VCCircle Feeds

MakeMyTrip To Buy Bus Ticketing Site Ticketvala.com

Sarimul I Choudhury — Tue, 09 Feb 2010 06:21:33 -0800

MakeMyTrip (MMT), India's largest online travel company, is reportedly in the final stage of discussions to buy Ticketvala.com, a Mumbai-based provider of online bus ticket reservation services, according to a report in Medianama. Ticketvala.com is the flagship
brand of Travis Internet Pvt Ltd.

When contacted by VCCircle, Deep Kalra, founder and CEO of MakeMyTrip, declined to comment on this development.

Ticketvala.com has raised venture capital funding of $2 million from Footprint Ventures, a Bangalore-based venture capital firm, in 2007.

Apart from bus services, Ticketvala also provides car hiring and bus hiring facilities in some select cities such as Bangalore, Hyderabad, Chennai, Mumbai, Pune, Ahmedabad and Delhi. Recently, it has also introduced travel packages (travel, food and stay) for two popular tourists’ destinations, Goa and Manali.

The deal, if materialises, will further strengthen MMT’s reach in bus servicing in North and Central India. Other businesses of MMT include air ticketing for both domestic and international passengers, rail ticketing, car and taxi rentals, holiday packages and hotels.

The company targets revenue of Rs 2,500 crore in the financial year ending March 2010, according to data available in the company website.

MMT has raised funds from private equity fund Sierra Ventures and two venture capital funds that include SAIF Partners and Helion Venture Partners.

NetAmbit Gets Rs 50 Cr From Helion, Bessemer

Madhav Chanchani — Tue, 09 Feb 2010 03:56:15 -0800

NetAmbit InfoSource & e-Services Pvt. Ltd, a financial products distribution company, has raised Rs 50 crore in a second round of funding led by Helion Venture Partners. Bessemer Venture Partners, which invested in the company in 2007, has also participated in this round by investing Rs 10 crore. The funds will be used by NetAmbit to expand into newer markets through diversified distribution channels.

The investment is the first by Helion in the financial services sector. The deal is one of the largest standalsone investment by Helion, said Rahul Chandra, director with Helion in an interview to VCCircle. He added that a distribution business depends on the size and NetAmbit has already achived a good size to expand further. Though the company will continue to focus on the Indian market, it will ontinue to expand its product offering in the future.

The 10-year-old company today claims to be one of India’s largest financial products distribution companies. Noida-based NetAmbit follows a ‘hub and spoke’ model of distribution in the insurance and financial products industry.

NetAmbit plans to use its position in life insurance distribution to cross-sell other financial products such as general insurance, mutual funds and loans. NetAmbit currently has a network of over 3500 workstations, 600 field agents and 105 sales locations.

“We expect the growth trajectory in the financial products distribution business to continue to be steep in the foreseeable future as a larger proportion of household savings migrate from traditional financial savings such as jewellery and bank deposits to those products that reflect modern day risk and return potential," said Chandra, who will join the board of NetAmbit.

Helion will continue to look at investments in the domestic consumption space, said Chandra. The venture capital firm, which has around $320 million under management across two funds, has made a spate of investments since mid 2008 in India's consumption space. These include salon chain YLG Salon & Spa, service apartment firm Hummingbird Suites, vocational training firm Global Talent Track and quick service restaurant firm Brand Calculas.

Founder-CEO To Buy Controlling Stake In Sobha Renaissance IT

padmapriya — Mon, 08 Feb 2010 09:41:31 -0800

Dr Madhu Nambiar, founder and CEO of Sobha Renaissance IT (SRIT), has teamed up with Bangalore-based IT entrepreneur Giri Devanur to buy out Sobha Developers Chairman PNC Menon’s entire personal stake in the IT entity, a source close to the development told VCCircle.

Dr Madhu Nambiar and Giri Devanur will together hold 75% stake in SRIT, following this transaction, which values the IT services company at Rs 350 crore at the enterprise level. The duo will be acquiring control in the firm through a management buyout structure. It is understood that Dr Nambiar will hold a controlling stake.

The deal is subject to regulatory and other approvals. Both Dr Nambiar and Devanur could not be contacted at the time of filing this story. Sobha Developers, which holds 20% in the company, will continue to retain its stake. VCCircle had, on January 18, 2010, broken this development that Sobha Developers chairman would exit the decade-old investment in IT services.

