VCCircle Feeds

News Roundup: Star Backs Out of Tata Sky Stake Hike Plan

Madhav Chanchani — Wed, 17 Mar 2010 21:05:29 -0700

ArcelorMittal Eyes Bhushan Power & Steel - ArcelorMittal is eyeing a strategic stake in Bhushan Power & Steel as the top executives of steel tycoon Lakshmi Mittal’s firm have met officials of the unlisted Indian firm. Christophe Cornier, a member on the board of the world’s largest steelmaker ArcelorMittal, and its chief technology officer Pierre Gugliermina were in New Delhi recently and met senior officials at Bhushan Power. The deal will give ArcelorMittal access to a steel mill and some mining rights in Orissa. (Economic Times)

Godrej Consumer Eyes More Acquisitions - Godrej Group Chairman Adi Godrej said his firm is looking for further buyouts in the developing countries to expand operations. Last week, Godrej Group's FMCG company Godrej Consumer Products (GCPL) bought one of the leading African personal care brands, Tura from Nigeria's Tura Group. GCPL had recently got board approval for raising Rs 3,000 crore to fund its expansion plans. (ET)

Birla Power To Invest Rs 5,000 Cr In Solar, Thermal Power - Birla Power Solutions will invest nearly Rs 5,000 crore to set up thermal and solar power projects in the next three years. The group has floated a special purpose vehicle (SPV) — Birla Urja — to run the power business, where it holds a 51% stake in the SPV. The group will set up 600 mw of thermal power plant capacity in Maharashtra and 125 mw solar power capacity in Andhra Pradesh, Rajasthan, Uttaranchal and Haryana. The equity component will be funded through promoters and private equity funds. (ET)

Parsvnath To Sell Mumbai Land - New Delhi-based Parsvnath Developers is close to signing a deal with a local developer for its BEST land at Kurla for Rs 307 crore. The realtor received development rights in 2007 for the land, which included constructing of a fully-equipped bus depot, staff housing and buildings for commercial utilisation. Mumbai's Kanakia Spaces is a close contender for the tract of land in Kurla and the final closure of the deal would happen by March-end. (DNA)

Star Backs Out of Tata Sky Stake Hike Plan - Star India has withdrawn its proposal hours before the last Foreign Investment Promotion Board (FIPB) meeting to increase its stake in DTH venture Tata Sky. The planned stake increase was through floating a joint venture company with the Tata group and the information and broadcasting (I&B) ministry did not supported the proposal. (Financial Express)

Reid & Taylor Plans IPO - SKNL is planning to list Reid & Taylor in the next 6-8 months even as the company plans to convert Belmonte into a separate subsidiary. This unit is looking to bring in private equity investment. Singapore's GIC holds 25% stake in Reid & Taylor's subsidiary. (Moneycontrol)

Future Group Buys Shoprite Store - Kishore Biyani-led Future Group bought the lone India franchisee store of Shoprite Holdings Ltd, South Africa’s biggest grocery chain. The store at Mulund in Mumbai will be used to unveil the Future Group’s new brand of stores over the weekend which will mostly stock food items. The store, spread over 55,000 sq. ft, will also house a bakery. (Mint)

Centrum Plans $100-125 Mn PE Fund - Mumbai's Centrum Capital Ltd is planning to raise a $100-125 million fund from domestic investors like institutions and retail investors. The sector-agnostic fund will be led by Shivani Bhasin, who was a principal at IDFC Private Equity. Bhasin has earlier worked with US-based PE firm Lightyear Capital Inc. and the PE arm of General Electric Co. (Mint)

3i Plans Second Infrastructure Fund in 12 Months - Brithish private equity firm 3i Group is planning to raise its second fund for infrastructure investments in the next 12 months. The PE firm has invested close to $600 million in India from its $1.2-billion India Infrastructure Fund. The PE firm is also eyeing investments in sectors such as media and healthcare. (Business Standard)

News Roundup: Sequoia's Rajiv Sabharwal Returns to ICICI Bank

Madhav Chanchani — Thu, 18 Mar 2010 19:37:09 -0700

After Uniliver, Vindi Banga Eyes Private Equity - Manvinder Singh 'Vindi' Banga is resigning after putting in 33 years at Unilever in May this year. Banga is currently president, global foods, home and personal care and member of the Unilever Executive and former chairman of HUL. He is eyeing opportunities, ranging from business, entrepreneurial, private equity, etc. (Times of India)

BSNL Drops Zamtel Bid - State-run BSNL has decided to drop its plans to acquire a majority stake in Zambia Telecommunications (Zamtel). BSNL plans focus on its domestic operations. BSNL had put in a bid for acquiring a majority stake in Zamtel and cleared two rounds. It was shortlisted along with three other global players for submitting the final bid. (Economic Times)

Maytas Properties To Get Strategic Investor - Corporate affairs minister Salman Khurshid said the government is looking at the possibility of inducting a strategic partner in Maytas Properties, the company promoted by the kins of B Ramalinga Raju, founder of the former Satyam Computer Services. Following the admission of accounting fraud in Satyam Computer Services by Raju last year, the government appointed its own nominees on the twin companies — Maytas Infra and Maytas Properties — promoted by Raju’s sons. (ET)

