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HDFC Realty, Citigroup and Government of Singapore Investment Corporation (GIC), among others, are set to pump $300 million into Shapoorji Pallonji Group’s realty business. Sources said the deal—amongst the biggest private-equity plays in the Indian real estate sector—was imminent and might also involve a few more investors. It is believed that PEs could pick 15-20% stake in the recently-created holding entity of the group’s realty venture. When contacted, Shapoorji Pallonji & Company director Jimmy Parakh said: “We are in talks with PE investors. But we have not concluded any deal. We are raising $300 million.” […]
Seven broking firms have been happy recipients of around $270 million in investments by private equity firms during the first six months of 2007, signalling a new trend in the industry. This compared to just three deals of $202 million which the broking space saw in the whole of 2006. According to Venture Intelligence, a Chennai-based research service focused on private equity and venture capital activity, the banking, financial services and insurance (BFSI) sector overtook manufacturing, healthcare and lifesciences to emerge as the second most attractive private equity investment asset class. The first quarter of FY08 logged 15 deals worth around $1.3 billion in the sector. In the 18 months ended June 2007, BFSI segment attracted about $3.3 billion across 58 investments. While banks, retail broking houses, NBFCs were among the favourites within the sector, stock exchanges (both BSE and NSE) as well as housing finance major HDFC raised large amounts of capital. Within the BFSI sector, broking houses were the most sought-after investment class. The reason for this could be the fact that PE funds think India is under-penetrated as far as equity is concerned and there is still a good leeway left for the upside, said Venture Intelligence managing director Arun Natarajan. […]
Baring Private Equity Partners (BPEP) will raise $450 million for its third India fund for strategic investments in healthcare, pharmaceutical, IT-enabled services, FMCG and alternative energy generation sectors in India. About 30 per cent of the fund will be specifically targeted towards healthcare and pharmaceutical sectors, Akhil Awasthi, partner, BPEP (India) said. BPEP’s ongoing investments in over 20 companies have come from its earlier India funds of an aggregate size of $200 million. BPEP had raised $175 million as second India fund in 2004. “Unlike several other sectors, healthcare and pharmaceutical is an ideal industry to leverage on intellectual capital. There are various niches, technologies and market segments that one could explore. There are at least 25-30 knowledge driven companies in this sector that could go for an expansion mode on their intellectual strengths,” Awasthi said. […]
Fidelity Investments International has picked up a 7% stake in Transport Corporation of India (TCI), the Delhi-based express logistics company, for Rs 53 crore. TCI will issue equity shares of Rs 2 face value to Fidelity Investments at Rs 105.25 per share, in accordance with Sebi guidelines for preferential issue.Post-issue, Fidelity’s stake in TCI would increase to nearly 10% of the paid up equity. TCI’s executive director Vineet Agarwal said: “The amount raised will be utilised to fund the expansion of TCI, specifically for building capacity in the warehousing space and setting up information technology (IT) systems.” Earlier, in 2006, TCI had announced expansion plans requiring Rs 450 crore of investments in warehousing, fleet upgradation and expansion, shipping and IT systems. TCI intends to raise another Rs 60-70 crore through sale of equity in the following year. “Our plan was to raise almost Rs 120 crore in two stages through equity dilution. The first stage has been completed. We will raise another Rs 70 crore within six to nine months,” said Mr Agarwal. The company claims it has already invested Rs 100 crore for expansion in FY07 and would be looking at investing another Rs 200 crore in the current fiscal. […]
India Debt Management (IDM), part of the the Hong Kong-based ADM Capital (ADM), is picking up a 14% stake in Mehtas-controlled Saurashtra Cement through the conversion of debentures into equity. Saurashtra's board will meet on August 16 to consider allotment of shares to equity warrants and convertible debentures at a conversion price of Rs 35 per share. Saurashtra Cement will allot shares worth 74.5 lakh equity shares of Rs 10 each to IDM by converting a part of the convertible debentures at a price of Rs 35 per share. This will translate into 14% equity stake for IDM. The company's shares were trading at Rs 58.35, down 0.09 per cent, on the Bombay Stock Exchange on Friday, when the benchmark Sensex dipped 231.9 points to close at 14,868.25. Mehtas, which own close to 78 per cent in the company, will see their stake coming down proportionately post conversion. IDM had invested close to Rs 93 crore in the company through the preferential allotment route. A significant part of this investment is now being converted into equity. […]
