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The government has nixed the expansion plans of one of its own. The proposed joint venture between SBI, the largest commercial bank in the country, and Societe Generale (SocGen) for providing custodial and depository services has hit a roadblock with the foreign investment promotion board (FIPB), the nodal body for clearing foreign investment in India rejecting the fund infusion from SocGen.
SBI had, in June, signed an agreement with Societe Generale Securities Services (SGSS), a division of the French banking giant SocGen Group, to offer custodial and depository services in India through a 65:35 JV. SBI was to appoint the CEO and SocGen the deputy CEO for the JV. The JV was to have a paid up capital of Rs 80 crore out of which SocGen was to bring in FDI worth Rs 28 crore. It is for this fund infusion that FIPB was approached for a green signal.
The JV would have made SBI the first Indian public sector bank to enter the custodial service business. Currently, the big players in this market are HSBC, Deutsche Bank and Citigroup. Overseas banks bring their global relationships into the country as a part of the business comes from foreign institutional investors (FIIs), who have a business relation with foreign banks in other markets.

As per this report: http://epaper.timesofindia.com/Repository/ml.asp?Ref=RVRNLzIwMDgvMDgvMTEjQXIwMDEwMw==&Mode=HTML&Locale=english-skin-custom
the RBI has raised concerns regarding few international scandals related to SocGen. The central bank has
specifically referred to two instances including a fine imposed on SocGen by a Zurich-based exchange, SWK, for violating trading rules by allowing authorised traders to make transactions under other people's names, besides allowing an unauthorised trader to trade on the exchange. According to RBI, SocGen was warned about the breach of rules, but failed to act.

The RBI has also referred to the securities scandal which surfaced in Europe early this year where one rogue trader had taken massive fraudulent directional position and concealed it through fictitious transactions. This cost SocGen more than $7 billion. Based on RBI's feedback, the FIPB has rejected SocGen's proposal to bring in its equity contribution for the proposed JV.

The proposed JV was the second tie-up between the two banks. In 2004, SBI and SocGen formed a 63:37 joint venture in the asset management business. This business, however, remains intact.

Indian Pharma company bags a $35 m order from UNICEF, will earn over $50 mn in next two quarters:

Panacea Biotec is learnt to have bagged a $35-million drug supply order from UNICEF to supply pentavalent vaccines, the first Indian company to get such a contract. Pentavalent combines four vaccines - Diptheria, Tetanus, Pertussis, Hepatatis B and HIB (whopping cough). Potentially, Panacea Biotec can earn over $50 million in the next two years. The revenues from the contract are expected to kick in from the third quarter onwards. At present, vaccines account for about 65 per cent of the Delhi-based company's Rs 850 crore (2007) sales. The company has also been looking to expand its business in branded drugs and is learnt to be in talks with a few companies in the US and Europe for an acquisition. http://economictimes.indiatimes.com/News_by_Industry/Panacea_bags_35_mn_Unicef_deal/articleshow/3353789.cms

Apnaloan.com launches credit card comparator : Sequoia Capital backed online loan lead generation company, Apnaloan.com Service,has recently launched its credit card comparator for providing information on the 212 credit cards available in the country and issued by 28 issuers

http://economictimes.indiatimes.com/Personal_Finance/Apnaloan_launches_comparator/articleshow/3352981.cms

DOT asks Idea to surrender licence for Punjab & Karnataka :The Department of Telecom (DoT) has asked Idea Cellular to surrender one of the two telecom licences it holds for the circles of Punjab and Karnataka. Idea Cellular, which had acquired a controlling stake in Spice Communications for around Rs 2,700 crore in June, now holds two licences in these circles on account of this acquisition. The DoT, however, ruled out any move to refund the licence fees paid by Idea after it surrenders the licences

SBI's hike in PLR the sharpest, raises lending rates by 100 basis points : The Reserve Bank of India's latest monetary-tightening measures, the country's largest lender, State Bank of India, raised its benchmark prime lending rate (PLR) 100 basis points to 13.75 per cent from Tuesday. This makes the bank only one of three — Punjab National Bank and Central Bank of India are the other two — to increase lending rates so sharply. Most other banks have raised PLR 50 to 75 basis points. ICICI Bank and HDFC have increased lending rates 75 basis points, and HDFC Bank and Axis Bank have announced increases of 50 basis points each.