Sequoia's Rajiv Sabharwal Returns to ICICI Bank - Rajiv Sabharwal, who joined Sequoia Capital as an executive director last year, is rejoining ICICI bank as head of all retail operations as senior general manager. He will report to Chanda Kochhar, the managing director & CEO of India’s largest private sector bank. Sabharwal was former head of the ICICI bank’s home finance business. Sandeep Bakhshi, the deputy managing director, and the current head of retail, will now look after corporate banking. (ET)

BSE Plans CDSL Takeover, Up Stake - BSE, which already owns 36.6% in the depository Central Depository Services (India) Ltd (CDSL), has approached the firm with an informal request for preference shares to increase its stake to 51%. This proposal was rejected and now BSE is planning block CDSL's proposal of buying office space in Mumbai for Rs65 crore.
CDSL is now headquartered in BSE-owned Phiroze Jeejeebhoy Towers in Mumbai. (Mint)

Eight Telcos Apply For 3G, BWA - The Government has so far got applications from eight telecom companies to bid for third generation (3G) and broadband wireless access (BWA) spectrum. Bharti Airtel, Reliance Communication, Tata Communication, Tata Teleservices, Vodafone Essar, Etisalat DB and Tikona. Qualcomm had submitted its application on Wednesday. Bharti Airtel, RCom, Tata Tele and Etisalat DB have expressed interest in bidding for 3G spectrum. (HinduBusinessLine)

Manthan Eyes Acquisitions - Venture capital-backed Manthan Systems, which provides retail analytics solutions, is looking to acquire companies with expertise in retail business intelligence. It is also planning an expansion into markets like Latin America, Eastern Europe, Baltic States and South-East Asia. It is eyeing a turnover of $18 million this year with about 65% of the revenues coming from the US and Europe. (HBL)

Unitech May Spin Off Non-Core Assets - Indian real estate group Unitech is planning to spin-off its non-core businesses that include power, hotels, telecom and special economic zones. This move, as media reports suggest, is part of company’s plan to attract private equity investments, or to sell the businesses. The company plans to utilise the fund in reducing the company's debt, which is currently Rs 6,200 crore. (Reuters)

Genpact Share Sale To See GE, General Atlantic, Oak Hill Pare Stake

Sarimul I Choudhury — Wed, 17 Mar 2010 04:14:35 -0700

The latest share sale of investors in outsourcing major Genpact will see its original promoter General Electric's stake falling to half of its current 18.3%. Private equity firms General Atlantic LLC and Oak Hill Capital Partners, along with Wachovia, are also in on their holdings in the New York Stock Exchange outsourcing major.

The deal could see the shareholders raking in around $417 million, according to the current trading price of $14.91 of Genpact. This amount can go up to $485 million if the option for allotment of additional shares is exercised.

The issue consists of 28 million shares, of which 20 million are being sold by GE Capital (Mauritius) Holdings, which will see its shareholding fall from 18.3% to 9.14%. The remaining 7 million shares will be sold by Genpact Investment Co, an investment vehicle owned by General Atlantic and Oak Hill, whose stake is expected to fall to 45.74% post this transaction. The remaining shares will be sold by Wells Fargo & Co.

Genpact recently acquired Symphony Marketing Solutions, Inc, a provider of analytics and data management services with expertise in retail, pharmaceutical and consumer packaged goods industries. Genpact had net revenues of $1.12 billion in 2009, of which around 40% came
from GE.

The present offering would be the second major liquidity event for the shareholders of Genpact. India's largest outsourcer was listed on NYSE in 2007, where it raised $494.1 million through an issue of 35.2 million shares. Of this issue, half consisted of a share sale by GE, General Atlantic and Oak Hill.

At the current market capitalisation of $3.25 billion, both General Atlantic and Oak Hill's remaining stake would be valued at $1.48 billion. The two PE firms bought a 60% stake Genpact in 2005 for a reported $800 million.

Strides May Sell Stakes In Generic Pharma; To Push Specialty Biz

Madhav Chanchani — Thu, 18 Mar 2010 03:25:52 -0700

Bangalore-based mid-sized and deal-savvy Strides Arcolab is open to private equity fund-raising and even divestment of its generic pharma business as it chases an acquisition-led growth to push its core sterile injectables business to the top 10 league globally within 2-3 years.

"Steriles will be our engine of growth. If you want be aggressive in steriles, it cannot be through organic growth only. The growth opportunity with investments, especially through inorganic route, is high in this domain," Arun Kumar, Vice Chairman and group CEO, Strides Arcolab told VCCircle.

The firm's steriles play centers around oncology, opthalmics and peptides and is at the heart of its specialty pharma operations, identified as the key business unit for the company.

On Thursday, it announced the buyout of Aspen's stakes in existing oncology joint ventures for $117 million. Last week, Strides Arcolab unveiled a $75-million buyout of Aspen's manufacturing facility in Brazil focused on penems, used in patients with a history of openicillin allergies, as part of its sharpened focus on sterile injectables.

