MCX to hit market with Rs 600-cr IPO

The largest commodity futures bourse in the country - Multi Commodity Exchange of India (MCX) - is all set to hit the primary market with an initial public offering (IPO). The commodity exchange is likely to announce its long-awaited IPO within a week. Sources said, MCX would sell 10% stake, through a mix of fresh shares and an offer for sale, to raise around Rs 500-600 crore.

According to sources, fresh shares will contribute the majority of the offering while the offer for sale will account for 2-3%. An offer for sale refers to the sale of promoter's existing equity to the public. The bourse has been valued at around $1.2-1.3 billion. The issue is being managed by DSP Merrill Lynch, Kotak Securities and Enam Financial. MCX has been mulling over listing on local bourses for the past two years.

Sources said, IPO would provide many of its Indian and foreign investors an exit route. Around 24% of MCX is owned by foreign investors. While Fidelity holds 9%, Merrill Lynch and Citi own 5% each. The other investors include US-based Passport Capital (3%) and the UK-based fund GLG (2%).

Read more in The Economic Times article.

R Systems to acquire Sento Europe

R Systems International, an outsourcing firm, is set to acquire Sento Europe B.V., a Netherlands corporation and Sento S.A.S., a French corporation (collectively known as Sento Europe) from Sento Corporation, US.

The transaction is subject to contracts and corporate and regulatory approvals and it is anticipated that the transaction will be completed before January 15, 2008, said a release issued by the company.

Sento Europe has operations in Enschede, Netherlands and Metz, France. The company provides integrated technical support and customer care services through multiple channels in 16 European languages. Sento Europe primarily focuses on the technology sector and amongst its clients are the world's leading consumer electronic companies. The company achieved revenues of approximately $14.85 million during the year ended March 2007.

DLF to list 5 Units

Real estate major DLF plans to raise $5 billion over the next three years by listing five of its business units, including DLF Homes, DLF Retail, DLF Hotels, DLF Utilities and DLF Infrastructure. There are no plans to further dilute equity in group flagship DLF. The eventual strategy is to make DLF a holding company with considerable equity stakes in the listed entities in addition to being an incubator for new businesses.

In all, the company is looking at a fund infusion of $10-12 billion in its various businesses over the next three years.The $5-billion group will raise the fund through domestic IPOs in addition to Singapore listing of DLF Assets (DAL)(Related story), the company which own the office space development and management business of the group. At present, the company is awaiting regulatory approvals for this IPO.All other business units of the company are expected to be listed in Indian capital markets only.

Read more in The Economic Times article.

Pvt equity firms line up cash for Nazara

Nazara Technologies, the Mumbai-based mobile entertainment provider and online gaming firm, is inching closer to get a second round of funding from two private equity firms in early January.An industry source in know of the development said that two overseas PE firms, including Sequoia Capital will invest around $7 million in Nazara.

It has been learnt that Sequoia deal has been sealed and Nazara will make an official announcement on January 7, though promoter and chief executive officer of Nazara Technologies Nitish Mittersain declined to comment anything at this stage.

“Margins in the cricket and gaming are as high as 40% compared to other space like music, ringtones where it’s around 5%. We have targeted the mobile value-added services space in a big way,” Mittersain added.

Nazara had got first funding of $1.5 million from Sequoia Capital.Sequoia Capital has investments in Mauj ($10 million), Bharti Telesoft ($12 million), Nazara ($2 million), Bubbly Motion ($10 million).

According to Associated Chambers of Commerce and Industry of India, a reduction in basic customs duty from 10% to 5% and elimination of additional customs duty could enhance India’s current share of 0.25% in the $30 billion global market to 3% by 2010.

Read more in The DNA Money article.

Vivimed lab close to buying German firm

Hyderabad-based Vivimed Laboratories, a business-to-business speciality chemical and pharmaceutical manufacturer, is close to buy the cosmetics and related ingredient manufacturing division of a German multinational specialty chemical and pharmaceutical company.According to sources Vivimed will add to its fold three units of the German company, located in Germany.

