Outsourcing News

Venture capital (VC) fund Sequoia Capital’s exit from Kerala-based non-banking financial company Manappuram General Finance and Leasing Ltd two weeks ago is just the beginning of an avalanche of high-return exits lined up for this year. Nearly half a dozen VC and private equity (PE) firms Mint spoke with are preparing for at least a dozen portfolio exits as they reach the end of their investment horizons, and to cash in on an improving economy. Overall, experts see at least 50 exits over the next six-nine months. India has never seen more than 20 VC exits in a year. But in the first three months of 2010 alone, there have been 10 VC exits against three last year, according to research firm Venture Intelligence. The flood of profitable exits, experts say, would help further establish India as an investment destination for VCs and PE funds.

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VC, PE firms lining up for mass exit

ICICI Bank, India’s No. 2 lender, is in talks to buy a holding in Bank of Rajasthan from the Tayals, who control the small private-sector bank, the the Economic Times reported on Thursday. The Tayals, who had about 29 percent holding at end-December according to the Bombay Stock Exchange data, are also negotiating with other suitors, the newspaper said, quoting unnamed sources. Bank of Rajasthan has a market value of $324 million, and ICICI has indicated it is willing to pay more than the market price for the stake, it said. “There are differences on valuations and talks have not progressed … a deal could be sometime away,” the paper quoted a a senior banker familiar with the negotiations as saying

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ICICI eyes stake in Bank of Rajasthan

EIH Ltd has announced that the Board of Directors of the Company at its meeting held on May 05, 2010, has approved the acquisition of the 45.85% equity interest of Amex Investment Ltd, Hongkong (“Amex”) in its international hotel joint venture company. EIH Holdings Ltd British Virgin Islands for US$45 million. The acquisition will be undertaken by EIH Ltd, through its wholly owned subsidiary EIH International Ltd, British Virgin Islands. A letter of intent for the acquisition has been signed with the principal shareholder of Amex. The proposed transaction is subject to a number of conditions including mutual agreement of the formal transaction documents and applicable regulatory approvals. The joint venture currently has the business interests in Hotel Investments and Hotel Management Contracts. The JV has equity investments in existing Oberoi hotels in Mauritius, Bali Indonesia, Lombok Indonesia and Sahl Hasheesh Egypt

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EIH to acquire 45.85% stake of Amex Investment Ltd

ICICI Venture is planning to launch a $222mn (Rs.1,000-crore) domestic real estate fund. It plans to close the fund in 6-12 months and will invest in projects in top five to seven cities. It was also looking to launch an offshore fund by the end of this year. Sanjeev Dasgupta, president, real estate, ICICI Venture, confirmed the plans but said that the exact amount is yet to be decided. He said that a domestic fund offers a lot more flexibility, as offshore funds are restricted by FDI norms. It is also difficult to raise an offshore fund in the current environment. Dasgupta said a number of projects which were not FDI-compliant were available at attractive rates now.

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ICICI Venture plans a $222 mn for Real Estate fund

A study says India emerged as one of private equity investors’ favourite investment destinations in April, with the volume of transactions rising three-fold to $840 million in comparison to the same month last year. According to the monthly report of VCCEdge, the financial platform of VCCircle.com, private equity deals in India amounted to $840 million in April, 2010, against $285 million in the corresponding period of the previous year. An upturn was also witnessed in terms of the number of deals recorded during the said period

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PE transactions in India rise three-fold in April

Hindustan Construction Company on Thursday said it has completed the acquisition of a 66 per cent stake in Swiss construction firm Karl Steiner AG. With the issuance of new shares as consideration for a 35 million Swiss francs (about Rs 140 crore) cash investment, HCC now owns a 66 per cent stake in Karl Steiner, the company said in a statement. The companies had entered into a pact in March this year for the deal. All regulatory approvals in India and Switzerland have been obtained for the deal, it said.