Kumar said, the recent company restructuring provides him with options to grow the steriles business aggressively and inorganically. Strides Arcolab bifurcated the operational structure under two fully owned subsidiaries, one focused on legacy pharma and the other on specialities and R&D.

"If we need $200-300 million to grow specialties, we have multiple options now. Do we exit pharma or do we bring in private equity? These options are there today. There is no steady state situation in Indian pharma. Everything is moving parts. While convergence may be there for two years, big pharma will suddenly come in and say it is all wrong," he explained.

Kumar added there was the enabling option of raising funds in the specialty unit. "But, obviously that means, we will bring only financial investor and not strategic. We will bring in only somebody who has no control because this is a powerful business for Strides," he said.

The company reported full year revenue of $275 million in 2009, with sterile injectables and R&D contributing $77.5 million. The company's specialty arm has had an industry record of 44 filings with USFDA last year, as the market potential of its R&D pipeline is now estimated at $5 billion. The firm's R&D market potential has grown nearly 10x from around $500 million in 2008. Strides has projected specialties business revenue to jump 50% in 2010 on the back of significant licensing deals with big pharma companies such as Pfizer and Glaxo Smithkline. The legacy generic pharma operation is expected to report 10-11% increase during the year.

One of the purposes of the restructuring was to bring in a change of perception and to improve the stakeholder value. "As we spend our resources on steriles, investing around Rs 600 crore on Rs 300 crore operations, we need to convey a message that we are doing it for solid reason. Most of our business deals, with Pfizer and GSK, are in this specialty business because this where there is arbitrage and margins for two companies to share. I need to do two dollar worth of other business to match one dollar in steriles," Kumar said.

Globally, the assets in steriles are not cheap with multiples on revenues and not on EBITDA. The last deal was done at eight times revenues signaling the high asset costs.

Strides is furthering its corporate restructuring exercise as it intends to hive off branded pharma into a separate unit, fleshing it out of generic pharma. This will see the company consolidating its branded business spread across Australasia, Africa and India into a single Rs 700 crore business this year. A recent move to delist Ascent Pharmahealth Ltd from Australian exchanges was part of this strategy.

"Australasia is the biggest part of the branded business, and we owned only 57% there. Going forward, Strides Arcolab will have three separate operating units in generic pharma, branded pharma and specialties but with consolidated ownership," he said. This arm will also include Grandix Pharmaceuticals, acquired in 2007, which gave Strides access to growing brands like Renerve in the Indian market.

"With brands, even though it is stretched for margins, it is superb on cash flow and then you own the IP. So if you steadily improve margins, then it suddenly becomes a great business in 3-4 years. There is ownership in branded business and there is technology in steriles," Kumar elaborated.

But, Kumar said, it was too premature to take any call on the pharma business even though it was highly competitive with low margins. "Strides wants to grow through partnerships. From that perspective, one can argue that pharma does not fit into our strategy as there is no arbitrage scope for two partners in it. But from a manufacturing point of view, without all these expenses of a global corporate, it is still a viable business," he said. "The legacy business is there, and at an appropriate time we will take a critical look at it. So, am I going to sell, my answer is we do not know. Whether we will look at options, there should be compelling reasons for any entrepreneur to look at them," he added.

The promoter stake in Strides Arcolabs has been steadily climbing in the last 18 months, touching 30% now. "The promoters had subscribed to warrants when the share was quoting at Rs 60 almost two years ago. We invested quite a bit in recent times, but it was easy to do as we seemed to be the only ones believing in the story," he quipped. Kumar also unlocked some of his personal investments to plough it back for shoring up the promoter stake.

The company has also improved its leveraging options with improvements in EBITDA and a significantly lower debt equity ratio, which stands at 1.73. "Besides FCCBs, the company debt is Rs 400 crore and it has been constant since 2007," he said. The company has FCCBs worth $40 million coming up for conversion in April 2010 and another worth $80 million coming up in 2012.

Welspun Arm Buys Majority Stake In Construction Firm

Sarimul I Choudhury — Thu, 18 Mar 2010 05:32:11 -0700

Welspun Gujarat Stahl Rohren (WGSRL), the flagship company of line pipe and home textile major Welspun, is acquiring a 75% in MSK Projects India Ltd for around Rs 400 crore. MSK is a Vadodara-based company, and is engaged in the construction of road and water pipeline. The deal will mark Welspun's foray into the infrastructure market.

The acquisition will be made through Welspun’s infrastructure arm Welspun Infratech Ltd. The company said in a statement that the acquisition helped it foray into infrastructure space, as well as to expand its operation into line pipe segment. MSK, which is listed on the bourses, has turnover of around Rs 450 crore.

BK Goenka, chairman and managing director, Welspun, said in the statement, “the acquisition is an important milestone for Welspun. It helps us in making direct entry into the infrastructure space.”

Welspun has already received the approval of the board of directors, and plans to complete the acquisition in the next three months. Welspun will pay around Rs 400 crore for the acquisition, out of which Rs 211 crore is being infused in MSK through a preferential allotment for further growth. Welspun Gujarat will make an all cash transaction for the deal. Welspun is also picking up most of the stake held by current promoters of MSK, which stands at 21.68%, for a sum of Rs 62 crore.