As per the earlier VCCircle report, SRIT, with an annualised revenue run rate of Rs 140 crore, was being carved out for strategic sales with Religare Technova close to snapping up the healthcare solutions business. It is understood that the healthcare solutions deal is expected to be announced soon.

News Roundup: Aegon Religare Gets Rs 85Cr Infusion

Madhav Chanchani — Mon, 08 Feb 2010 20:03:59 -0800

Aegon Religare Gets Rs 85Cr Infusion - The founders of Aegon Religare Life Insurance has put in Rs 85 crore of additional capital in the venture to fund expansion. India’s business giant Religare Enterprises owns 44% in the company, while Aegon owns 26% and the remaining 30% stake is with Bennett, Coleman & Co Ltd. The company plans to use the fund to strengthen its distribution network. The venture started operation in India in July 2008. (Reuters)

Kumar Urban To Raise $100 Mn From PEs - Pune-based realty firm Kumar Urban Development is planning to raise up to $800 million through private equity placements in various special purpose vehicles (SPVs) next fiscal. The company is close to signing a deal worth $100 million by April. Kumar Urban has upcoming projects in residential and commercial projects across Mumbai, Pune and Bangalore. (Business Standard)

GMR Energy To Get Rs 1,500 Cr PE Funding - Bangalore's GMR Infrastructure is in advanced discussions with a couple of private equity funds to raise Rs 1,500 crore for its power subsidiary GMR Energy. The deal, being advised by Kotak Mahindra Capital and Rothschild, is expected to be closed in the next two weeks. The investment is expected to be a mix of structured equity and debt. GMR Energy contributes about 46% to the company’s total revenues. (Economic Times)

Gulf Oil To Disinvest in IDL - Gulf Oil Corp has said that it will disinvest its entire equity shares in its subsidiary IDL Speciality Chemicals Ltd. Last year in December, Biocon Ltd had acquired the bulk pharmaceutical business undertaking of IDL Speciality Chemicals Ltd. (HindusBusinessLine)

Pantaloon To Spin Off Food Brands Under One Company - Pantaloon Retail plans to spin off at least five of its brands and merge them with Capital Foods, where its unit Future Ventures owns a stake. Pantaloon is looking to compete with global giants Nestle and Kraft with his home-grown recipes’ such as pav bhaji masala and lemon pickles. It has also roped in Sanjeev Kapoor of the the Khana Khazana brand as a venture partner. (ET)

Coffee Day Arm To Raise Funding - Tanglin Developments, part of the Coffee Day Holdings, is in talks with HDFC’s real estate private equity fund to raise Rs 300 crore. The company develops infrastructural facilities for technology enterprises and has developed two software parks at Bangalore and Mangalore. (BS)

Fame Says Reliance Did Not Make A Written Offer - Theatre chain Fame India's managing director Shravan Shroff has said that Reliance Media did not made any written offer on a higher price. This comes after Reliance MediaWorks (which operates BIG Cinemas) said that Fame had rejected its offer to buy stake at Rs 80 per share, which was much higher than what INOX Leisure paid to Fame for the stake (Rs 44 per share). (BS)

ARSS IPO To Raise Rs 103 Cr - ARSS Infrastructure Projects Limited, a city-based infrastructure firm engaged in the construction of roads, bridges, highways, bridges and railway projects, expects to raise Rs 103 crore through its initial public offer (IPO). ARSS intends to use the proceeds of the issue for investments to float joint ventures and also to meet its working capital requirements. (BS)

Jalan To Head SEBI Panel - Markets regulator Securities and Exchange Board of India (Sebi) has formed a seven-member committee to review ownership and governance structure of market infrastructure institutions like stock exchanges and depositories. The committee, headed by former Reserve Bank of India Governor, Bimal Jalan, would study the functioning of these institutions with regards to supervision of the markets, while simultaneously pursuing commercial objectives. (Reuters)

Renault India To Restructure Mahindra JV - The Indian unit of French carmaker Renault plans to restructure its four-year-old joint venture with Indian utility vehicle maker Mahindra & Mahindra. The JV was formed to manufacture Renault’s Logan brand in India. The company said a decision will be taken in 30 to 45 days on the same. (Reuters)

