Tuesday, March 31, 2009

Companies line up for DLF’s wind business

Several Indian and overseas companies have shown interest in acquiring the wind power business of DLF Ltd, India’s largest real estate developer by market value, which is seeking to raise money by selling assets outside of its main business.
Adani Group, Essar Power Ltd, Infrastructure Leasing & Financial Services Ltd, Hong Kong-based CLP Group and the UK’s BG Group Plc have evinced interest in the unit, said a person close to the development who didn’t want to be identified. An executive at one of the firms independently confirmed that his company was interested in the business. He also didn’t want to be identified.

DLF plans to sell assets that are “non-strategic” to its main business of property development and reorganize debt as it weathers a downturn in the real estate market. The company expects to raise Rs2,000 crore by selling assets such as the wind power business.
DLF’s plan to divest its wind power generation business was reported on Tuesday by Business Standard newspaper, which cited unnamed people in the company as saying it intended to use the proceeds for a more related business.
DLF has net debt of around Rs13,000 crore, according to the company. At Rs24,750 crore, the company’s net worth (equity and reserves) as of 31 December 2008 was far higher than its net debt, according to a presentation DLF made to analysts.

DLF has hired audit and consulting firm Ernst and Young to help sell the wind power business, which has a capacity of 250MW, the person close to the development said. “These companies are doing due diligence to acquire the DLF wind power business. While CLP is looking at this opportunity through Roaring 40s, IL&FS’s wind-focused group is looking at this opportunity,” he added.
Roaring 40s is an equal joint venture between CLP and Australian power producer Hydro Tasmania. A DLF spokesperson declined to comment, saying the company is in its “silent period”—a time close to an earnings announcement when it is not allowed to make public statements. “Wind power is a vibrant and emerging sector and has a great potential,” said Vikas Kaushal, a partner at management consulting firm AT Kearney. “Globally, renewable (energy) is becoming a mainstream business. The short-term business outlook will have an impact on valuations. However, the fundamentals of wind business remain strong.” Rajiv Mishra, managing director of CLP Power India Pvt. Ltd, said, “We continue to remain interested in expanding our renewable portfolio in India. In the current financial crisis, there are a number of opportunities that have been brought to us and we are considering them.” Mint had on 12 January reported on CLP Group’s plans to take over power projects in the country that may be surrendered by developers, who find it tough to raise resources in a tightening credit market. Questions emailed to Adani Group and IL&FS remained unanswered, a BG spokesperson said in an email response that the company doesn’t comment on “market speculations”. “As a group, we keep evaluating growth opportunities, but as a policy we don’t comment on specific projects or speculation,” said an Essar Group spokesman.

FINO to raise up to $20 mn from private equity funds

Mumbai-based Financial Information Network and Operations (FINO), which provides technology solutions such as biometric smart cards for banks, plans to raise as much as $20 million (Rs102 crore) from private equity funds to increase the number of customers it serves fivefold in two years.
“We are in the process of dialogue with a few people. We are looking to raise $15-20 million and it should be finalized in the next couple of weeks,” said Rishi Gupta, chief financial officer and president (sales and marketing) of FINO. Gupta declined to reveal the identities of the likely investors. He said two parties would be infusing funds into the company, whose technology solutions have so far helped financial institutions to reach five million customers. FINO is targeting increasing the number to 25 million by 2011.

Client focus: Rishi Gupta of technology solutions provider FINO. He says that the firm is looking to deepen its base with all its customers.Private sector institutions including ICICI Bank Ltd, ICICI Lombard General Insurance Co. Ltd and IFMR Trust hold 30% of FINO. Public sector entities such as Life Insurance Corp. of India Ltd and Union Bank of India hold 30%.
The remaining 40% is owned by institutional investors such as International Finance Corp. (IFC), the private sector arm of the World Bank, and Intel Capital, the investment arm of chip maker Intel Corp.
FINO was founded in July 2006 with the aim of providing a shared pan-India technology infrastructure linking clients and financial services providers, reducing their cost of client acquisition and servicing. It aims to take financial services to under-served and unbanked populations.
“Given that this firm (FINO) has already raised $20 million in 2007 and with a credible set of investors such as IFC and Intel Capital, and also given that microfinance is doing well despite the economic downturn, I don’t see any reason about their raising funds now,” said Arun Natarajan, founder and chief executive officer, Venture Intelligence, an information and networking services provider to private equity and venture capital investors in India.
FINO currently works with 12 public and private sector banks, three insurance companies and on government schemes such as the National Rural Employment Guarantee Scheme, which promises at least 100 days of work yearly to at least one adult from each rural family.
“We are looking to deepen our base with all our customers. We are looking at cross-selling of products,” said Gupta.
FINO has developed so-called micro deposit machines in association with Ohio-based NCR Corp., which would be installed at various locations to enable small customers to save money by making regular deposits and will also help in assisted cash withdrawals.These machines, named FINO Tijori-NCR Easy Point, are movable machines that would be handled by agents such as shopkeepers.
These agents would target people such as autorickshaw drivers and others who earn daily wages to encourage them to save regularly. These machines would be located ideally near a bank branch so that opening an account and depositing money becomes easier. The agents would help customers carry out all the transactions and receive a commission of Rs2 for every transaction carried out.
The company launched a pilot project in Mumbai last month and is planning to set up at least 300 such machines at various places across the country.

Canada’s SciMed close to signing deal with Mumbai firm

Canada-based SciMed Technologies Inc., a privately held maker of diagnostic devices, is close to signing a pact with a Mumbai-based firm to supply in India its new diagnostic devices that can test blood and food samples in minutes as opposed to hours that existing equipment take. Once commercially available, these devices are also expected to cut the cost of such tests.
“We are still working on the device and have confirmed an Indian distributor. I cannot disclose the name (of the company) now because we are still to sign a formal agreement, in the next few weeks,” said Rajan Gupta, president, SciMed Technologies.

Test kit: A scientist at SciMed Technologies tests the lab-on-chip devices at its research and development facility in Edmonton, Canada. Jacob P. Koshy / MintThe so-called lab-on-chip devices, rectangular and transparent, are not bigger than your thumb. Intricate channels etched on this chip are as thin as strands of hair and separate liquids into their biological basics such as proteins.
These chips are then plugged into special card readers that relay data to a computer, in which custom-designed software can detect the presence of desired molecules.
SciMed, which is still perfecting its proprietary Nutrachip, as they are called, expects to launch the devices in the country by 2010, said Gupta. He didn’t disclose details of the likely pact with the Indian company.
Currently, laboratories use the ELISA (enzyme linked immunosorbent assay) and HPLC (high-performance liquid chromatography) techniques for testing blood and food samples, using large and expensive devices that can take from several hours to weeks depending on the protein that needs to be analysed.
Several such tests require significant quantities of various chemicals. SciMed’s chips, according to Gupta, won’t need more than a 1,000th of a litre of a sample and also use fewer chemicals.
However, lab-on-chips are still largely in research phase. “Several universities across the world are trying to make effective chips at reasonable costs. As of today, no lab in India uses diagnostic devices of this sort,” said Chandrashekhar Nair, a director at Bangalore-based Bigtec Labs, a start-up that has developed a hand-held device for rapidly detecting Hepatitis B. Nair said Bigtec Labs is in talks with SciMed in a separate deal for another class of diagnostic devices.
According to Nair, high costs for designing such chips and the absence of dedicated manufacturing facilities are barriers to commercial production.
“Just as manufacturing silicon chips needs a well-developed physical infrastructure, even lab-on-chips require good design facilities. Moreover, scientists are still working on practical difficulties, such as having to use a separate chip for each experiment, that make them expensive to

Bharti likely to sell stake in asset management JV with AXA

Bharti plans to rework its relationship with AXA, reports CNBC-TV18, quoting sources. It is looking to exit its asset management joint venture with AXA and might dilute its stake or exit if necessary. Commenting on the same, Bharti said reworking in relationship will not impact insurance business with AXA. Bharti has 26% stake in Asset Management JV with AXA. This is the one of the first steps of Bharti to rework its relationship with AXA, Bharti has categorically come out and said that it is looking at diluting its stake or even exiting Asset Management business in which Bharti holds 26% stake and remaining 74% stake is held by AXA. In other ventures where these two have a relationship is the life insurance business, where Bharti holds a 74% stake and AXA holds a 26% stake by virtue of being regulated. As of now Bharti has very categorically said that they haven’t changed anything in their insurance business but have gone ahead and seen the asset management business in which they are willing to dilute or even exit the business at this point of time.