The three units, which include a research and development centre, currently manufactures about 45 products with a turnover of $30-40 million. Vivimed was negotiating with the German company since last year to take over the brands, existing business and intellectual property rights of that division, they said.

Read more in The Business Standard article.

UB group ups stake in Deccan Aviation by 3%

UB group has increased its stake in low-cost airline firm Deccan Aviation by almost 3% through market purchases, stock exchange data showed on Wednesday.UB group firm Kingfisher Radio, that runs Kighfisher Airlines, purchased a total of four million shares (2.95%) on Wednesday on BSE and NSE combined at Rs 275 each.Most of the shares were purchased from Money Matters Advisory and Money Matters (India), according to the BSE and NSE data.

With these purchases, Kingfisher Radio and other group companies of UB group have increased their stake to almost 49%.In September, UB group had made an open offer to the shareholders of Deccan Aviation at Rs 155 a share for a 20% stake.Last week, Deccan Aviation had announced it would merge the airline operations of Kighfisher Airlines with it.

Spice to sell telecom towers to Srei

Mobile services provider Spice Communications is set to sell its tower arm to Srei Infrastructure. The deal is estimated to be worth around Rs 500 crore. Following the deal, the towers from Spice may be added to Srei’s subsidiary Quipo Telecom, a stand-alone tower company.

Spice has also said that it was availing loans for up to $400 million from Hong Kong & Shanghai Banking Corp and another $410 million from China Development Bank for expanding its networks in Karnataka and Punjab, the two circles where it currently offers mobile services.

Read more in The Economic Times article.

SBI to absorb 6 associates by Mar ’09

SBI chairman O P Bhatt, who had convened the meeting of six associate banks of SBI at its Nariman Point office, made it clear that he wanted nothing less than a “bullet” merger — all the six associates, three of which are listed entities, should be fused into the mothership in one shot, before March 31, 2009.

He was insistent because separate integration exercises — as was done in the case of State Bank of Saurashtra, which ceases to be an entity on January 26, 2008, — would be extremely cumbersome, gargantuan and mind-numbing considering the complexity of manoeuvres needed to keep the 3.3 lakh combined employees happy.

The boards of the SBI and the six associates will now hold a meeting on January 25 to give their in-principle nod to the merger.The finance ministry and the Reserve Bank of India are expected to give their green signals.The goal is to have a common balance-sheet as on March 31, 2009, said an SBI official in the know.

That’s important because India will open its doors fully to foreign banks by then. The size of operations of the foreign banks could dwarf the domestic players, which is why the government has been at pains to encourage consolidation.

Read more in The DNA Money article.

India Inc to have easier M&A ride

The government has decided to simplify the norms for mergers and acquisitions by removing the bottlenecks that slow down India Inc’s inorganic growth. The idea is to offer a fast-track system which will spare companies from the lengthy process of securing high court sanctions for M&As, if they meet certain criteria.

The ministry of corporate affairs is working on two types of fast-track clearances for M&As. The first one is a new concept called ‘contractual mergers’. Under this, companies needn’t wait for the high court approval, which will take at least six months to materialise.

This proposal, originally mooted by a panel headed by eminent lawyer Shardul Shroff and later endorsed by the JJ Irani panel on company law, will get legal recognition soon, officials said. The second proposal is a simplified procedure for M&As between group companies and unrelated private companies.

Under the contractual merger plan, companies can decide to merge through a contract which should be approved by the shareholders later. Such a window is available in many other countries. Currently, all private sector companies need to get the approval of high courts for M&A activities, while state-run companies have to obtain the government approval.

Read more in The Economic Times article.

Future Capital picks up 28% in Sankalp Stores

Future Capital, the financial arm of Future Group, has picked up an estimated 28% stake in Sankalp Retail Value Stores, a franchisee of the US-based discount format, My Dollarstore. The discount format will now be a part of Pantaloon Retail’s larger strategy to set up imported bazaar concessions as a shop-in-shop concept in its hypermarket, Big Bazaar.

