VCCircle Feeds

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.

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.

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.

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)

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.

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)

Will India Do An SWF This Time?

Shrija Agrawal — Wed, 17 Mar 2010 05:25:12 -0700

India, sitting on a $254-billion of foreign-exchange reserves, may create a sovereign wealth fund to help state companies compete for overseas energy assets with China, reports Bloomberg, quoting a government official. The oil ministry has formally asked the finance ministry to set up a fund using a part of the reserves, added the report. The size of the fund is yet to be determined.

This is not the first time that the talks about Indian putting together a SWF have surfaced. An earlier report by Economic Times in 2008 says, the country is looking at creating an SWF of the corpus of about $5 billion. The proposal was, however, turned down by the then Finance Minister P Chidambaram who is quoted as saying in the Rajya Sabha that “there is no such proposal under consideration of the government at present.”

It remains to be seen how such plans play out this time. This is being seen as a move to keep up with the growing ambitions of other emerging nations going big on state owned acquisitions.

China Investment Corp., the country’s $300 billion sovereign wealth fund, last year invested in energy and mineral producers in nations including Canada, Indonesia and the U.S, while India’s government blocked ONGC’s plan to buy the share. ONGC last year bought Imperial Energy Plc for 1.4 billion pounds ($2.1 billion) in India’s biggest energy acquisition. The total energy consumption in India is expected to double by 2030.

While the argument continues on whether India should float such a fund or not, there are various sovereign wealth funds who have already forayed into the country. The current trend being observed is that these SWFs buy into private equity firms thereby giving them an indirect presence in the countries where these PE firms invest.

China Investment Corporation (CIC), sovereign wealth fund from China, with an initial corpus of $200 billion, has already made an indirect foray into India through its substantial $3 billion stake in US-based private equity group Blackstone, giving it an indirect entry into India. The largest sovereign wealth fund active in India, Temasek’s portfolio in the South Asian region (India and Pakistan) has increased from 1% of its total portfolio in 2004 to 7% as on March 2009. Some of the major investments of Temasek in India are ICICI Bank, Bharti Airtel, Tata Teleservices, among others. The fund has infused more equity capital in two of its India portfolio firms in 2009 - DTH player Tata Sky and non banking financial services company Fullerton India.

Religare Technova Buys SRIT's Healthcare Solution Biz

Sarimul I Choudhury — Wed, 17 Mar 2010 05:17:39 -0700

Religare Technova Ltd, the holding company of diversified business group Religare Enterprises, has acquired the healthcare solutions business of Bangalore-based Sobha Renaissance Information Technology Pvt Ltd (SRIT) for an undisclosed sum. The acquisition will bring SRIT's over 100 employees in Religare’s fold, it said in a statement.

VCCircle was the first to report about the deal in January this year. The earlier report suggests that Religare will be paying between Rs 20 crore and Rs 25 crore for this deal. SRIT has an annualised revenue run rate of Rs 140 crore. The contribution of the healthcare business to the revenue is not known.

PNC Menon, the chairman of real estate firm Sobha Developers, holds a substantial minority stake in SRIT. The other promoters of the firm include Madhu Nambiar and Giri Devanur.

Religare says, the acquisition is in line with the company’s long term plan to become the market leader in healthcare IT in Asia in the next three years. “Domain focus is what drives our IT services strategy” said Sanjay Padode, CEO, Religare Technova, in the statement.

Religare Technova has been planning for an integrated IT solution company in health care space that offers both IT services and solutions catering B2B and B2C market place. It focuses on clients in verticals such as financial services, insurance, capital markets and health care and pharmaceuticals. Religare currently has operations across 10 countries including Middle East, US, Europe and Asia.

Sobha had been providing hospital information system (HIS) under its technology suit called Magnum. Apart from healthcare, telecom and enterprise are the two other domains of SRIT's services play. As per earlier VCCircle report, SRIT is also in discussion with other suitors for the sale of its telecom and enterprise businesses either in a single transaction or by way of two separate deals.

