September 2007
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Blackstone's on full blast in India

It was a particularly trying moment in the negotiations. Blackstone, the US private equity giant, was in last-minute negotiations with the promoters of the Andhra Pradesh-based Ushodaya Enterprises, owners of Eenadu and ETV, to buy a stake in their media business. Broad details had been agreed upon and documents were being prepared when the deal makers realised that the structure can be tweaked slightly. A plain vanilla equity structure (with cash being brought in lieu of equity shares) was fine, but a higher return can be squeezed out if preference shares could be added. The question then was about the fixed dividend on the preference shares. The Blackstone team debated the issue for a long time, but it was proving to be a knotty problem. The dividend should be high enough to cover Blacktone’s interest costs otherwise it wouldn’t make sense. Akhil Gupta, the chairman and managing director of Blackstone Advisors India, didn’t bat an eyelid. “4.5%. It should be at least that much to cover the interest Blackstone is paying globally,” he told his team. In the end, they didn’t have to worry. Blackstone and Ushodaya opted for equity shares. But the incident highlighted Mr Gupta’s level of preparedness and attention to detail. […]

VSE sells 51% to raise Rs 12 cr

The members of Vadodara Stock Exchange (VSE) raised Rs 12 crore by divesting over 51% of its total equity as part of its demutualisation process. The deadline set by Sebi for the second and last set of stock exchanges to complete their demutualisation process came to an end on Friday. “With September 14, 2007, being the last date to complete the demutualisation process, VSE has completed the process well within the deadline set by market regulator,” VSE MD Dipak Raval said. Around 29 investors have picked up stake in 15-year-old regional stock exchange. Some of the investors include companies like Financial Technologies, one of the promoters of Multi Commodity Exchange of India (MCX). Other players include Amod Stamping, Lisa Finevest and Pratham Group company-Pratham Investment. A senior official of Reliance Group has also been allotted 2% in VSE. According to Mr Sanjiv Shah, Sebi nominee on VSE board, eight corporate houses have been allotted 26% of VSE’s total equity. “We expect that with prominent corporate houses as VSE’s shareholders, the market value of the exchange would go up further,” added Mr Shah. […]

Ten in race to buy 26% stake in IFCI

The race for IFCI has entered the final stage with 10 bidders – both domestic and international – in the fray to acquire up to 26% stake in India's oldest financial institution. While the names of bidders will only be known on Saturday afternoon when the expression of interest is opened, the only name that was confirmed was a consortium comprising Japan's Shinsei Bank, US investor JC Flowers and state-run Punjab National Bank. PNB and IFCI had earlier agreed on a merger proposal brokered by government but deal fell through since the bank's management felt that the FI did not fit into its portfolio. But a change of management at the bank and IFCI's recovery have forced a rethink. While there were reports of Blackstone, Cargill, WL Ross and IDFC too submitting bids on the last day, at least two players – IDBI and Life Insurance Corporation – who already hold stakes and were widely expected to bid were absent. […]