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%.

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Infrastructure India acquires 49% in Oriental Tollways

Infrastructure India, a London-listed investment fund, is close to acquiring a 49% stake in Oriental Tollways for Rs 450 crore ($90 million).Oriental is part of New Delhi-based privately-owned Bakshi Enterprise.Dabur India vice-chairman Amit Burman is a shareholder in OSE in a personal capacity.

The specialist India-focussed fund will invest in Oriental Tollways through a Mauritius-based subsidiary.Infrastructure India’s mandate is to invest in Indian energy and transport infrastructure projects and comes out of its belief that the present time is appropriate to focus on infrastructure in India given the fast pace of change in its economy.The fund has already invested in Shree Maheswar Hydel Power Corporation, a 400-MW hydroelectric power project located in Madhya Pradesh, among others, in India.

Its investment, which will value Oriental Tollways at Rs 918 crore, comes against a gloomy backdrop for the Indian infrastructure sector, which has, in the past, been hobbled by bureaucratic delays and is now a victim of tight funding conditions amid a global credit crunch, on the whole.

Read more in The Economic Times article.

Merrill Lynch sells stake in Religare

Merrill Lynch has sold its nearly 5% stake in financial services company Religare Enterprises,promoted by Malvinder and Shivinder Singh for an undisclosed sum.Last November Merrill Lynh had bought a 5.56% stake in Religare as part of a pre-initial public offering (IPO) placement.

The one-year lock-in period expired last month, and Merrill Lynch has since sold its post-IPO stake of 4.97%. The buyers of the stake or the price at which it changed hands were not immediately known, although a Religare official said the sale happened last week.

Based on Religare’s average stock price of Rs 299 last week, Merrill Lynch could have cashed out for Rs 113.6 crore, generating a return of 87.5% in one year. Merrill had acquired 5.56% stake in Religare for Rs 60.6 crore last October through its wholly-owned subsidiary Indopark Holdings.

Despite the stock market crash, the scrip is trading much above its IPO issue price of Rs 185. The stock had shot up after listing to touch Rs 729 on the NSE. Promoters currently hold 54% stake in the company.

Germany's MAN to be 50:50 partner in Force Motors JV

Force Motors Ltd today announced that it would sell up to 14.50 per cent stake in its auto components joint venture with German truckmaker MAN for about 3 bn rupees, sending the former's shares up.MAN would acquire additional equity in the joint venture to increase its stake to 50 percent, via a rights issue for up to 2.5 bn rupees.

Force Motors currently holds 70 percent stake in the JV, MAN Force Trucks Pvt Ltd, while the German firm holds the rest.The joint venture would start designing and make trucks and bus chassis over the next few months to widen its footprint in the Indian market.

Force Motors will reduce its stake in the heavy commercial vehicle joint venture with MAN Nutzfahrzeuge to 50% from the current 70%.Force will sell 14.2% stake to MAN for Rs 300 crore. Later, MAN will infuse Euro 40 million (around Rs 250 crore) in the JV through subscription of a rights issue. Force will refrain from subscribing to the issue. As a result, MAN’s stake will go up to 50% from the current 30%.

The transaction, which is to be completed over the next few weeks, will peg the enterprise value of the JV at Rs 2,000 crore. Both the parties have signed the deal on Tuesday in Munich.

Kingfisher plans 25% stake sale

Vijay Mallya's Kingfisher Airlines is believed to be discussing stake sale with three foreign airlines — British Airways, Singapore Airlines and Virgin — as a strategic investment is expected to fetch better valuation compared to the numbers indicated by PE investors.

The airline is holding exploratory talks with international carriers for diluting up to 25% stake. The move comes as the Centre is reportedly planning a policy change to allow foreign airlines to invest in domestic carriers with a cap of just below 26%.

The civil aviation ministry had met the airlines on October 30 to discuss key policy changes including allowing foreign airlines to pick up stake in domestic carriers. This meeting has triggered expectation that the government may allow the foreign carriers to buy equity in Indian companies. It must be mentioned that while foreign airlines are not allowed to pick up equity in aviation companies, other institutions and foreign investors are free to hold up to 49% stake.

