Blackstone’s NCC stake-hike plan blocked

The government has blocked private equity firm Blackstone’s plans to hike stake in Nagarjuna Construction Company (NCC) on the grounds that the construction firm has been operating as a ‘foreign-owned Indian holding company’ without prior permission from the Foreign Investment Promotion Board (FIPB).NCC has been asked to first pay a penalty to RBI and then seek a fresh permission from the FIPB to offload an additional 3.5% stake to US-based Blackstone.

The construction company had sought government permission to issue 91 lakh convertible share warrants to Blackstone at a conversion price of Rs 225 each, a deal size of Rs 205 crore. This was the second tranche of investment planned by the private equity firm in the company. In August 2007, Blackstone struck a deal to invest about Rs 616 crore to pick up a 12% stake. This was a two-tiered transaction in which it was to get convertible warrants in the second leg.

Blackstone, however, stands to benefit from the government’s decision to reject the proposed investment. NCC’s stock price has crashed and on Monday closed at Rs 68.55 on the BSE. The private equity firm would not like to pay more than a two-fold premium on the existing stock price while subscribing to the convertible warrants.

According to Press Note 9 guidelines, laid down by the Department of Industrial Policy and Promotion (DIPP), a foreign-owned Indian holding company is a domestic firm in which foreign investment is 51% or more. In NCC’s case, though, the total foreign stake is 30.83% as of August 2008. Of this, Blackstone holds 8.85% as a foreign institutional investor (FII). NCC has RBI’s permission to take FII investments up to 74%.

Read more in

Blackstone arm buys Synergy stake for Rs 72 cr

Blackstone Real Estate Partners, the real estate arm of Blackstone group, has taken a minority stake in Synergy Property Development Services by investing $18 million (Rs 72 crore).Blackstone recently closed Blackstone Real Estate Partners VI with capital commitments worth $10.9 billion, creating the largest ever real estate opportunity fund.

Synergy specializes in architectural design and fitouts, complete project management and turnkey contracts. The company's forte is in managing the entire process from start to finish and ensuring timely project delivery.

Synergy, which is based out of Bangalore, has delivered real estate worth more than 20 million square feet and currently manages over 100 million square feet across various asset classes including office, retail, residential, hotels and hospitals. The company is also planning to expand into infrastructure projects such as airports.

Read more in The Business Standard article

Blackstone to up Nagarjuna Construction stake to 12.2%

US-based private equity firm Blackstone is all set to raise its stake in Nagarjuna Construction from existing 9% to 12.2%. The company has got the Foreign Investment Promotion Board (FIPB) clearance for investing in the Hyderabad-based infrastructure firm.Blackstone had bought 9% stake in Nagarjuna Construction in July 2007. The Hyderabad-based company raised $180 million (Rs 730 crore) through the sale of fresh shares to financial institutions.

In March 2007, the company had informed BSE that it would be doing a placement to institutional shareholders at a premium of Rs 215 per share of Rs 2 paid-up value. The company had simultaneously taken the approval of shareholders for an issue of 25 lakh warrants to an investment company, AVSR Holdings, belonging to the promoters, also at the same price of Rs 217.

At the end of March 2007, the foreign fund holding in the company stood at 30.2%. The promoters hold 24.5% stake in the company. Nagarjuna Construction announced that it has secured three new orders aggregating Rs 424 crore. All these projects which include a Rs 266-crore order to construct a sewage system in Indore, are likely to be completed in the next 36 months.

Read more in The Economic Times article.

Blackstone may pull out of Eenadu deal

Blackstone, the world’s largest leveraged buyout firm, is close to scrapping its PE deal for Hyderabad-based media group Ushodaya Enterprises, owners of Telugu publication Eenadu, according to sources familiar with the situation.

