India focused buyout fund New Silk Route Private Equity is ahead in the race to acquire 50 per cent stake of Dawnay Day in its Indian joint venture, Dawnay Day AV, The Economic Times has reported. The other contender in the race to acquire the stake is Hyderabad-based Karvy Stock Broking Ltd. The troubled property and financial services group had set up its India operations in 2005, with ex-DSP Merrill Lynch Alok Vajpeyi, who holds 25 per cent stake, as partner. The remaining 25 per cent is owned by an employee trust.
Besides the financial services arm, Dawnay Day AV Securities Pvt Ltd, the firm also operates real estate arm Dawnay Day India Land Ltd and Dawnay Day Hotels India. Some bidders have shown interest in all three businesses, while other have shown interest only in the financial services arm. The report added that New Silk Route is interested in the financial services arm and the deal size could be in the range of $20 million-$25 million.
Vajpeyi is not looking to sell his stake and is looking for a valuation of Rs 160 ($40 million) crore for Dawnay Day AV Securities, the report added. Dawanay Day has invested Rs 100 crore in the financial services arm and the company’s real estate arm has invested $200 million in the country so far and has bought land in in Pune, Ahmedabad, Jaipur, Lucknow, Noida and Bangalore.
New Silk Route, a $1.5 billion fund, has been formed by ex-McKinsey chairman Rajat Gupta, former investment banking head of DSP Merrill Lynch and Vedanta Capital’s Parag Saxena. Some of its investments include Hyderabad-based Aster Infrastructure, Reliance Communication’s tower arm RTIL, TV network INX Media and so on. New Silk Route is also said to be in negotiations to pick up a large stake in Dodsal Corp, one of the largest franchisees of Yum! Brands-owned Pizza Hut and KFC.
UK- based Dawnay Day Group has been a victim of the sub-prime credit crunch. Around 65 of the London-based investment group’s operations have been put under an administrator BDO Stoy Hayward, who is now disposing the firm’s assets. The group also sold its stake worth $6 million in two Aim-listed property companies it manages. Dawnay Day has sold off 20 per cent stake in F&C Asset Management for a loss of about $160 million and ahs also put its investment banking arm Dawnay Day Investment Banking on the block.