Mediation to resolve Sun-Taro dispute fails

Sun Pharmaceuticals Industries Ltd said the mediation to resolve its dispute with Israel&aposs Taro Pharmaceutical on the aborted merger of the two firms has failed. The mediation, as recommended by the Supreme Court of Israel earlier, was unsuccessful and no agreement was reached, Sun said in a communique to the Bombay Stock Exchange, adding it had informed the court on the development. "The company (Sun) is now awaiting a decision of the Supreme Court of Israel, "it added. Sun and Taro Pharma have been locked in a legal dispute over the former&aposs proposed USD 454 million takeover of the latter. The two pharma companies had signed a merger agreement in May 2007. Taro terminated the agreement in May last year, saying that the merger was not approved by its shareholders and that the price of USD 7.75 per share offered by Sun was not enough.

Aditya Birla buys stake in financial services firm

Aditya Birla Nuvo Ltd on Tuesday said that it has acquired over 3.5 million equity shares in its subsidiary Birla Sun Life Distribution Co (BSDL). The shares were acquired from Canada-based Sun Life (India) Distribution Investments Inc. BSDL has now become a wholly-owned subsidiary of the Aditya Birla group. The move will bring synergy and synchronisation in the business of broking and distribution in the financial services, the company said in a regulatory statement. The financial details of the deal were not immediately available. Sun Life also has a stake in Aditya Birla Nuvo's life insurance business arm Birla Sun Life.

DLF to sell its wind power business

Sun Pharmaceuticals Industries Ltd said the mediation to resolve its dispute with Israel&aposs Taro Pharmaceutical on the aborted merger of the two firms has failed. The mediation, as recommended by the Supreme Court of Israel earlier, was unsuccessful and no agreement was reached, Sun said in a communique to the Bombay Stock Exchange, adding it had informed the court on the development. "The company (Sun) is now awaiting a decision of the Supreme Court of Israel, "it added. Sun and Taro Pharma have been locked in a legal dispute over the former&aposs proposed USD 454 million takeover of the latter. The two pharma companies had signed a merger agreement in May 2007. Taro terminated the agreement in May last year, saying that the merger was not approved by its shareholders and that the price of USD 7.75 per share offered by Sun was not enough.

CVC in Exclusive Talks to Buy Barclays's iShares

CVC Capital Partners is in exclusive talks with Barclays PLC to buy its exchange-traded funds business iShares, people familiar with the situation told Dow Jones Newswires Tuesday.
The price is around £3 billion ($4.28 billion) and doesn't include the securities lending business, these people said. Barclays would get warrants equivalent to 20% in iShares as part of the deal, one person familiar with the situation said, but added that the terms of the warrants have yet to be ironed out. The warrants would allow Barclays to participate in any upside in the value of iShares in the future. The deal, expected to be completed by the end of the week, would be a coup for the London-based buyout firm, which entered the auction relatively late in the process.
Other bidders for iShares included a group comprising Hellman & Friedman and Apax Partners, and another consortium made up of Colony Capital and Bain Capital. Goldman Sachs is also likely to have put in a bid, people familiar with the situation said. The £3 billion price tag is equivalent to 10 times the business' earnings before interest, taxes, depreciation and amortization.

Tata Tech talks to PE investors

Tata Technologies, the engineering design and technology arm of the Tata group, is looking to do a private placement and is in talks with some PE investors, said a source familiar with the Pune-based company's plans. The renewed fund raising exercise comes after the company cancelled its initial public offering proposal some months ago. The plan was to raise Rs 400-500 crore from the capital market. Details about its proposed private placement remain sketchy. Sources say the company, depending upon valuations, intends to dilute 10-12% equity stake. Tata Motors is the single largest shareholder of Tata Technologies, with holding of 82%. The design houses employees and other Tata entities hold the balance. The company serves automotive, aerospace and consumer durable manufacturers. The global economic slump has dragged valuations southwards sharply, with the impact being felt even on PE deals. The number of PE transactions being closed has dropped noticeably in the past several months. The Rs 1,100-crore Tata Technologies group, with over 3,000 employees, has development centres in the US and Germany. The private placement could be through a combination of Tata Motors selling its stake and Tata Technologies issuing fresh equity to the new investor. For the cash-starved Tata Motors, this is part of its strategy to monetise part of its investments in subsidiary companies. And for Tata Technologies, the proceeds would help reduce debt. In October 2005, Tata Technologies acquired UK-based INCAT, which in turn acquired Stuttgart, Germany-based CEDIS Mechanical Engineering in 2006. If the deal materialises, this would be one of the few closely-held Tata companies which would tap PE money. Some of the earlier PE deals include Singapore government investment arm Temasek buying into mobile operator Tata Teleservices and direct-to-home service provider Tata Sky. International Finance Corporation and IL&FS have invested in Tata Teas Amalgamated Plantations, that runs its North India plantation operations

A K Capital buys 70.83% in NBFC for Rs 1.48 cr

A top Mumbai-based bond broker, A K Capital, has acquired 70.83 percent stake in a non-banking finance company (NBFC), Girdhar Vanijya, for Rs 1.48 crore. Through the NBFC, A K Capital plans to start an investment banking unit for the bond market.

Talking to Business Standard, A K Capital’s Senior Vice-President Vikas Jain said, “There is tremendous opportunity in the corporate bond market, which is going to witness high activity in the coming days.”
Recently, the Rs 500-crore bond issue of Tata Capital was a huge success. It received record subscription from the retail segment too. However, the NBCF business has been under consistent pressure after the meltdown in stock markets in 2008 as client defaults piled up.
Last year, A K Capital had announced its plan to either float or acquire an NBFC and had also kept aside nearly Rs 5 crore for the same.
A K Capital has been playing a pivotal role in debt market private placements for banks, the government and other financial institutions, is one of the biggest competitor of Mumbai’s oldest brokerage house Darashaw & Co. A K Capital had consistently been there in the top two arrangers of debt through the private placement route for six consecutive years from FY03 to FY08.

IDFC Project Equity invests $68.5m in Indian power production firm

IDFC Project Equity, an Indian infrastructure equity investor, has put INR3.5bn ($68.5m) into Essar Power, a power production company headquartered in Mumbai. The capital will be used for ongoing expansion projects. Essar Power operates three power plants: two in Hazira with generating capacity of 515MW and 500MW each and one in Vadinar with a capacity of 125MW. The company is currently implementing four power projects which are under various stages of construction and are scheduled to be completed over the next three years, after which the total capacity of Essar Power would increase to approximately 6000MW. MK Sinha, president and CEO of IDFC Project Equity, said, "We find the power sector particularly attractive and are delighted to partner with a strong and credible group like Essar for our first large investment in this sector since the initial fund close in June 2008. What we particularly like about this investment is our partner's credible and measured project development and execution plans." Aditya Aggarwal, principal of IDFC Project Equity, added, "We believe that in these unprecedented times, Essar group is well positioned to capitalise on the opportunities in the Indian power sector and leverage its inherent large scale project implementation expertise. The management team at Essar Power is one of the most experienced and proactive in the sector today and we look forward to working with them." IDFC Project Equity manages India Infrastructure Fund (IIF). IIF has been set up as part of the 'India Infrastructure Financing Initiative', a collaborative effort between the government of India and Indian and global financial institutions to deploy $5bn in capital for infrastructure projects in India. IIF currently manages a corpus of $875m.