The PE giant had recently reduced the size of its original $275-million deal for picking a 26% stake in Ushodaya, announced in January 2007, as it was not receiving the mandatory clearance from the Foreign Investment Promotion Board (FIPB) and the Cabinet Committee of Economic Affairs (CCEA). Blackstone had subsequently reduced the size of the proposed deal and under the revised terms, it was looking to acquire a 14% stake for Rs 590 crore or a little less than $150 million in Ushodaya Enterprises.

As per the process followed by the Indian government, the proposed investment by Blackstone now awaits final clearance from the finance minister, which is usually just a formality after the FIPB gives its green signal. Sources say despite the imminent clearance, Blackstone is likely to pull out of the transaction.

Read more in The Economic Times article.

Related Post:
Blackstone scales down investment in Ushodaya

Blackstone scales down investment in Ushodaya

Global private equity player Blackstone Group has reworked its investment proposal and will now invest less than Rs 600 crore in Ushodaya Enterprises, the company that owns leading South Indian newspaper Eenadu.The reworked proposal was submitted to the Foreign Investment Promotion Board (FIPB) recently, in which the private equity major now proposes to pick up around 14 per cent stake (as against the earlier 26 per cent for Rs 1,081 crore).

The reduction in Blackstone’s investment would obviate the need for the proposal to be vetted and cleared by the Cabinet Committee on Economic Affairs (CCEA). As part of existing Government policy, all proposals which have a foreign direct investment of over Rs 600 crore have to be finally approved by the CCEA.

Blackstone’s new proposal will be vetted at the FIPB itself, a process that should speed up approval. There is a sense of urgency surrounding the deal and the parties concerned are keen to wrap up the deal by February.

As per the original proposal, announced last January, Ushodaya planned to raise $465 million, with Blackstone investing $275 million and $190 million raised through bank financing. The deal was stuck for nearly a year on account of several objections raised to the proposed transaction.

Read more in The Business Standard article.

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.

IFCI raises bar for strategic investor

IFCI Ltd, the troubled term lender that has started the process of inducting a strategic partner, has agreed to its creditor banks’ demands to convert all their debenture holdings into equity shares.

This formula, which is expected to be ratified at a board meeting on December 1, could jeopardise the prospective partner's attempt to gain management control at the New Delhi-based institution.

The short-listed bidders for a stake in IFCI include Blackstone Group, General Electric Capital Corporation, billionaire Wilbur Ross along with Goldman Sachs Group, Standard Chartered and HDFC, Cargill Financial Services Corporation, Natixis and Newbridge Asia. Their bids will be considered after the conversion issue is resolved.

Read more in The Business Standard article.

25 foreign investors line up for UTI AMC stake

Private equity firm Blackstone, Goldman Sachs, UBS, Citigroup, National Australian Bank and Shinsei Bank are likely bidders for an equity stake in India’s oldest fund house, UTI Asset Management Company (UTI AMC).

Close to 25 overseas institutional investors have evinced interest in picking up a stake in the country’s third largest mutual fund. UTI AMC plans to offload 20% stake through a private placement and 29% through an initial public offer. However, no single investor would be able to hold more than 5%.

The private placement is expected to be completed by January while the initial public offer is slated for February-March. The listing process has to be completed before March 31, 2008. The fund house could raise about Rs 6,000-8,000 crore through the combination of private placement and initial public offer.

Read more in The Economic Times article.

Blackstone to invest $65 mn in MTAR

The Hyderabad-based MTAR, a privately-held company promoted by P Ravindra Reddy, Satyanarayana Reddy and P Jayaprakash Reddy,has sold 26% stake to Blackstone for about $65 million, which is in one of the first PE deals in the defence and nuclear science space.MTAR Technologies makes critical components and products used for nuclear and space projects.

The funding is through a mix of additional issue of shares and equity sale by the promoters. MTAR will continue to be led by the founders, who will hold 74% cumulatively. After the deal, Blackstone will have three representatives on the 12-member board of the company.

Currently, the company has an order book of Rs 250 crore executable over two years. While MTAR’s revenues are undisclosed, the management is aiming to raise it four to five times by 2010.

