VCCircle

After Brazil's CSN upped their bid to 515 pence (against Tata's revised bid of 500 pence offer) for acquiring Corus, the Tatas are contemplating a counter offer. The Mumbai business house has appointed UK investment bank NM Rothschild & Sons to advise them on the deal, reports The Economic Times. This shows that the Tatas are not backing out yet.

The 515 pence offer values Corus at $9.6 billion. Tata's original offer was 455 pence, while CSN bid at 475 pence. On Monday, Tatas made a counter offer at 500 pence.

Rothschild will be the third advisor to Tatas. It is already been advised by ABN Amro and Deutsche Bank. Rothschild aill apparently advise them on the strategy as for going forward as well as on the fund raising.

CSN is being advised by Lazard and Goldman Sachs, while JP Morgan Cazenove and HSBC are acting for Corus. Tata Steel is being advised by ABN AMRO, Deutsche Bank and Rothschild.

Mumbai-based investment banking and institutional broking house Edelweiss Capital is close to raising $100 million from two funds - The Government of Singapore Investment Corporation (GIC) and New York-based hedge fund Galleon Partners - reports The Economic Times. Edelweiss is expected to dilute 20 per cent, which will value the firm at $500 million. Apparently what has attracted the foreign funds' attention is that Edelweiss has grown at 100 per cent for the thrid consecutive year in 2005-06.

Edelweiss chief Rashesh Shah has confirmed that they are in talks. In December last year, the Mumbai investment banking firm had placed 20 per cent stake with Greater Pacific Capital, a London-based strategic investment firm, for about Rs 125 crore ($27.5 million). If the current rumoured valuation is anything to by, the firm has multiplied its asking price by at least four times in one year.

Not bad for a firm which started only 11 years ago. Edelweiss currently employs about 600 people. In 2005-06, Edeleiss registered revenues of Rs 147 crore, up from Rs 73 crore in the previous year. The profit after tax grew to Rs 42 crore from Rs 24 crore.

Edelweiss is also planning an IPO probably in the next two years.

Another investment bank that's seeking private equity is Mumbai-based Avendus Advisors. Avendus is believed to be raising $15 million in private equity to fund its expansion activities.

Here is a big people move. Amit Chandra, the Country Head of DSP Merrill Lynch, has quit the firm to set up a private equity fund along with former McKinsey chief Rajat Gupta. Chandra is leaving after a 13-year stint at the firm. Hemendra Kothari, chairman of DSPML, will stand in for Chandra (probably till they find a suitable replacement).

Chandra joins other investment banking veterans like his former colleague Rajeev Gupta, Enam's Mahesh Chhabria and IL&FS' Hetal Gandhi to join the private equity industry. Gupta left DSP in early 2005 to join as Managing Director and India head of the buyout firm Carlyle. Chhabria left Enam Financial Consultants to join UK private equity firm 3I, while Gandhi left IL&FS to head Tano Capital.

The talent-starved private quity industry looks for investment banking veterans to man their operations.

Thirty-eight year old Chandra spent all his i-banking career at DSPML. He worked briefly as a consultant in 1993-94, and before his MBA, he worked for Larsen & Toubro, a leading Indian engineering and construction company.

Chandra's main role was to build relationships at the firm, and he has executed some of the largest deals for the firm. Chandra joined the board of DSPML in 2004. He received his MBA in Finance and Strategy from Boston College and holds a Bachelors Degree Engineering (Electrical), from VJTI (University of Bombay).

Worbus, an international joint venture consultant and investment banking firm, is looking at expanding investments in the SME sector. The company helps UK and US-based funds find investment targets in India and China, besides others.

Worbus has tied up with Kolkata-based India Trade Center which will be essentially to get a dealflow in the SME segment. It plans to focus on both North (Delhi) and Eastern (Kolkata) areas to start with. Worbus has already earmarked $10 million for Kolkata-based SMEs.

Worbus claims it has so far invested in 25-odd projects in India in areas like telecom, automobile engineering and white goods. [Via The Economic Times]

UK banking giant HSBC Holdings has hired Sanjay Bajaj as head of its equity capital markets business in India, reports Bloomberg.

Bajaj moves from JM Morgan Stanely, where he worked for 11 years as a member of the equity capital markets team. "Sanjay's appointment reinforces the importance of India for HSBC and our equity capital markets business in the region,'' the bank said in an internal memo procured by Bloomberg.

Bajaj has an uphill task to take HSBC, which ranks 12th among stock underwriters in India, to take it to higher levels in marketshare. Last year, it handled 3 percent of the $9.6 billion raised by companies, including Reliance Petroleum Ltd. and Bank of Baroda. On the other hand, JM Morgan Stanley holds the No. 2 position, with a 10 percent market share. A big win is that HSBC has got the mandate to arrange Hiranandani Construction's $750 million London IPO.