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HCC completes acquisition of 66% stake in Swiss firm

Capital Magazine Interprets China’s Private Equity Market China Venture News With the launch of China's stock markets in 1992, Financial news reporting has taken on a wider and more prominent educational role in advising the increasing number of private equity investors. …

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Seen that? – Capital Magazine Interprets China’s Private Equity Market

When Chennai-based Everonn Education begins setting up international schools in the country next year, it plans to do so as a private limited entity under Section 25 of the Companies Act, 1956, and not as a trust. The reason: The company sees this as an alternative way of having a scalable model (which the trust structure does not allow as its bars payment of dividends). Increasingly, educational institutions in the country are taking innovative routes to expand. For example, schools that cannot go for the Section 25 option have begun turning to “smart equity” from private equity (PE) players to expand access to new technologies, build new set of services and add resources. This explains the $22-million (100 crore) deal that Reliance Equity Advisors — Reliance Capital’s PE arm — struck with Pathway World School recently. The stake acquired was, however, not disclosed.

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Schools turn smart to woo PEs

Dealmaking is back in the private equity and venture capital circles with the economic recovery taking hold. After a pretty subdued 2008 and 2009, PE deals have breached $500 million mark every month since February, according to VCCEdge, the financial research platform of VCCircle. The gestation period for deals which doubled to 6-9 months, rising even up to a year in fiscal 2009, has also come down and deals in various stages of due diligence are finally seeing closures. Bharat Banka, MD & CEO, Aditya Birla Capital Advisors, said, “With the exception of any unanticipated shocks in the economy such as extremely weak monsoon or external shocks such as oil prices, the investment interest is expected to remain robust.”

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At $500 million a month, PE deals may touch $10 biliion in 2010

New Delhi Television Ltd (NDTV) said that it has decided to call off its deal with US based Scripps Networks Interactive Inc. ‘The NDTV Group has decided to exercise its right to terminate the definitive agreements and is in the process of terminating them,’ a company statement said. In November, both the parties had entered into a deal where Scripps had agreed to pay 55 million dollars for acquiring a 69 per cent stake in NDTV Lifestyle.

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NDTV calls off stake sale deal with US based Scripps

Ajmera Realty & Infra India today announced that its investment committee has approved the proposal to invest in Ultra Tech Property Developers (P) to acquire the 36% equity shares. The aforesaid decesion is subject to such approvals, consent, sanctions and permissions of the appropriate authorities. Ultra Tech Property Developers (P) is holding a Leasehold right of 604.50 square meters in Kalina, Santacruz (East). The plot is adjacent to BKC and is having potential of development of approx 40,000 Sq. Ft.

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Ajmera Realty to acquire 36% stake in Ultra Tech Property

Salt-to-steel conglomerate Tata Group is forming a joint venture with private equity investor Actis that could spend $2 billion (about Rs 8,900 crore) in building roads over five years, as Indian and foreign investors seek to cash in on opportunities created by the governments attempt to upgrade the countrys network of highways, the third largest after the US and China. Tata Realty & Infrastructure, a company set up by the Tata group to foray into the roads and highways sector, will own 65% of the venture, called TRIL Roads Pvt Ltd

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Tata, Actis to roll out $2 bn JV for road projects

In its first investment, the private equity (PE) arm of Anil Ambani-controlled Reliance Capital Ltd has purchased a stake worth Rs100 crore in Pathways World School, a group of schools for students from kindergarten to Class XII. The size of the stake acquired by Reliance Equity Advisors (India) Ltd hasn’t been disclosed. Reliance Equity Advisors is seeking to tap annual growth in the education sector that its chief executive officer Ramesh Venkat estimates at 50-60%. A recent report by education-focused PE fund Kaizen Management Advisors Pvt. Ltd has estimated that the so-called K-12 segment (kindergarten to Class XII) is a $20 billion (around Rs89,000 crore) business. “Also, there are a lot of government initiatives and policy changes which are attracting investment in the sector,” Venkat said.