A team of Big Bazaar is working on setting up the new format which will offer a huge array of imported products at reasonable rates. Anil Biyani, Kishore Biyani’s younger brother, is likely to be in charge of imported bazaar, sources said. The format is also expected to help scale up the profit margins in Big Bazaar.

Read more in The Economic Times article.

Merrill Lynch may pick 20% stake in Sharekhan

Private equity(PE) investor Citigroup Venture Capital (CVC) is diluting a part of its 75% stake in brokerage firm Sharekhan. Financial services major Merrill Lynch is said to be the front-runner to pick a minority stake even as other PE firms, including Baring Private Equity, are believed to be in the race.

The industry buzz is that the deal for 20% stake is valued at around Rs 300 crore. However, a source close to Sharekhan said CVC is looking to dilute its stake only by 10% and the deal value is close to $50 million or Rs 200 crore.

This will put Sharekhan’s total value at Rs 1,500-2,000 crore, a jump of around 100% in seven months. CVC along with IDFC had picked 85% in Sharekhan in May this year for Rs 650-700 crore, pegging the valuation at around Rs 800 crore.

Read more in The Economic Times article.

Bharti eyes Big Apple as starter for retail feast

Bharti Enterprises, slated to start its retail business in the first quarter next year, may acquire Big Apple — the Delhi-based supermarket chain with 65 stores. Bharti’s acquisition blueprint in the retail sector may be a replay of its telecom business, where the group built up a pan-India mobile presence by acquiring telcos such as JT Mobile in Karnataka and Andhra Pradesh, Skycell in Chennai and Hexacom in Rajasthan.

A senior source said the Bharti Group and Big Apple are at fairly advanced stages of negotiations and if price expectations match, the deal could be sealed as early as next month. He also said Big Apple has quoted its price and Bharti has given a revised offer.

Read more in The Economic Times article.

Australian co may buy controlling stake in Sharepro

Australia-based Link Market Services, a provider of registry services and technology to financial market participants in Australia, is learnt to be in an advanced stage to pick up controlling stake in Mumbai-based Sharepro Services.

The deal, pegged at around $10 million and likely to be sealed within a month, is yet another example of the interest among foreign capital market intermediaries to build a presence in the Indian capital market.

Sharepro Services is a Sebi-registered category-I registrar and securities transfer agent with depository connectivity for both NSDL and CDSL. Sharepro Services CEO Chhaya Shah confirmed that talks were on.

According to sources, the Australian company is keen on picking up a controlling stake of over 51% in Sharepro. The two companies are also learnt to have agreed to let the current management run the daily operations.

Read more in The Economic Times article.

IFCI stake sale called off !

IFCI, India’s oldest financial institution saddled with bad loans, today called off its stake sale plan after marathon talks with the Sterlite-Morgan Stanley combine ended in disagreements over the price and management control.

A press release from IFCI said since the bid was made on the condition that the consortium would take over the management of the company, it was decided not to proceed with it.According to sources close to the development, the Sterlite-Morgan Stanley consortium was offered management control at Rs 145 a share, which it did not accept.

IFCI then quoted Rs 111 apiece with three of the eight board seats. The bidders, however, insisted on five board seats at this price. At this point, the deal was called off.

Read more in The Business Standard article.

Manappuram receives Rs 70 crore funding

Manappuram General Finance and Leasing (MAGFIL), the flagship company of the Manappuram Group has arranged a fund infusion of Rs 70 crore from Sequoia Capital and India Equity Partners (IEP).

Sequoia Capital and IEP will invest Rs 35 crore each in two tranches to bankroll Manappuram’s expansion plans for MAGFIL and other group companies.MAGFIL, the BSE-listed non-banking finance company, which is the flagship of the Manappuram Group, had earlier this month finalised the raising of Rs 46.80 crore in working capital from Sequoia and Hudson Equity Holdings, an investment vehicle of IEP, a $300-million private equity fund.