Religare Technova stocks closed at Rs 38.25, down by 0.52%.

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.

Chennai MFI Smile Raises Rs 50Cr From US Fund

Sarimul I Choudhury — Tue, 16 Mar 2010 02:20:26 -0700

Smile Microfinance Ltd, a Chennai-based microfinance institution (MFI), is raising Rs 50 crore from Developing World Markets (DWM), a US-based fund manager. Smile has so far invested over Rs 577 crore, and claims a recovery rate of 99% across investments, said a company statement.

This is the maiden equity investment of DWM in an Indian MFI, the statement added. The investment was made through DWM Microfinance Equity Fund, a $82-million fund managed by DWM. Grameen Capital India has acted as advisor to Smile in this transaction.

Smile has started its operation in 2004 and has reached three lakh household in the last five years. It currently has 95 branches across 12 districts in Tamil Nadu. It plans to reach out to 2.5 million customers over the next five years, with a total capital of over Rs 1,500 crore.

N Sethuraman, chairman, Smile, said, in the statement, “the transaction is a strong demonstration of confidence in the ability of our management team to be able to execute the goals we have set for the business.”

Bradley Swanson, partner at DWM commented, in the statement, “Smile offers us the perfect opportunity to build on our global strategy of partnering with socially-committed MFIs.”

DWM is an asset manager and investment bank dedicated to making socially positive investments to promote sustainable economic development. It provides both debt and equity investmenst in MFIs and other socially motivated organizations. It currently has $600 million assets under management, and has invested in over 100 microfinance institutions in over 30 countries globally.

Some other Indian MFIs which have raised funding in the last few months include Grameen Koota, Asirvad and Grama Vidiyal Micro Finance Ltd.

HSIL To Buy Havells' Faucet Biz

Sarimul I Choudhury — Wed, 17 Mar 2010 03:36:05 -0700

HSIL Ltd, a Kolkata-based company engaged in manufacturing sanitaryware products, is acquiring the faucet business unit of Havells India Ltd.

Though the company did not disclose the financial details, it said, it will be an all-cash transaction for the deal.

HSIL is acquiring Havells’ manufacturing plant in Rajasthan. The unit manufactures chrome-plated brass bathroom fittings and accessories. Havells, the New Delhi-based company, is a market leader in electrical switch gears and lighting equipment in industrial and home use category.

Private equity firm Warburg Pincus holds around 15% stake in Havells. The company has also raised funding from SAIF Partners and Henderson Equity Partners.

HSIL states that the acquisition will help it grow in this segment to become the second largest player in faucet business in one year. It retails its sanitary ware products under Hindware brand, through exclusive and multi-brand outlets. The company runs its exclusive retail store under Evok.

It also manufactures and retails kitchen appliances and wellness products. The company plans to expand its exclusive outlets in other parts of the country to have a pan-India presence. The other major players in this category include Cera Sanitaryware Ltd and Parryware Roca Pvt Ltd.

According to a recent study by research firm KPMG, the sanitary and bathware segment has been growing at 12% -15% year-on-year. The market size is estimated at $500 million, while the organised sector contributes over half of the total sales by value. The study also figured the energy efficient lighting solutions market, which was growing at 30% in 2008, much faster than the bath ware segment.

The stocks of HSIL were traded at Rs 79.15, up by Rs 1.35, or 1.74% in the BSE. At that current price, HSIL has a market capitalisation of Rs 435.05 crore. Net sales and net profit of the company in the financial year 2009-10 were Rs 615.78 crore and Rs 32.67 crore, respectively.

Wearing a Bullseye on Your Business - WalMart

Shrija Agrawal — Wed, 17 Mar 2010 03:17:05 -0700

One of the worst impacts of Defend & Extend Management is the placement of a bullseye on your business. Take for example Microsoft. When everyone knows what software Microsoft is going to release, they start targeting it for hacking and otherwise spoiling. Likewise, competitors can predict Microsoft's moves and launch products that compete alternatively - such as Firefox and recently Chrome have done in Browsers. And has cloud computing using mobile devices. As leaders take actions to Defend & Extend the Success Formula the business becomes predictable, and much easier to attack.