http://www.business-standard.com/india/storypage.php?autono=331167

More PSU's to hit the bourses :The government is likely to list four or five more of state-owned companies, which include Satluj Jal Vidyut Nigam Ltd, Manganese Ore India Ltd and Cochin Shipyard, by March next year, reports Business Standard. The companies can dilute anywhere around 10 percent The Union Cabinet is likely to approve these initial public offer (IPO) proposals in the coming weeks to enable them to complete the ground work in time for a March issue.http://www.business-standard.com/india/storypage.php?autono=331165

After Engineering, it is industrial consulting for IIT-K: The Indian Institute of Technology, Kanpur (IIT-K) is fast emerging as one of the choicest industrial consultants for prestigious projects in government and private sectors. The institute has undertaken to provide technical know-how to a leading private construction house in Mumbai to construct a building, which will give the country its tallest skyscraper on completion. The professors are already providing advice and assistance to the Indian Space Research Organisation (ISRO) to realise the proposed Indian lunar mission, 'Chandrayaan'.http://www.business-standard.com/india/storypage.php?autono=331132

IndusInd Bank reenters the personal loan segment :The Hindujas-controlled IndusInd Bank plans to re-enter the personal loan business after having almost stopped extending loans about two years ago.The bank may launch personal loan products in October-December, reports BS.http://www.business-standard.com/india/storypage.php?autono=331105

Parsvnath Developers aggressive realty plans: Delhi-based realtor Parsvnath Developers will open 10 retail stores this year and develop 21 commercial projects as part of its plan to foray into retail, Chairman Pradeep Jain told the reporters. Appoints RJ Kamath as an independent Director on Board and to open 75 hypermarkets and boutique in five years.

SEBI revisits P- Notes

Participatory Notes are once again on the agenda of the capital market regulator, with the Securities and Exchange Board of India (SEBI) set to begin a review of the entire "regulatory framework" governing these instruments at its board meeting on August 13. http://www.thehindubusinessline.com/2008/08/12/stories/2008081252050100.htm

New policy for Urea opens up opportunities: The new investment policy for urea announced last week has the potential to sharply improve realisations and open up new growth opportunities for domestic manufacturers of the fertiliser. Read more here, http://www.thehindubusinessline.com/2008/08/12/stories/2008081251891500.htm

RPG Group affiliate goes big on telecom tower plays : KEC International, part of the Rs 13,500-crore RPG Group, engaged in laying of power transmission lines on EPC basis globally, is broadening its business canvas to get into installation of telecom towers that would be rented out to telecom services providers, reports Hindu Business Line .http://www.thehindubusinessline.com/2008/08/12/stories/2008081251360200.htm

It is expected that KEC, which is at present executing projects in 40 countries, will be spending Rs 100 crore this fiscal to set up 400 telecom towers in the rural areas where mobile phone is yet to penetrate.

Private equity firm Kohlberg Kravis Roberts & Co (KKR), which recently decided to list on the NYSE, has said it is considering infrastructure deals in India and China. The leveraged-buyout firm run by Henry Kravis and George Roberts said in an SEC filing that as a part of its growth initiative it plans to expand into areas such as mezzanine financing, real estate and infrastructure. KKR said that though emphasis will be on infrastructure investments in OECD (Organization for Economic Cooperation and Development) economies, however, India and China, may also be considered.

KKR created history in India by buying out Flextronics Software, which was renamed as Aricent Technologies, for $900 million in the largest LBO in India. Earlier this year it also made a strategic investment of $250 million in Bharti Infratel Ltd, the tower arm of India's largest private sector telco Bharti Televentures. The firm has put fair value of these two investments as $463 million. George Bilicic, the former head of Lazard's global power and energy investment banking, was brought in to start an infrastructure fund. The infrastructure team will have a presence in the United States, Europe and Asia.

The sector in infrastructure that KKR is loking at are energy, waste and wastewater, transportation and telecommunications assets but may also include social infrastructure and infrastructure-related assets. The investments will be made in form of equity and equity-related securities but we may also consider debt-related securities. In its 32-year old history KKR has made more than 165 private equity investments with a total transaction value in excess of $420 billion.
Infrastructure is the new favourite of global private equity giants. While Morgan Stanley and Global Infrastructure Partners (PE firm backed by Credit Suisse and General Electric) have announced almost $10 billion worth funds for infrastructure, Goldman Sachs is raising a targeted $7.5 billion fund. As for India specific funds, Citigroup Inc., and Blackstone Inc are planning a $5 billion fund for India (of which Citi has already raised $500 million). Macquarie Capital Group Ltd. and State Bank of India are co-raising a $2 billion infrastructure fund, while 3i Group of UK has already raised a $1.2 billion fund. ICICI Venture is following suit with a $1 billion fund..