Read more in The Business Standard article.

VCs ready to finance carbon credit business

The Indian carbon sector is getting hot. Venture capital firms are making a beeline to set up exclusive carbon funds for clean development projects (CDM) which have the potential to generate carbon credits.

Kick-starting the process is IFCI Venture Capital Fund, which is planning to float Green India Venture Fund with a corpus of around euro 50 million, to begin with. The fund could be raised to euro 100 million once a partner is roped in.

Read more in The Times of India article.

ICICI Ventures may exit Dr Reddy's R&D unit

ICICI Venture Funds and Citigroup Venture Capital are likely to pull out their investment in Dr Reddy’s Laboratories’ drug research company, Perlecan Pharma, on concerns over the commercial viability of its experimental drugs. The two investors have begun talks with Dr Reddy’s to sell their stake for their initial investment of $26 million plus interest.

Perlecan Pharma started in September 2005 with four new chemical entities from the Dr Reddy’s stable and has the first right of refusal for further discoveries by the Hyderabad-based company. However, the company this year abandoned the development of a new drug code-named DRL 11605, aimed at treating diabetes and obesity. Perlecan’s pipeline is now left with three molecules: DRF 10945, a molecule targeted at metabolic disorders, currently in phase II of clinical trials, RUS 3108, a cardiovascular drug in phase I, and finally DRL 16536, an anti-diabetic drug in late pre-clinical studies.

Read more in The Economic Times article.

NYSE, Nymex line up to buy stake in MCX

The New York Stock Exchange (NYSE) and the New York Mercantile Exchange (Nymex) are awaiting policy guidelines on foreign direct investment (FDI) in commodity exchanges to pick up minority stake in Multi Commodity Exchange of India (MCX). The guidelines may be announced on Friday.MCX, the largest commodity futures bourse, is promoted by the Mumbai-based Financial Technologies (FTIL).

When contacted an MCX spokesperson said that the exchange has been long awaiting the government policy on foreign investments. While the transaction value under discussion is not clear, sources say that it could be in line with the previous stake sale. Last week, FTIL offloaded around 10% stake in MCX. ICICI, IL&FS and Kotak acquired 3.55%, 5%, 1% stakes, respectively, at an enterprise value of $1.1 billion (around Rs 4,400 crore). With this, FTIL's holding in MCX has come down to 37.5%.

MCX and National Commodity & Derivatives Exchange (NCDEX), which run two leading national commodity bourses, have been pioneers in attracting foreign investors. While Fidelity had picked up 9% in MCX, Goldman Sachs had bought 8% in NCDEX. NCDEX had later sold 7% to Inter-Continental Exchange (ICE) as well.

Read more in The Economic Times article.

Merrill Lynch buys 13% in mining co

Merrill Lynch International has picked up a 12.74% equity stake in mining firm Resurgere Mines & Minerals India for an undisclosed amount. Formerly known as Exfin Shipping (India), Resurgere has interests in extracting, processing and selling mineral products and also in exploration and development of mining assets.

In a bid to fund the purchase of plant and machinery to set up its extraction and crushing facilities at mines, it is in the process of tapping the capital markets. The company also plans to buy railway rakes to set up its logistics infrastructure facilities from the capital raised.

Resurgere currently operates in Kendujhargarh and Mayurbhanj districts of Orissa and has plans to start operations in Jharkhand’s Singhbhum district soon. It has entered into an arrangement with a leaseholder in a mining area in west Singhbhum district for mining iron ore and supplying the entire production.

All three mines carry high-quality iron ore of about 62-64% ferrous content. Resurgere sells most of its products domestically, except for iron ore fines, which it exports to China.