Fortis likely to buy 74% of Wockhardt hospitals for Rs750 crores

Fortis Healthcare has emerged as the front-runner to acquire a substantial stake in the unlisted Wockhardt Hospitals, people familiar with the development said. Fortis' promoters have reached a broad agreement with Wockhardt's founder Habil Khorakiwala on a possible deal to acquire up to 74% in the hospital chain for close to Rs 750 crore, valuing the business at over Rs 1,000 crore, the people said. Wockhardt Hospitals is a 100% subsidiary of pharmaceutical company Wockhardt. Private equity firms General Atlantic and Advent were also in the race, but Fortis is close to clinching the deal, they added. Investment bankers said if the deal materialises, Fortis, which is run by Shivinder Singh — the younger brother of Ranbaxy's MD and CEO Malvinder Singh — is likely to invest Rs 400 crore in the first phase for a 40% equity holding, and plans to subsequently increase its stake. But a formal deal is yet to be sealed, with both parties in the process of ironing out differences, including those over branding the hospital chain. When contacted, a Wockhardt spokesperson refused comment. A Fortis Healthcare spokesperson said: "We are in the market. We cannot comment on market speculation or any individual deals." Bankers told ET that Fortis' promoters and Mr Khorakiwala had reached an agreement almost 10 days ago. One banker said Fortis is valuing the hospital chain at over Rs 1,000 crore, which is substantially lower than the proposed IPO valuation, arrived at almost 15 months ago. In February 2008, Wockhardt had sought to divest 24% for Rs 800 crore. The issue had to be withdrawn because of lack of demand. Since the time Fortis entered the fray, investment banking circles have been wary of 'control' issues. The group has, in the past, walked out of deals with other hospitals over differences on management rights. "A staggered deal could be a way out," said an analyst, who argued that selling some pharma assets and a strategic dilution in the hospital business was critical to Wockhardt's fiscal restructuring plans. On Monday, the Fortis scrip ended marginally lower at Rs 66 on the BSE in a weak market. Fortis currently manages 3,000 beds with a network of 26 hospitals, which it plans to increase to 40 by 2012. It will add 1,200 beds soon at new facilities in Vashi in Navi Mumbai, Shalimar Bagh in Delhi and Gurgaon. Industry analysts feel rising incomes and a demand for quality healthcare — with an efficient government-run health delivery system not in place — are fuelling the growth of hospital chains in India. The sector grows at an estimated 10% to 15 % a year. Wockhardt Hospitals, which runs 17 facilities, is planning more at Kolkata, Mumbai and Nashik, which will start functioning within a month. If the deal materialises, Fortis will obtain easy entry into Maharashtra, Bangalore and Kolkata. The deal will take its network strength to 43. Fortis Healthcare is in the process of raising Rs 1,000 crore through a rights issue. The company had said the money would be used to fund its greenfield projects and restructure the balance sheet, besides being utilised for other investments. Additionally, the company plans to raise money through issue of warrants, but the details are yet to be decided.

Monday, March 30, 2009

STREET VIEW: Sterlite - Asarco deal

We present to you the views of different analysts across brokerage houses.


CLSA Asia

“Sterlite has driven a hard bargain acquiring Asarco for 50% lower price. At 5.2x EV/EBITDA assuming long term copper prices, the new acquisition price does not look expensive on a long term view - especially given potential for reserve enhancement and cost reduction. Near term, copper prices could see a sharp drop, which could severely impact consolidated profits. The acquisition will also substantially reduce Sterlite’s net cash position. We believe stock will ontinue to be driven by nearer term profitability issues and maintain U-PF”








Credit Suisse

“The new price of US$1.7 bn has a NPV of US$1.4 bn, US$400 mn higher than our previous estimate: to take Rs30/share out of fair value. As per Sterlite’s management, Asarco can produce 200 kt of refined copper: the 237 kt CY08 sales volume includes tolled production. The cost (ex. tolling) is US$1.5/lb. At the current cost, production and prices, valuation is 10.5x EV/EBITDA, versus the sector average of 8.2x CY09. Sterlite expects production to rise 25% to 250 kt and costs to fall 20% to US$1.2/lb, bringing down EV/EBITDA to 4.2x (Fig. 2) at current Cu prices. Sterlite’s expectation of a three-year payback seems to be based on a Cu price of US$4,100/t (now US$3,662/t). Asarco’s Jan. 2009 P&L shows a US$1.5/lb cost of production, a sharp fall MoM. EBITDA of US$1.8 mn turned positive after four months. The US$1.1 bn in upfront payment will make Sterlite a net debt company, though gearing will remain nominal. Subsequent payments should be possible from Asarco operations. We would have been more positive if the transaction had not taken place or if the acquisition price was lower than US$1 bn. We remain positive on Sterlite due to its Zn and power businesses.”



BOA – ML

“Asarco is value dilutive in our view; Reiterate Neutral. Sterlite announced that it has signed a new agreement with Asarco to purchase its operating assets for up front cash payment of $1.1bn and staggered payment of $600m over next nine years. On NPV basis, this implies total cost of $1.35bn. We value Asarco at $750m and hence believe this acquisition is value dilutive. On a near-term 1 year horizon, we estimate, it is earnings dilutive by 7%. However, we think a good part of the bad news has already been reflected in the current share price. Asarco can be funded internally given that Sterlite (stand alone) has cash of ~$2bn.”

“Asarco needs copper price of US$4,600/ton to be value neutral
Our value of $750m for Asarco is based on the assumptions of: Cu price in FY10/11 of $3500/3761/t, cost of production at $3087/t & WACC of 13.7%. We get EBITDA/t in FY10/11 of $588/862 and from FY12 onwards we take $1000/t. To be value neutral, we need Asarco to earn EBITDA of $1650/t. Given that Asarco is a high cost asset (in 3rd quartile globally), contrary to management expectations we believe cost reduction will be challenging. Hence, for the acquisition to be value neutral, we need copper price to be (and sustain over the
25-year mine life) at $4600/t vs spot of $3700/t.”

Goldman Sachs

“This is an earnings accretive transaction, with valuation multiple of about 3.0x CY08E EV/EBITDA (GS estimate based on limited disclosures by the company) vs Sterlite at our target price implied multiple of 2.7x FY09E EV/EBITDA. We await further details on the operating financials of Asarco. We also believe significant uncertainties exist before conclusion of this
transaction.”

Implications
“We reaffirm our Buy rating on the stock, for the following reasons: 1. Valuation – In our view after deducting immediate cash payment for this acquisition: a) Sterlite is still trading at 0.8x FY2010E P/B with FY2010E ROE of 11.8%, vs global comps trading at 0.9x P/B with 6% ROE. b) Net cash on balance sheet accounts for roughly 35% of market cap. 2. Competitive industry position – We believe that: a) Sterlite is among the lowest cost producers of zinc in the world, and b) possesses strategic advantages in its forthcoming aluminium projects, in our view.
Our target price is unchanged. Risks: M&A risks, metal prices, project funding & execution, delays in securing balance stakes in key subsidiaries, and delays in securing coal blocks.”

Kotak Institutional Equities

“Sterlite has announced the acquisition of ASARCO for a consideration of US$1.7 bn—of this, US$1.1 bn would be paid upfront and the balance US$600 mn would be paid over a period of nine years which would be in the form of a senior secured, non interest bearing promissory note. The deal has been backed by two letters of credit totaling US$100 mn issued by ABN AMRO, Chicago and an additional US$25 mn letter of credit would be issued if the bankruptcy court approves the disclosure statement for ASARCO’s reorganization plan. Upon closing, ASARCO will release Sterlite from any claims arising out of the first purchase and sale agreement signed in May 2008.

In NPV terms, the acquisition value is US$1.3 bn. Sterlite would be acquiring the operating assets of ASARCO which include smelting capacity of 270,000 tons, refining capacity of 500,000 tons and copper mines with an estimated reserve of 5 m tons of copper (to last 25 years). Sterlite has indicated that it would not be acquiring any liabilities and would be completely ring-fenced from existing environmental liabilities. We believe the acquisition will likely be positive for Sterlite given (1) the mining reserves of ASARCO, (2) Sterlite’s past operational track record, no other company would be better equipped to reduce costs at ASARCO and (3) attractive acquisition price given current copper prices. Our DCF calculation indicates that, at a long-term copper price of US$3,800/ton, the ASARCO deal would be value neutral to Sterlite. Current copper prices are at US$3,850 ton.”

Macquarie Research

“The deal – better than expected: The new offer includes an upfront payment of US$1.1bn and deferred payments of US$600m over the next 9 years (non interest paying and non recourse, US$20m each year and US$460m bullet payment in the 9th year). This represents an effective cost of US$1.4bn against the street’s expectation of US$1.5-2.0bn. This is a substantial improvement over the previous bid of US$2.6bn and is better structured with a lower initial cash outflow. EPS accretive and positive NPV: Based on our copper price forecasts, the deal has a NPV of US$350m and would add Rs23 to our target price. It is marginally EPS decretive in FY10, but would add around Rs5, or 10%, to our FY11 EPS estimate. Asarco assets – sufficient scope to improve: Asarco operated at a cash cost of US$1.45/lbs of copper in the December quarter and in January at US$1.37/lbs against the current copper price of US$1.6c/lbs. Also, it has 5m tonnes of copper reserves which, on the current production of 200kt,
represent 25 years of mine life. Smelter capacity is even higher at 270ktpa.
Management expects to increase production by 25% and reduce costs further
to US$1.25/lbs, to bring Asarco to the second quartile of the cost curve. Well funded for the acquisition: On its standalone balance sheet, Sterlite has US$2bn of cash and doesn’t need to raise debt for this acquisition. It has already provided for equity contributions of US$500m each for its energy business and the Vedanta alumina ventures and is still left with US$1bn for reducing minorities in Hindustan Zinc and Balco (estimated cost US$1.5bn).”