And that's now a big problem for WalMart. Advertising Age is now discussing this problem at the world's largest retailer in "Stuck-in-middle Walmart Starts to Lose Share." As WalMart kept promoting, over and over and over, its message of "low price" (how many "rollback" ads did you see on television with images of falling price signs?) a single position was drummed home.

But while WalMart did this, smaller and more nimble competitors like Dollar General have actually been able to undercut WalMart on price - sucking away customers. Additionally, changes to improve margins in WalMart stores, and some redesigned stores, have caused prices to go up at WalMart making the company no longer the price leader! In several categories Target has beaten WalMart in professional pricing surveys! What happens when WalMart, with its concrete floors, limited merchandise and lowly paid employees is no longer the price leader?

Unfortunately, not everybody wants low price - especially all the time. And smart competitors like Target have been figuring out how to beat WalMart on specific items, while also offering a better shopping experience. While WalMart keeps trying to cut prices on the backs of vendors, thus not being the favorite customer of most, Target and others have been smarter about making deals which offered more win/win opportunities. They took specific aim at weaknesses in WalMart's strategy, and are now ruining WalMart's day by beating WalMart selectively while simultaneously offering more! WalMart made it possible by signaling its strategy and tactics so clearly. A result of Defend & Extend management.

WalMart would like to move away from being strictly low price. As the article details, the company has implemented a "project impact" intended to upgrade stores and make them more merchandise and experience competitive. However, this has raised prices and confused shoppers. If WalMart isn't "low price" what is it? Again, when management is all about Defend & Extend then customers aren't able to understand behavior that is different from doing more of what was always done.

WalMart's move to upgrade stores is laudable. But the company cannot implement a change through the traditional store operations. Phoenix Principle companies know that good new ideas cannot survive as part of the existing D&E business. Confused customers, unhappy and confused management and conflicts with historical metrics (like pricing and margin metrics) simply makes the new idea "out of step" with the Success Formula. And as Lock-ins (like "we are low price") are violated discomfort leads to resentment and a desire to get back to old ways of doing business. People start asking for a "return to the core of what made us great." For these reasons, "project impact" is not succeeding and has no real chance of succeeding.

WalMart is in trouble. It's growth has slowed as competitors are figuring out other ways to compete. Ways WalMart cannot follow. Competitors are picking apart the WalMart strategy, and siphoning off revenue and profit. Walmart is stuck in the Swamp, with no idea how to regain growth because the old approach has rapidly diminishing returns and the new approach is not viable in the organization.

To succeed, WalMart needs to apply The Phoenix Principle to "project impact." It must first develop its future scenario, and start spreading that message throughout WalMart and analysts.

Otherwise, confusion will remain dominant. Secondly, WalMart must be honest with employees, customers, vendors and analysts about changing competition and how WalMart must change to remain competitive. It must talk less about WalMart and more about competitors and market shifts. Thirdly, WalMart has to be willing to Disrupt itself. Instead of all the incessant "rah rah" about the great "WalMart way" of doing things top management has to start saying that it is going to attack some lock-ins. It is going to force some changes. Then, "project impact" needs to be implemented in White Space. It needs to report outside the existing WalMart operations, have its own buyers, merchandisers, employees (maybe even allowing a union!). It needs permission to violate old Lock-ins in order to develop a new Success Formula, and the resources committed to really do the implementation - including testing and changing.

WalMart is Locked-in and its Defend & Extend Management approach is not good news for investors, vendors or employees. We can see that competitors, from on-line to the traditional Target, are taking shots at the bullseye Walmart has so proudly worn. Market shifts are happening. But WalMart is not establishing White Space to develop a new solution, and as a result the leadership is confusing everybody about "What is WalMart"? The company doesn't need to go back to its old ways - instead it really needs to apply The Phoenix Principle. But so far, D&E Management seems to be leading.