Welspun would get a majority stake of 54.8% in MSK through preferential allotment and promoter stake buy. While the fresh allotment is being made at Rs 123 per share as per SEBI ICDR regulations, the promoter stake has been bought at Rs 130 per share. The shares of MSK closed at Rs 128 on Thursday.

Welspun plans to increase its stake further to 75% in the company by making a mandatory open offer to the shareholders of MSK, the statement added. Subhkam Ventures, a private equity firm, which currently holds (pre-dilution) a 23% stake in MSK is one of the major shareholders in the company. The PE firm bought into the company in 2007 at Rs 84 a share.

MSK is engaged in roads and industrial construction through public-private partnership (PPP) model. It owns and operates several BOOT (build, own, operate and transfer) assets in road and water sector.

Morgan Stanley Appoints PJ Nayak As India Head

Sarimul I Choudhury — Thu, 18 Mar 2010 04:01:23 -0700

Wall Street bank Morgan Stanley on Thursday named PJ Nayak, the former head of India's Axis Bank, as its new country head and chief executive for India.

Nayak, who stepped down in April 2009 after nine years with Axis Bank, will take up his new post on April 5, Morgan Stanley said. He replaces Narayan Ramachandran, who quit in January.

Nayak was currently working as an operating partner at Advent International Private Equity and non-executive chairman of Motilal Oswal Asset Management Company, said the Morgan Stanley statement.

Foreign banks are looking to boost their presence in India, as companies in Asia's third-largest economy look to grow their businesses overseas through acquisitions and tap the capital market.

Bank of America Merrill Lynch said last week it was hiring JP Morgan's India equities head to run the bank's operations in the country.

Morgan Stanley-Led Consortium To Invest $425M In Asian Genco

Madhav Chanchani — Wed, 17 Mar 2010 04:05:00 -0700

In the largest PE deal in almost two years and the largest in the power sector, Asian Genco Pte Ltd (AGPL), which has investments in Indian power generation assets and engineering services businesses, has raised commitments of over $425 million from a consortium of investors. The investor group, led by Morgan Stanley Infrastructure Partners (MSIP), includes Norwest Venture Partners, General Atlantic LLC, Goldman Sachs Investment Management, Everstone Capital and others.

The last PE deal of a similar magnitude came when Providence Equity Partners invested $428 million in Aditya Birla Telecom Ltd, a transaction that closed towards end of 2008. The largest investment in power sector so far was Indiabulls Power's $395 million mop up from hedge fund Farallon Capital and steel tycoon Lakshmi Mittal's LNM India Ventures.

PTC India and its financial arm PTC India Financial Services, which have investments in various projects of AGPL, continue to remain investors in various portfolio projects along with other existing investors, according to a statement.

AGPL is currently developing a portfolio of 4,000 MW which involves a capital outlay of around $4.5 billion. These include assets in areas like hydro, thermal and non-conventional generation which once commissioned will be one of the largest portfolio of investments in power assets in the country.

AGPL will use the proceeds, which are expected to flow over a period of time, to fund the development of its portfolio of power generation investments in India. Zeus Inframanagement was the sole advisor to AGPL on this transaction.

"With this transaction, we have secured full equity financing for all our current slate of projects. In addition, we believe our investors will add tremendous value and financial strength to AGPL as we grow our portfolio and expand our leadership position in the clean power sector," said Vijaykumar T V, Chairman of AGPL.

Differentiated Assets

AGPL's investments in power generation assets are differentiated and highly attractive, said Gautam Bhandari, head of Morgan Stanley Infrastructure in India. Currently AGPL has two assets under operation - a 16MW hydro project called Patikari in Himachal Pradesh and 17 MW
thermal gas project called Srivathsa in Andhra Pradesh. A 100 MW hydro project called Malana - II (in pic) in Himachal is also expected to be commissioned soon.

"AGPL has a portfolio of unique assets. If you compare them to their peers, they have a differentiated portfolio," said Sohil Chand, managing director with Norwest Venture Partners.

AGPL's portfolio comprises the 1,200 MW Teesta III in Sikkim, the largest hydro project in the private sector in India, which is expected to be commissioned in 2012. The Teesta project is competitive from a cost perspective, is in an attractive region and produces peaking power.

"Teesta is a remarkable asset, which is a relatively compact project and because of its geography and hydrology of the area, is able to generate more power than a project of a similar size elsewhere," said Chand in an interview with VCCircle.

Another one of its mega projects is in the state of Andhra Pradesh in called East Coast Energy Pvt Ltd, being implemented in two phases, with each phase constituting 1,320 MW. This project is attractively located near the coal linkage near the coast, so access to imported coal is easy.

"They are located in the southern grid, where there is maximum energy shortage. So we think they will be able to command premium pricing," said Chand. This would be the first deal for Norwest in the Indian infrastructure space and the first from its new $1.2 billion Norwest Venture Partners XI in the country. Its other recent investments include National Stock Exchange and Shriram City Union Finance.

"The management team is best in class team and as importantly they have an in house engineering services business, which has expertise in building the power projects," added Chand. AGPL has a team of over 250 specialised hydro and thermal engineers who have over 1,600 years of development experience.

