VCCircle News

Eredene Capital Invests Rs 40 Cr In Ennore Container Freight Station

Sahad P V — Wed, 19 Nov 2008 04:01:21 -0800

Eredene Capital, a London-based Alternative Investment Market listed fund, has invested Rs 40 crore in a container freight station (CFS) formed as a joint venture with Chennai based Sattva Business Group. The CFS will serve the port of Ennore in Tamil Nadu.

Eredene will invest up to £5 million (Rs 40 cr) for an 85% stake initially, which will be diluted in tranches as the business achieves certain milestones. An SPV will develop and operate the CFS at a site18 km away from Ennore port.

Eredene had in Sep 2007 invested £0.85 million (Rs 6.86 cr) for a 49% stake in a JV for a CFS at Vichoor (near Chennai port), which is currently serving the nearby port of Chennai. It also invested £3 million ($6.24 million) for a 40% stake in a 32-acre CFS project in the south of Gujarat, to develop the first dedicated CFS at Pipavav port.

The new CFS will be located on a state highway near Ponneri to the north of Ennore. The CFS will be converted from a large-scale warehousing operation into a full-fledged CFS in time for the opening of the new Ennore Container Terminal scheduled for 2011.

The Eredene Group is also bidding for the Ennore Container Terminal project in a consortium headed by Spain's port operator, Grup Marítim TCB SL, Spanish construction group Obrascón Huarte Lian SA and GE Mauritius Int Holdings, a subsidiary of America's GE Equipment Services. Eredene has a 22% stake in this consortium. The same consortium has also bid for building and operating a new 330-metre container terminal at Jawaharlal Nehru Port Trust (JNPT) near Mumbai.

Eredene is an AIM listed investor in Indian infrastructure developments and this is its ninth JV investment in India and the third in a CFS. Its previous investments include Matheran Realty, Box-Trans Logistics, MJ Logistic Services among others.

Ennore Port, which began operations in 2001, was set up to ease the congestion at Chennai Port. The significance of a CFS in this region can be gauged from the fact that Chennai-Ennore region is the centre of India's automobile industry with manufacturing facilities of BMW, General Motors, Hyundai, Ford and Renault-Nissan and additionally, a major manufacturing and light industry hub.

The Sattva Group is a regional logistics operator and has been operating a CFS in Chennai since 2000. LCL Logistix which is funded by Tuscan Ventures, also opened up a 80,000 sq mt CFS in Pipavav shipyard in mid of this year and operates a Central Warehousing Corporation owned CFS at Adalaj, Ahmedabad, with further plans to open two additional CFSs. Other recent PE deals in allied sectors are Warburg Pincus's $35 million investment in Gangavaram Port and 3i Group's in Krishnapatnam Port.

HSH Nordbank AG, a German bank and one of the biggest shipping finance companies, is also planning to set up a fund to invest in maritime-related sectors in India.

Dabur Finally Snaps Up 72% In Fem Care For Rs 203 Cr

Madhav Chanchani — Fri, 21 Nov 2008 04:47:36 -0800

Dabur India Ltd. has acquired a 72% in Nasik-based Fem Care Pharma, which is famous for its Fem bleach, for Rs 203 crore. Delhi-based Dabur has acquired the entire promoter stake in Fem Care, which is listed in stock markets. The deal has been done at a price per share of Rs 800, and an equity valuation of Rs 282 crore.

The deal has been done at more than a 21% premium to current share price of Rs 656 of Fem Care. Dabur will make an open offer for an additional 20% shares in Fem Care. Dabur's last major acquisition was Balsara’s hygiene and home products business for about Rs 143 crore in 2005.

There has been some consolidation in the Indian FMCG space in past few months. Ealier this month Emami Ltd also completed the acquisition of Zandu Pharamceuticals Works Ltd.

"Acquisition of Fem Care Pharma is in line with our strategy to aggressively expand Dabur's scale of operations and strengthen its presence in the fast moving consumer goods (FMCG) space. This
transaction would give Dabur an entry into the high-growth skin care market with an established brand name 'FEM'. Further, Dabur also has the potential to extend the brand into newer and related skin care categories," said Dr. Anand Burman, Chairman, Dabur India Ltd.