Parle Software Acquires 45.83% Stake Realty Project - Parle Software Ltd, a Mumbai-based company, has acquired 45.83% stake in a real estate project called Hazoor Township Developers Pvt Ltd, which is a subsidiary of Hazoor Multi Projects Ltd. With this, Hazoor Township Developers Pvt Ltd has become Associate of Parle Software, the company said in a filing to the BSE. (Team VCC)

Hathway Gets Five Anchor Investors - Hathway Cable and Datacom's initial public offering was subscribed by five anchor investors. Franklin India Funds, DSP Blackrock Funds, Reliance Capital Trustee, Copthall Mauritius Investment and Tree Line Asia Master Fund (Singapore) were allotted 49.95 lakh shares at Rs 240 a share. (HBL)

‘Venture Capital Is A Customer Servicing Business’

Sarimul I Choudhury — Mon, 08 Feb 2010 21:41:44 -0800

Harshal Shah, the CEO of Reliance Technology Ventures Ltd (RTVL) and a member of the leadership team at Reliance Anil Dhirubhai Ambani Group, has a unique definition for the venture capital business. He believes VC firms are in the business of servicing their customers, who are portfolio companies and entrepreneurs. In an exclusive interview with VCCircle, Shah talks about RTVL’s new sector focus, performance of portfolio firms and exit strategy for Yatra.com. Edited excerpts:-

RTVL began as a corporate VC firm focused on technology and mobile sectors. We now see the firm diversifying into other sectors as well. What has triggered this?

When I looked at investing into technology in 2005, our mothership was Reliance Communications. We had access to knowledge of the ecosystem- the customers, the suppliers, contracts, nature of financing and so on—as Reliance Communications was a Tier I and well-established mothership. That is why we started focussing on tech and telecom.

Subsequently, the other businesses of the Reliance ADA Group – Reliance Capital, Reliance Infrastructure, Reliance Energy, Reliance Natural Resources, Reliance Power, Reliance Media & Entertainment--started to grow. We again had access to the same kind of knowledge and experience in these businesses. So, it made sense for us to look at other sectors. We believe that information and knowledge is an incredible competitive advantage for us.

Which sectors look attractive to you?

It’s very difficult not to see technology as an underlying theme for most of the businesses. But, outside of IT and telecom, some of the areas that I find interesting are retirement homes, cleantech, real estate infrastructure enablers (like standardising pre made homes), aerospace component or equipment makers and defence.

Would you look at investing across all these areas?

These are some of the concepts we are toying with in our organisation. We not only plan to invest but might go out and seek some of these opportunities. As a VC investor, we are investing into areas which could become an industry in its own right in the near future.

How did your portfolio companies fare in the economic downturn?

I don’t look at venture capital as an investing business. It’s actually a customer service business. The customers are our portfolio companies, entrepreneurs and the top management team. It would be pretentious to believe that we are the only people with money. We believe our money is smart money, and if we can go across servicing our customers, then we end up making our money greener than anyone else. This makes our model very different from a lot of other VC firms.

Every single portfolio company of ours, despite the worst downturn last year, has seen an increase in valuations, taken away market share from its competitors and hired employees. If you look at the average IRR, that has been generated by VC firms for vintage 2006, the returns have been negative 50%. Our annualised IRR is in excess of triple digits at the point of time across the portfolio companies. Not a single portfolio company of ours will be a dud. Our model is fool–proof.

How is Yatra (portfolio firm) faring against other online travel agents. Is an exit on cards?

Yatra is a leader in terms of market share and it enjoys the highest customer awareness and retention. People find the Yatra interface most comprehensive.

We are making good amount of money in Yatra. In fact, we have a large amount of cash in the bank now.

Should I exit this now or not, the way I see it is that should we continue to increase our IRR in the investments or not. Now, there’s a company called C Trip in China, similar to Yatra. Started in 1999, it got listed in 2003 at NASDAQ at a market cap of $300 million and it eventually became a billion dollar company in 2009.