Power Sector Attractive, But Dealmaking Not Easy

The Indian power sector continues to be an attractive bet for private equity investors in country where demand outstrips supply. Most Indian PE players have a macro thesis on the space and are eyeing deals in the space. Two power firms, the 3i Group-backed Adani Power and Indiabulls Power went for a listing last year.

But Chand says that investing in this sector can be a tough cookie to crack with issues in diligence, myriad licenses that are needed and regulatory conditions, among others.

"I think power is also a challenging sector to invest in. In a deal like this one, it has taken over a year of due diligence and huge efforts by all the consortium parties to close," said Chand.

The power sector has seen a rising interest and pick up of deal activity since last year. Hyderabad's Ind-Barath Power Infra Ltd has raised $100 million in funding from Sequoia Capital India, Bessemer Venture Partners and returning investor Citi Venture Capital International (CVCI).

IDFC Project Equity has been a prolific dealmaker in the space by closing investments in Essar Power, Adhunik Power and Natural Resources and GMR’s Kamalanga Energy SPV last year.

"It's very difficult to get a project to a stage where an external investor will invest in and there is a lack of funding," adds Chand.

Sequoia Capital Exits Times Internet

Sarimul I Choudhury — Thu, 18 Mar 2010 02:46:31 -0700

Private equity firm Sequoia Capital India has exited from its investments in New Delhi-based Times Internet Limited (TIL), according to a report in Medianama. The $7-million investment in Indiatimes was made in late 2005 by WestBridge Capital Partners, which was later acquired by Sequoia in 2006.

Reportedly, TIL has bought back the shares issued to WestBridge. However, Sequoia’s return and the valuation at which the firm made its exit could not be ascertained. When contacted, Sequoia Capital said, "we won't be able to share any comment here."

Times Internet is the digital venture of media conglomerate Bennett, Coleman and Co. Ltd (BCCL). It provides internet and mobile value-added services. The company has recently expanded its operation adding ecommerce, online advertising, online money remittance services and online classified advertising.

The company has also been exploring opportunities to expand through the inorganic route. In 2008, it acquired 50% stake in US-based Webnotions Books India, which runs online book marketplace called A1Books.co.in.

Some of Sequoia’s other investments in Indian online space include Apnaloan.com Services Pvt Ltd, TutorVista.com, Shadi.com and ticketing site Via.

VCCircle Runway: Calling Startups In Bengaluru

Madhav Chanchani — Wed, 17 Mar 2010 00:23:03 -0700

To raise a toast to Bengaluru's uninhibited entrepreneurial streak, VCCircle debuts its concept Runway, a platform for startups to showcase their fledgling business to potential investors and customers, in India's Silicon Valley.

The new event-in-event format presented by VCCircle, Runway--akin to an airport runway or a fashion ramp runway--aims to put the spotlight on eligible startups and bring them a few steps closer to the next level, be it funding, new team, clients or simple business tips from a distinguished panel of venture capital experts.

Styled as an easy take-off platform for mature startups, Runway will be part of all VCCircle theme-based and destination-specific investment conferences, that are well-attended by private equity funds, investment banks, and other professional services firms. VCCircle, an online media vehicle that tracks the venture capital and private equity ecosystem, targets to discover and feature Runway startups on its site, which will give them bragging rights, exposure, customer and investor attention!

So, if you are a startup with annual revenue of over Rs 25 lakh, angel/seed-funded and have been around for two or more years, then Runway is the right platform for you.

The first edition of Runway, which will kick off on March 24 under the banner of VCCircle Bengaluru Investment Forum 2010 in the city, will showcase six such startups who will have the opportunity to showcase their plans. (Click on the link for more details).

VCCircle has also put together a star panel of venture capital firms who are the best-known names in the industry. Shortlisted startups will get the opportunity to present their plans to heads of these VC firms who have invested in companies such as Telibrahma, Redbus, Flipkart, Kaatizone, BharatMatrimony, iYogi, UnitedLex, Billdesk and Elbee Express.

Srini Vudayagiri, Founder, Stega Capital (a new fund); Subrata Mitra, Partner, Accel Partners; Alok Mittal, Managing Director, Canaan Partners; and Samir Kumar, Managing Director, Inventus Capital Partners and Rahul Khanna, Director, Clearstone Venture Advisors, are the distinguished Runway panelists who will hear the Runway proposals and presentations.

Runway could not have made its debut from a more apt location, Bengaluru, which is considered India's startup capital. The salubrious city is a melting pot of entrepreneurial activity although its flavor may be skewed towards technology. Experts reckon that there are interesting startups emerging in non-tech areas and in technology targeted to address the domestic market.

With hundreds of startups and an ecosystem that boosts the innovation DNA, Bengaluru is the popular hunting ground for investors. With marquee institutions and corporate houses such as Indian Institute of Science, Indian Institute of Management, Hindustan Aeronautics, Texas Instruments, Microsoft Research, Intel, Cisco and the like, there is an environment that exists for professionals to take the entrepreneurial path, often leaving their cushy jobs behind.

That is the ecosystem advantage.