Apart from Fem bleach, other popular brands by the firm are Oxybleach cream, Botanica anti-ageing cream, Stratum colour protecting hair conditioners, SAKA men's bleach and Bambi fabric softeners. Marico Industries and Godrej were also reported to be in race for Fem Care Pharma.

The deal fetches very attractive valuations for Fem Care Pharma. The share prices of the company has increased from Rs 358 to Rs 656 in last month. It reached its 52-week high of Rs 666 today.

Private equity fund Acacia Partners holds about a 9% stake in Fem Care. If Dabur plans to make the open offer also at Rs 800, it may prove to be an attractive exit option in the current market situation.

KPMG Corporate Finance was the financial advisor to the promoters of Fem Care Pharma Ltd and Ambit Corporate Finance was the financial advisor to Dabur India Ltd.

Religare, Aegon End Asset Management Joint Venture

Madhav Chanchani — Fri, 21 Nov 2008 04:20:24 -0800

Religare and Dutch financial services major Aegon have decided to part ways in their asset management joint venture in India, Religare Aegon Mutual Fund. This comes barely a month after the firm received regulatory nod to commence business.

Though some reports suggest the partners decided to go separate ways following the acquisition of Lotus Mutual Fund, others hint at the deal where Religare Enterprises acquired London-based brokerage Hichens Harrison as it translated into a conflict of interest between the partners in the European market.

In a statement issued by the company, "Religare and Aegon have announced restructuring plans relating to their partnership for the asset management business in India. These changes have been driven by the new business opportunities which have arisen in the Asia Pacific region and the desire of each partner to achieve their strategic goals in the asset management area in the region."

"Under the revised structure proposed to the regulators Lotus Mutual Fund, (recently proposed to be acquired by Religare) would be rechristened as Religare's asset management business in India and Aegon would assume control of Religare Aegon Mutual Fund, which is currently the joint venture between the two parties. Both Religare and AEGON are firmly committed to building globally scaleable businesses of excellence. This rearrangement is subject to SEBI and other approvals," the statement said.

According to this BS report, the Lotus India Mutual Fund deal may have also contributed to the split of the JV as the deal was pushed solely by Religare. Moreover, Aegon is said to have observed that the acquisition of Lotus will affect its plan to launch an offshore fund in India as Fullerton(a Temasek group firm and the promoter of Lotus India Asset Management Company), already runs an offshore fund called Fullerton Sabre Lotus India fund.

However, Religare Enterprises(now the flagship business of Malvinder and Shivinder Sigh who sold off their pharma firm Ranbaxy to Daiichi Sankyo) was not ready to let go of the opportunity to buy Lotus as apparently it got a bargain deal.

The break-up of the asset management JV, however, will not affect the life insurance JV between Religare and Aegon. In this venture Religare holds 44% stake while Aegon has 26%, as per the maximum permissible FDI limit. Media house Bennett Coleman & Co Ltd(BCCL), through its private treaties wing(which sells ad space for equity) owns the remaining 30% stake in the life insurance venture.

Philips To Acquire Medical Device Maker Meditronics

Madhav Chanchani — Fri, 21 Nov 2008 03:43:43 -0800

Philips is acquiring Indian medical device maker Meditronics for an undisclosed amount. Mumbai-based Meditronics which was founded by two engineers Kanti Gada and Vinod Vora is engaged in the field of general X-ray systems with a focus on surgery and radiography. It employs around 150 people with four manufacturing plants in the country.

For the Dutch electronics major, this would be the second acquisition in Indian healthcare market in the last three months. In early September it had announced a deal to acquire Mumbai-based Alpha x-ray Technologies, which is engaged in the field of cardiovascular X-ray systems. Both these transactions are expected to be completed before the end of 2008.

Globally it competes with Siemens and GE in the healthcare field, particularly in the area of medical devices. Besides competing with the global firms in India it is looking at acquiring domestic companies with niche technology and product portfolio. This is aimed at building a presence in India and also taking some of the indigenously developed low cost products to other emerging markets.

Philips which delisted from the Indian stock market operates through three business divisions- lighting, healthcare and consumer lifestyle(electronics & appliances). While lighting is its biggest unit in India, followed by consumer lifestyle and software development, healthcare is one of its fastest growing areas. In 2007 calendar year it had revenues of around Rs 2,900 crore in India.

