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Real estate developers are depending heavily on private equity (PE) funds to bail them out to make payments for old land acquisitions and to kick off projects at the land-buying stage. With bank loans drying up and cash flows under stress due to dipping sales, PE money seems to be the only source of relief. Two Mumbai-based firms, DB Realty Ltd and Ackruti City Ltd, need to pay up a premium of Rs.802 crore and Rs.330 crore, respectively, in February for the redevelopment of the high-profile Bandra Government Colony project in the city that was allotted to them by the state government last year. The land premium that was to be paid in September 2010 was pushed to February this year according to a 28 January report by Anand Rathi Financial Services Ltd. Both the developers have said that they will need to raise money to make the payments. […]
Coal India Ltd , the world's largest coal producer, may buy up to a 15% stake in US-based Peabody Energy Corp's Australian assets early next fiscal for an estimated USD 100 million (about Rs 450 crore). “It (deal) should not take too long a time. It should be two to three months. We are in the final stages of talks with Peabody Energy for a 15% stake for USD 100 million,” an official privy to the development, who did not wish to be named, told PTI. More or less an agreement has been reached on the valuation, the official said, adding, “We will invest in equity and in return, we will get the right for coal offtake.” CIL Chairman P S Bhattacharyya, however, refused to comment on the issue. The proposal to buy a stake in Peabody's asset will be deliberated at a meeting of a sub-committee of the company board on the state-owned firm's foreign acquisition plans, which is likely to take place this month. […]
The departing chairman of the Securities and Exchange Board of India (Sebi), C.B. Bhave, proposed changes in key areas related to the capital market, 10 days before the end of his three-year term. In a bid to bring in more transparency in deals between group companies, Sebi will propose that the ministry of corporate affairs tighten norms for all interested parties, including promoters, in such deals. The market regulator said it will recommend to the ministry the amendment of a clause of the Companies Bill, 2009, to prevent interested shareholders from voting on the special resolution of the prescribed related party transaction. The definition of interested party will cover the promoters of companies, Bhave said, while addressing the last board meeting of his tenure that ends on 17 February. The board discussed some of the issues that had arisen out of the earnings fraud at Satyam Computer Services Ltd. Investors won’t be allowed to vote on resolutions that involve a conflict of interest. “The issue arose when Maytas was proposed to be amalgamated with Satyam. Though the transaction did not materialize eventually, the matter originated from there,” said Bhave. […]
Private equity investment slowed down to $500 million in January over the previous month, says a report by Ernst & Young. Infrastructure companies, however, attracted a major chunk of the PE investment in January, which was lower by 9% over about $550 million in December last year, the report said. “There has been a marginal decline in the aggregate investments during the month compared to last month, but activity remains robust compared to January 2010,” E&Y Partner (Private Equity) Mayank Rastogi told PTI. The total PE investment in January 2010 was $380 million. However, the total number of deals announced during the month was higher than that in both the previous month and January 2010. In January this year, 28 PE deals were announced, against 26 deals in December and 16 in the same month last year. […]
Private equity (PE) firms are taking tax insurance on exits from investments in order to protect themselves from litigation, having been spooked by the recent travails that have beset acquisitions by HSBC and Vodafone. According to tax consulting firms such as KPMG, Deloitte Haskins and Sells and PricewaterhouseCoopers (PwC), and law firms that help PE firms structure the exits, funds are seeking such cover while negotiating the deals. However, they declined to disclose details of such transactions due to client confidentiality agreements. “Funds are actively looking to take some cover regarding uncertainties on the taxation aspect,” said Pranay Bhatia, associate partner at legal firm Economic Laws Practice (ELP). In the past one year, he has worked on at least five exits where such insurance cover was taken. “There is a lot of uncertainty regarding the Mauritius tax treaty protection in the (proposed) direct taxes code, so we want to protect ourselves from any tax exposure,” said a fund manager of a foreign PE fund that invests in India. He declined to be identified. […]