Dell may sell its BPO biz

Intelenet and Blackstone seem to have joined the race to acquire Dell’s non-US BPO business, which is on the block.Interestingly, even as Dell maintains that it was not contemplating any such move, sources said that Intelenet (which was recently acquired by Blackstone) and Blackstone itself as a standalone buy-out fund have evinced interest in acquiring the unit. Besides, these two, the other names going around in the market are Wipro and Accenture which have shown interest to acquire the PC makers unit.

Sources said the world’s second-largest PC maker has put its contact centres across India, Philippines, El Salvador in South America and Canada on the block. The valuation of the business could be anything upwards of $3 billion, sources said.

Read more in The Times of India article.

RCom completes takeover of Yipes Holdings

Anil Ambani group company Reliance Communications today said it has completed the acquisition of US-based Yipes Holdings in an deal valued at around Rs 1,200 crore.The acquisition, which was announced in July this year, would give the company access to a Rs 4,00,000 crore global enterprise data market, RCom said in a statement.

It has received all necessary approvals from the US Federal Communications Commission (FCC) for the transfer of control of Yipes, the statement added.Yipes has strategic network presence in the top 14 US metros, which account for 40% of the total US datacom market and also has nearly 1,000 enterprise customers.

The company would expand Yipes presence to 40 new markets globally including Middle East, Asia and India. By synergizing Flag and Yipes, Reliance is poised to become the global leader in Ethernet, which is expected to reach Rs 1,00,000 crore ($25 billion) market by 2010, it said.

Related Post:
Flag Telecom buys US-based Yipes for $300mn

Vivimed Labs nears buys in US, Europe

Hyderabad-based Vivimed Labs is close to acquiring two speciality chemical companies in the US and Europe.It will pay $40 million for the European company and $25 million for the other.

Vivimed will acquire only the brands, intellectual property and customers of the company. Manufacturing assets and employees will remain in the parent company. The European company is expected to add over 10% to the revenues in the first year of operations. Vivimed will integrate the company with its Indian operations by shifting manufacturing to the country.

Read more in The DNA Money article.

Sequoia, Singapore fund may invest in Excelsoft

Sequoia Capital and a Singapore-based private equity fund are learnt to be in the race to invest upwards of Rs 100 crore in Mysore-based e-learning firm Excelsoft.Excelsoft is a six-year-old firm which provides a range of customised learner-centric learning systems, test and assessment systems, and desktop tools.

According to industry information, the company, which has a topline of around Rs 50 crore is expected to be valued in the range of Rs 350-400 crore for the stake sale. A deal is expected to be sealed by early-January 2008.

Industry sources further indicate that in addition to Sequoia and the Singapore fund, ICICI Venture is also in the fray to invest in this high-margin firm.

Read more in The Business Standard article.

3 Indian cos bid for Singapore power giant

Three domestic power companies — Reliance Energy, Tata Power and GMR Infrastructure — have submitted indicative bids to acquire Singapore-government owned Tuas Power.

While Tata Power and Reliance Energy have decided to bid on their own, Bangalore-based GMR Infrastructure has formed a consortium with Macquarie Bank and Kuwait Fund for the purpose.The price tag for the foreign asset could be at around $2 billion (Rs 8,000 crore).The domestic power majors submitted their bids today, which was the last date of submission of indicative bids.

Industry sources said other interested parties include Hong Kong's China Light & Power, Hongkong Electric, Japan's Marubeni, Singapore's SembCorp Industries, Tokyo Electric Power Co, Australia's Babcock & Brown, General Electric and International Power Plc of the UK.

Read more in The Business Standard article.

US fund to pay Rs 501 cr for 5% in Rel Cap

Eton Park, a US-based hedge fund managing over $10 billion worldwide, is buying a 5% stake in Reliance Capital Asset Management for Rs 501 crore. This values the mutual fund at Rs 10,000 crore or 13% of assets under the fund’s management. RCAM will use the proceeds from the stake sale to expand its domestic and international operations, a company press release said, adding that the transaction was expected to be finalised in January 2008.