Here is one investment bank who sees India as the hottest country for deal-making. David Goldfarb, Head of Strategic Partnerships at Lehman Brothers, said at a conference, "We are amazingly excited about India...India is a full-service opportunity for us today."

Goldfarb said Indian companies increasingly want banking advice on acquisitions and capital-raising as well as capital-markets products such as derivatives and securitized assets.

So it's likely Lehman will be on a hiring spree to man its investment banking operations in India. In July, Tarun Jotwani, co-head of Lehman's fixed-income businesses in Europe, was appointed as the chairman and chief executive of the bank's Indian businesses. It recently snagged Surojit Shome of Citigroup to head its investment banking operations in India. So things are moving pretty fast at Lehman in India.

Lehman employs about 16,190 bankers and traders in the United States. It expects fee income to grow there at a CAGR of 7.3 percent between 2005 and 2010 in the US. But in Asia, where Lehman employs only 3,337 employees, the industry-wide fees are expected to grow 11.6 percent.

Goldfarb was slightly pessimistic about China, though. "China is just a banking opportunity for us," he said.

Rajat Gupta has joined the Board of Directors of The Goldman Sachs Group, Inc. Gupta will be an independent director of the corporation, and will serve on the Audit, Compensation and Corporate Governance and Nominating Committees of the Board. With the addition of Gupta, the Goldman Sachs Board has 13 directors, of whom ten are independent directors.

Gupta is Senior Partner of McKinsey & Company. From 1994 to 2003, he was Worldwide Managing Director of McKinsey. That will be a lot of work for Gupta, who is also an advisor to UN Secretary General, and also one who serves on the advisory boards of a host of b-schools like ISB, Kellog, Harvard and Tsinghua University of Beijing.

"Over his 32-year career, Rajat Gupta has been a valued source of counsel to institutions, governments and business leaders around the world," said Lloyd C. Blankfein, Chairman and Chief Executive Officer of Goldman Sachs. "Our shareholders will be fortunate to have his strategic and operational expertise and judgment represented on our board."

Release here.

Here is an interesting development. ICICI Bank may work as an investing banking firm too, and that is going to clash with its subsidiary ICICI Securities' work. The Economic Times reports about some reorganisation and restructuring of ICICI Bank to that effect. According to the report, the corporate banking business of ICICI Bank is being re-organised as the Corporate Products & Investment Banking Group (CIB). The Bank apparently wants to cater to a corporate's entire range of needs like "transaction banking, credit and investment banking, including structuring and syndication". CPIBG will be headed by Kalpesh Kikani who recently became a senior general manager.

The report says, in the past few months, ICICI Bank has also been trying to get investment banking mandates. [Ed: I am sure some of the readers of VC Circle may know the truth]. This would have necessarily clashed with I-Sec's activities since it's alreay into the business.

Read - ICICI may take on I-Sec in I-banking

US investment banking firm Lehman Brothers has started hiring in India. It has appointed Surojit Shome as head of its investment banking division. Shome is currently the MD and corporate banking head, India and sub-continent, for Citigroup. He will now be the MD and head of investment banking, India, for Lehman. He will report to Tarun Jotwani, who was recently appointed chairman and CEO of Lehman's Indian operations, and Kunho Cho, head of investment banking, Asia Pacific. The Economic Times also puts a figure to Shome's compensation package - over $1 million along with bonus.

Lehman is said to be filling in other key positions too - about 70 people for investment banking, corporate finance, fund raising (both equity and debt), derivatives and also investments from the proprietory book. The bank has taken up a 25,000 sq ft office space in Worli in Mumbai.

Lehman already has a senior hand in India in the form of RK Rangan, who currently looks after the BPO operations.

Read - Lehman raises hiring pitch here

Finance Asia has some interesting details about Tata's financing of its $8.23 billion Corus acquisition. India's largest leveraged buyout comprises of "a $3.88 billion equity contribution from Tata Steel, a fully underwritten non-recourse debt package of $5.63 billion, and a revolving credit facility of $669 million". Interestingly, the sell side advisor Credit Suisse is now helping the buyer raise finance. That's because ABN AMRO and Deutsche Bank - who were appointed by Tata Steel to advise on the transaction and raise the required financing for the acquisition - were unable to commit the debt required. At this point, the transaction was almost derailed, Finance Asia reports, quoting sources.

Then Corus asked its advisor in the deal Credit Suisse to "resolve the impasse". To cut a long story short, Credit Suisse is now the lead financing bank, joined by ABN AMRO and Deutsche Bank in the consortium. Of the £3.3 billion of financing being raised at the SPV level, Credit Suisse will provide 45% and ABN AMRO and Deutsche will pick up 27.5% each. The $1.8 billion bridge debt being raised at the Tata Steel level in India is being shared between Standard Chartered and ABN AMRO.

Read - Who is financing India’s largest LBO? (Finance Asia)