High property prices and spiralling interest rates are holding back many developers and hospitality funds from writing big cheques for hotel projects in India. Instead, private equity (PE) funds are focusing on other developing markets like Vietnam, Malaysia and Thailand. PE players who were recently planning to invest in the Delhi-based Asian Hotels (before the split), had changed their minds. Some developers are having a rethink on their hotel projects, preferring to develop commercial office space, where upfront cash investment is less and returns are quicker. PE players were willing to bring in close to $1 billion, but few deals have been cut in the hospitality sector. “PE funds expect a 30-35% return in 3-5 years and that’s not possible when the real estate valuations are high,” said Hotel Leelaventures vice-chairman & MD Vivek Nair. Agrees Akshay Kulkarni, Knight Frank’s head of hospitality: “Large transactions in the domestic hotel market are getting fewer as the returns in India are low as compared to other developing markets.” Globally, hotel deals are getting delinked from properties. They strip off properties into separate companies or real estate investment trusts while PE investors invest only in the company that manages the hotel business. Until this happens in India, hotel deals will continue to be expensive, said an official from a Mumbai-based PE fund. […]
Two very interesting bits of headlines caught the eye last week — one pertaining to the Indian market, and the other to the global. A consulting firm released a report last week stating that PE investments in India could touch $15 billion in 2007. The other news item was about Blackstone’s mammoth new buyout fund of $21.7 billion, which reportedly is the largest fund raising exercise by an alternative investment vehicle so far. The projection that PE investments could hit $15 billion also implies that such investments in 2007 will be double that of 2006, and, hold your breath, 7.5 times what we saw in 2005. From $2 billion in 2005, PE investments grew to $7.5 billion in 2006. So far this year, deal making has been running at around just over a billion dollars a month. So the projection that deal making size will double in 2007 is unlikely to find disbelievers. Yet, this number will once again raise a question which has been raised with increasing frequency in recent times — how long can the PE boom last? Do we already have too many PE funds chasing too few deals? […]
ONGC Videsh Ltd (OVL) has sought 20 per cent participating interest in Iran’s Yadavaran field, which has an estimated capacity to yield 60,000 barrels per day (bpd) of crude. “Exercising our option we have asked Iran to consider giving OVL a 20 per cent stake in the project. The fate of the five-million-tonne liquefied natural gas (LNG) deal, which was inked between India and Iran in 2005, is linked to the development of these fields,” official sources said. In 2005, as part of a memorandum of understanding (MoU) signed with India, Iran had agreed to give 100 per cent participating interest in the Jufeyr project along with 10 per cent in the Yadavaran project to OVL. “However, if OVL, is unable to get 100 per cent participating interest in Jufeyr field then there was an option that Iran would offer 20 per cent in Yadavran project,” the sources told Business Line. This move by OVL is significant as Iran is reported to be in talks with China for a stake in Yadavaran. Besides, PEDEC, a subsidiary of National Iranian Oil Company (NIOC), is understood to have informed OVL that the MoU signed in 2005 has expired though OVL had prepared a master development plan for the project and submitted the same to PEDEC. […]
Private equity firms are shying away from investing in Indian auto parts makers, hitherto one of their favourites, citing muted medium-term growth potential, but experts said the long-term outlook remained positive. Private equity (PE) investment was likely to return once the sector tides over its current problems – falling domestic demand amid sluggish auto sales and high interest rates and stunted export growth, thanks to a hardening rupee, they said. “Manufacturing used to be the second most favourite sector for PE investors for almost two years and now it's nowhere in the top five,” Arun Natarajan, chief executive at Venture Intelligence, which tracks private equity deals, said. A third of all manufacturing deals used to be in the auto components sector, he added. PE firms invested about $215 million rupees in nine auto parts makers in 2006 but have managed to put in just about a third of that in three firms so far in 2007, according to VC Circle, that tracks India's deal economy. Warburg Pincus, New Vernon Private Equity, Standard Chartered Private Equity, DE Shaw, International Finance Corp., Actis Advisers Pvt Ltd., IL&FS Investment Managers are some of the private equity investors in the sector. “The rise in interest rates had a dampening effect on auto demand, which has led to some auto component companies deferring fund raising,” Nainesh Jaisingh, head of Standard Chartered Private Equity in India, said. […]
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