Runway hopes to capture this entrepreneurial spirit and diversity in its Bengalure edition. Will a Runway debut company be the next multi-million dollar game-changer?

Elder Pharma Ups Stake In Bulgarian Arm To 61%

Sarimul I Choudhury — Thu, 18 Mar 2010 03:04:52 -0700

Elder Pharmaceuticals Limited has hiked stake in its Bulgarian subsidiary Elder Biomeda AD to 61% from the present 51% for an undisclosed sum. The balance 39% stake in Elder Biomeda AD is held by the original owners of Biomeda group.

In April 2008, Elder had formed a subsidiary in Bulgaria called Elder Biomeda AD, which acquired 100% equity in three leading Bulgarian healthcare companies belonging to the Biomeda group. The original owners of Biomeda Group companies were in exchange given 49% shares of Elder Biomeda AD at that time.

This is a move by the company to capitalise on the low infrastructure and production costs existing in EU & CIS markets. It has an aggressive expansion plan to reach a turnover of Rs 1,000 crore by 2012.

“This shall be our strategic gateway to the EU & CIS Markets. Bulgaria offers low infrastructure cost (compared to other EU countries), lower production and labor cost and low construction cost as compared to other EU countries. Additionally, the WHO GMP approved and USFDA
compliant seven manufacturing units of Elder in India will offer its nutraceuticals product range internationally acquired companies”, Alok Saxena, Director International, Elder Pharmaceuticals, said in a statement.

Of the three companies one has a manufacturing unit for formulations, another is a distribution company for pharmaceutical and allied products and the third is a logistics company with strategically located warehouses.

Biomeda group is among the top 10 distributors & manufacturers of oral dosage pharmaceutical formulations in Bulgaria. Elder is planning to quickly spread in major regulated markets with specific focus on EU & CIS countries. The Bulgarian entities will launch many products in the next 8-10 months in that region.

Europe remains an attractive market to launch pharmaceutical products in, because centralized regulatory ruling allows for immediate access to all member states. Also, EU expansion to 27 countries offers greater market opportunities. By 2012, Elder is targeting a pan-European presence, covering all the key markets of Europe which will be the stepping stone towards spreading its footprints across the world – both in regulated as well as unregulated markets.

Tata Tele Arm Sells Tower Biz To WTTIL

Madhav Chanchani — Thu, 18 Mar 2010 02:22:17 -0700

Tata Teleservices Maharashtra (TTML), the listed arm of telecom services operator Tata Teleservices, is selling its telecom towers for an enterprise value of Rs 1,318 crore to Wireless-TT Info Services (WTTIL).

WTTIL is the joint venture between Tata Tele and Srei group’s Quippo where the Tata group’s privately held telecom business owns 51% stake.

TTML currently operates services in Mumbai, Maharashtra and Goa circles and, as per the deal, will sell its 2,535 telecom towers, being run by its subsidiary 21st Century Infra Tele, to WTTIL that would bring cash inflow of Rs 900 crore.

This transaction values the towers at Rs 52 lakh per unit, around 10% more than the Rs 48 lakh per tower paid by GTL Infrastructure for acquiring Aircel Cellular’s towers earlier this year. As part of this deal, WTTIL has also received a commitment from 21st Century Tele of around 4,000 towers to be rolled out over five years in Mumbai, Maharashtra and Goa.

WTTIL that was formed last year through a merger of the telecom tower operations of Tata Teleservices — in which Japan’s NTT DoCoMo holds 26% — and Quippo, will now have over 38,000 towers. At the same tower valuation, WTTIL would be worth Rs 19,760 crore or $ 4.4 billion. In January 2009, the combined entity had about 18,000 towers, which gave it an enterprise value of Rs 13,000 crore ($2.82 billion).

The transaction will give strategic advantage to WTTIL with lucrative towers network in Mumbai, Maharashtra and Goa. In a statement, the company said, "this transaction will also bring immense benefit to Tata-Quippo with the 3G and WiMax auctions to be conducted shortly and hence the additional requirements for towers in these strategically important geographies."

Although TTML has not stated what it will do with the cash infusion, the money will allow it to get ready to bid for 3G spectrum allowing the firm to offer next generation mobile services.

Is Prestige Estates Doing A Rethink On Rs 1.2k Crore IPO?

Madhav Chanchani — Tue, 16 Mar 2010 04:31:48 -0700

There are speculative talks that Bangalore-based real estate major Prestige Estates may be "re-thinking" on its proposed plan to raise up to Rs 1,200 crore through an initial public offer (IPO). Prestige had filed its draft red herring prospectus with Securities Exchange Board of India in November last year for the public issue for divesting up to 15%-20% stake.

Sources directly familiar with the development said, the promoter family was in the midst of a re-think, which might see it deferring the plan or even dropping it. The firm is yet to receive a final clearance from the market regulator nearly four months after filing the prospectus. It has appointed Enam Securities, UBS, J.P. Morgan and Kotak Mahindra Capital as its book running lead managers for the issue.

An email sent to Prestige Group chairman Irfan Razack, seeking a confirmation on IPO deferment, did not elicit a response at the time of posting this article. However, Razack replied through a text message, saying, “just to set the record straight, we have not deferred our plans for IPO. We are just awaiting the final nod from SEBI and are fully geared up.”

