US institutions plan to sell off assets in India

Large institutions such as AIG, Morgan Stanley, Wachovia and others are planning to liquidate some of the Indian assets in which they had invested their proprietary capital.Investment banking sources and PE funds have confirmed that a number of such deals have been available in the market for the last few weeks.Some of these institutions are highly leveraged and their mortgage related assets in the US are getting marked down. There is a need to liquidate some of the assets they bought with their proprietary capital to get cash and strengthen their balance sheet.

Most of these large institutions have been investing in real estate in India through both managed and proprietary capital. Wachovia does not have a fund and has been investing from its proprietary books for the last two years, though at the moment they are looking at investing selectively from their proprietary books in India.Market sources though confirm that there are a few of Wachovia's real estate deals that are being looked at closely. Interestingly, Merrill Lynch had merged its proprietary book with its third-party fund early this year so they are safe on that front after the recent events. DSP Merrill Lynch has made proprietary investments of $500 million in the real estate segment.

Citigroup considers $400 bn of asset sales

Citigroup Inc will identify, today, as much as $400 billion in non-core assets that could be sold as part of a cost-cutting effort.The asset sell-off was likely to take years and some of the non-core holdings may never be sold.

In todays meeting with analysts, Citigroup Chief Executive Vikram Pandit would confirm his pledge to cut Citigroup's cost base of more than $60 billion by about 20 percent.

HSBC investment arm buys 4.99% in Yes Bank

HSBC Financial Services Middle East has picked up a 4.99 per cent stake in Yes Bank in the secondary market.The global investment arm of HSBC has been investing in the bank since January.Rabo Bank holds around 18 per cent in Yes Bank.

While HSBC refused comment on Tuesday, the strategic investment in Yes Bank has set the market abuzz with rumours. This is the second strategic investment made by the HSBC group in a bank after its investment in Axis Bank (earlier called UTI Bank). The group now holds a 4.96 per cent stake in Axis Bank.

In the recent past, Citigroup had picked up around 12 per cent in HDFC. Analyst saw Citi’s acquisition, and its indirect stake in HDFC Bank, as a strategic move to get ready to buy an Indian bank once the RBI eases the rules for foreign banks to enter India.

According to the RBI norms, foreign banks are allowed to buy up to 5 per cent stake in a bank. Annually, all foreign banks operating in India receive permission to open around 12 to 14 branches.

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.

Religare eyes up to $35 mn via IPO

Religare Enterprises has set a price band of Rs 160-185 per share for its initial public offer, the financial services firm said in a statement.

At upper end of the band, the firm, which is selling 7.57 million shares, would raise Rs 1.4 billion ($35 million).

Enam Financial Consultants and Citigroup are advising Religare, founded by the the owners of Ranbaxy Laboratories.Merrill Lynch has bought a 5 per cent stake in the firm.

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Merrill Lynch, Citigroup buy 10% in MCX

Global financial services firms Merrill Lynch and Citigroup have picked up five per cent stake each in the country's biggest commodity exchange MCX for a total of about Rs 480 crore.

Financial Technologies (India) Ltd, the parent company of Multi Commodity Exchange of India, sold the stake. FTIL has also entered into agreements to offload three per cent and two per cent stake to two foreign funds - Passport India Investment (Mauritius) and GLG Financials Fund, respectively.The transactions put the enterprise value of MCX at over USD 1.1 billion (Rs 4,400 crore).

FTIL will get about Rs 720 crore from selling 15 per cent stake in MCX, an exchange official said. With the sale, FTIL's shareholding in MCX will come down to 49 per cent, he added.

Read more in The Economic Times article.

Essar Communications to raise $3.95-bn syndicated loan

Essar Communications, Ruias-promoted telecom company and partner of UK giant Vodafone in India, is planning to raise $3.95 billion of syndicated loan.The loan proceeds would help Essar monetise its liquidity rights agreed with Vodafone as part of the British company's acquisition of Indian mobile operator Hutchison Essar, now known as Vodafone Essar, earlier this year.The funds would also be used for partly refinancing the existing debt and to fund further investment and expansion plans of the group.