Read more in The Economic Times article.

Related Post:
Blackstone eyes 30% in nuclear tech firm MTAR

PE firm to invest in Leela

Hotel Leelaventure, the parent company of one of India's leading hotel chains - Leela Palaces, Hotels and Resorts is getting private equity investment from a US-based private equity (PE)to the tune of Rs 5,000 crore.The PE firm is most likely to be Blackstone.

Chairman of the Leela Group, Capt C P Krishnan Nair confirmed the investment but he declined to divulge the name of the PE firm or state how much equity dilution had taken place.

Leela also has plans to diversify into an altogether untapped market - religious destinations, in which the organised sector constitutes only 10%."We will launch a second chain of 5-star luxury hotels called Leela Gardens, which would come up in religious/devotional cities," said Capt Nair.

Read more in The Times of India article.

Goldman, Macquarie set to buy 40% in PTC arm for Rs 120 crore

PTC is selling a 40% stake in PTC Financial Services (PFS), the investment arm of power trading and advisory services company.The deal is expected to be in the region of Rs 120 crore.Two private equity players, Goldman Sachs and Macquaire would subscribe equal number (20% each) of shares in the company. PTC, formerly known as Power Trading Corporation, is diversifying beyond its traditional power trading business.

PFS Registered as a non-banking finance company (NBFC), one of the main activities of which would be to pick up equity in power projects and facilitate financial closure.

PFS is expected to dilute its holding further by 26% when the capital of the NBFC is raised further, reducing the holdings of PTC to below 50%.The proposal received a huge response from investors forcing it to appoint a consultant to finalise the equity partners for PFS.PTC was also engaged in talks with Blackstone, Soloman Brothers and a few other private equity players for roping them as strategic partner in PFS.

Read more in The Economic Times article.

Notz Stucki in race for ICICI’s 63% stake in Infomedia

Notz Stucki, one of the largest asset managers in Europe, has joined the race for ICICI Venture’s 63% stake in Infomedia (formerly Tata Infomedia). Private equity funds such as General Atlantic, Blackstone and Warburg Pincus have also shown interest to buy out ICICI Venture’s stake in the media firm.

The buyer of ICICI Venture’s stake will have to make an open offer, and shell out upwards of Rs 400 crore. On Thursday, Infomedia’s shares closed at Rs 233.90 on BSE, taking the market capitalisation to Rs 461crore.

In India, Notz Stucki is managed by a team led by Anil Singhvi, former managing director of Ambuja Cements. “Notz Stucki is one of the serious contenders for Infomedia,” sources close to the development said.

ICICI Venture acquired Tata’s 50% stake in Infomedia India in 2003 for Rs 123 crore. It later acquired an additional 13% through an open offer.Infomedia publishes the popular business directory Yellow Pages and some well-known niche magazines.

Read more in The Economic Times article.

DRL to bid for US-based Bradley Pharma: Srcs

Dr Reddy's has moved one notch closer to buying out US based generic drug maker Bradley pharma but, a few other big players pose a challenge to the deal.

The battle for US based generic drug maker Bradley pharma is intensifying. The Indian challenge is from Dr Reddy's Labs, which is learnt to have moved into, round two of the bidding process. Bradley’s product portfolio includes a few high profit margin dermatology products and that’s expected to benefit Dr Reddy's. But, that portfolio has attracted attention from Archimedes Pharma and Nycomed. Archimedes is a company promoted by private equity giant Warburg Pincus while Nycomed has the backing from Blackstone.

Read more in The Moneycontrol article.

Blackstone, GE Capital, HDFC expected to bid for stake in IFCI

Manager of the world’s biggest buyout fund Blackstone Group LP., General Electric Capital Corp. and a group led by billionaire Wilbur Ross are among investors who may bid for a 26% stake in India’s oldest state-owned project financier, the Industrial Finance Corporation of India Ltd (IFCI).