The three co-promoters are Irfan Razack, Rezwan Razack and Noaman Razack and their family members own 33% each in the company. One source, who did not wish to be quoted, said, the family was still debating whether remaining private was in the best interest of the company's growth ambitions and for the future roadmap being readied by the promoters. In doing this, the promoters have looked at the experience of some city-based realty peers who went public.

"While the work on IPO may be still on, there exists a possibility of them not going ahead with the public issue for the time being at least," said a second source familiar with the situation. "I do not see the issue going through before June this year even if the momentum is stepped up," he added.

Further, the market appetite for real estate issues seems to be evaporating with the last few issues performing badly on debut. The last two listing in this space, DB Realty Ltd and Vascon Engineers, are currently trading below the lower band of their issue prices.

DB Realty, which had slipped by 10% on its debut, is currently trading Rs 456 against the issue price of Rs 468-486. Vascon, which is involved in EPC and realty business, is currently trading at Rs 141.5, a 14% discount to its issue price of Rs 165.

And there is still a long list of realty firms working towards an IPO. This includes over half a dozen players like Emaar MGF, Lodha Developers, Sahara Prime, Prestige Estates, Nitesh Estates, BPTP and Oberoi Realty. While BPTP has said it plans to raise Rs 1,500 crore in the early next fiscal, Emaar MGF and Lodha also have SEBI approval for a Rs 3,850-crore and Rs 2790-crore offerings, respectively, but have not decided on a timeframe for the issues.

"Valuation challenges are significant and the possibility of having to divest more shares than anticipated is real," explained a top honcho at real estate firm, which may be eyeing the public markets in the short run.

Prestige promoters have been running very closely-held operations and have shied away from private placements at the holding entity level several times in the past. The company has attracted private equity funds from CapitaLand of Singapore and Redfort Capital at the SPV level. In context, it is left to be seen if the promoter family would walk the extra mile to convince the market, which is growing skeptical about more realty issues.

One of the reasons behind a possible IPO from Prestige was the fact that the next-generation promoters wanted to run a professional operation, and not being hands-on managers. And a listed entity was seen as better suited to attract professional managers. So a possible rethink and deferring of IPO plans could be dictated by the market conditions as well as a closer scrutiny of the business roadmap for the future.

A large part of its saleable area is in the residential space besides exposure in retail, commercial buildings and hospitality. For the year ended March’09, the company had a total income of Rs 914 crore with net profit of around Rs 77 crore. The realty sector, which suffered a severe slowdown on account of the global crisis, is now slowly recovering with sales picking up and the demand for quality office space now resurfacing.

Nomura Appoints Jesse Bhattal As President Of Wholesale Division

Sarimul I Choudhury — Thu, 18 Mar 2010 00:45:36 -0700

Nomura Holdings, Inc., the holding company of Japanese financial services major Nomura Group, is establishing a wholesale division combining its investment banking and trading businesses. The company has elevated Jesse Bhattal as president and COO of the wholesale division, said a company statement.

Bhattal was previously chairman of Nomura’s Asia operation and was formerly Asia-Pacific CEO of Lehman Brothers. He has over 25 years of experience in the investment banking industry, and was a member of Lehman Brothers' global executive committee.

Apart from Bhattal, Nomura has also appointed Philip Lynch as CEO of Asia ex-Japan. Both the appointments will be effective from April 1, 2010.

The development came days after Sadeq Sayeed, the chief executive officer of Nomura Europe, resigned from his post.

The company states that the creation of the new division will bring greater synergies into investment banking and trading businesses across the regions. Nomura Holdings is engaged in investment and financial services business, with interest on securities businesses.

Takumi Shibata, deputy president and COO of Nomura, will take the charge of chairman and CEO of the wholesale division, in addition to his current responsibilities. Bhattal will be based in Hong Kong, and will report to Shibata about the developments.

On Bhattal’s appointment, Shibata, said, in the statement, “Bhattal’s unrivalled experience and track record in this industry makes him the best possible choice to take our wholesale businesses forward as we accelerate the globalisation of our businesses.”

Lynch, on the other hand, is currently the firm's CEO for the Middle East and Africa, and is responsible for expanding the franchise in that region. He was also a former Lehman Brothers’ executive and a co-head of the firm’s Asia investment banking division. He will also look after the Middle East and African operation, apart from Asia.

Last week, Nomura Securities International, Inc., has announced six key hires in its US convertible bonds sales and trading team. Early this month, the group has also named two hires in Nomura Financial Advisory and Securities India Pvt Ltd, the investment banking business of Nomura in India. The firm has also relocated Minoru Shinohara, CEO for Asia ex-Japan to Tokyo, to run Nomura's global equity and debt capital market new issue businesses.

Perfios Raises $2M From Angel Investors

Shrija Agrawal — Wed, 17 Mar 2010 03:07:06 -0700

Perfios Software Solutions Private Limited, a Bangalore-based personal finance software solutions provider, has raised $2 million from four angel investors.