Nomura

“Although the bid price was expected to come down as management was renegotiating the deal, the structure of the deal is favourable for Sterlite as just US$1.1bn will be paid upfront and the balance of US$600mn will be paid over a further nine-year period. While earlier we were building in US$-1.3bn on account of the Asarco acquisition, at current copper prices with new bid price there will be value destruction of US$670mn only. We have valued Asarco at the current copper price of US$3,681/tonne and total reserves of 5mn tonnes. Total net profit from Asarco will be in the range of US$45-50mn, which will be close to INR3.3/share of Sterlite, according to our estimates. However, total cash and cash equivalents for Sterlite will also be reduced by US$1.1bn, which will result in a similar fall in other income.”



Cadila signs drug development deal with Eli Lily

Cadila has signed a drug development agreement with Eli Lily in which Cadial will do the initial part and take the molecule all the way up to phase II after which Eli Lily will take over and develop and bring it to the market. Thereby, Cadila is entitled to receive US$ 300 million in terms of milestone payment and this agreement could continue for about six years. Though there is no clarity yet as to when they will receive milestone payments. These drug development processes can be very long and not all molecules actually hit the market, so we do not know when the molecule will come out but the positive thing is that it builds a kid of confidence capabilities of Cadila. Cadila already from its own molecule pipeline has six molecules out of which two are phase II trials. Basically it’s the confidence on research and development (R&D) capabilities of Cadila, because this USD 300 million is not going to come right now. With its out performance in the past three months Cadila’s results have also been good despite its high debt. Consistently it has been a good performer; it has garnered good market share in US through inorganic as well as organic routes and also its own player in domestic markets which has helped it sustain its growth

Tanla Solutions to form JV with Spanish firm

Telecom infrastructure solutions provider Tanla said that it will form a joint venture firm with Spain-based Zed Worldwide Holdings at an investment of about Rs 63 crore.

Tanla and Zed together propose to establish a joint venture company in India," the Hyderabad-based company said in a filing to the BSE. Further, the firm has already received the approval from the Foreign Investment Promotion Board (FIPB) for the establishment of the proposed JV, Tanla Solutions said. According to Tanla, the new entity would be mainly engaged in the development and provision of traditional and next generation mobile application content and services to mobile phone users in the country. "The joint venture would commence its operations during the first quarter of financial year 2009-10," the company further said. "The JV proposes to offer new services for the mobile internet (including 3G), mobile entertainment, mobile advertising and interactive television verticals," Tanla Solutions CMD Uday Reddy said. Zed is a leading mobile entertainment services firm and has presence in 54 countries.

Hindujas close to acquiring 2 firms

Business process outsourcing company Hinduja Global Solutions (HGSL) is hunting for acquisitions in the UK and the US, despite the global recession and is close to buying two companies, a top official said.“We are very close to acquiring two companies over the next few months, which would be a strategic fit to our existing businesses. These would be contact centres with some amount of voice and data processes,” PaBOtrick David, executive vice- president, global human resources strategy, Hinduja Global Solutions, said without divulging any further details about the acquisition.In 2008, the company’s chief executive officer Partha De Sarkar had said that four companies were short-listed for acquisition and around $110 million cash from internal accruals is earmarked from the purpose. He had also said that a company with revenues of $50 million would be ideal match for HGSL.David added that cash set aside for acquisitions remains the same and the company would be looking at an optimal structure for making the acquisition.Hinduja Global Solutions, part of flagship Hinduja Group, provides outsourcing services in the areas of banking, financial services and insurance, telecom and healthcare. The company employs about 9,500 people in India, which accounts for nearly 65 per cent of its total workforce. Telecom contributes about 80 per cent of the company’s domestic business.On a query on the impact of recession, David said the company has not seen any softening in business from existing clients.

3i eyes new deals in health care sector

European private equity firm 3i Group Plc is exploring fresh investments in India’s health care sector, nearly two years after it made its first. “We are currently looking at several proposals for comparatively large investments in the country’s pharmaceuticals, medical devices manufacturing, and health care and laboratory services industries, including large and medium hospital groups,” said Mahesh Chhabria, partner, 3i India Pvt. Ltd, the local arm of the London-listed buyout firm. 3i India’s previous investment in the sector was in May 2007, in clinical research organization Siro Clinpharm Pvt. Ltd, the country’s largest fully integrated clinical trials organization. The firm has been in India since 2005; its investment portfolio here is currently valued at $920 million Chhabria said in an interview with Mint on Thursday that the new investments could be in the form of a local acquisition by Siro Clinpharm. Siro Climpharm, which acquired German clinical trials company Omega Mediation group and its associates in Europe in May, will look at one or two strategic acquisitions in India after the integration is completed this year. “Our investments had been in companies which are either the only player or the leaders in that particular sector, and the deals were not below $30 million (Rs151.5 crore),” Chhabria said. 3i Group has been in India since 2005 and has invested in sectors including media, automotive, construction, power, ports and manufacturing. The firm’s investment portfolio in India is currently valued at $920 million. In 2007, the private equity firm also signed a strategic partnership with India Infrastructure Finance Co. Ltd to invest in public works. After launching a $1.2 billion India infrastructure fund in 2008, it has so far invested at least $330 million in Indian utilities, according to information on its website. Globally, 3i Group has health care investments valued at €1.6 billion (Rs10,976 crore). In January, the firm hired John Moore, a former managing director and global head of health care investment banking at Morgan Stanley, as a partner responsible for its health care investment strategy across the US.

Sunday, March 29, 2009

Phoenix AG to buy Andrew Yule's stake in Phoenix Yule

German company Phoenix AG will buy Andrew Yule's 26 per cent stake in Phoenix Yule -- its joint venture with the public sector heavy engineering firm as a part of the latter's disinvestment process. Andrew Yule Chairman and Managing Director Kallol Datta said that Phoenix would buy Yule's stake in the joint venture. "Phoenix has agreed to exercise the first right of refusal. It is now waiting approval of the Cabinet," Datta said. Phoenix AG presently holds 74 per cent in the JV, while the remaining is held by Yule. Datta said the divestment of another company -- Tide Water Oil -- was also at an advanced stage. He, however, regretted that Andrew Yule had not been able to complete the three disinvestment exercises within the current financial year. As per the BIFR (Board for Industrial and Financial Reconstruction) package, Andrew Yule was to sell its holdings in DPSC Ltd, Phoenix Yule and Tide Water Oil during 2008-09, the proceeds of which would go towards repayment of Rs 87 crore bridge loan to the government. "It is extremely dissatisfying that the disinvestments could not happen. But the work done in the last nine months was commendable", Datta said. The company's operations would not be affected since the sell offs were meant for returning money to the government, he said. Andrew Yule holds 26 per cent in Tide Water Oil. The DPSC sale process was halted due to legal complications involved. Commenting on the performance of the company this financial year, Datta said Andrew Yule was expected to make a handsome profit. The company's networth, which was still negative, was also expected to become positive in the next fiscal, he said. As a part of the revival package, Andrew Yule was also required to spin off the electrical and engineering businesses into two separate companies. For this purpose two shell companies, Yule Engineering and Yule Electrical, were required to be floated. Datta, however, refused to comment on this issue. After spinning off the two units, Andrew Yule would primarily focus on the emerging tea business. The entire revival package of Andrew Yule was pegged at Rs 112 crore.