Future Group's Indivision Buys Blue Foods Restaurants

Madhav Chanchani — Fri, 21 Nov 2008 02:52:47 -0800

Indivision India Partners, the private equity arm of the Kishore Biyani's Future Group, has picked up over a 50% stake in Blue Foods. It operates a chain restaurants under various brand names such as Copper Chimney, Bombay Blue, Noodle Bar, Gelato Italiano and Spaghetti Kitchen Cream Centre.The stake has been picked up for Rs 150 crore, reports Times of India.

Blue Foods was established by Sunil Kapur of Copper Chimney, Sanjiv Chona of Cream Centre, and the promoters of Royal Sporting House of Singapore in 2002. It formed a 50:50 joint venture with Pantaloon retail called Pan Foods Solutions. After the deal with Indivision, both Blue Foods and Pan Foods have been merged. An earlier report said that Anil Ambani Group was also in contention for the restaurant business.

Blue Foods operates through centralised kitchen in every city that sources and stocks all raw materials required for its various restaurants. Blue Foods also has a franchisee agreement with California-based Coffee Beans & Tea Leaf.

Future Group, which has a presence in malls across the country through its retail operations, has been running food courts in the malls. Future Capital Holdings also runs several real estate funds which invest in malls and other retail destinations.

Indivision has made several investments in the food and beverages segment. It had picked up 33% stake in Mumbai-based processed foods company Capital Foods in 2006. Last year Indivision had picked up 20% stake in Sula Wines for Rs 50 crore ($12.5 million). There have been several deals in the restaurants space also. Earlier this year SAIF partners picked up a stake in Speciality Restaurants, which runs Mainland China and Oh! Calcutta for Rs 90 crore. Also Kotecha Capital invested Rs 500 crore in United Pizza Restaurant for 49% stake.

Motilal Oswal Hires Rakesh Sony As Director, Private Equity

Madhav Chanchani — Fri, 21 Nov 2008 02:38:49 -0800

Financial services company Motilal Oswal Financial Services Ltd has appointed Rakesh Sony as director of its private equity business. Motilal Oswal Venture Capital Advisors Private Limited (MOVCAPL) runs a general private equity fund and a real estate fund. Sony has 10 years of experience in investment banking and corporate finance.

Sony was till now a co-founder and managing director of Kolkata-based Microsec Group, a financial services company with presence in investment banking, stock and commodity broking and wealth management. He is a chartered accountant and B.Com graduate from St Xaviers,
Kolkata. Motilal Oswal's private equity division is headed by Vishal Tulsyan.

MOVCAPL has a sector agnostic fund to provide growth capital to SMEs of $125 million. It also launched a $175 million real estate fund earlier this year. MOVCAPL has so far invested in six companies. Some of its recent investments are Pune-based Parag Milk Foods Pvt Ltd and
Rajasthan-based non-banking finance company AU Financiers.

Mark Robinson To Replace Sanjay Nayyar As Citi's South Asia CEO

Shrija Agrawal — Thu, 20 Nov 2008 19:37:56 -0800

As Sanjay Nayyar moves out of Citigroup to pursue private equity interests at KKR, the U.S. financial major gets veteran Citi banker Mark Robinson to replace him as the chief executive officer of Citi South Asia. Robinson is a 24-year Citi veteran who has spent most his career in emerging markets. He is currently president of Citibank ZAO, Citi country officer for Russia and division head for Russia, Ukraine and Kazakhstan. During his career with Citi, Robinson has worked in Turkey, Israel, Hungary, Pakistan, Hong Kong and US.

‘‘Citi has built an extensive franchise in India, Sri Lanka and Bangladesh, and I look forward to working with the excellent team on the ground to continue our momentum and deliver the full power of our universal banking model to clients in the region,'' said Robinson.

This is the first time in almost a decade that Citi has appointed an expat to head its India operations.The last expat CEO for Citi in the country was David Conner, who was the chief between 1996 and1999. He had taken over from Robert S Eichfield.