Vodafone had acquired a controlling stake in Hutch Essar earlier this year for $10.9 billion from Hong Kong- based Hutchison Telecom International Ltd (HTIL).

The loan was launched by arrangers BNP Paribas, Citigroup, Commerzbank and Standard Chartered on Monday, a statement said here. The fully-underwritten deal would mature in December 2011 and pays a margin of 90 basis points over LIBOR.

Citigroup's hedge fund unit eyes KVK Energy

Citigroup Inc.’s hedge fund unit Old Lane LP plans toinvest Rs 1.06 billion ($26 million) in India’s KVK Energy & Infrastructure Pvt., as the world’s second-fastest pace of economic growth lures investors.

Old Lane, bought this year by Citigroup, may acquire 26 per cent of KVK Energy, which builds power projects, company secretary Ram Mohan said in a telephone interview from Hyderabad, where KVK Energy is based. He didn’t give a timeframe.

An Indian panel this week will consider proposals from KVK Energy and 17 other companies seeking to invest in India or sell stakes to overseas buyers, according to information posted by the industrial policy department of the government.

Read more in The Business Standard article.

Genpact leads pack in race for Citi BPO

An end to the long search for Citigroup BPO’s buyer finally seems to be in sight. Genpact is said to be ahead in the race for the BPO. The decision is expected by the month end. Firstsource and WNS also remain in contention, according to sources.

According to sources, the final valuation will depend on a number of parameters, including the number of years for which Citigroup is willing to give the BPO-committed business. It is currently looking at giving a contract for five years.

However, a final decision is yet to be taken. While the valuation being quoted in industry circles is around $850 million, it could be higher or lower depending on how long the contract would be. Sources also indicated the payment for the deal is likely to be a mix of cash and shares in the winning company.

Read more in The Economic Times article.

RBI may block Citi`s plan to buy 3% in NSE

The Reserve Bank of India (RBI) may block Citibank India’s proposal to pick up 3 per cent stake in the National Stock Exchange (NSE).Citigroup already holds 2 per cent in the exchange.

A source close to development said the bank proposed to buy shares from the State Bank of India group, which holds 12 per cent (9 per cent by the State Bank of India and 3 per cent by subsidiary, SBI Caps).The bank has submitted a proposal to the RBI.

The banking regulator is of the view that Citibank India is a member of the Citigroup, which already owns 2 per cent stake in the NSE. Therefore, granting permission to Citibank India may lead to conflict of interest among related entities holding stake in the same entity.

As per the demutualisation norms, an individual entity cannot hold more than 5 per cent stake in an exchange. SBI and SBI Capital Markets have already pared their stake by 3 per cent and 2 per cent, respectively ,thus bringing down the combined stake to 12 per cent from 17 per cent earlier.

NSE has institutional holding from SBI, Industrial Development Bank of India, Corporation Bank, Oriental Bank of Commerce, Union Bank, Bank of Baroda and Canara Bank.Thus, NSE has already offloaded 26 per cent stake in favour of foreign investors as permissible under the foreign direct investment norms for stock exchanges.

PGCIL aims to raise Rs 580 cr through IPO

Power Grid Corporation of India Ltd (PGCIL), the country's biggest transmission utility, on Wednesday filed its red herring prospectus with market regulator SEBI for its initial public offer to raise an estimated 580 crore.

PGCIL is the third central power utility to tap the capital market for raising funds after NTPC Ltd in 2004 and Power Finance Corporation early this year.Like NTPC and PFC, the government will piggyback on PGCIL IPO to divest five per cent of its stake. While NTPC had raised around Rs 5,400 crore, PFC had mopped up nearly Rs 1,000 crore. Power Grid is expected to mobilise up to Rs 580 crore, sources said.

The public issue comprises 57.39 crore equity shares of Rs 10 each. This includes a fresh issue of 38.26 crore shares by PGCIL and an offer for sale of 19.13 crore shares by the government. About 1.39 crore shares have been reserved for employees and the net issue to public is 55.99 crore shares.