Saturday, March 28, 2009

Toshiba to take 100% of Panasonic LCD JV

Japan's Toshiba Corp plans to take a 100 per cent stake in its struggling liquid crystal display (LCD) joint venture with Panasonic Corp, a source with knowledge of the matter said. Toshiba Matsushita Display Technology, currently owned 60 per cent by Toshiba and 40 per cent by Panasonic, is the world's second-largest maker of small and midsized LCD panels used in cell phones, car navigation systems and other devices. Toshiba has decided to buy Panasonic's 40 per cent stake for several billion yen, the source said, confirming an earlier report in the Nikkei business daily. No one at Toshiba or Panasonic, formerly named Matsushita Electric Industrial, was immediately available for comment. The source spoke on condition of anonymity because the deal has not yet been made public. Hit by falling prices and sluggish demand, Toshiba Matsushita Display is expected to post an operating loss of 30 billion yen on sales of 270 billion yen for the financial year ending this month. Despite the earnings downturn, Toshiba still views the small and midsize display business as an important business and taking a 100 per cent stake will allow it to accelerate decision-making and restructuring, the source said. Toshiba is planning to cut costs by 300 billion yen in the next business year from April as it braces for its worst-ever annual loss in the year ending this month. At the same time the deal should allow Panasonic, the world's top maker of plasma TVs, to focus more of its resources on large displays, though it will still hold 25 per cent in another small and midsized LCD venture majority-owned by Hitachi Ltd. Toshiba Matsushita Display held 10.3 per cent of the global market for small and midsize LCDs in 2008, second only to Sharp Corp's 20.2 per cent share, the Nikkei said, citing figures from research firm DisplaySearch. The move will mark the latest realignment of the LCD sector. Earlier this month NEC Corp said it would close a LCD plant in Japan while Sony Corp and Seiko Epson Corp announced that they were considering an alliance in small-sized LCDs. After making the venture wholly-owned, Toshiba plans to scale back production of amorphous silicon panels, which have been hit hard by sliding prices, and focus on higher-end polycrystalline silicon panels, the Nikkei said.

LIC wants to further increase its position in Indian banking sector - Team M&A EXCLUSIVE

The Life Insurance Corp. of India (LIC), the country’s largest insurer, has sought regulatory approval to increase its stake in Axis Bank Ltd, pitching for a greater say in India’s third largest private bank’s operations. LIC holds 10.36% in Axis Bank and needs approval from the Insurance Regulatory and Development Authority (Irda) as well as the Reserve Bank of India (RBI) to hike its stake. As per RBI norms, one bank cannot own more than 5% in another bank but institutions and promoters can hold up to 10% stake. Irda regulations, too, cap an insurance firm’s holding at 10% in any company, which applies only to instances of new investments. LIC has been off-late an active investor in India's banking sector space.
Refer to this link for further analysis on LIC's other investments in India's banking sector
http://mergers-in-india.blogspot.com/2009/03/lic-bets-big-in-indias-equity-markets.html

Walt Disney to Hike stake in UTVi

UTV Software Communications, in which Walt Disney Company holds a majority stake, is planning to increase its shareholding from 20 to 49% in a Special Purpose Vehicle (SPV) that owns and controls the business news channel UTVi. Walt Disney currently holds 59.9% in publicly-listed UTV Software Communications, in which Ronnie Screwvala holds 23% and the rest lies with the public. UTV Software Communications, in turn, holds 20% in an SPV that owns UTVi. Screwvala and associates hold the rest. Because of Walt Disney’s majority holding in UTV Software Communications, the company is considered a foreign company under the pre-2009 FDI guidelines, so the SPV will be considered a foreign-owned company. The proposal, which was made at a UTV board meeting on Friday, would effectively mean that, on a pro-rata basis, Walt Disney’s stake in the SPV would go up to 29%

Daiwa and Quantum to form Private Equity JV; To Invest In India & China

Daiwa Securities SMBC Principal Investments and Quantum Leaps will set up a private equity joint venture to invest in Japan, India and China. The JV is expected to be closed in April and is targeting a raise ¥30 billion ($307 million). It plans to invest in technology-oriented growth companies in Asia. Last August Daiwa had announced that it is looking at a 500 billion yen ($5.4 billion) Asia fund, which it scrapped earlier this year. Daiwa's talks for the private equity fund with Blackstone (who was to be the co-sponsor of the fund) failed to materialise. After that it had decided to raise a smaller $200-300 million fund.
The fund aims to act as a bridge between Asia and Japan, with an investment focus on providing support for Asian companies to grow by acquiring technologies and management skills from Japan and also for Japanese companies to expand their businesses in Asia. The fund plans to invest 70% of its assets in Asia, particularly China and India and the rest in Japan. Nobuyuki Idei, founder and CEO of Quantum Leaps, says the fund will help create new value in Asian companies by providing risk capital. Idei will serve as the chairman of the JV. "The financial turmoil triggered by the subprime mortgage crisis continues to have serious and wide-ranging negative repercussions. Now more than ever, we need bold new initiatives that will spur innovation in Japan and Asia. Our joint venture company aims to bring together the technological prowess of Japanese companies with the growth potential of Asian economies to create new value and Pan-Asian prosperity and harmony. Utilizing a network of the best and brightest CEOs of Japan and Asia, we hope to manage a fund unlike any other," he said.
The JV looks to leverage Idei's broad network with top management throughout Asia for access to high quality deals.

Sandstone capita increases its exposure to India - invests in Phoenix and PSL

Hedge funds joined in on the bull rally as the country’s bellwether index breaches the 10K mark on strong global cues. Sandstone Capital, an India focused hedge fund with $1 billion capital under management, picked up stakes in Phoenix Mills and PSL Ltd from open market on Thursday. Sandstone has picked up a little more than 2% stake in Atul Ruia-promoted real estate developer Phoenix Mills for Rs 18.3 crore. Sandstone also picked up a 1.53% stake in PSL Ltd for Rs 4.23 crore. PSL Ltd is involved in manufacturing and coating of pipes for transporting hydrocarbon products, water products, and steel structural applications. The company has been promoted by Punj family and claims to be largest manufacturer of high grade large diameter Helical Submerged Arc Welded (HSAW) pipes in India. Present shareholders of Phoenix Mills include Americop Ventures, New Vernon, Deutsche Securities, Kotak Mahindra, among others. Phoenix Mills raised Rs 1,300 crore from German real estate fund MPC Synergy for its various projects in August last year. Trafelet Company was another hedge fund busy in the market, but it was selling its holding in various companies. The hedge fund sold its holdings in various companies like Central Bank of India, TVS Motor Company, Jagaran Prakash, and JK Lakshmi Cement to Morgan Stanley Mauritius. Sandstone has made a few private equity investments in the country. It's last investment was in Hyderabad based SKS Microfinance, for which it was the lead investor in a $75 million round. Its other investments include optical networking product company Tejas Networks and local search firm Guruji.

NDTV restructures to attract PE & Strategic Investors

Media firm NDTV is in the midst of a corporate restructuring which will allow it to raise fresh foreign funds. It has divided the businesses into news and non-news. This is because the news business has restrictions on foreign investment while the entertainment company will be able to raise more foreign fund. According to the plan, NDTV is demerging its news business into a separate listed entity to be called NDTV Studios. This will house three wholly-owned subsidiaries – NDTV News 24X7 Ltd, NDTV India Plus Ltd and NDTV Business Ltd. These companies will run the three existing news channels- English (NDTV 24X7), Hindi (NDTV India) and business news channel (NDTV Profit). This is in accordance with the foreign direct investment(FDI) guidelines in the media sector. FDI in an entity engaged in the news and current affairs TV channels is restricted to 26%. There is no such ceiling for FDI in companies engaged in the business of running non-news TV channels.The non news or entertainment business (NDTV Imagine and NDTV Lifestyle) will remain with the parent firm NDTV. It is this entity which will be free to get more foreign funds. Currently, NDTV has foreign institutional investment to the tune of 23.79%(as of December 31, 2008). Given the presence of the news business in the firm it faces challenges in raising funds as it cannot look at foreign investors. But this will change once the news business is separated.Even though the Indian media space has a large presence of foreign media firms such as that owned by media mogul Rupert Murdoch(Star), NBC Universal(CNBC) and Sony, among others, most have a large Indian strategic partner. More recently Disney had built a strong presence by taking management control of UTV Software. By separating the news business, NDTV could also be potentially making way for a similar partnership with a foreign media giant. NDTV already has raised some money by selling 26% in NDTV Networks to NBC Universal for $150 million last year. NDTV Networks is a holding company for the firm's entertainment and lifestyle channels and digital media business. The preliminary agreement includes an option for NBC Universal to increase its stake to up to 50% in two years' time. This may not have been possible with the news business still under NDTV.
Raising fresh money could also be imperative for the firm as it has been facing huge pressure on bottomline. For the first nine months of 2008-09 the company has made consolidated (adjusted for other income including inflow of Rs 634 crore from NBC) net loss of Rs 334 crore on net sales of Rs 368.9 crore. The company’s stock price is now lower by more than 80% of its one year highs and the market cap has shrunk to Rs 510 crore odd. Interestingly, the value of the company is now 33% lower than what NBC paid to get a small chunk of one of the businesses within.