Perfios has raised the funding from P.S. Pai, former Vice-Chairman of Wipro Group and later Executive Chairman of the Murugappa Group; V. Chandrasekaran, former president of Wipro Systems, managing director of iGate and CEO of Aztecsoft; Ashish Gupta, co-founder and managing partner of Helion Venture Partners and A.G Muralikrishnan, founder and CEO of Ujwal Management Services.

This is the second round of funding for the company which had earlier raised money from angel investors last year. Both Ashish Gupta and V. Chandrasekaran had participated in the earlier round.

The company has been founded by serial entrepreneur V.R Govindarajan, a Founding Member of Aztecsoft, a company in the outsourced software products development space.

Govindarajan told VCCircle that the company’s product was gaining significant traction from wealth managers and independent financial advisors. He added that the monies raised will be used for a pan-India acquisition and aggressive marketing approaches for customer acquisition.

Without divulging the revenue details, Govindarajan said that the company was still not cash positive but had huge plans to scale up. The company currently has a 15-member core team.

Perfios is targeting to increase the customer base to about a million users in three years. The increase in the number of tax payers in the country (over 3.5 crore last year) and the rising internet penetration will be key drivers in growth, it said in a statement.

The product is also updated with the latest regulatory requirements including tax laws.

News Roundup: StanChart Announces Coffee Day Deal

Madhav Chanchani — Tue, 16 Mar 2010 20:58:09 -0700

SantChart Announces Coffee Day Deal - Standard Chartered Plc’s private equity unit has invested $50 million in Cafe Coffee Day chain, reports Bloomberg, quoting a spokesperson of the company. KKR & Co. led a group including Standard Chartered Private Equity and New York-based New Silk Route in investing $200 million in the Bangalore-based company, the Financial Times reported earlier today. VCCircle was the first to report that this deal is in offing. (Business Week)

DE Shaw May Buy 49% in Asset Reconstruction Firm - Hedge fund DE Shaw is planning to pick up a 49% stake in Mumbai-based Pegasus Asset Reconstruction Company in a deal that values the firm at Rs 250 crore. The fund will buy the stake from Bhimjyani family, the promoters of Pegasus, and leading investor Rakesh Jhunjhunwala. As per the proposal, the foreign fund will buy 23% from the Bhimjyani family and 26% from Mr Jhunjhunwala. (Economic Times)

Hinduja Group Eyes European Bank - The Hinduja group is in race to acquire KBL European Private Bankers and has made a bid of over $2 billion. The bank, which has 47 billion euros in assets under management, is being sold by Belgium’s KBC and has attracted bids by Brazilian banking group Safra, Italy’s Exor, private equity firm KKR and Swiss bank Julius Baer. (Business Standard)

ICICI Venture Writes Off Subhiksha Stake - After the corporate debt restructuring (CDR) plan for Subhiksha Trading Services Ltd hit a dead end, ICICI Venture is considering its investment in the company a “write-off” and is struggling to find a buyer. ICICI Venture, which holds about 23% in the retailer, is the largest non-promoter stakeholder in Subhiksha. PremjiInvest, the PE arm of billionaire Azim Premji, had bought a 10% stake in Subhiksha from ICICI Venture in 2008 for Rs230 crore. (Mint)

No Merger Proposal of SBI With Nationalised Banks - The government said there is no proposal for merger of any nationalised bank with the State Bank of India (SBI). This comes even as it has granted approval to SBI to take forward negotiations with State Bank of Indore to acquire its business. State Bank of Saurashtra, an associate bank of SBI, was merged with SBI during 2008 besides SBI's proposal for acquisition of State Bank of Indore, another of its associates. (ET)

PFC Eyes 26% in Power Projects - State-owned Power Finance Corp (PFC) is keen on picking up as much as 26% equity in power generation projects in the country. The firm is working out a policy to decide on picking equity stake in power (generation) projects. PFC provides and arranges finance for projects in the power sector. (BS)

Nissan Scouts For New Partner - Japanese auto major Nissan Motor is open to tying up with yet another partner in India to develop a car positioned between the fourth-generation Micra, the compact car that will go on sale in May in India, and it’s proposed ultra low cost (ULC) car being jointly developed with Bajaj Auto. This would add a fourth partnership in India to the Renault-Nissan alliance’s existing three in India — Bajaj, Mahindra & Mahindra (M&M), with which Renault produces and sells the Logan, and Ashok Leyland, with which it proposes to make a car to compete with the Maruti Suzuki Alto. (BS)

Reliance Eyes JV With Atlas - Energy giant RIL is eyeing a big stake in a US natural gas field, for which it is believed to be putting in $1-1.5 billion. Reliance would pay between $1 billion and $1.5 billion to take a joint venture stake in the gas field Marcellus Shale. This comes days after losing its $14.5-billion takeover bid for global petrochemicals major LyondellBasell. (Times of India)

TCIL To Demerge Real Estate & Warehousing Biz - Transport Corporation of India Ltd (TCIL), an Andhra Pradesh-based supply chain solutions provider, has informed the stock exchanges that the board of directors of the company has approved the demerger of its real estate and warehousing division from the company. The decision is subject to the shareholders’ approval. (Team VCC)