IPO is a possibility but not a given at this stage. In a year or two, it could happen.
RTVL has also invested in a company (Stoke) based out of the US. How do you plan to gain advantage from this? (Stoke develops carrier-class mobile broadband gateways to enable mobile and converged network operators to maximise the economic returns of their 3G mobile networks.)

We led the round in Stoke and then got other investors like KPCB, Seqouia and DAG Ventures on board. We got Dan Warmenhoven - CEO of Net Appliance, a data centre management company -- to join the board.

We have set up its office in Bangalore to achieve cost arbitrage. When 3G- 4G happens, Stoke should be the de facto choice for this kind of product.

What are the recent investments that you have made?

We are seed investors in Scalable Display Technologies Inc, founded by Rajeev Surati. He is to instant messaging what Sabeer Bhatia is to Hotmail. Just when Bhatia sold his company to Microsoft, Surati also sold his company Flash Communications to Microsoft. What we use today for instant messaging is based on his (Surati) technology.

As part of his thesis at MIT, he wanted to come up with better forms of projections to be used for the media & entertainment industry. He has 12 PhDs working with him and he also has a full time MIT professor on the company’s board. Scalable Displays has already broken even. (Scalable Display simplifies the creation of super-resolution, multi-projector displays of the highest quality and scalable size.)

So, if you connect normal projectors with Scalable’s software, it actually eliminates the need for having screens. This company has got contracts from the US department of defence, and from Japanese companies such as Sony, Hitachi, Toshiba and others.

ICICI Pru, Realty Fund Invest Rs 40Cr In Shriram Project

Madhav Chanchani — Tue, 09 Feb 2010 04:07:50 -0800

Deals in the property space are trickling in. Bangalore-based Shriram Properties Ltd, part of the diversified Shriram Group, has raised Rs 40 crore from ICICI Prudential Asset Management Company Limited and India Opportunities Real Estate Fund (Mauritius) for their 16-acre residential project in Yelhanka, the northern suburb of Bangalore.

With this investment, ICICI Prudential and the realty fund would hold a 49% stake in the Rs 280-project that is targeting the mid-income housing segment. Shriram Properties managing director M Murali told VCCircle that the project, Shriram Sahaana, with a built-up area of 1.2 million sq feet, will have 800 apartments in the price points of Rs 28 lakh to Rs 45 lakh. The project is approved and is under construction, he added.

o3 Capital were the exclusive bankers for the transaction.

Shriram Properties recently launched mid-income housing project where it plans to develop 7,000 housing units cities like Bangalore, Chennai, Visakhapatnam and Kolkata.

After a complete lull last year, the realty sector is now witnessing small-ticket deals particularly at the project or SPV level which is being seen as a de-risked model. An SPV level investment translates into easier and visible exits as each apartment or unit sold in the project amounts to partial exit, says a realty observer.

Shriram Projects has completed 4.23 million sq. ft. of residential space and 1.03 million Sq. ft. of commercial space, in addition to 67 million Sq. ft. of built-up area currently under various stages of development across Bangalore, Chennai, Vizag and Kolkata. Shriram has seen investments from Walton Street Capital, Starwood Capital Group & Sun Apollo in property development.

Subex Promoter To Invest Rs 48Cr To Shore Up Holding

Sarimul I Choudhury — Tue, 09 Feb 2010 02:38:46 -0800

Subex Limited, a Bangalore-based software company, is raising Rs 48 crore through a preferential placement of shares. Subash Menon, who is the promoter and chief executive officer (CEO) of the company, has agreed to infuse the fund to increase his stake in the company.

Menon said in a release that the primary objective of this preferential placement is to raise his stake in the company. He currently holds 6.58% stake out of the total promoter holding of 10.46% in the company. Kivar Holdings Pvt Ltd, a holding company of the group, holds the balance 3.88% stake. Media reports suggest that the issue is likely to increase Menon's stake by 6%. Subex recently restructured its foreign currency convertible bonds (FCCBs), which upon conversion will further reduce Menon's stake.

Subex plans to utilise the fund in reducing liabilities including bank loans, it informed in the Bombay Stock Exchange.

The company plans to issue up to 6 million shares at Rs 80 a share to raise the fund. It further said that the shares will be placed exclusively with the promoter group, and the issue price is higher than the floor price of SEBI. The decision of the placement is due for
approval of the shareholders of the company.

