VCCircle

The number of suitors for the Hutch stake in India is growing. The latest to enter the fray is the Indian partner itself - the Ruias of Essar. The Ruias hold about 33 per cent stake in Hutchison Essar, and acording to Business Standard, the Mumbai-based diversified business group is toying with the idea of picking up its majority partner's stake.

Hutchison holds a 52 per cent stake directly, while another 15 per cent is held by Analjit Singh of Max India and Hutch CEO Asim Ghosh together. The stake held by Hutch alone could be valued at around $7-8 billion, which means Essar will have to raise funds or strike partneships to pick up the stake.

There has been interest from global buyout funds like KKR, Texas Pacific Group, Blackstone and even Reliance Communications.

What is interesting is even Bharti Tele-Ventures may look at buying the Hutch stake. "If the Ruias aproach us, then we would think about it," Bharti Chairman Sunil Mittal told CNBC TV18. Which means Bharti can consider buying the Hutch stake only with the concurrence of the Ruias.

The Hutch asset sale is getting interesting with a variety of players entering the fray.

Related:

Now KKR In Talks With Reliance Com To Buy Hutch Assets In India

Blackstone, Texas Pacific, Reliance Com May Consider Acquiring Hutch Assets In India: WSJ

Hutch To Exit India? Will Essar-PE Firm Combine Buy Them Out?

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.

There is a new twist to the Hutch tale. The Economic Times reports that buyout fund KKR is in talks with Anil Ambani's Reliance Communications (RELCOM) to buy out Hutch's wireless assets in India. The Wall Street Journal had earlier reported that buyout funds like Blackstone, Texas Pacific Group, and also Indian telco RELCOM were in talks to buy the Hutch stake in Indian telco Hutchison Essar, India's third-largest GSM operator with a subscriber base of 16 million.

“It is very preliminary as of now. There are a number of unknowns in a transaction of this type,” ET quotes an investment banking source. Hutchison seems to be planning to exit Indian market since it's not sharing a great relationship with its Indian partner Essar. Also, Hutch can cash out at a price of $8 billion for its two-third stake in Hutchison Essar. The Indian partner Essar owns 33 per cent stake.

The report also says that Texas Pacific Group and Malaysia's Maxis had made a bid last week for 100 per cent of Hutchison-Essar at an enterprise value of $13.5 billion. The bidders approached Canning Fok, chairman of Hutchison Telecom International, the parent of Hutchison Essar, who was in India on a brief visit, says ET. The bid was believed to be turned down.

There is definitely something cooking up.

Related:

Blackstone, Texas Pacific, Reliance Com May Consider Acquiring Hutch Assets In India: WSJ

Hutch To Exit India? Will Essar-PE Firm Combine Buy Them Out?

There is some development on the MTR Foods sell-off front again. The company has been on the auction block for a while. Now the latest suitor being reported by The Economic Times is the US-based McCormick & Company, a leader in the manufacture, marketing and distribution of spices, seasonings and flavours. The deal may sealed in the next two weeks, and the Bangalore-based company's asking price is said to be in the range of Rs 350-400 crore. MTR makes ready-to-eat and ready-to-cook food ingredients and spices.

MTR was believed to have got interest from other buyers too, which included names like Tata Coffee (can't figure the synergy), Godrej, ITC, and even Wipro. Besides the private equity firms like Blackstone, Indivision and Actis were also believed to have been in some kind of talks with MTR Foods.

The Economic Times reports that the Maiya family, the owners of MTR Foods, decided to hang on as the valuations kept creeping up from Rs 250 crore to Rs 350 crore.

It apparently made sense to McCormick, even if it pays a slightly higher premium, because the company does not have Indian foods in its portfolio. Moreover it can also use MTR Foods facility to outsource some of its products manufacturing. McCormick was founded in 1889.

MTR Foods's investment banker N M Rothschild had put a price tag of Rs 300 crore on the company when it called for bids earlier this year. The Maiya family controls 59 per cent stake in the company, JP Morgan holds 26 per cent and Aquarius Capital holding 14-15 per cent.

Related:

JP Morgan Chase May Sell Its 26% Stake In MTR Foods

MTR Stake Sale To Take Time; PE Funds Interested Still

MTR Foods Sell-off Auction Hotting Up; Sept 25 Last Date For Bids

Updated (on 10/12/06): ICICI Bank board on Saturday cleared the proposal to merge Sangli Bank with itself. The deal would cost ICICI Bank Rs 302 crore, according to a report in The Times of India.

The details are: Post-merger, an investor holding 925 shares of Sangli Bank will get 100 shares of ICICI Bank. The amalgamation will result in issuance of around 3.4 million additional shares of ICICI Bank, equivalent to about 0.4 per cent of its existing equity share capital. Considering the share-swap deal, ICICI Bank will pay Rs 302 crore to acquire the Maharashtra-based bank.

