […]

Mkt crash hits PE majors' investments

Diminishing share prices of listed companies have hit the portfolios of the largest private equity majors such as Blackstone, Carlyle and Warburg Pincus. Following the recent market crash, the investments they had made in the past have declined drastically, by 70-80 per cent. However, experts believe transactions in the listed space are likely to go up as the typical fundraising sources dry up, leaving enough room for more PIPE (private investments in public equities) transactions. Blackstone, one of the largest global PE players, bore the brunt of a decline in stocks listed on Indian bourses. Its investments in Gokaldas Exports shrank 70 per cent. It had invested $158 million in 2007 to acquire 67.88 per cent stake in Gokaldas. Shares of Gokaldas, bought by Blackstone for Rs 275 apiece, touched their 52-week low of Rs 70 on the Bombay Stock Exchange (BSE) on Friday. Mayank Rastogi, partner (private equity), E&Y, said: “The LPs (limited partners) are mature enough to discount the spikes and troughs. If the delta between the market price and the potential deal price is large, fund managers will need to have a solid rationale for their investment committees/LPs to give higher value.” […]

KKR to expand India operations beyond private equity

After lending in excess of $1 billion to Indian promoters and companies through its non-banking financial company (NBFC) KKR India Financial Services Pvt. Ltd, Kohlberg Kravis Roberts and Co. (KKR), the world’s fifth largest private equity firm by assets under management, plans to expand its Indian operations beyond private equity. “The idea behind setting up the NBFC business was if we only do private equity (PE) then there are not going to be enough deals,” Sanjay Nayar, KKR India’s chief executive and country head said. “The long-term plan is to build an asset management company, of which the NBFC will just be a part and over a period of time we could even set up a mezzanine fund.” The NBFC has got balance sheet money and risk-taking capability, and has become a local financial services unit, said the former Citigroup India head who joined the American private equity fund in 2008. […]

PEs may invest $125min Shriram Properties

Private equity arms of JP Morgan, IL&FS and Morgan Stanley may invest $125 million in Shriram Properties, which wants to refinance projects under development and acquire distressed real estate assets. Bangalore-based Shriram Properties is the real estate arm of Rs 25,000-crore Shriram Group, but has TPG, Starwood and Walton Street Capital as large shareholders making it a heavily private equity backed Indian real estate developer. These three investors hold over 40% in Shriram Properties, which is developing 30 million sq ft of residential and office space across southern states in the next 2-3 years. Shriram Properties MD M Murali confirmed fresh $120-125 million fund raising at the project level, but declined to identify potential investors. “We are still talking to various investors and nothing is finalized,” he said. Sources said JP Morgan was holding talks to invest $75-80 million in Shriram Gateway, which is a 6.3 million mixed use development in Chennai. JP Morgan's investment could be deployed for refinancing funds raised from Germany's troubled Hypo Real Estate Bank, which had taken an exposure in this project four years ago. […]

Omnivore picks up 33% stake in Skymet

Omnivore Capital, an early stage venture capital fund backed by Godrej Agrovet Ltd, has made its first investment by buying a 33% stake in weather forecaster Skymet for an undisclosed amount. “We believe that improved meteorology is one of the best tools to reduce risk in agriculture,” said Mark Kahn, executive vice-president for strategy and business development at Godrej Agrovet and venture partner, Omnivore. “In India, the difference in productivity between the best and the worst farms is very high. Superior forecasts can reduce the level of crop failure and help close that productivity gap.” Omnivore, in which Godrej Agrovet—the diversified agribusiness arm of the Godrej group—is the anchor investor, focuses only on investments in the agriculture technology area. […]

Srei to raise $500 mn overseas VC fund

Infrastructure finance company Srei will soon be raising a USD 500 million venture capital fund from global investors, to be deployed in domestic projects, a top company official has said. “We will be embarking on roadshows to raise up to USD 500 million from across the world in the next two months,” Srei chairman and managing director Hemant Kanoria said. Srei expects to finish the fund-raising by mid-2012 and will be targeting high networth individuals, pension funds, endowment funds and fund of funds to raise the money, Kanoria said. In spite of the negative buzz in the country following a scams and lack of positive policy measures as well as good governance, Kanoria sounded confident of achieving the targeted amount citing the benefits of the infra sector and the company's deep-rooted presence in it since 1989. […]

Sebi's proposed changes in takeover rules to alter India's M&A scene

India's new takeover rules spell different things to a varied class of stakeholders. For promoters with low holdings, it could mean buying more shares to bolster their holdings to shield themselves from a potential hostile bid. Institutional investors, mainly private equity funds, will now be able to acquire up to a 24.99% stake in a company, without triggering an open offer. Retail investors, too, should gain with the removal of non-compete fees and greater participation in open offers. Late last month, the Securities and Exchange Board of India, or Sebi, proposed to amend the 13-year-old takeover rules and said that an acquirer can buy up to 25% in a listed firm without triggering a public offer. The offer size, too, was changed to 26%, providing an exit for more investors. That is a marked change from the scenario now when an acquirer has to make an open offer to buy out an additional stake of 20% from public shareholders once the holding tops 15%. […]

PE funds hold majority stake in Treehouse

Private equity funds Matrix Partners and FC advisors (Mauritius) Ltd hold more than promoters Geeta and Rajesh Bhatia in the IPO-bound Tree house Education and Accessories Ltd. The two funds, along with another Mauritius-based entity, hold a majority stake with over 50 per cent in the pre-issue share capital of the company. Typically, PE funds have shied away from making control transactions due to Indian regulations which require a designated promoter at the time of an Initial Public Offer. Many PE funds do not want to take the mantle of a promoter and compliance and other responsibilities that come with it. This has kept the control transactions low in the Indian PE space. Even if PEs take control, not many have come to the IPO market, making the Tree House IPO a rare event. […]

Mohandas Pai launches PE fund

T.V. Mohandas Pai, former human resources director at Infosys Ltd, and Manipal Education and Medical Group chief executive Ranjan Pai have founded a $100 million private equity fund that’ll make its first investment in 4-6 months. The fund will focus on mid-stage healthcare, health services and technology firms, Ranjan Pai said. “The idea is to invest in unlisted mid-stage companies, though eventually we will look at listed entities also,” he said in a telephone interview on Tuesday. Mohandas Pai, chairman of Manipal Universal Learning, told Businessworld magazine in a 6 August interview published online that he and Ranjan Pai want to provide more than just money to start-ups. Ranjan Pai said several fast-growing firms that needed both mentoring and funding had approached Mohandas Pai to join their boards after he quit Infosys in June. “So, we thought why not join them and become a part of their success story,” he said. […]