Read more in The Economic Times article.

PE's pick up 80% stake in GEAR

Two private equity firms — US-based Berggruen Holdings and UK-based Cycladic Capital — have picked up close to 80% stake in construction equipment service provider Gemini Equipment and Rentals (GEAR) for around $15 million (nearly Rs 74 crore).

“This is part of the first round capital-raising programme. The proceeds will be utilised for expansion,” said GEAR managing director Rajiv Sethi. The construction equipment industry is growing at the rate of 35% and is likely to expand fivefold by 2015. The critical role of the industry in the infrastructure development has opened huge opportunity for entrepreneurs to enter the construction equipment rental business.

Currently, GEAR has an asset fleet of 200. The company has presence in Ahmedabad, Bhopal, Bhubaneshwar, Lucknow, New Delhi, Bangalore, Kolkata and Secunderabad. It aims to have 500 equipment assets by the end of this fiscal and additional 250 in the year 2009-10.

DoCoMo to buy 26% of Tata Tele for $2.7 bn

Japanese business daily the Nikkei Wi-fi wireless networks today reported that DoCoMo will buy a stake of about 26 per cent in Tata Teleservices Ltd for 260 billion yen ($2.7 billion). This would be the latest of a series of overseas acquisitions by DoCoMo and follows $350 million investment in Bangladesh's No.3 cellphone carrier.In September DoCoMo was in talks to buy a stake in Tata, part of the Tata Group conglomerate and parent of Tata Teleservices (Maharashtra) Ltd.

The deal would add to a record value of overseas acquisitions by Japanese firms this year as companies increasingly snap up competitors abroad, taking advantage of tumbling global stock markets and the yen's recent surge.

DoCoMo spent nearly 1.9 trillion yen in the late 1990s and early 2000s to buy small stakes in operators around the world to promote use of its i-mode mobile Internet technology and ensure the adoption of 3G networks on the same W-CDMA standard that it uses.But it saw its investments sour, and pulled out of AT&T Wireless Services Inc, Dutch operator KPN Mobile N.V. and Hutchison 3G UK Holdings after incurring heavy losses.

Anand Jain’s firm buys 10% stake in Gokaldas Exports

Anand Jain, chairman of Jai Corp and a confidante of Reliance Industries chairman Mukesh Ambani, has picked up nearly 10% equity stake in Gokaldas Exports, a leading player in the readymade garment industry.Mr Jain’s acquisition coincides with Reliance Industries’ attempt to revive ‘Only Vimal’ and other textile brands. Reliance Industries, which started as a textile company in 1979, now earns less than 1% of its revenues from the textile business.

Blackstone had acquired a 50% stake in Gokaldas from its promoters last year. The deal was pegged at Rs 275 a share, 20% higher than the ruling market rate at that time, making it the country’s largest management buyout in the textile industry. It was followed by the mandatory open offer to shareholders which increased Blackstone’s stake to 68%.
The US-based PE giant Blackstone is the largest shareholder in Gokaldas, with a 68% holding. The Hinduja family, the original promoters of the company, now holds 20%.

Kuwait's Global Investment buys 11% in MAPE

Kuwait-based Global Investment House (Global) has picked up an 11.11% equity stake in MAPE Advisory Group, a boutique investment bank, for about $10 million (about Rs 48 crore), valuing the firm at $90 million. MAPE has offered the stake to Global by way of a fresh issue of shares.The funds raised through this transaction would be utilised by MAPE as working capital to boost its institutional broking business.

Post stake sale, Mr Mathew and Mr M Ramprasad, the promoters of MAPE, will own roughly 70% of the company’s equity.MAPE, which was founded in 2001, focuses on M&As, private equity fund raising, debt syndication, cross border advisory services and institutional broking.

It has closed over 60 transactions — the recent ones being Mahindra's acquisition of Kinetic Motors, CVCI's investments into Mumbai-based broking firm Sharekhan and ICICI Ventures, and Baring's investments into Karvy Stock Broking — across various sectors.

