VCCircle News

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.