Ross’s group, including Goldman Sachs Group Inc., Standard Chartered Plc. and Housing Development Finance Corp. Ltd (HDFC), is vying with Cargill Financial Services Corp., Natixis SA and Newbridge Asia HT LP, IFCI said in a statement to the Bombay Stock Exchange (BSE).

The successful bidder would gain access to a market where lending grew 28% last year, and where the Reserve Bank of India (RBI) limits foreign banks’ ownership of local private rivals to 5%.IFCI, which was bailed out by the government in 2003 because of bad debts, in July announced plans to sell a stake to a local or overseas investor to bolster its capital.

Other potential bidders for a stake in IFCI include a group comprising Sterlite Industries (India) Ltd and Morgan Stanley, and a team consisting of Japan’s Shinsei Bank Ltd, India’s Punjab National Bank Ltd and J.C. Flowers & Co., IFCI said. Kotak Mahindra Bank Ltd and Infrastructure Development Finance Co. (IDFC) may also submit offers, the lender said.

Read more in The Livemint article.

Blackstone may pick up stake in Bombay Dyeing

There are reports that Blackstone may be interested in picking up a stake in Bombay Dyeing. However, while Bombay Dyeing may be in talks with private equity players including Blackstone, etc. the point to be noted out here is that there are two things which might actually be something that might worry investors from believing whether the deal might happen or not.

Firstly, the total promoters stake currently stands at 43%, Bombay Dyeing being the flagship company of the Nusli Wadia group, and if they give out about 14.5-15%, the promoters stake goes well below 30% which is something that a flagship company of a traditional group might not be too keen to do.

If that is debatable, another point is the fact that the positives for Bombay Dyeing currently are as follows. 2 million odd sq ft of property at Dadar and Worli. The present value of the properties on a very conservative basis comes to around Rs 4,000-5,000 odd crore. The current market cap of Bombay Dyeing is around Rs 2,500 odd crore.

The point to be raised out here is the fact that, if indeed the properties are valued at Rs 5,000 odd crore, considering the way real estate in Mumbai is moving up, and the kind of triggers the company may get as a result of the development of those properties, why would a promoter who holds only 43% of his stake might be willing to dilute 15% of it in a company which is values at almost half the times on a conservative basis right now.

If indeed the development does happen and the market cap does go up to about Rs 4,000-5,000 odd crore of the NAV of the properties, then indeed they might get much more for the same 15% or they might actually have to dilute only 7.5% for raising the kind of money that they are looking to raise right now.

Read more in The Moneycontrol article.

Blackstone eyes 30% in nuclear tech firm MTAR

US private equity (PE) giant Blackstone is learnt to be close to picking up a 25-30% stake in Hyderabad-based nuclear and space science components company MTAR Technologies for around Rs 300 crore. If the deal goes through, it will possibly be the first PE investment in the defence and nuclear space in India.

The privately-held MTAR makes critical components and products for nuclear reactors. The transaction, which comes in the backdrop of the Indo-US nuclear deal, is taking place in a company which was subject to US sanctions following India’s nuclear tests of 1998.

According to investment banking sources, Blackstone is expected to acquire MTAR shares from a fresh equity issue as well as from the promoters’ kitty.

Read more in The Economic Times article.

Private equity firms invest record $3.8 bn in India

Global private equity firms, including Blackstone and Carlyle Group, have made an investment of $3.8 billion in 2007 so far in the country, up 50 per cent from the year-ago period.

The record volume has been reached through 81 M&A deals. Last year, foreign private equity players had invested $2.6 billion, data complied by global consulting firm Dealogic showed.

Carlyle Group is the leading "financial sponsor" in India with investment of $777 million via two deals, including acquisition of over six per cent stake in HDFC.

It is followed by Dubai International Capital, which acquired a 2.87 per cent stake in ICICI Bank for $741 million, and Blackstone Group with $619 million inflow via eight deals.