Khaleej Finance Invests In Secunderabad Based Power Co

Indian Private Equity Fund (IPEF) which is sponsored by Khaleej Finance of Bahrain is picking 41% stake in Secunderabad-based Shalivahana Green Energy (SGEL) for an estimated Rs 53.94 crore($10.5 million) valuing the firm at Rs 131 crore ($25.6 million). Launched in collaboration with Kuwait Investment Company (KIC), IPEF is a $200 million Sharia compliant Indian focused private equity fund. Besides power sector, IPEF invests in real estate, sugar, cement, iron & steel, pharma, telecom, IT, infrastructure etc targeting IRR of 25%. The fund looks at investment horizon of 3-5 years aiming to more than double the value of its investments in the investment period. According to the deal, IPEF will subscribe to around 34.32 million fresh shares of SGEL, making it the second largest shareholder of the firm. SGEL is into development and operation of renewable energy projects. Its business area include generation and distribution of green energy from biomass, hydro, wind, solar, tidal among other non conventional energy sources. SGEL also has six subsidiaries in which it holds stakes ranging from 26.8% (Pallavi Power & Mines) to 99.99% (Konark Power Project). Other subsidiaries include Rake Power, Shalivahana(MSW)Green Energy, Shalivahana Solar Energy and Shalivahana Wind Energy.
In the meantime, VCCircle learns that one of the existing investors-- Small Is Beautiful (SIB) fund-- is exiting its investments in SGEL. SIB is backed by investments from various domestic public sector banks and financial institutions. Its investment advisor is KSK Energy Ventures.
SIB is currently holding around 33.44% stake representing 14.42 million shares and is selling 6.4 million shares to a Singapore-based fund Pan Asia Infrastructure Asset Management Company Pte. The value of this deal, which would give 7.67% of the expanded capital (after issue to IPEF) to the Singapore based fund is not clear.
The Singapore fund was formed two year back to invest in infrastructure projects in Asia. It already has few other investments in India including Central UP Gas Ltd, Worlds Window Infrastructure & Logistics and IL&FS Waste Management & Urban Services.
The remaining shares held by SIB(around 8 million shares) is believed to be in the process of being sold to the other existing resident shareholders including promoters of SGEL. SGEL is part of Hyderabad-based Shalivahana Group which operates in areas of construction, power, education, eco-tourism and real, estate. Shalivahana Projects is the privately held flagship group company.

Lumis Partners Acquires Majority Stake In BPO Firm BNK eSolutions

Lumis Partners, a Delhi-based private equity fund, has picked up a majority stake in BPO firm BNK eSolutions for an undisclosed amount. Sandeep Sinha, managing partner of Lumis Partners, has confirmed this development to VCCircle. The stake has been acquired from the BPO's parent company BNK Capital Markets, a Kolkata-based brokerage. Besides the stake buy, Lumis has also invested an additional amount in the firm for its growth and expansion.
"BNK eSolutions is a very specialised high end BPO firm in areas like IT and healthcare after market services," said Sinha. BNK eSolutions is now looking to expand the its footprint, especially in the US. Also with the deal closed, Lumis is looking for acquisitions for BNK eSolutions for inorganic growth, said Sinha. BNK eSolutions currently has three facilities with nearly a 1,000 employees. Its paid up equity capital of stands at Rs 6.63 crore, according to Economic Times. The BPO is also planning at opening more delivery centers in India, even outside Kolkata. Besides healthcare and IT, BNK eSolutions also has a presence in verticals like education and supply chain management.

DoCoMo to buy 12% in TTML for Rs570 crores

Tata Sons Ltd today said that DoCoMo would acquire 12 per cent of the common shares of Tata Teleservices (Maharashtra) Ltd (TTML) for about Rs 570 crore through an open offer.
“DoCoMo is preparing to acquire roughly 12 per cent of the common shares of Tata Teleservices (Maharashtra) Ltd (TTML) for about Rs 570 crore through an open offer, as the tender offer period ended on March 12,” a statement by the company said. The statement added Tata Sons has completed the sale of a 26 per cent stake in the group’s unlisted mobile telecom firm, Tata Teleservices Ltd, to DoCoMo. The two firms had announced the $ 2.7 billion deal in November last year. DoCoMo will nominate three executives to serve on TTSL’s board of directors, Tata Sons said in a statement. With this, DoCoMo is now a 26 per cent shareholder in TTSL, where Tata Sons is the single largest shareholder, with over 40 per cent stake in the company. NRI businessman C Sivasankaran holds 8 per cent and the Singapore government’s investment arm holds 9.9 per cent. The Japanese company said the acquisition in TTSL included 20 per cent newly issued shares and 6 per cent shares purchased from shareholders. Yesterday, Tata Communications sold one per cent of its stake in TTSL to DoCoMo for Rs 424 crore and another Tata firm, Tata Power, is also learnt to have sold some of its stake to DoCoMo for Rs 317 crore.

Lupin buys stake in Multicare Pharma - Philippines firm

Drug maker Lupin Ltd (LUPN.BO: Quote, Profile, Research) said it has acquired a 51 percent stake in Multicare Pharmaceuticals Philippines Inc, marking the Indian firm's foray into the $2.5 billion Philippines pharmaceuticals market. Financial details were not disclosed but Lupin said the purchase was funded through internal cash accruals. Multicare Pharmaceuticals, which sells branded generics drugs, reported revenue of about $6 million for the year ended December 2008, Lupin said in a statement late Thursday.
Earlier this month, Lupin's president-finance and planning, S Ramesh, had said the company continues to scout for acquisitions in Asia, eastern Europe, the Gulf region and Latin America.
Last year, Lupin's acquisitions included stakes in South Africa's Pharma Dynamics, Germany's Hormosan Pharma and Australia's Generic Health. (Reporting by Bharghavi Nagaraju; Editing by Ramya Venugopal)

ICICI to hive off PoS units first; delays plans to separate ATM network

ICICI Bank has decided to farm out its point of sale (PoS) terminals first, and has delayed hiving off its ATM network. A deal finalising the sale of the bank’s two lakh-plus PoS terminals, which are used for swiping credit and debit cards for payments, is expected to be concluded in April. ICICI Bank is looking at a valuation of over $100 million (Rs 500 crore). According to sources, close to a dozen companies in the payments business have shown interest in the bank’s PoS network. Of these, several have been shortlisted and have accessed the data room, which has been opened to final bidders. Besides being the highest bidder, other conditionalities have been attached to the sale. Topmost among these is the condition that transaction costs should be brought down. The bank is also looking at a much faster rate of deployment in the future. The final discussions with the bidders are likely to kick off in the next few days. ICICI Bank is likely to sell the PoS units outright or keep only a part of the stake so as to help the transition for the new owner. It will continue to be the settlement bank. Those interested include Visa, FSS, Total Systems Services, KKR-owned First Data Corporation, Blackstone-CMS joint venture and Venture Infotek. A few private equity investors have also shown interest. The bank was earlier looking at hiving off both its ATMs and PoS terminals into a separate company. However, given that the regulatory environment is still evolving, the bank has decided to wait for some time. In credit cards, there are instances of at least two foreign banks having hived off their POS network. However, their terminal numbers are negligible compared to that of ICICI Bank, which processes nearly half of the card transactions in the country. Among banks, SBI is planning a massive deployment of POS terminals that will rival ICICI’s network. However, the country’s largest bank has gone slow on the project and has set up a payments division to take a holistic view of opportunities in this segment of banking. The build-operate-hive off strategy is not new to ICICI Bank. The largest private bank has earlier done this with its technology arm 3i Infotech, which began as the erstwhile ICICI’s registrar and transfer services arm. A similar strategy was followed for Firstsource (formerly ICICI Onesource), its business process outsourcing outfit.

Friday, March 27, 2009

Reliance Money ties-up with Kuoni India for retailing FOREX products

Reliance Money, part of the Reliance Anil Dhirubhai Ambani Group, today announced its strategic business tie-up with Kuoni India. The tie-up was announced by Sudip Bandyopadhyay, CEO, Reliance Money. Under this tie-up, Reliance Money will partner with Kuoni India to set-up Shop-in-Shops at all the Kuoni and SOTC outlets across the country. They will also facilitate Customer Acquisition process of Reliance Money.

