Jet Air to sell 10% stake to global funds

Naresh Goyal who holds close to 80% stake in Jet Airways, today announced plans to dilute 10% equity to international funds. He however did not disclose the identity of the fund, nor the timing or price. Jet Airways is country’s largest private airline and controls one-third of the domestic market share. It also runs JetLite, a low-cost airline.

At the current stock price, a 10% dilution may bring in Rs 340 crore to the struggling airline.This is over and above the company’s plans to raise up to $800 million through a qualified institutional placement of equity shares and $400 million through a rights issue.The company also is raising $1 bn through debts to finance the delivery of five A330 Airbus and three Boeing 777.

Read more in The Economic Times article.

Actis Biologics taps PE firms to raise Rs 125 cr

Actis Biologics (India) is close to finalising a deal with private equity (PE) players to sell 15% stake. The company is in advanced stages of discussions with three foreign players to raise Rs 125 crore through issue of fresh shares, said Actis Biologics CEO Sanjeev Saxena.

Actis Biologics had recently purchased a technology ‘Liv1’ and is looking to set up an office in the US, for which these funds would be used. Actis has already invested $10 million in its R&D lab in Mumbai. The company plans to launch its new technology ‘VFF2’ in 8-10 months.

RNRL mulls Rs 12,000 cr capex for cement, shipping foray

Anil Ambani-controlled Reliance Natural Resources plans to enter cement manufacturing and shipping activities with an investment of Rs 12,000 crore.Earlier at the meeting, RNRL Chairman Anil Ambani said that "we are actively considering entering into cement manufacturing with 20-million tonnes capacity".

For supporting its ambitious cement business, RNRL is looking to run a shipping service. It will help the company in transporting raw materials and finished products. At present, RNRL is engaged in sourcing, supply and transportation of various fuels along with exploration, production and distribution of gas.

Asia jittery after US bailout reject

Even before the vote by US lawmakers on the $700 billion bailout plan, Asian and European markets had fallen on fears the crisis was spreading, while US regional lender Wachovia became the latest big bank to succumb to the crisis.Retail investors from Tokyo to Melbourne kept nervous vigil over their investments and some dumped shares on Tuesday following the shock rejection of the US bailout plan, which sent global equity markets tumbling.

In Japan, the Nikkei fell more than four percent to a new low for the year, following a rout in the US, Latin American and European stock markets earlier, as investors sought refuge in cash and safer investments, such as gold and government bonds.
In Australia, stocks fell more than five percent in early trade as brokerages scrambled to deal with spooked investors looking to cut their losses given the bleak outlook.

Bank of America to buy Merrill for $50 bn

Bank of America Corp said it agreed to buy Merrill Lynch & Co Inc in an all-stock deal worth $50 billion, snagging the world's largest retail brokerage after one of the worst-ever weekends on Wall Street.Bank of America now has one of the best and largest retail brokerages in the country, one of the top investment banks in the world, and a large stake in one of the best investment managers in the world.

The bank is buying about $44 billion of Merrill's common shares, as well as $6 billion of options, convertibles, and restricted stock units.Bank of America agreed to pay 0.8595 shares of Bank of America common stock for each Merrill Lynch share. The price is 1.8 times stated tangible book value.The bank also said it expects to achieve $7 billion in pretax expense savings, fully realized by 2012, and expects the deal to be accretive to earnings by 2010. The transaction is expected to close in the first quarter of next year.

The price, which comes to about $29 per share, represents a 70 percent premium to Merrill's share price on Friday, although Merrill's shares were trading at $50 in May and over $90 at the beginning of January 2007.The deal has been approved by directors of both companies. Three Merrill directors will join the Bank of America board.

Read more in The Economic Times article.
Chronology: History of Merrill Lynch

Lehman to file for bankruptcy, plans to sell units

Lehman Brothers Holdings Inc said it plans to file for bankruptcy protection, but the Chapter 11 filing will not include its broker-dealer operations and other units, including Neuberger Berman.Lehman is looking at selling its broker-dealer operations, and is still in advanced discussions with a number of potential buyers of its investment management division.

Bankruptcy represents the end of a 158-year old company that survived world wars and the collapse of Long-Term Capital Management but could not survive the global credit crunch.Investors in recent weeks had grown increasingly jittery about Lehman's $46 billion of mortgages and asset-backed securities, as well as its credit rating and its ability to raise capital.

Edelweiss plans to set up asset reconstruction unit

Financial services firm Edelweiss Capital Ltd plans to set up an asset reconstruction firm and apply for regulatory approval in the next six months, a top official said on Friday.

Asset reconstruction firms buy bad loans in a pool format at a discount and recover the money from the borrowers subsequently. Loan growth of nearly 30 percent in India over the past few years has resulted in creation of non-performing assets, an opportunity which is luring several state-run and private sector banks as well as financial institutions.

Under the deal, Edelweiss would offer advisory services on wealth management products to customers of the bank with an average net worth of over 1 million rupees each, Shah said. Several banks such as ICICI Bank, HDFC Bank , ABN Amro and Kotak Mahindra Bank have increased their focus on wealth management as wealthy Indians demand specialised advisory services.