Mahindra & Mahindra Ltd (M&M) has acquired a majority stake in the third largest tractor company in China, Jiangsu Yeuda Yancheng Tractor Manufacturing Co Ltd (Yancheng Tractor), for $26 million. Under the terms of the deal M&M and Yancheng Tractor will form a joint venture, which will have assets of $50 million. M&M will hold 51 per cent stake in the venture and Yancheng Tractor will transfer all its tractor related assets and liabilities to the JV company. The transaction has been done by M&M through its subsidiary, Mahindra Overseas Investment Company (Mauritius) Ltd, the company said informing the BSE. M&M chief Anand Mahindra has also said that it is not pursuing the acquisition of Hummer brand.
This will be M&M's second investment in China. In 2004, M&M had acquired 80 per cent stake in Chinese company Jiangling Tractor, to form Mahindra China Tractors. Mahindra China Tractors has a 12,000 unit capacity and M&M invested $ 8 million in it. Kotak Investment Banking was the financial advisor to M&M and King & Wood, Shanghai was the legal advisor.
The market for tractors in China is growing with a CAGR of 40 per cent per year and reached to 2,20,000 tractors last year. Through this acquisition, M&M will expand its distribution network in China and have a larger presence in the market. Also the production facilities will be used for production for domestic sales as well as a low cost manufacture base for exports. Yancheng has a distribution network in 25 provinces of China and exports its products to 60 countries across the world. Yancheng Tractor is is part of the $5.8 billion Yeuda Group of China, which is also present in other sectors such as real estate, automobiles, textiles, hotels and supermarkets. M&M also exports its tractors to the US and other western countries.
Last month, M&M announced that it would merge its subsidiary Punjab Tractors with itself. It had acquired 64 per cent stake in Punjab Tractors last year through acquiring 43 per cent stake from Delhi's Burman family and PE firm Actis for Rs 1000 crore. Then later it acquired 20 per cent more through open offer for Rs 437 crore. M&M also bought the assets of Kinetic Motors for Rs 110 crore last month, venturing into the two-wheeler business.

Delhi-based e-waste management company Attero Recycling Pvt. Ltd has landed an undisclosed amount of funding from Draper Fisher Jurvetson (DFJ) and NEA-IndoUS Ventures. Founded in 2007 by two brothers, Rohan Gupta and Nitin Gupta, the startup plans to set up an automated Waste Electrical and Electronic EquipmentWEEE processing plant on a large scale. The plant will process WEEE (Waste Electrical and Electronic Equipment) in an environmentally friendly manner and will have a recycling efficiency of 98%.Developed nations dump an estimated 500 million tonnes of e-waste yearly in emerging countries - and about 70 per cent of the waste ends up in China, making it the world's largest dumping ground for e-waste.

In India, Toxics Link, a Delhi-based non-governmental organisation, claims that India produces about 1.5 million tonnes of e-waste yearly. Some 70 per cent of the waste collected for recycling in New Delhi alone comes from developed nations. And as many MNCs are relocating their manufacturing plants to these two emerging giants, they will require recycling services from qualified e-waste recyclers.

DFJ has been on a deal overdrive since it set up shop in India in mid-last year. The firm has made 17 investments including the four unannounced ones in the last 2.5 years. The new four investments include Attero Recycling Pvt. Ltd, Catura Systems, an Hyderabad based online publishing company and a Bangalore based semi-conductor company. Jolly said they will make these announcements shortly.As the deal making is picking up pace, the firm has also added a Princpal to the existing team of three. DFJ has brought in Sachin Maheshwari from Opus Capital as a principal. The firm already has Sateesh Andra as a Venture Partner working out of Hyderabad.

Matrix Partners India has made a Series-A investment of $7 million (Rs.30 crores) in pre-school educator Tree House Education and Accessories Pvt. Ltd. Mumbai-based Tree House claims to be the largest non-franchised, branded pre-school educator in the country and currently operates more than 45 pre-schools across India. It provides learning environment for children between the age of 1.5 to 6 years. Tree House is currently has a presence in Mumbai only but with the current round of funding it now plans to expand and open centers all over the country.

"The pre-school education market is upward of a billion dollar size in India. It is largely fragmented and there is huge scope to scale the company. Also, there is a great need for standardized quality education in the pre-school segment at an affordable price, with a clear focus on early childhood care," said Rajesh Bhatia, MD, Tree House Education.