Bangalore MFI Ujjivan Raises Rs 94 Crore From Unitus, Others

Shrija Agrawal — Thu, 20 Nov 2008 21:33:55 -0800

Looking at the amount of money MFI's (microfinance institutions) are raising even in the current downturn, it indeed appears that the economy of poor is decoupled from the financial crisis. Ujjivan Financial Services, the Bangalore-based microfinance institution focusing on the urban and semi-urban poor, has raised Rs 94crore as its fourth round of funding. Originally planned for Rs 75 crore, the equity round was oversubscribed.

Unitus Equity Fund (UEF) managed by Elevar Equity, Bellwether Microfinance Fund, Michael & Susan Dell Foundation, A W Holdings and individual investors including promoter & CEO Samit Ghosh continued to remain invested. The five new investors in this private placement transaction are Sequoia Capital, Lok Capital, Unitus Equity Fund II, India Financial Inclusion Fund and SIDBI.
This will increase Ujjivan’s paid up capital and reserves to over Rs 108 crore, thereby making it the fourth highest capitalised microfinance institution in India. The capital will be used for the company’s major expansion plans for the next one year and to meet the enhanced capital adequacy norms set by the Reserve Bank of India. Grameen Capital India was the exclusive Equity Advisor for this transaction.

Speaking on this transaction, Samit Ghosh said, “Ujjivan has expanded the institutional investor base to create a balance between social and market driven private equity investors to ensure that its social mission is not diluted and at the same time it can maintain the ambitious growth plans. The support of these investors all through this transaction even under these challenging times is a testament to the future of microfinance industry in India.”

Funding in the MFI Sector

In the largest microfinance deal in the world, Hyderabad based SKS Microfinance raised Rs 366 crore or $75 million from private equity investors as its fourth round of fund raising. Swadhaar FinServe, a Mumbai-based MFI, raised $3 million from Michael & Susan Dell Foundation, ACCION and Unitus Equity Fund.

In August, Michael & Susan Dell Foundation (MSDF) and Lok Capital LLC invested $1.5 million in Arohan Finnacial Services Ltd, a Kolkata-based microfinance institution (MFI). Arohan already has commitments of about $500K (Rs 2 crore) from Bellwether Microfinance Fund.

News Round Up: Govt To Open A Rs75,000 Cr Refinance Window

Shrija Agrawal — Thu, 20 Nov 2008 20:59:55 -0800

Gopinath Sells 1% In Kingfisher Airlines To Raise Funds For Cargo Venture : Captain GR Gopinath has sold nearly 1% stake in Kingfisher Airlines in the last few days. He has sold stake to raise funds for his cargo business venture called Deccan Express Logistics. Deccan Express Logistics was in incubation for the last three years. Captain Gopinath will invest $25 million on it and the company has already leased 100 acres of land from the Maharashtra government in Nagpur for 60 years. Captain Gopinath told CNBC TV 18 that they are in process of putting together the logistics, IT and warehousing departments. The company has recruited 100 people, mostly former FedEx, UPS and DHL employees. Jude Fonseka (former MD - Sales of FedEx) has been appointed as the CEO of Deccan Express. He added that he is looking to expand to 95% of India's GDP and will look at the international market via the Middle East and South East Asia.The aim of the business is to provide a complete integrated end-to-end logistics solution and also to build a robust supply chain for the country.

Intel Capital Looking At Indian Wi-Max Operations Closely : Intel, the world's largest chipmaker, plans to make strategic investments in the WiMax rollouts undertaken by Indian telcos. The company is open to investing in 'one or perhaps even more' Indian operators. Intel Capital had already invested in several Indian companies that make hardware and software applications work on this technology platform and more such deals are in the pipeline

SBI Gets Nod for JV With Societe General for Custodial Services : State Bank of India said it has received Reserve Bank approval for a joint venture with Societe Generale, a large financial services group from Europe, for offering custodial and related services in the country. A release here said SBI will hold 65 per cent equity in the new company that will be set up to undertake the business, while the remaining 35 per cent will be held by Societe Generale Securities Services. The company plans to commence operations by the first quarter of 2009 after receiving licence from market regulator SEBI, the release said.