The company will issue shares at a price to be decided through the book building process and the shares will be listed on Bombay Stock Exchange and National Stock Exchange.

Kotak Mahindra Capital Company Ltd, Citigroup global Markets India and Enam Financial Consultants are the book running lead managers to the issue.

PNB may bid for IFCI stake

"Punjab National Bank may bid for a 26 per cent holding in institutional lender IFCI Ltd.", said the bank's chairman and managing director."The bank's board will take a final call on the matter," K.C. Chakraborty said, adding the bank shared some common account holders with IFCI.

The state-run Punjab National Bank had sought to acquire a controlling stake in IFCI more than three years ago but the proposal fell through. A spokesman at the bank could not be immediately reached.

State-run IFCI is looking for a strategic investor and has appointed Ernst & Young as its advisors.Citigroup, Lehman Brothers, BNP Paribas, Deutsche Bank and Barclays were eyeing a 26 per cent in IFCI.

StanChart-UTI Securities Deal May Be Cleared By FIPB Today

Standard Chartered Bank's proposal to pick up 49 per cent stake in broking firm UTI Securities is under the consideration of Foreign Investment Promotion Board (FIPB), reports TV channel CNBC-TV18.FIPB is taking up the Stanchart proposal at a meeting to be held on August 17. So this deal is likely to be cleared today. The financial terms are not known as this post is being written.

UTI Securities is currently owned by Securities Trading Corporation of India, which had put 49 per cent stake in the broking firm on the block. There were several firms like Kuwait's Global Investment House, Citigroup, Macquarie Bank, and Societe Generale in talks with STCI to buy a stake.

Several banks are looking for an entry into broking and financial products distribution, so a firm like UTI Sec offered synergy. STCI bought UTI Sec in February 2006 for Rs 265 crore from the Specified Undertaking of UTI. STCI will sell 49 per cent of it now, and the rest after the lock-in period which will end in 2009.

Shapoorji Pallonji realty targets $300m from PEs

HDFC Realty, Citigroup and Government of Singapore Investment Corporation (GIC), among others, are set to pump $300 million into Shapoorji Pallonji Group’s realty business.

Sources said the deal—amongst the biggest private-equity plays in the Indian real estate sector—was imminent and might also involve a few more investors. It is believed that PEs could pick 15-20% stake in the recently-created holding entity of the group’s realty venture.

The Mumbai-based 140-year-old construction group is developing real estate worth about $2 billion across India. The group’s realty arm is managed by Shapoor Mistry, the elder son of Pallonji Mistry, among the wealthiest Indians.

These projects are mostly FDI-compliant and located at prime areas, which will attract substantial premium. It is also working on over 10 real estate projects in Mumbai, Pune, Hyderabad, Chennai, Kolkata, Delhi, Nagpur and Mysore.

Genpact, 2 others in race for Citi BPO unit

Citigroup has shortlisted three bidders for its business process outsourcing (BPO) unit after the first round of bidding.

The sale of the BPO business, run by Citigroup Global Services (formerly e-Serve), is expected to fetch around Rs 3,200 crore for the group. At this price, it will be the largest deal in the domestic BPO space.

The shortlisted bidders are Firstsource, WNS and Genpact, said sources close to the development. Others who had expressed initial interest, including IBM, Automatic Data Processing (ADS), Infosys, EDS, Capgemini and private equity players such as Blackstone and General Atlantic, are no longer in the race.

The largest major deal in the BPO space so far was when Blackstone recently bought Intelenet from Barclays and HDFC for Rs 840 crore.

Read more in The Business Standard article.

Genpact, 2 others in race for Citi BPO unit

Citigroup has shortlisted three bidders for its business process outsourcing (BPO) unit after the first round of bidding.

The sale of the BPO business, run by Citigroup Global Services (formerly e-Serve), is expected to fetch around Rs 3,200 crore for the group. At this price, it will be the largest deal in the domestic BPO space.

The shortlisted bidders are Firstsource, WNS and Genpact, said sources close to the development. Others who had expressed initial interest, including IBM, Automatic Data Processing (ADS), Infosys, EDS, Capgemini and private equity players such as Blackstone and General Atlantic, are no longer in the race.