There are several other big players in this segment. Shemrock Schools with a total of 90 branches. Then there is also Kidzee, which is backed by Zee's Subhash Chandra. Eurokids International is another player in this segment which has 180 pre-schools spread across 70 towns. Then there is also Mothers Pride, which is spread across Delhi and NCR.

Matrix Partners India has around $450 million under management. It invests upto $50 million in companies, making venture and growth capital investments. Some of the portfolio companies of Matrix Prtners India is Brand Marketing India , Itzcash Card, Seventymm, Tree House and Yo! China. Avnish Bajaj, who previously founded Bazee.com, is the Managing Director of Matrix India.

Ambit Holdings Pvt. Ltd., Ashok Wadhwa's financial services arm, has appointed Nikhil Puri as he Managing Director for Ambit Corporate Finance. Ambit Corporate Finance is a mergers and acquisitions advisory firm. Puri was previously working as Managing Director in the Global Industries Group. There his work involved accomplishing client and coverage related responsibilities across the healthcare, specialty chemicals and FMCG sectors. Puri has spent the last 12 years working with leading global investment banks such as Lehman Brothers and Bear
Stearns.
Ambit Corporate Finance was the advisor to Balaji Telefilms on its recent agreement with Star Group. It has also advised on various other deals such as Patni stake sale, DHL's acquisition of Blue Dart, Bharti Televentures acquisition of Hexacom, among others.
Ambit Holdings Pvt Ltd. also runs a $100 million private equity fund called Ambit Pragma Ventures Pvt. Ltd, which is focused across five sectors - entertainment and leisure, health care and wellness, logistics, infrastructure services and branded food.

As the Reserve Bank of India has been tightening the lending screws on the real estate sector, special purpose vehicles have become a preferred route to raise money for real estate companies from private equity players. "Private equity players find it safer to invest in projects rather than a developer. A lot of developers are also finding easy that way. Once a private equity fund enters, the project suddenly becomes viable because it has the money to execute," said Ashish Bahalla, Managing Director of Millennium Spire India Management, a real estate investment firm.
Look at some of the recent SPV deals. Sun Apollo Ventures is believed to have closed a $76 million deal in the SPV of Amrapali Group, which is developing a 200-acre township in Jaipur, and a 15-acre high-end housing project in Noida. Similarly, TAIB Bank is investing $50.44 million for a 26 per cent stake in the SPV of Anant Raj Industries, while Lehman Brothers Real Estate Partners is acquiring a 50 per cent stake in Unitech's Mumbai project. (See a list of major SPV deals).
An increased liquidity pressure coupled with declining internal accruals and reduced funding options, the sector is already reeling under pressure. Add to it, is the post quarterly monetary review of the Reserve Bank of India, where it's decision to raise repo rate and cash reserve ratio is expected to further add to woes of the real estate sector. Already banks have raised their prime lending rates, and the residential demand is likely to get hit, said industry observers. "Even if the developer now takes loan which is difficult to get anyways, where is the assurance that buyer is there," Bhalla.
Real estate players are already grappling with dwindling sales, correction in land prices, tepid demand, and rising input costs, even as they face a liquidity squeeze. The developers are now looking at other sources of funds, and they find no other option than to raise money from PE players for particular projects, because the situation out there is extremely scary.

"Most mid size developers, be it at the regional levels have taken over a lot of load. All these people have got more projects than they can execute. They have more agreements to buy land than they have money for. They have applied for licenses but have no money for licensing fee and construction. All of them have three – four files lying somewhere in want of funds. And in a market where sales are being restricted to genuine investor and to some extent cautious investors, there isn't much liquidity for a free flowing real estate river that it was a few years back. Ever larger guys are trying to shed their load", said Bhalla. Bhalla added that all those who banked on the land bank concept of investing in real estate are having very difficult times.

Having said that, Bhalla also believes that although raising funds have become difficult now, this is the best time for investing in the sector as valuations have reached the rock bottom levels and there are lesser options available for financing now. "Now that the real estate river has reached the bottom line, it will definitely find well hidden nuggets", said Bhalla.

Matrix partners in the U.K. raised an India focused fund and returned the money to investors. Since it has opened its shop in India, Blackstone Real Estate Partners has only managed to make one investment (Synergy Properties), the investors are increasingly cautious to invests in real estate, finding it safe to invest in individual projects and keep scouting for the same. Hopefully, they will also find the nuggets.