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Reliance Capital PE’s first deal is in education

AT&T Inc. (T) Wednesday sold its entire 7% stake in Tech Mahindra Ltd. (532775.BY) through two block deals for about INR6.55 billion ($147 million), leaving analysts worried that this could hurt outsourcing business from the U.S. telecommunications major to the Indian software services provider. The stake sale comes just a month after AT&T International Inc., a unit of AT&T, bought an 8.07% stake, or about 9.9 million shares, in Tech Mahindra from Mahindra-BT Investment Co

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AT&T Sells Full 7% Stake In Tech Mahindra For About INR6.55 Bln

As private equity (PE) and venture capital (VC) deal-making gathers pace, PE firms are trying to raise cash, both in India and overseas, to purchase stakes in companies hungry for capital after last year’s downturn in the alternative investment market. Alternative investors such as PE and VC firms also stand to derive tax benefits by using the so-called dual structure, in which they raise separate domestic and offshore funds for investment in Indian firms. The alternative is a unified structure, which requires offshore funds to register in India as a foreign venture capital investor (FVCI) or through the Foreign Investment Promotion Board (FIPB) and put money in a domestic trust that makes the final investment.

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Firms use dual structure to raise cash, get tax benefits

Private sector lender Yes Bank plans to raise Rs 1,500 crore of capital this financial year, a top bank official said. “We are very well capital-endowed as at March 2010 but we do have a headroom to raise around Rs 1,500 crore of hybrid capital in both our Tier-II and Tier-I structure,” Yes Bank Managing Director and CEO Rana Kapoor told reporters here today. “We will be tapping this window definitely this fiscal because in a rising interest rate environment it is better to raise money sooner than later,” he said. As on March 31, the bank’s total CRAR stood at 20.61 per cent. The bank would be tapping the domestic market for this hybrid capital, he said.

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Yes Bank to raise Rs 1,500 cr capital this fiscal

Ananta Capital, an alternative investment fund set up in August last year, is raising a total of $150 million for its two funds — a pledge fund focused on private equity deals, and an equity fund dedicated to stake acquisitions in publicly-traded companies. Jaganath Swamy, managing partner, Ananta Capital, said both funds had so far drawn commitments of $20 million from limited partners (LPs), high networth individuals and financial institutions. “We are looking at closing $110 million in the next three-four months for both funds. The pledge fund is designed to be LP-friendly and will be focussed primarily on the advanced materials and renewable energy sectors in India,” Swami said.

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Ananta Capital raising $150 mn for two funds

Real estate company DLF Ltd said on Saturday that its subsidiary, Caraf Builders & Constructions Pvt Ltd, acquired 24.52 crore compulsorily convertible preference shares (CCPS) in group company DLF Assets from PE firm SC Asia for Rs 3,084.68 crore. The company said the move is in line with its strategy of consolidating shareholding of DAL, a co-developer for four IT/ITES SEZs based in Gurgaon, Chennai and Hyderabad. With this, Caraf’s stake in DLF Assets has risen to 91.90 per cent. DSIPL (a company owned by SC Asia) would continue to hold 2.72 crore CCPS, representing an economic interest of 4.59 per cent in DAL. The balance 3.5 per cent is held by DE Shaw. Sources said that before the deal, SC Asia’s stake in DAL was 45-50 per cent.

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DLF arm buys out PE stake in group firm for Rs 3,085 cr

EID Parry India has entered into a definitive agreement with GMR Holdings to acquire majority equity stake in GMR Industries, the agri-business entity of GMR Group. As per the definitive agreement entered into between the parties, GMR Group will divest a majority equity stake such that post the mandatory open offer (as per SEBI regulations), EID Parry would hold a minimum 65% equity stake in GMR Industries. Post the open offer, GMR Group would become a minority share holder in the company.(Bloomberg UTV)

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EID Parry India announces acquisition of majority holding in GMR Industries

© kalleboo I saw a very thought-provoking article on the Chinese Yuan early this month. I filed the article, but didn't writing about it because, well, I've written about the Yuan several times in the last year and it would be possible to let that single topic take over any blog on China's economics. In the article, John Tamny basically argues that currencies should be more like units of measurement that like commodities. The dollar, the Yuan, the Yen, the Euro, the Indian Rupee, …

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Yuan Debate Continues