The largest major deal in the BPO space so far was when Blackstone recently bought Intelenet from Barclays and HDFC for Rs 840 crore.

Read more in The Business Standard article.

Vijaya Bank to raise Rs 2K cr via bonds

Vijaya Bank plans to raise Rs 2 billion through a bond sale, which opens on Friday, a merchant banker associated with the issue, said.

Following are the terms and conditions of the issue Borrower Vijaya Bank Coupon 9.50 per cent, payable annually Maturity 10 years Issue amount 2 billion rupees Opening date July 20 Closing date July 25 Arrangers UTI Bank, A.K Capital Services, SPA Merchant Bankers, ICICI Securities, ICICI Bank, Citigroup.

Omaxe seeks Rs 600 crore in IPO

Real-estate developer Omaxe Ltd plans to raise as much as Rs 600 crore ($148 million) selling shares for the first time to finance land acquisition and repay loans.

The company will sell 17.8 million new shares of Rs 10 face value at Rs 265 to Rs 310 apiece, starting July 17. The price will be decided based on demand from investors after the sale ends on July 20, the New Delhi-based company said in a statement on Thursday.

Omaxe founder Guild Builder Pvt may offer an additional 1.75 million shares on demand, taking the total offer to 19.5 million shares, the company said. The company has reserved 296,520 shares for employees.

Omaxe hired DSP Merrill Lynch Ltd, Citigroup Global Markets India Pvt, UBS Securities India Pvt, JM Financial Consultants Pvt and ICICI Securities Ltd to arrange the sale.
If all 19.5 million shares are sold, they will account for 11.2 per cent of the company's fully diluted, post-issue capital, Omaxe said.

Read more in The Economic Times article.

JM Financial invests in Spandana

Private equity fund JM Financial India, co-promoted by JM Financial group and Citigroup’s Old Lane, has invested about Rs 40 crore in Hyderabad-based microfinance company Spandana, which will enable the non-banking finance company to expand its capital base and geographical reach.

The $225-million corpus JM Financial India is also close to deciding on increasing its investment in Genesis Colors, a lifestyle company, where the fund had initially invested about $5 million with an option to invest another $10 million.

“Apart from an equity stake in the microfinance company, the investment also gives us affirmative rights and the chance to bring in management professionals into the organisation,” said JM Financial MD Dilip Kothari. Although he declined to specify details, it is reliably learnt that the fund will get a 20% to 30% equity stake in Spandana.

Spandana is a southern India-oriented microfinance company that is currently planning to expand its reach to other countries. “We look forward to working with JM Financial’s team to expand our customer base and grow our distribution network,” said promoter and MD Padmaja Reddy.

Read more in The Economic Tims article.

IDFC raises Rs2,100 cr through QIP route

The Board of state-run lender IFCI will consider a proposal on 6 July to invite preliminary bids for selling at least 26% stake to a strategic investor.Along with annual results, the board would take up the issue of inviting expression of interests (EoI) from strategic investors.

The lender has appointed management consultant Ernst & Young to look for the strategic investor. E&Y has been asked to suggest names of strategic investors and will help IFCI in carrying out modalities related with stake sale.

According to the plan, strategic investors will have to make bids within a month of the memorandum of information being made public. Following this, IFCI will shortlist some investors. These investors will be allowed to do a detailed due diligence and submit a fresh bid indicating the price they are willing to pay for the 26% stake.
Based on the second round of bids, the IFCI board will decide on the new stakeholder.
As a precusor to stake sale, IFCI had in May passed an enabling resolution to increase foreign holding in the company up to 74% of its share capital.

Foreign investors Morgan Stanley (2.5%), Goldman Sachs (3.3%), Citigroup (2.5%) and Deutsche Securities (4.61%) already have equity interest in IFCI.Eleven financial institutions, domestic and overseas, hold 34.8% in the company as on 31 March, which includes 8.4% and 5.01% held by LIC and IDBI respectively.