Hyderabad based mobile TV company, Apalya Technologies Pvt. Ltd, has received $500,000 (Rs 2 crore) investment from Mumbai Angels, a network of angel investors. Apalya aggregates premium entertainment content from many different content providers, and then optimises the content to be suitable for small screen or mobile viewing.
The firm was founded in December 2005 by Vamshi Reddy and Shiva Bayyapunedi, who have combined experience of 26 years in the IT industry. "We wanted to focus on mobile technology and felt that most of the market was dominated by WAP related applications. We felt that mobile TV will take off," said Vamshi Reddy, Co-Founder and Director of Apalya Technologies Pvt Ltd.
"We had seen a lot of people try to bring in 3G solutions and slap it into existing networks and fail. What we tried to do is to build a customised solutions which would work in client's 2G network and eventually evolve into 3G," he added.
Apalya has built up a clientele of 30,000 paid subscribers across the country and has a 24 people team in Hyderabad. It plans to expand the marketing team and infrastructure. "Funds are primarily going to be used to expand the team on the marketing front and for setting up the infrastructure. We will work with each operator to take the product to the next level," said Reddy. Bayyapunedi and Reddy had invested $250,000 in the venture.
"We have developed a propriety technology of our own which basically does a progressive play of radio," said Reddy. Apalya has tied up with most of the telecom operators in the country including Idea Cellular, BSNL, Vodafone, among others. It has also tied up with 40 television channels, which includes most of the news channels and regional channels. The company has tie-ups with some general entertainment channels such as Zoom and Turner international (Cartoon Network), and is working on expanding its offering in this segment.
"The main focus for us was to build a platform and have the whole solution ready integrated with every operator. So when 3G comes in we can exploit the market," said Reddy. "We are in 3G trials with some operators right and expect to roll out the product in the next 3-6 months," he added.
Apalya provides its customers with On Demand Movies, Timely News, Sports, Movie Advertisements, Premium TV Soap's, Interactive and Collaborative TV and Personalized Content.
Mumbai Angels have previously backed firms like distressed inventory travel website AtYourPrice.in, mobile advertising company mKhoj, digital photo company Canvera, and Bangalore-based text mining company Textual Analytics Solutions. They also recently invested in Fin-e-ssential Infotech India Ltd, a payroll and HR process management company.

New York-based Apollo Management, which has assets in excess of $40 billion under management, is the next private equity biggie to open an India office. The firm has appointed Mintoo Bhandari to head the India operations, who was till now a partner at the UK unit of Apollo Management. He is currently in the process of putting together a team in Mumbai. Apollo Management's real estate investment arm, Apollo Real Estate Advisors, currently runs a $650 million real estate private equity fund in India in partnership with Delhi-based Khemka family's SUN group. Apollo is currently investing from its sixth private equity fund, Apollo Investment Fund VI, L.P., which together with related co-investment entities, involves about $12 billion of new capital.
Prior to joining Apollo Management, Bhandari was the principal founder and a Managing Director of The VIEW Group, which is venture capital firm based out of Boston. Formed in 1992, the firm was invested in companies in India and the US. A Harvard Business School alum, he has also worked for Harvard Private Equity Group, where he was involved in private equity investments across a wide range of industries. He has also managed two public markets funds for Harvard, a risk arbitrage fund and a traditional hedge fund.
Apollo joins a list of funds setting up offices in India. Europe's leading private equity house Candover has appointed Harsha Raghavan from Goldman Sachs to head its India unit. Also UK's mid-market focused private equity fund Englefield Capital is setting up an office in India and has appointed Dinesh Waswani to co-head its operations. Australia's Babcock & Brown recently opened its India unit by hiring eight key managers from ABN Amro India. Rabobank has also launched its first private equity fund in India focusing on food and agri business. Also Lloyds TSB Development Capital (LDC), the private equity arm of the UK-based Lloyds TSB, is drawing it Asia strategy in which India will figure prominently.
Apollo Management was founded in 1990 by Leon Black. The firm is focused on private equity and leveraged buy outs with investments in underperforming companies and distressed assets. Certain sectors where it looks to invest are chemicals, supply chain management, BPO, media, healthcare and transport. Apollo has been involved in some big buyouts. In 2006, along with Texas Pacific Group, it bought out US casino operator Harrah's for $17.1 billion. Apollo also bought GE Advanced Materials from General Electric in 2006, and renamed it as Momentive Performance Materials in a deal valued at approximately $3.8 billion.