What could have been one of the largest private equity deals in India has come unstuck. ICICI Venture and Jaypee Infratech have terminated negotiations for the PE player buying close to 10-15% stake for $800 million in the infrastructure company, which is developing project worth Rs 1 lakh crore. The deal could have given Jaypee Infratech a valuation in excess of Rs 30,000 crore.
“ICICI Venture is not investing in Jaypee Infratech. We were looking at getting a strategic investor in the firm, but have put our plan on hold for now,” Jaiprakash Associates (JAL) executive chairman Manoj Gaur told ET.
Jaypee Infratech is a wholly-owned subsidiary of JAL and the original plan was for investors to acquire 44% stake in the company through allotment of new shares. But now JAL plans to invest up to Rs 440 crore to acquire 44 crore equity shares of Rs 10 each at par, in one or more tranches in Jaypee Infratech.
The additional shares JAL is subscribing were originally meant for strategic investors, Mr Gaur said, adding that “since the strategic investment has been put on hold, JAL has initiated action to subscribe to these shares.”
It couldn’t be ascertained as to why the deal didn’t work out. But sources said the deal may have fallen through because of several reasons, including valuation and representation on board.
It couldn’t be independently confirmed how much stake ICICI Venture was seeking in Jaypee Infratech, but Mr Gaur had told a news agency two months ago that the stake could be in single digit, although some reports suggested that it could be above 10%.
JAL had floated Jaypee Infratech last year to execute the 165-km-long Taj Expressway project linking Noida with Agra. Mr Gaur estimates this project to be worth Rs 1 lakh crore. Under the project, Jaypee Infratech will also develop close to 35 crore sq ft of real estate in the five proposed townships along the expressway.
The Taj Expressway project, which was awarded to Jaypee group in 2003 by the then Mayawati government of Uttar Pradesh, was delayed due to a political controversy. The project, however, has now been given a go-ahead by a probe panel and may be completed by 2010. With Mayawati back in Lucknow as chief minister, the project is unlikely to see any further delay.
Had the ICICI Venture-Jaypee Infratech deal been completed, it could have been the biggest deal by ICICI Venture in India. At least two PE deals have been reportedly called off in the past two months. Leading international buyout firm Blackstone first scaled down and later called off its agreement to buy 26% stake in Hyderabad-based Ushodaya Enterprises, promoters of Eenadu newspapers and television channels, for $275 million.
Similarly, Future group’s PE fund Indivision cancelled its deal to buy 4.9% stake for Rs 250 crore in media house Zee TV’s DTH venture Dish TV. The deal was reportedly called off following the market meltdown that saw Dish TV share prices sliding in the open market much below the agreed purchase price between the two parties.
Source : Economic Times