Subex develops software products and also offers software consulting services. The products primarily focus on providing software solutions for clients in the telecommunication sector.

The shares of the company were traded at Rs 64.6, up by Rs 4.25 or 7.04% at 1:35 pm in the BSE. At current prices, the company has a market capitalisation of Rs 224.98 crore. Private equity firm UTI Ventures is an investor in Subex.

Subex has already expanded its presence across UK, USA, Canada, Dubai and Singapore. The two of its major acquisitions include UK-based Azure Solutions for $140 million in 2006 and Toronto-based Syndesis Ltd for $164.5 million in 2007.

The revenue of the company was Rs 311.1 crore in the financial year 2008-09, however, it incurred loss of Rs 178 crore in that fiscal.

Radifinity Gets On Board Aditya Birla Minacs

Sarimul I Choudhury — Tue, 09 Feb 2010 04:00:38 -0800

Aditya Birla Minacs (ABM), the business process outsourcing (BPO) subsidiary of Aditya Birla Nuvo Ltd, has brought Bangalore-based startup Radifinity under its fold.

Radifinity, which provides technology solutions in radio frequency identification (RFID), smart cards, global positioning system (GPS) and GPRS, will now become a new business unit within Aditya Birla Minacs. The financial nature of this transaction could not be ascertained.

Radifinity is an incubatee company of NS Raghavan Centre for Entrepreneurial Learning (NSRCEL) at IIM, Bangalore.

The founders from Radifinity have been hired to create a new business unit – Physical Assets Management under Aditya Birla Minacs IT services portfolio. The new unit will focus on delivering physical asset management solutions to customers globally by deploying RFID,
GPS, and other wireless technologies such as GPRS and GSM.

Radifinity’s management team gets a shot in the arm to leverage a larger platform, Jay Krishnan, one of the founders of Radifinity said, in a statement.

Minacs will leverage Radifinity’s domain expertise, contracts and existing client information. ABM currently has customised BPO solutions focusing on customer relationship management, marketing, knowledge & process outsourcing, finance & accounting outsourcing and
IT.

M&A Deal Volume Up Over 50% In January 2010

Sarimul I Choudhury — Mon, 08 Feb 2010 22:33:04 -0800

The first month of 2010 has begun on a sound note for investment bankers. The latest data for corporate activity as captured by VCCEdge, the financial research platform of VCCircle, shows that the number of M&A deals in India in January 2010 was the best since January 2008, considered the peak period of deal activity in India till date.

As many as 53 M&A transactions were struck last month, over 50% against an average of 35 deals per month in 2009.

On a sequential basis, January was the fourth straight month to see month-on-month increase in deal volumes.

If we consider the M&A deal types, there has been an all round increase in volumes but the big jump has come about due to local consolidation with domestic deals more than doubling compared to January 2009. It also showed up with four out of the top five M&As last month being domestic transactions.

Interestingly, even though big-budget overseas acquisitions are yet to revive, the number of outbound deals more than doubled in January 2010 over the same month last year.

Comparison of deal value may throw a startling picture as the data gets skewed due to a few large deals, but for the records there was a 126% jump in M&A deal value to $2.8 billion last month led by the $1.8-billion Aircel-GTL Infra transaction.

Telecom, logistics and banking, finance & insurance were the most targeted sectors for investment with deals worth $2.18 billion, $164 million and $117 million respectively. Together, these three sectors accounted for more than 85% of total M&A deal value during the month.

In terms of deal volumes, the most active sectors were banking, finance & insurance with seven deals followed by manufacturing & IT/IT services with six deals each in January 2010. Other sectors contributing significantly to deal volumes were media & entertainment and agriculture accounting for five and four deals respectively.

Karuturi Arm In PE Deal Talks To Raise $100M

Madhav Chanchani — Tue, 09 Feb 2010 03:46:38 -0800

Karuturi Overseas Ltd, a subsidiary of world's largest rose exporter Karuturi Global, is in advanced level of talks with private equity players to raise up to $100 million to fuel its expansion plans in Africa.

Banking sources told VCCircle that Standard Chartered Bank's Africa private equity arm and a unit of Reliance Capital are in talks to invest in the Dubai-based Karuturi Overseas. Several other PE players and hedge funds are also in the reckoning to buy stake in the
subsidiary.