Reliance Capital said the valuation of the mutual fund arm, following the proposed investment by Eton Park, translates into Rs 400 per share of Reliance Capital. Eton Park was formed in 2004 by three former Goldman Sachs executives.

Read more in The Economic Times article.

Goldman values Tejas at $625 million

Tejas Networks, the Rs 240 crore Bangalore-based optical networking firm which makes proprietary boxes for transmitting data for telecom carriers, has been valued at Rs 2,400 crore ($625 million) by Goldman Sachs when it recently invested around Rs 95 crore.The investment by Goldman Sachs in the firm takes the total private equity investments in the company to Rs 280 crore ($73 million).

Tejas is aiming to go public next year and its valuation is expected to be close to Rs 3,200 crore ($800 million), when it will have a topline of around Rs 400 crore.
According to industry information, around 10-15 per cent is expected to be offloaded, with Tejas raising around Rs 300 crore in the process. Tejas Networks offered not to comment on the valuation by Goldman Sachs.

Other private equity investors, include Sandstone, Intel Capital. Mayfield Ventures, Battery Ventures, SUN Group of the Khemkas, besides ASG Omni. IL&FS Venture was among the early investors who have exited the firm. Tejas has Silicon Valley billionaire entrepreneur Gururaj Deshpande as its mentor and early-stage investor, besides his company Sycamore, also has an exposure.

Tejas Networks is among the few homebred firms focussing heavily on the Indian markets and counts almost all telecom service providers among its customers.

Read more in The Business Standard article.

Welspun sewing another European buy

Some 16 months after its first European buy, Welspun India is close to acquiring another home furnishings and textile firm in the continent as it tries to reduce dependence on the US market and combat the rupee’s appreciation against the dollar.

The company is likely to announce the deal, which is estimated to be in the range of Rs 80-100 crore, by the end of this month. The name of the company it buying and other details were not disclosed.However, Akhil Jindal, president, Welspun India, denied any such plans. Welspun acquired Christy, the UK’s largest terry towel brand, in July 2006.

The flagship company of Rs 2,500 crore Welspun Group exports products mainly to the US; 70% of its revenues comes from exports of which Europe contributes only 5%.Welspun is among the top four terry towel manufacturers in the world and accounts for 30% of the country’s terry towel exports to the US and 8% of the US imports of terry towel.

It is a vertically integrated company with activities starting from cotton farming to branding and retailing. It is one of the largest exporters of terry towels in Asia, exporting products to global companies like Costco, Wal-Mart, Kohls, Target, Springs, Nautica and Umbra.

Read more in The DNA Money article.

Nicco Corp to form JV with Italy-based Prysmian group

Electrical cable manufacturer Nicco Corporation today said it will set up a joint venture company with Italy's Prysmian group to cater to the Indian cable market.

Prysmian, a global player in energy and telecommunications cables industry, would hold about 60 per cent stake, while Kolkata-based Nicco corporation would pick up 40 per cent stake in the JV company.

Prysmian (Dutch) Holdings BV, a subsidiary of Prysmian group, has signed a definitive agreement with Nicco Corporation to set up the said JV, Nicco Cables Ltd, the company said in a filing to the Bombay Stock Exchange.

Essar Power to divest 10% to PEs for $700 m

The Ruia-controlled Essar Power (EPL) is offloading 10% stake to private equity (PE) investors to raise up to $700 million. The equity of the company is valued at $7 billion, sources said.

Essar Power currently operates power plants with a capacity of 1,200 MW and has drawn up an investment plan of over $4 billion to set up three more projects with cumulative capacity of 3,600 MW. The projects are coming up in Gujarat, Madhya Pradesh and Jharkhand and are expected to be funded on the basis of debt-equity of 3:1. The company has drawn up plans to set up projects of about 6,000 MW capacity.

The Indian power sector is attracting a lot interest from international investors. Projects with fuel linkages fetch attractive valuations. As Essar Power has developed capabilities in setting up mega power projects, the investors are eyeing the company as a potential investment target, said industry analysts.