This is the second acquisition of a bank by ICICI Bank. It had taken over Bank of Madura in 2000.

Previous post: India's largest private lender ICICI Bank is planning a rural push. It's acquiring Maharashtra's Sangli Bank. ICICI Bank today announced that a board meeting would be held on Saturday to consider the proposal to acquire Sangli Bank. This is part of ICICI Bank's plans to enhance its rural branch network. ICICI Bank presently has 640 branches, while Sangli Bank has about 186 branches in seven states. According to Business Standard, the deal could be valued at Rs 75 crore. The bank had capital plus reserves of Rs 82.36 crore as on March 31, 2006. Sangli Bank had failed over the last couple of years to take steps to raise its networth to Rs 300 crore, the minimum stipulated by the RBI. So weak banks like Sangli Bank are up for sale.

ICICI Bank had earlier made a bid to acquire United Western Bank. But, finally IDBI Bank won the deal.

Bigger banks like ICICI Bank, Federal Bank, Corporation Bank and Canara Bank all are looking to acquire smaller banks to increase their coverage. There was a heavy rush to buy UWB from all these banks, besides from companies like Indiabulls.

Earlier, Federal Bank amalgamated with itself another Maharashtra-based bank - Ganesh Bank of Kurundwad.

Related:

Maharashtra's Weak Banks Up For Grabs

United Western Bank To Be Merged With IDBI

I didn't expect the Tatas to make an aggressively revised offer to buy Corus. Tata Steel has increased the offer by 45 pence to

Here is the biggest deal in Indian telecom if it goes through. The Wall Street Journal reports (under the sub wall) that buyout funds Blackstone and Texas Pacific Group are "considering a possible acquisition" of the stake of Hutchison Telecommunications International in the Indian telecom business Hutchison Essar. The deal could be as big as $8 billion, Journal reports.

The report also says that Blackstone may join hands with Reliance Communications Ltd for acquiring Hutch. The report is however unconfirmed, while a Hutch spokeswoman refused to comment.

Hutchison Telecommunications controls about 67 per cent of Hutchison Essar, while Essar Group, the Indian JV partner, controls 33 per cent. Hutch, a GSM player, operates in 16 of the 23 telecom circles in India. It has over 18 million mobile subscribers in India.

The Reliance Communications angle is interesting. The company is toying with the idea of entering GSM service nationally, and this could be a good strategy to acquire the national presence in one shot ratjer building it ground up. Reliance Communications is a CDMA player, while its subsidiary Reliance Telecom is a GSM player in essentially eastern states.

(Hat tip to Vijay)

The Tata group is close to buying a 26 per cent stake in Nagarjuna Group’s oil refinery project (Nagarjuna Oil Corporation) for about Rs 400 crore, reports The Economic Times. Nagarjuna - alongwith Tamilnadu Industrial Development Corporation (TIDCO) is building a 6-million tonne refinery project in Cuddalore, Tamil Nadu, at a cost of Rs 4,000 crore. The Tata group may buy about 26 per cent for about Rs 400 crore. The project’s equity base is about Rs 1,500 crore.

The South-based company is also said to be in talks with some Russian and Middle East companies for funding the remaining equity portion of the project. It's also tying up the project debt of about Rs 3,000 crore. The commercial production is expected to start in the year 2008.

As for the Tatas, this will be the first move in the oil refining sector, although it has presence in the upstream business through Tata Petrodyne.

ICICI Bank is expected to sell its remaining 8 per cent stake in NCDEX, India's largest commodity online exchange. ICICI is looking for a buyer for its stake, reports The Economic Times. The bank recently sold a 7 per cent stake in NCDEX to Goldman Sachs for Rs 108 crore. ICICI is believed to have made 43.2X its original investment of Rs 2.5 crore. Goldman had bought stake from ICICI at Rs 508 a share. In the current sell-off, ICICI may get some Rs 620 a share, the report says.

Now some M&A in retail. Mukesh Ambani's Reliance Retail has reportedly acquired 100 per cent stake in Gujarat-based Adani Retail for Rs 100-110 crore. The Economic Times reports that Reliance has pipped other contenders like Subhiksha, Trinethra and the Tatas to in clinching this deal.

The deal will give Reliance access to 54 retail locations (neighbourhood stores, supermarkets and hypermarkets) across nine cities in Gujarat, besides its infrastructure and sourcing facilities. That leaves Reliance in a god spot which is kicking off its retail operations nationwide.

Retail is getting hotter in India with Wal-Mart signing up with Bharti group for a joint foray while A V Birla group is also readying a $2 billion warchest to enter the sector. There are existing players like Pantaloon group and Subiksha expanding their territories.

In retail, real estate and supply chain are the most important factors. The total retail space which will be available by 2010 is only about 150-million sq ft, while Reliance alone require about 100 million square feet.