Blackstone Group, the world's leading private equity firm, has acquired stake in companies such as Intelenet Global Services, Punj Lloyd and Gokaldas Exports.

The US-based Group has also decided to pump in $150 million to acquire a stake in Nagarjuna Construction Company. A move that comes close on the heels of its decision to acquire up to 70.1 per cent stake in Gokaldas Exports, the country's biggest apparel exporter, for about Rs 675 crore.

Blackstone Group manages around $90 billion of assets worldwide. In January, it invested about $275 million in Ushodaya Enterprises Ltd (UEL), a media and film production company owned by Ramoji Rao.

Blackstone's $109 Investment In Intelenet BPO Holding Company Cleared

Blackstone's proposal to invest Rs 447.2 crore ($109 million) in an operating and holding firm SKR BPO Services has been approved by India's Foreign Investment Promotion Board (FIPB). SKR BPO is a recently formed vehicle which has carried out the management buyout of Intelenet BPO. Blackstone GVP Capital, Mauritius, and the Intelenet management own the company jointly.

Blackstone is believed to be holding about 80 per cent stake in the company. Blackstone's capital infusion will also be used to "make further downstream investment by way of acquisition of existing shares".' SKR has made an open offer for 20 per cent of shares in the publicly listed Sparsh BPO, in which Intelenet holds 51 per cent stake.This would cost SKR BPO about Rs 64.59 crore, as it plans to acquire 3.23 million shares at an offer price of Rs 200 per share.

Blackstone buys Gokaldas Exports

Global private equity giant Blackstone Group is acquiring majority control in Gokaldas Exports for nearly Rs 660 crore, in the country’s largest management buyout in the textiles industry.

Blackstone will acquire a 70 per cent stake in Gokaldas through a two-step deal — 50 per cent from the Bangalore-based Hinduja family and 20 per cent through an open offer to other shareholders. Kotak Investment Bank was the advisor to the transaction and is the manager for the open offer.The deal will price one share of Gokaldas Exports at Rs 275, a 20 per cent premium over today’s close of Rs 228.70.

This is Blackstone’s third major deal this year, the other two being a $275 million investment in Ushodaya Enterprises, which runs the Eenadu newspaper and ETV franchise, and a management buy-out of BPO firm Intelenet from Barclays and HDFC for Rs 840 crore.

Akhil Gupta, CMD of Blackstone Advisors India, said his company was attracted by the growth potential of Gokaldas. “With the abolition of the quota regime, the potential of Indian textiles exporters is huge,” he added.He said Blackstone would restructure the Gokaldas board after the open offer.

Read more in The Business Standard article.

Punj Lloyd sells 11% stake

A clutch of private equity funds including Warburg Pincus, Blackstone, Avenue Capital and hedge funds DKR Oasis and Kingdom Capital have bought a total of 11 per cent stake in Punj Lloyd for Rs 814 crore.

Warburg Pincus has bought 5.5 per cent stake while, Avenue Capital has acquired 2.5-3 per cent in Punj Lloyd, which is an EPC contractor focused on the oil and gas sector with diversification to infrastructure.

Private equity major Blackstone bought somewhere between 0.5 per cent and 1 per cent in Punj Lloyd, which issued the shares to these global investors through a qualified institutional placement (QIP) issue priced at Rs 275 a share, almost on par with the current market price.

The deal propels the company’s valuation to nearly Rs 8,000 crore. Moore Capital bought 1-1.5 per cent stake in the Delhi-headquartered construction major.

The company issued 29.6 million shares through the QIP issue, managed by Citigroup Global Markets India and Kotak Mahindra Capital Company.

Following the placement, the company’s paid-up capital has gone up from Rs 29 crore. Ravi Keswani, director (finance) of Punj Lloyd said the company would invest Rs 400 crore to buy a strategic 25.1 per cent stake in Pipavav Shipyard and it would spend another Rs 80 crore for its foray into real estate development.