The rising foreign exchange revenue from the travel industry is encouraging both the international and domestic segment to expand their business.“The purpose of this tie-up is to provide the customer a convenient and cost effective platform for meeting their FOREX requirements. Our tie-up with Kuoni India will help us provide customers additional convenient locations for completing their FOREX transactions,” said Bandyopadhyay. Reliance Money plans to set up Shop-in-Shops across all the different business segments of the Outbound Division of Kuoni India. These include Kuoni Holidays, SOTC World Famous Tours, SOTC Do-It-Yourself Holidays, SOTC Special Interest Tours and SOTC Holidays of India.

Thursday, March 26, 2009

EBRD,Tata Tea to acquire 51% stake in Russian company Grand (player in coffe and tea sector)

The consortium led by Tata Tea, acting through an overseas subsidiary, intends initially to hold 51% of the Grand business -- with Tata Tea and EBRD having an effective stake of 33.2% and 17.8%, respectively.

The EBRD and Tata Tea Ltd are joining forces for the joint acquisition of a controlling stake in the Russian branding, packaging and distribution company- Grand, a well known player in Russia’s coffee and tea sector. The consortium led by Tata Tea, acting through an overseas subsidiary, intends initially to hold 51% of the Grand business -- with Tata Tea and EBRD having an effective stake of 33.2% and 17.8%, respectively. The balance of 49% will remain with the founding promoters, led by Dr. Alexander E Borisov.

Established in 1994, Grand today is a major Russian branding, packaging and distribution company in the economy segment of the coffee and tea business in Russia. It is mainly focused on regions outside the big cities and areas like the Urals, Siberia and Southern Russia. The investment by the EBRD and Tata Tea will be used to fund a programme which includes, among others, the modernisation of Grand’s production facilities in order to increase quantity and quality of output. This will open the way for new market opportunities.

On top of providing fresh capital, Tata Tea will also bring its considerable expertise and know-how to Grand. Its parent company, Tata Group, is India’s largest conglomerate and one of the largest producers of coffee and tea in the world. Tata Group has no investments in the beverages sector in Russia so far, but sees strong growth potential on a market where coffee is becoming increasingly popular and tea is a national beverage. Gilles Mettetal, EBRD Director for Agribusiness, said “the EBRD is pleased to add its specific strengths to Tata’s in order to make this investment successful. We can see a very clear role for Tata on the Russian market where it will provide customers with a wider choice of tea and coffee products of the highest standards.” The acquisition is subject to the fulfillment of various conditions, including regulatory approvals. Subject to this, the deal is expected to be completed during the first half of 2009.

In the agribusiness sector alone, the EBRD has directly committed more than €5.0bn in over 330 projects across Central and Eastern Europe and the Commonwealth of Independent States since 1991.

Graphite to consider demerger of Powmex Steels

The company has board meet on March 27 to consider demerger of Powmex Steels of GKW into itself. Story to follow.

Vishal Info to raise $40 mn to finance foreign acquisition

MUMBAI: Vishal Information Technologies, a small size ITES company, plans to raise around $40 million through global depository receipts (GDR), to be listed on Luxemburg Stock Exchange.

The amount so raised would be utilized to acquire foreign companies and dollar financing would suit most for this purpose since it would avoid any impact of current currency market volatility.
The acquisition would be entirely financed by the net proceeds from the GDR issue and no further debt would be raised for this purpose.

The company has already identified a couple of target companies, which operate in data conversion and fund accounting space.

Vishal Information Technologies’ business also includes data conversion and content management. And the current acquisition plan would be in line with the existing business of the company.

The company will issue six new Indian equity shares for every GDR issued outside. If the current issue goes as per plan, the company’s paid-up equity capital would increase to around Rs 15 crore from the existing Rs 10.68 crore.

The company had an annual turnover of Rs 40 crore in FY ’08 with an operating margin of around 35%. It reported 50% year-on-year growth both in sales and net profit in recent quarters.

Currently, the company’s stock is trading at a very high price-earning multiple of around 36 compared to the valuations of other small sized IT players. The stock lost nearly 7% at the end of Tuesday’s session compared to 0.5% rise in Sensex.

Zain exploring India telecoms acquisition

Kuwait-based mobile group still open to possible investments in Datacom or Loop Telecom.
Kuwait's Mobile Telecommunications Co., or Zain Group, said it is looking for an acquisition in India to enter the fastest growing telecommunications market in the world."Whilst in 2008 Zain engaged in discussions with leading investment banks on (acquisition) opportunities in India, we were unable to conclude any transaction," it said in an emailed statement to Dow Jones Newswires late Tuesday."Zain will continue its evaluation of opportunities."The company is still considering investments in Datacom Solutions Pvt. Ltd. or Loop Telecom Pvt. Ltd., two companies it had looked at last year as well, Zain said.

The two privately owned companies hold licenses to start mobile phone services across India.Zain said it can't provide further details on its India plans "at this stage."Global telecom companies are vying to enter India - which adds more than 9.0 million mobile phone users every month - to offset slowing growth in developed markets.The country had 376.12 million mobile phone users at the end of January, the telecom regulator's data showed.Datacom is 64% owned by consumer goods maker Videocon Ltd., with the rest being held by a family-owned venture of Mahendra Nahata, the chairman of Himachal Futuristic Communications Ltd.While Videocon Chairman Venugopal Dhoot said he wasn't aware of any discussions with Zain, Loop officials declined to comment."If they do (buy a company in India), it will be only to extend their footprint," Marise Ananian, an Egypt-based telecom analyst at EFG Hermes, said.Zain's main strategy is to focus on the African and Middle Eastern markets, where it is facing stiff competition, Ananian said.Zain is also exploring acquisition opportunities in Africa, the Middle East and other parts of Asia as part of its efforts to become one of the top 10 global mobile operator by 2011, the statement said, without elaborating.

GE Healthcare enters home healthcare market in India

GE Healthcare, the USD 17 billion healthcare business of UK-based General Electric Company, has announced its entry into the home healthcare market in India with the introduction of its sleep care and home respiratory care solutions. GE Healthcare's foray into Indian market came with its acquisition of Vital Signs Inc and its subsidiary Breas Medical AB, according to a company press release. V Raja, president and CEO, GE Healthcare - South Asia, said, "Home healthcare is largely untapped, while at the same time, a fast growing market in India. This global acquisition is consistent with GE's strategy to invest in high technology, innovative businesses that deliver top-line growth and earnings expansion.”“It is a strong, strategic fit and allows us to address the individual patient directly, for the first time. This is our first foray into home health in India,” added Raja.Currently, GE Healthcare is operational in more than 100 countries across the world, added the release.

Novartis Offers To Buy 39% More Of India Unit At INR351/Share

Swiss drug maker Novartis AG (NOVN.VX) Wednesday made an open offer to acquire an additional 39% stake in its Indian unit, Novartis India Ltd. (500672.BY), from public shareholders at INR351 a share. Novartis is looking to raise the stake in its Indian unit to nearly 90% from the current level of 50.9%, the company said in a statement. The offer is expected to open in May, it added. At least a 90% stake will allow the company to delist the unit.

Wednesday, March 25, 2009

STREET VIEW: DLF is looking to take a stake in DAL

We present to you the views of different analysts across brokerage houses.

CSFB
The story so far …
DLF Assets Ltd (DAL), a promoter company, entered into an agreement to buy 13 mn sq ft of commercial assets from DLF at a 9% cap rate. Against this, DLF recognised revenues of Rs101.7 bn between FY07 and FY09E at an average rental of Rs58/sf/m and PBT of Rs68.2 bn (~Rs40/share). Of the 13 mn sq ft, 9 mn sq ft is to be completed and ~6 mn sq ft leased by March 2009. The purchase was financed by about Rs1 bn in promoter equity, Rs43.5 bn in private equity (PE) from D.E. Shaw (US$400 mn) and Symphony (US$675 mn). The total outstanding from DAL to DLF is expected to be about Rs57.2 bn (US$1.1 bn) as of March 2009.
Valuation loss due to adverse cap rate movement
Cap rates and valuations have moved adversely since DAL contracted to buy at a 9% cap rate from DLF. Yields for listed Indian commercial assets currently range from 13% to 20%. We believe the fair valuation for DAL today could be somewhere between 11% and 13% cap rate resulting in a Rs19-32 bn erosion in DAL’s asset value.
Loss on private equity transaction
Media reports suggest D.E. Shaw wants to exit from DAL and that it has been promised a USD-protected return. We estimate the potential loss on an assumed 12.5% return to be about US$172 mn on the D.E. Shaw investment. While we do not know Symphony’s terms, we estimate a further potential loss of about US$209 mn if it were on similar terms as D.E. Shaw’s.