Karuturi Overseas is the holding company for the Karuturi Group's Africa operations, which has interests in floriculture and agriculture. The fund-raising talks were initiated back in 2008. The deal is taking time to close as there are issues regarding pricing and
structuring as Karuturi Overseas is a subsidiary of a listed firm, said one source familiar with the transaction.

The Reliance Capital arm may look at co-investing in Karuturi in order to limit its exposure. Karuturi is betting on the growth story that is developing in Africa, where many investors and corporates are buying and leasing land at relatively cheaper rates for crop production.

"While it is true we are raising capital, we are not in discussions with any PE player at present for a specific dilution in our Dubai subsidiary at the moment," said Sai Ramakrishna Karuturi, managing director of Karuturi Global, in an email response.

Karuturi has acquired vast tracts of land in Ethiopia for its foray into agriculture, which it believes will be its next driver of growth.

The Bangalore-based company had earmarked a capital expenditure of $250-$300 million to fund its land acquisition in Ethiopia. While debt has been raised from the banks, the company now needs an equity infusion to meet the capex requirement. Karuturi bought around 311,700 hectares of land on lease in Ethiopia to start agricultural cultivation in a phased manner. It plans to grow crops like cereals, sugar and palm, which could be exported.

Karuturi, whose rose export accounts for most of its revenues right now, annually produces around 555 million stems of cut roses which are exported to markets like the US, Europe, Japan, Russia and Australia. It has an area of 239 hectares in countries like Kenya, Ethiopia and India under green house for this. The company became the world's largest rose exporter after it acquired Ethiopia’s Sher Agencies for $68 million back in 2007. Karuturi Global reported revenues of Rs 445 crore and a net profit of Rs 117 crore for FY09.

2i Capital Makes Rs 100Cr In Pipavav Stake Sale

Sarimul I Choudhury — Mon, 08 Feb 2010 23:13:35 -0800

2i Capital has sold three-fourths of its 6% stake in Pipavav Shipyard in the open market since the company came up with its maiden public issue last September.

As per its latest disclosures, the private equity fund has sold 2.7% of Pipavav over the last three weeks and is estimated to have pocketed around Rs 100 crore in the process.

Earlier, it had sold around 2% stake between October 2009 and mid-January 2010, encashing around Rs 70-77 crore. 2i’s remaining 1.16% in Pipavav is valued at Rs 41 crore.

Most of the share sale is estimated to have made at an average of Rs 55 apiece against the cost of acquisition for 2i Capital pegged at Rs 25 a piece. As a result, the partial exit translates into 120% net return on the three-year-old investment.

2i Capital had invested a total of Rs 100 crore in two tranches through convertible bonds in September 2006 (Rs 84 crore) and February 2007 (Rs 16 crore). The bonds were converted into 40 million shares in October 2007 which gave it 6.89% equity stake (pre-IPO).

The issue, which raised Rs 478 crore ($100 million) last September, brought down 2i Capital’s holding to 6.01%.

Pipavav Shipyard has been one of the many new public issues where the stock price didn’t manage to hold on to the issue price. Although it hit an intra-day high of Rs 64 on its debut on October 9, 2009, the stock has been mostly trading below the issue price of Rs 58 ever since.

Promoted by SKIL Infrastructure Ltd and Punj Lloyd Ltd, Pipavav had a large group of institutional investors before it got listed including some PE firms. Other investors in Pipavav include Blackstone (portfolio investment arm), Merrill Lynch, Galleon, New York Life, Trinity and The India Fund among others.

Tata-Quippo May Tap PE Route To Pare Debt

Madhav Chanchani — Mon, 08 Feb 2010 05:07:14 -0800

After losing the race to acquire Aircel’s tower business, Tata-Quippo, one of the largest independent telecom tower firms, is back in deal action and is now pursuing a private equity deal.

SREI Group company, Quippo Telecom Infrastructure Ltd (QTIL), merged with Wireless Tata Telecom Infrastructure Ltd (WTTIL) to emerge as a formidable player in the tower space only to be rivaled by GTL Infrastructure Ltd when it recently scripted a $1.84-billion buyout of Aircel's de-merged tower operations.