Governmet re-starts attempts to see IFCI stake

Goverment has revived its effort to sell 26% stake in IFCI, plans of which were shelved in December last year.The stake sale process is expected to begin next quarter.Differences, however, persist over whether the new partner should be given management control. This was what had caused the IFCI board to cancel the process last year after the lone bidder, the Sterlite Industries-Morgan Stanley-led consortium, demanded management control.

The bidding process last year was fraught with problems after the board set a minimum reserve price of Rs 107, which was considered too steep. As a result, most prospective bidders withdrew. Of the three bids, two were for less than Rs 107 per share and were disqualified.

Read more in The Business Standard article.

Related Stories:
IFCI to sell 26% stake to strategic investor
IFCI raises bar for strategic investor
IFCI stake sale called off !

DoCoMo may buy stake in Tata Tele

NTT DoCoMo, Japan's biggest mobile phone operator, is in talks to buy a stake in India's Tata Teleservices in a deal that may exceed $933 million, company sources said. The news boosted shares in a unit of Tata Teleservices, Tata Teleservices (Maharashtra), by as much as 4% in Indian market.

DoCoMo is increasingly expanding its overseas presence as growth in the Japanese market slows, and the Tata deal would follow its $350 million investment in Bangladesh's No. 3 cellphone carrier TM International (Bangladesh) Ltd. The sources said DoCoMo's investment would likely only amount to a minority stake and it was unclear if the Japanese firm would clinch the deal as other carriers were keen to take a stake in sixth-largest player Tata Teleservices, part of the Tata Group conglomerate. DoCoMo, which competes with KDDI Corp and Softbank Corp, said in June it would seek more acquisitions overseas and particularly in Asia, and it will look into China and India if the chance arose.

India is the second-biggest market in the world after China, and the market is growing some 50% annually as only 23% of the population are now carrying cellphone. Demand for data communication is expected to show explosive growth after 2009 when 3G services starts, enabling faster transmission.

Orchid plans to sell 15-20% stake in research unit

Orchid Chemicals & Pharmaceuticals (Orchid) is considering selling stake in its research subsidiary by next year.A strategic investor may also be considered for Orchid Research Laboratories.However, before the fund-raising, Orchid plans value addition through work on molecules.

Orchid Research operates in four therapeutic areas — diabetes, pain, oncology and infectious diseases — at its two R&D centres at Sholinganallur and Irungattukottai in Chennai.The therapeutic areas have lead molecules which will go into trials by next year.

This would be the value-add after which Orchid Research would look at generating funds to meet the demands of the molecules, Rao said.Hence, putting a number on the amount of funds raised would be premature now.
The company currently invests 5-6% of its revenue every year for research and development, which was Rs 60 crore last year.

Essar Oil to raise $5 bn loan from 4 banks

Oil refiner Essar Oil is close to raising $5 billion in loans underwritten by four banks to fund the expansion of its refinery in western India, three bankers with knowledge of the deal said on Thursday.

Essar will raise $3.5 billion in 12-year, rupee-denominated loans underwritten by top lender State Bank of India, ICICI Bank and IDBI Bank, the bankers said.

It will also raise $1.5 billion in foreign currency loan from Standard Chartered and ICICI Bank, they said. "A couple of us have already signed the underwriters agreement. The other two will do it soon," said one banker, who declined to be identified because he was not authorised to speak to the media.

Essar is spending $6 billion to expand its 210,000 barrels a day refinery in western Gujarat state to 1 million barrels a day within three years. The bankers said the company's founders would bring in about $2 billion in equity for the expansion and working capital.

SBI to fund Tatas' bid for Singapore co

India’s largest bank, State Bank of India (SBI), will offer Tata Power $1 billion to help it acquire Senoko Power, Singapore’s largest-power utility.In the past, SBI had extended a $1.2 billion loan for the Corus acquisition and about $500 million for financing the buy out of Jaguar and Land Rover( SBI, others to raise $3 bn for Tata Motors
). For the Senoko bid, SBI Capital Market has been appointed as the lead arranger for funds. SBI has agreed to provide a loan for 18-24 months. The loan is pegged 350 basis points over Libor.

Temasek Holdings had put Senoko Power on the block in early August, in a deal which is expected to raise close to $3 billion. Temasek is expected to shortlist bidders in the first week of September after which those shortlisted will be allowed to carry out a due-diligence exercise. The entire sale is expected to be concluded by the end of 2009.

Suzlon to buy Martifer's REpower stake early

Suzlon Energy Ltd announced today that it has signed an agreement with Martifer for an early acquisition of the Portuguese conglomerate's stake in REpower Systems for 270 million euros ($396 million).

The agreement to buy Martifer's stake of about 22.48 per cent in REpower will be completed by December 15, taking Suzlon's holding in the REpower to around 90 per cent, the firm, the world's fourth-largest wind turbine maker.

Reliance abandons stake transfer of gas-rich D-6 block

Reliance Industries Ltd has abandoned a plan to transfer an 80 percent stake in a deepwater block to its subsidiaries as it has raised the money it needs for the block, the company said in a statement today.

Reliance, which owns 90 percent in the gas-rich D-6 block in the Krishna Godavari basin off east coast, said last week it had sent a proposal for the transfer of the stake to four fully-owned subsidiaries and was awaiting government approval.There were no details of the amount of funding it had raised.

Canada's Niko Resources owns the remainder in the D-6 block where huge gas discoveries have been made.Reliance aims to pump gas from D-6 from October and oil from September.