Nigeria Dispute Unlikely To Thwart Bharti-Zain Deal

Sarimul I Choudhury — Wed, 17 Mar 2010 02:10:51 -0700

Bharti Airtel looks set to land its $9-billion purchase of Zain's African assets, overcoming a stumbling block posed by an ownership spat over Zain's Nigerian units.

A dispute between Zain Nigeria and South Africa-based Econet Wireless Holdings -- a minority shareholder -- had been a complication in Indian group Bharti's third effort to get its hands on a meaningful business in Africa.

But a team of bankers from UBS, which is advising Zain, visited Nigeria with Bharti Chairman Sunil Mittal last week, sources familiar with the situation said.

They indicated the two parties had worked their way around the problem, though they did not say how.

"The Nigeria situation didn't come as a surprise to anyone and won't derail the deal. We are hopeful that an agreement can be reached by March 25," one person familiar with the deal said, referring to the date on which exclusivity expires.

Bharti, which failed twice before to acquire the continent's biggest mobile operator MTN does not want to do the deal with Zain without the Nigerian unit -- roughly a third of Zain's African business -- one of the sources said.

Bharti, 32-percent owned by Singapore Telecommunications, regards the Nigeria dispute as a "seller's issue", according to people familiar with its thinking, and Mittal has played down any concerns over the conflict.

Bharti also came closer to lining up financing this week, sending a term sheet to a shortlist of banks to raise $8.5 billion in offshore loans, sources said.

The two sides are still working towards the deadline, the sources said, and both have plenty of incentive to complete a deal, including a $150-million breakup fee on either side.

Bharti is desperate to succeed in its third push into the fast-growing African market, while Zain -- a Kuwaiti group -- is keen to lock in what many regard as a high price.

RIGHTS BREACHED?

Econet -- the firm at the centre of a dispute with Zain -- has not had any contact to resolve the dispute despite the looming takeover, sources told Reuters on Tuesday.

"We've had no contact from Zain in trying to resolve this out of court," one person familiar with Econet said, adding that the group was not looking for a financial settlement.

"We're a mobile operator and want to be present in an important market," the person said.

Econet, which owns 5 percent of Zain's Nigerian assets, is seeking to overturn a 2006 deal by Zain -- then called Celtel -- in which it bought a majority stake in Nigerian mobile operator called Vee Networks Limited, now Zain Nigeria.

The South African group was a founding shareholder of Vee Networks and said that its right of first refusal was breached when its Nigerian partners sold the shares to Zain.

Zain is selling the 65 percent it owns in the Nigerian operations to Bharti Airtel, and the Indian group will leave existing minorities in tact.

Broad Communications Ltd, another minority shareholder in the Nigerian unit, has welcomed the divestment because it thinks Zain has done a poor job in running the company.

The sources did not say what solution Zain and Bharti had found, though one source ruled out that Zain would offer the Indian group indemnity. An out-of-court settlement is one other option sometimes mooted by deal observers.

Nigeria's legal system is notorious for delays in dispensing judgment and it could be very expensive to prosecute a case from start to finish.

Bharti declined to comment.

ANY OTHER BIDDERS?

Other pitfalls would be any nasty surprises unearthed in Bharti's due diligence process. A better bid for Zain's operations in 15 African countries could emerge if a deal is not sewn up while talks remain exclusive.

The prospect of a higher bid for the Africa assets can't be ruled out, but any such offer would need to be sufficiently rich to cover Zain's breakup fee as well as renewed execution risk after Bharti and Zain have come this far.

"It is not unthinkable but unlikely that there will be a rival bid," said Emeka Obiodu at research firm Ovum.

Last year, Zain rejected an offer from France's Vivendi for its Africa assets. China Mobile, the world's largest cellular carrier, has the cash but not necessarily the marketing and operational expertise to thrive in fiercely competitive and high-risk overseas markets.