QTIL, which currently holds a 49% stake and management control of the Tata Quippo combine, paid Rs 2,367 crore for the transaction of which only Rs 900 crore was funded through equity. Banking sources said, QTIL was interested in whittling down the accumulated $350-400 million debt at WTTIL level emanating from the merger effected in 2009.

QTIL had raised Rs 900 crore of equity for financing its cost of acquiring 49% stake in WTTIL from SREI Infrastructure, IDFC Private Equity and Oman Investment Fund. IDFC and GIC holds 11.24% stake each and OIF has 16.24% stake in QTIL at present.

This is also desirable as it may be hitting the market with a multi-billion dollar capital expansion plan to support its growth in the medium term. QTIL has a capex plan of $4 billion over the next two years to expand its tower base to 60,000, Umang Das, president at Quippo, recently told PTI. He said, private equity and IPO were some of the options being explored by the firm.

One source said, private equity giants like Carlyle, Apollo and General Atlantic may still be interested in a deal but at a "realistic price" as GTL's emergence as a rival independent tower player may put pressure on valuations. Further, there are divisive opinions on sobering tower valuations even though PE interest in this space continues unabated as witnessed in last week's deal at TowerVision.

Quadrangle Capital Partners led a consortium of investors for $300-million stake in TowerVision India, which operates about 5,000 towers.

In fact, some of the above-mentioned PE majors were in the picture to back Tata-Quippo's bid for Aircel arm, and might have infused over $1 billion in return for a sizable minority stake if it had clinched the deal.

The most recent deal between GTL-Aircel values each tower at Rs 48-49 lakh, signaling the trend of falling valuations of telecom towers since last year. Back in 2007 and early 2008, the Bharti Infratel Ltd and Reliance Infratel Ltd had valuations of between Rs 1.6 crore and Rs 2 crore per tower when they sold stake to private equity firms. The WTTIL and Quippo merger, which took place in early 2009, valued the towers at Rs 61-70 lakh. Though after this Nasdaq-listed American Tower Corporation (ATC) acquired Xcel Telecom at Rs 41 lakh per tower, but this was a smaller portfolio.

Last year, QTIL targeted a valuation topping $4 billion as it looked for a private placement to offload debt. While Tata-Quippo combine's valuation would have suffered, it may still fetch around $3.5 billion going by GTL-Aircel transaction benchmarks. GTL's acquisition of Aircel valued the latter's towers at Rs 49 lakh each.

Tata Quippo has 33,000 towers with a tenancy ratio of 2 per tower, which is higher than GTL's 1.2 per tower, Tata-Quippo may be valued at $3.44 billion going by the Aircel deal valuations much higher than $2.6 billion at the time of QTIL's merger with WTTIL.

Tata-Quippo would be increasing its tower network to 40,000 by end of the fiscal year. The company expects to expand to 60,000 in the next two years. Last week, QTIL unveiled $4 billion capex plans to fuel its aggressive expansion plans in one of the fastest expanding mobile telephony markets in the world.

Tata Capital Raises Rs 750Cr For Maiden Special Situations Fund

Madhav Chanchani — Mon, 08 Feb 2010 03:45:44 -0800

Tata Capital, the financial services arm of the conglomerate Tata Group, has managed to mop up Rs 750 crore for its debut special situations fund. Tata Capital Special Situations Fund, which managed to make its first close in December 2009, will be a turnaround fund targeting investments in unlisted companies in the manufacturing sector. The fund would look at small-to-medium-sized companies which are in a distressed situation.

At present, there are select funds and arms of overseas banks that operate in the special situations space in India. But, very few of these existing funds have SME sector turnaround stories as their investment themes. Special situation, especially distressed investing, is still a nascent business in India with few players like WL Ross, ADM Capital, Clearwater Capital, Eight Capital and units of foreign banks like Standard Chartered.

One private equity observer said, the catchment would be huge as India's manufacturing ecosystem has thrown up several SME assets in distress due to excessive leverage, poor working capital management and unforeseen business fluctuations.

The Special Situations Fund is likely to make an investment of around Rs 100-150 crore to pump in fresh equity in companies. The firm has also managed to rope in International Asset Reconstruction Company Pvt Ltd (IARC), where it has a 20% stake, which will buy the debt of portfolio companies. Other major shareholders in the asset reconstruction firm are HDFC Bank, City Union Bank, ICICI Bank, among others.