Colgate–Palmolive Sells Its Nepal Arm : Oral care company Colgate Palmolive India has transferred its shareholding in its Nepal subsidiary to Nepal-based Everest Hygiene Products, for an undisclosed amount. "All employees of Colgate-Palmolive (Nepal) would continue their employment on the existing terms and conditions under the new ownership," the company said in a filing to the Bombay Stock Exchange (BSE).

IFC Eyes 5% In GSPC Gas Co : International Finance Corporation (IFC), a member of World Bank that promotes sustainable private sector investment in developing countries, is likely to pick up 5 per cent stake in GSPC Gas Company, a subsidiary of Gujarat State Petroleum Corporation (GSPC). The company may use the IFC fund to partly finance its investment of $140 million (approximately Rs 700 crore) for laying new pipelines for gas distribution in cities. GSPC Gas distributes natural gas to households and vehicles in Gujarat and plans to spend Rs 8,000 crore over the next few years to expand its network to distribute natural gas in 180 more towns of Gujarat. GSPC with 62 per cent equity, is the largest shareholder in GSPC Gas. Gujarat State Petronet (GSPL), a subsidiary of GSPC, owns another 36.5 per cent while the remaining 1.5 per cent is owned by couple of other large gas-consuming companies in Gujarat in the power and fertiliser sectors. This IFC financing of GSPC Gas is expected to initiate the process of diluting the 100 per cent government stakeholding of the company.

Reliance Capital To Launch Islamic Funds In Malaysia : Reliance Capital Ltd, India's largest asset management house, has received approval from the Malaysian authorities to commence Islamic finance funds operations in the country. The fund would enter this nouveau riche segment based on the Shari'ah principles of investing. The firm is planning to start off with its offering in the next 6-8 months.

RBI To Allow 49% FDI in Credit Information Biz : RBI has announced it will now consider letting through Foreign Direct Investment of upto 49 percent in credit information bureaus. The central bank said that the investor should be a company with a well established track record and no shareholder in the company should hold voting rights exceeding 10 percent. Credit information bureaus are institutions that collect and maintain a database of frauds and defaults to help banks analyse the risk appetite of individuals applying for loans and credit cards.

Govt And RBI To Open A Rs75,000 Crore Refinance Window : The government and Reserve Bank of India (RBI) are jointly working on developing a massive Rs 75,000 crore refinance window to help infrastructure, housing and small and medium enterprises (SMEs) raise capital through concessional funds by leveraging the country's foreign exchange reserves. The refinancing would be provided through India Infrastructure Finance Company Ltd (IIFCL), National Housing Bank (NHB) and Small Industrial Development Board of India (SIDBI). These institutions would receive funds at 7 to 9 per cent to enable banks to earn a decent spread but cap lending between 10 and 11 per cent, which is lower than the current prime lending rates of 13 to 17 per cent. This move is expected to increase lending by banks to sectors that are considered vital to economic growth. Under this model, RBI will purchase bonds worth $10 billion from IIFCL's London subsidiary at a coupon rate of 2.5 per cent, which is equivalent to what it earns on its reserves.

Suzlon Moves Into Solar Power : Suzlon said it has chosen two sites in India for its first investment into solar power. Suzlon, the fourth-largest maker of wind turbines in the world, plans to build solar power plants in Gujarat and Rajasthan. The company did not release other details about the projects but cited the market opportunity in wind and solar for making the move to solar energy.

Saudi Arabia's Prince Alwaleed Backs Citigroup Under Pandit

Madhav Chanchani — Thu, 20 Nov 2008 05:54:03 -0800

Saudi Arabian investor Prince Alwaleed bin Talal bin Abdulaziz Al Saud has said he will increase his stake back to 5% in beleaguered banking giant Citigroup as a sign of confidence. Yesterday, the shares of Citigroup plunged 23% to a 13 year low. Currently the Prince holds less than 4% stake in the firm, reports Wall Street Journal. Citigroup has till now raised $50 billion in capital, half of which has come from the bailout programme.

Asian soveriegn wealth funds, both from Middle East and Singapore, have pumped in billions of dollars in the banking giant. The bank, which is led by Vikram Pandit, has taken a number of steps to shore up its balance sheet. Just earlier this week Citigroup announced its plans to cut 52,000 jobs by early next year, in addition to the 23,000 it has already cut this year. It has also sold several of its assets worldwide.