The total value of these deals add up to nearly $1.9 billion. MAPE currently employs around 60 professionals across its offices in India and the United States.
This strategic alliance finally gives Global a toehold in India. It may be recalled that the Kuwait-based firm was a strong contender for UTI Securities, which was eventually lapped up by Standard Chartered bank.Global is one of the leading mid-sized investment banks in the Gulf and has registered itself as a foreign institutional investor (FII) with SEBI.

Nomura to buy Lehman's Indian operations

Japan's top broker Nomura Holdings today announced that it had agreed to acquire Lehman Brothers' operations in India, giving jobs to 3,000 more workers from the bankrupt Wall Street giant.Nomura, which is already buying Lehman's operations in the Asia-Pacific, the Middle East and Europe, will take on the failed US bank's India-based back office and IT support businesses for an undisclosed sum.The subsidiaries, based in the financial hub of Mumbai, were not included in the earlier deal because they were under the wing of Lehman's North American business, which is being bought by the British bank Barclays.

L&T buys 4.2% stake in Kalindee Rail

The country’s largest engineering firm Larsen & Toubro (L&T) has picked up 4.2% stake in Delhi-based Kalindee Rail Nirman Engineers from open market. L&T Capital, a subsidiary of L&T, on Friday bought 4.5 lakh shares of Kalindee at an average cost of Rs 121.21 a piece, according to statistics with BSE.Blackstone Asia was the possible seller.

KRNL is a significant beneficiary of aggressive capex plans of Indian Railways and makes a strategic fit with L&T’s future plans. The company has proven skills in tracks, signalling and telecommunications.KRNL has a strong relationship with the Indian Railways and qualifies for required technical specification and safety norms by it. It has also entered into various tie-ups and JVs with leading international players to keep pace with technology.

Some of the other shareholders in the company include Quantum, HDFC Trustee Company, JPMorgan, Sundaram BNP Paribas, Morgan Stanley who along with others hold about 44% in the firm as per the shareholding patter as of June 2008. Promoters currently hold 24.66% stake in the company.

Provogue sells further stake in realty unit

Apparel retailer Provogue (India) Ltd announced today that UK's LTG International Ltd will invest 569.7 mn rupees to pick up 3.36 per cent stake in a unit of real estate arm Prozone Enterprises Pvt Ltd.LTG is founded by Lewis Trust Group of UK and Prozone is a joint venture between Provogue and Liberty International Plc.

In April, Provogue sold 27 per cent stake in the unit for 4.57 bn rupees to Triangle India Real Estate Fund, founded by Old Mutual Investment and ICS Realty.

Reliance Money gets nod to acquire 10 pc stake in NMCE

Financial services firm Reliance Money has obtained approval from Ministry of Consumer Affairs to acquire a 10 per cent stake in the National Multi-Commodity Exchange of India (NMCE) Board.Reliance Money had proposed to acquire a total of up to 26 per cent stake in NMCE in two phases. NMCE had accordingly applied for necessary approvals from the regulator Forward Markets Commission (FMC), which in turn, recommended the acquisition to the Ministry of Consumer Affairs.

The Anil Ambani-led Reliance ADAG is the first large business group to get into the commodity exchange space in India.

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.

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

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.

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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.

Balaji in talks with investors to buy Star's stake:Report

Television content provider Balaji Telefilms Ltd is in talks with a consortium of investors to buy the 25.99 percent stake held by a unit of Rupert Murdoch's Star group, a newpaper reported on Tuesday.

The stake is owned by Dubai-based Asian Broadcasting FZ-LLC and was bought for 1.23 billion rupees in 2004, the paper said. Balaji will float another joint venture company with these investors to launch a bouquet of regional television channels, the paper said.

While Star was "very close" to ending its relationship with Balaji, the formalities were yet to be completed, the paper cited an unnamed official as saying. On Monday, News Corp chief Rupert Murdoch said the US media conglomerate plans to invest $100 million in six regional language channels in India, where it is a leading broadcaster.

Officials at Balaji Telefilms could not be immediately reached for comment. Murdoch on Monday declined to comment on speculation Star and Balaji were ending their venture.