The fund will be lead by TA Ramkumar, who was earlier vice‐president &secretary of Tata AutoComp Systems. Ramkumar has been with the group for over 14 years and has also worked with companies like Voltas India and BASF India. An e-mail sent to Ramkumar did not elicit any response at the time of filing this story.

When contacted, a Tata Capital spokesperson declined to comment. But, a source added, the Special Situations Fund attained closure two months back, in December 2009, at Rs 700 crore to Rs 750 crore.

This would be one of the first third party PE fund to be closed by Tata Capital since it announced its foray into the business. The firm has currently launched the $350-400-million fund, which it plans to close in five to six months. Tata Capital is looking at creating various funds under categories like mid-market, healthcare and innovation.

Pune Incubator Body ISBA Launches Rs 55Cr VC Fund

Sarimul I Choudhury — Mon, 08 Feb 2010 03:00:54 -0800

Indian STEP and Business Incubators Association (ISBA), a Pune-based association of incubators, has launched a Rs 55-crore venture capital fund. The fund will focus on sector-agnostic investments in companies with no proven track record.

Arihant Group, a company engaged in steel manufacturing in Pune, has contributed a major chunk to this fund while the other investor in the fund is Mumbai-based Adventa Infratructure Pvt Ltd.

The fund will invest in incubatee companies of ISBA members and will be managed by Science & Technology Park, Pune, where ISBA secretariat is located, said a company statement. ISBA plans to fund around 25 start-up companies from this fund in 2011-12.

The fund looks at an average investment of Rs 2.5 crore, and expects equity stake somewhere between 5% and 30% in investee companies, Rajendra Jagdale, secretary general of ISBA, told VCCircle. Arihant and Adventa have contributed Rs 30 crore and Rs 25 crore, respectively, said Jagdale. Chandu Chavan, chairman, Arihant Group, and Dhananjay Pandey, chairman and managing director, Adventa Infrastructure have joined the ISBA board.

ISBA was established in 2004 and currently has around 32 incubators as its members. Some of these incubators include the Science and Technology Park, University of Pune; Tiruchirappalli Regional Engineering College (TREC–STEP), Tiruchirappalli; Technopark-TBI, Trivandrum; International Crops Research Institute for the Semi-Arid Topics (ICRISAT), Hyderabad; and Society for Innovation and Entrepreneurship (SINE), IIT Bombay.

Apart from financial support, ISBA will hold board representation and also offer domain and technical expertise to investee companies.

ChrysCap, Morgan Stanley To Partly Exit In Hathway IPO

Madhav Chanchani — Mon, 08 Feb 2010 04:48:34 -0800

ChrysCapital and Morgan Stanley are making a part-exit from Hathway Cable and Datacom Limited, one of the country’s top cable television service provider, with modest gains on their less than three-year-old investment.

At the IPO price band of Rs 240-265 per share, ChrysCap will be pocketing returns of 48%-63% on its investment made in May 2007, while Morgan Stanley, that invested in June 2008, will generate returns of 13%-25%.

The average cost of acquisition of shares stands at Rs 162 for ChrysCap while it is Rs 213 a piece for Morgan Stanley.

The issue, which is being managed by UBS, Kotak Mahindra and Morgan Stanley, opens for subscription on Tuesday. The total size of the issue is up to Rs 735 crore of which Rs 580 crore will go to Hathway while the rest will be pocketed by the private equity investors.

At this price, the company is seeking a market cap of Rs 3,786 crore ($815 million) at the upper end of the price band. This will value it around 50% above PE-backed Den Networks-- currently the largest cable TV operator in terms of market value-- and much above Zee Group’s WWIL.

ChrysCap and Morgan Stanley currently hold 13.3% and 3.8%, respectively in the company which will drop to 6.4% and 2.9%, post the IPO. Other large investors in Hathway include media giant Newscorp that has around 20% stake.

Hathway intends to use around half of the money for customer acquisitions besides investments for set top boxes and other infrastructure and some debt repayment. The firm had revenues of Rs 672 crore during 2008-09 with net loss of Rs 62 crore.