Marquee private equity names are in the reckoning for bigger investments in India's $50-billion healthcare industry. General Atlantic Partners (GAP) and Jardine Rothschild are among the funds that are likely to cut deals with a few emerging healthcare service providers in the coming weeks. General Atlantic, which is shaking off its technology and export focus in India, is holding discussions to buy $100 million, or Rs 450 crore, stake in DM Healthcare spearheaded by Dubai-based medical entrepreneur Dr Azad Moopen. Jardine Rothschild Asia Capital, a private equity joint venture between Jardines and the Rothschilds, is in the fray for $50 million, or around Rs 200 crore, investment in Hyderabad-based Quality Care, which operates a network of 12 hospital under the Care brand. These transactions are part of the ambitious growth capital raising by emerging healthcare networks. Care Hospital-in which the big bull Rakesh Jhunjhunwala and serial entrepreneur and Matrix Labs founder N Prasad are investors-plans to raise Rs 350 crore in equity and debt for doubling beds from 1,700 to 3,200. DM Healthcare is looking at over Rs 600 crore fund-raise to ramp up fast even through acquisitions. […]
Fundraising woes and changing investor preferences are diminishing the influence of private equity fund-of-funds managers. No longer can a fund-of-funds manager's decision whether to invest in a fund make or break that fund. In fact, some insiders estimate that 20% of current fund-of-funds managers might not survive because of fundraising problems. According to Preqin, an alternative investment research firm in London, funds of funds accounted for a mere $10.7 billion of the $225 billion raised worldwide by private equity funds in 2010, the lowest total since 2004. In 2009, funds of funds accounted for $27.4 billion. Private equity funds of funds returned 11.6% for the year ended June 30, according to Preqin. The overall private equity internal rate of return for the year ended June 30 was 19.18%.Industry professionals predict that many funds of funds will either merge, close or change investment strategies. […]
Largest private equity fund launched in Asia since the global financial crisis; Fund V raised in less than five months; 60 per cent larger than BPEA’s Fund IV which was closed in February 2008. BPEA affiliates now have approximately $5 billion in funds under management, making the group one of the largest dedicated Asian private equity firms. Baring Private Equity Asia (BPEA) has closed the Baring Asia Private Equity Fund V, with $2.46 billion in investor commitments, making it the largest private equity fund launched in Asia since the Global Financial Crisis. BPEA affiliates now have approximately $5 billion in funds under management, making the group one of the largest dedicated Asian private equity firms. Fund V which was raised in less than five months closed at its hard cap and was heavily oversubscribed with more than $1 billion in excess demand. The fund is 60 per cent larger than BPEA’s Fund IV, which was one of the largest regional growth equity funds in Asia when it closed in February 2008 at $1.52 billion. “Further building on BPEA’s successful track record, Fund V will deploy the same investment strategy targeting growing mid-sized businesses in Asia that require capital for expansion, recapitalization or acquisitions. The fund will target companies in a broad range of sectors with operations in Greater China, India, Japan, Singapore, South Korea or South East Asia,” BPEA said. […]
Money Matters Financial Services on Saturday said that it has terminated the joint venture (JV) with the private equity firm Milestone Capital. In November 2010, Money Matters Financial Services was accused by Central Bureau of Investigation (CBI) of bribing senior officials of public sector financial institutions to arrange corporate loans. The board of directors of the company at its meeting held on Saturday has terminated the joint venture with Milestone Capital Advisors and has winded-up the special opportunity fund, Money Matters Financial Services, said in a filing to the Bombay Stock Exchange. The board of directors have also cancelled the capital commitment as a sponsor to Money Matters Venture Capital Fund, the filing added. […]
Faering Capital, promoted by former Morgan Stanley executive Sameer Shroff and HDFC honcho Deepak Parekh’s son Aditya Parekh, has raised Rs 830 crore as the first closure of its fund — Faering Capital India Evolving Fund. It is aiming to raise Rs 1,000 crore. “We raised the fund completely from the domestic market and have no immediate plan for any off-shore fund. We are looking at about 10-12 deals through this fund and acquiring a significant minority stake,” Aditya Parekh told Business Standard. Faering plans to add eight people by the end of 2011 and three-fourth of them will join as associates and at the VP level. The possible investment areas include financial services, consumer and retail, telecommunication, technology and internet, media and entertainment, education, healthcare and business services. The fund would assign significant consideration to the investee company’s corporate governance record and the quality of its management team, said a company statement. Faering expects to commit Rs 35-80 crore equity per transaction. “Today, there are significant structural positives in the Indian economy — largely driven by favourable demographics, increasing urbanisation, a growing middle class and a young professional workforce,” it said. […]
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