Reliance Equities
Merger likely to result in a dilution of 10–15% in DLF. The DLF-DAL merger is likely to result in dilution of 10–15% in DLF (assuming DAL’s are valued at the sale price). DLF had sales of Rs 106.2 billion in FY08–9M FY09 (out of a total transaction value of Rs 150 billion) to DAL. DAL paid Rs 51.6 billion (entirely through private equity funding), while the rest Rs 54.6 billion is yet to be paid (receivables). The merger would bring DAL assets on DLF’s books, while DLF shares would be issued after netting the receivables.

Morgan Stanley
What may happen – OPTION 1: DLF could take a partial equity stake in DAL in lieu of receivables. OPTION 2: DLF could buy the entire equity of DAL and merge the company. In option 2, the valuation at which DLF would acquire DAL and who would pay for the difference will be the key. It appears that DLF could buy back the assets at a meaningfully higher cap rate (12% or so), implying 30% or so lower value.
What would this mean for DLF – In option 1, not much would change for DLF except that receivables would get promoted to investments. In option 2, P/L impact – DLF would get rental flow of Rs 6 bln pa (available to securitise), B/S impact – assumes $1.05 bln debt (DE Shaw/Symphony) and assets sold to DAL. Valuation difference would either result in book writedown (DLF bears the cost) or new receivable/cash (promoters bear the cost).
Our thoughts - We think that DLF should transition its business model to ‘third party’ sales and mark down its historical DAL sales to market value. Intrinsic value of 9.5 msf of now completed DAL assets is roughly Rs60 bln at 11% yield vs Rs110 bln booked by DLF. Stay U/W

Crompton Greaves Invests Rs227 Crore in group power company

Electric equipment manufacturer Crompton Greaves will invest Rs 227 crore in another group company Avantha Power and Infrastructure Limited (APIL). Crompton Greaves will have 41% stake in the company post investment. The company will pick up shares of face value of Rs 10 at a book value of Rs 11.
APIL is an Avantha Group company, whose shareholders include Ballarpur Industries Ltd (BILT). APIL is engaged in the generation, transmission and distribution of electricity. It already has four captive power plants and is in the process of setting up two new independent power produces (IPP) plant with a capacity to generate 600 MW each, in Madhya Pradesh and Chhattisgarh.
Cromptom Greaves views the power generation, transmission and distribution business as a strategic opportunity for its future growth.
Since APIL is a group company, the investment proposal was referred to a committee of independent directors for evaluation. An external professional valuation of APIL was appraised by KPMG India Pvt. Ltd. The committee recommended the investment after assessing the prospects and potential of APIL and the features and the progrees made in APIL’s IPPs in Madhya Pradesh and Chhattisgarh.
Also, since it is a related party transaction the investment proposal was also reviewed by the Audit committee before it was sent to the board of directors for a consideration.
This is Crompton Greaves’ second acquisition in the past six months. The firms had, in September 2008, acquired US-based MSE Power Systems Inc and its group companies - MSE Engineering LLC & MSE West LLC for an enterprise value of $16 million.
The electrical equipment maker has been on an acquisition spree since the past two years as in June last year, the firm has acquired French firm Societe Nouvelle de Maintenance Transformateurs (Sonomatra) for about Euro 1.30 million and in 2007, it had acquired Ireland's Microsol Holdings Ltd for $35 million

Pacnet Increased Stake In Indian Joint Venture To 74%

There is more investment coming into the telecom sector. Asian telecommunications service provider Pacnet said it has increased its stake to 74% from the current 55% in its Indian joint venture in India. The company plans to apply for national long distance (NLD) and international long distance (ILD) communications licenses.
Bill Barney, Chief Executive Officer of Pacnet, said: "Together with our joint venture partner FutureWorld India Pvt. Ltd., we have further capitalised Pacific Internet India Pvt. Ltd to support our network roll out in India post receipt of ILD and NLD licenses." The additional capital brought in by Pacnet is not known.
Pacnet recently received approval from the Foreign Investment Promotion Board of India to increase its shareholding in the joint venture and to apply for ILD and NLD licenses. It may obtain the Letter of Intent from the Department of Telecom of India soon.
Pacnet currently offers Internet services in six Indian cities including Bangalore, Chennai, Mumbai, Pune, Gurgaon and Hyderabad. The company is looking at Pan India coverage, besides offering its full suite of network services including International Private Line (IPL), IP VPN, Ethernet IPL, IP Transit, Direct Internet Access, as well as managed services.
Pacnet's managed services include its recently launched Media Delivery Service that enables enterprises to distribute digital media around the world without investing in a costly high-bandwidth infrastructure.
According to Barney, "India will remain one of the world's fastest growing markets."
India's demand for bandwidth is also forecast to grow and latest figures from research firm TeleGeography has forecast bandwidth demand in India to grow from 157,041 Mbps in 2009 to 1,344,141 Mbps in 2014.
"This supports our strategy to focus on India as one of our key countries to invest aggressively in 2009, as we will continue to tap the continued economic strength of India, and support the country's demand for added network connectivity," Barney added.

Reliance shrinks its big pharma plan

Mukesh Ambani group has severely curtailed its earlier plan for an integrated pharmaceutical company, Reliance Pharmaceuticals.
The plan was announced a year earlier, and the new company floated, but the group’s flagship company, Reliance Industries Ltd (RIL), is now grappling with other priorities -- sliding oil prices, shrinking refining margins and a battle with the Anil Ambani group over supply of gas.
The plan was to build an integrated pharma company in two to three years, on the lines of the large domestic majors such as Ranbaxy’s or Dr Reddy’s Laboratories. Instead, the plan has been modified to being a start-up bulk drug manufacturing company, that will launch six bulk drugs or active pharmaceutical ingredients (APIs) by next year.
“We have put on hold our plan for large-scale formulation development and will re-organise the project to start with about 10 bulk drugs. We will go forward slowly, by consolidating our entry into bulk drugs,” K V Subramaniam, president of Reliance Life Sciences (RLSL), told Business Standard.
Privately-held RLSL is an umbrella company -- Reliance Pharma is its subsidiary -- that co-ordinates the healthcare businesses of the group. Seven years old, it is into biotech drug research, stem cell therapies, biodiesel production, cord blood banking and clinical research.
Reliance Life Sciences has also suspended its plan to invest Rs 1,000 crore in a special economic zone at Jamnagar in Gujarat for setting up world-class multiple drug manufacturing facilities. Instead, it has started a pilot facility to make pharmaceutical bulk drugs at its Navi Mumbai headquarters.
Subramaniam said Reliance Pharmaceuticals would focus on high-value bulk drugs, mainly in the field of cancer, peptides, steroids and hormones. Six products in oncology and steroids are likely to be ready for commercialisation by next year.
Earlier, the plan was to have Reliance Pharma launch numerous formulations and APIs in various global markets in two-three years to take on seasoned Indian generic drug-makers such as Ranbaxy, Dr Reddy's Lab and Sun Pharma, as well as overseas players such as Israel-based Teva Pharmaceuticals.

Tuesday, March 24, 2009

Asian groups to increase M&A activity - Survey by PWC

More Asian financial services companies say they will make acquisitions this year in spite of the global economic crisis as they plan to take advantage of the downturn to expand, according to a survey by PwC.

Among Asian financial groups, Taiwanese and Chinese companies are the most likely to undertake merger and acquisition activity in the next 12 months while Indonesia and Vietnam have overtaken China and India as the most popular places to do deals.

With relatively stronger balance sheets, Asian financial institutions are seeking to use the crisis as an opportunity to snap up cheap assets and grow their businesses. But many are reluctant to buy because of a lack of confidence and market uncertainty.

According to PwC, 42 per cent of the 215 Asian financial institutions polled forecast that they will do a deal this year, up from 38 per cent in last year’s survey which was conducted in the beginning of 2008 before the region felt the full-force of the financial crisis.

Despite this optimism, Matthew Philips, PwC China partner based in Shanghai, said the value of transactions for this year was set to fall to the level of 2005 and 2006, which reported $38.7bn and $64.5bn worth of deals respectively, as companies are more likely to do smaller transactions.
Asian financial institutions struck $99.1bn worth of deals last year, down from $125.9bn in 2007, due to notable declines in Japan and South Korea and Taiwan. ”I now expect to see an increased number of smaller deals to build share in underweight markets or segments, rather than the game changing deals that one might have expected at the beginning of the crisis as western players retreat,” said Mr Philips.

PwC said companies were looking to do deals to build scale and develop new markets. Nearly half of the companies surveyed said expanding their businesses was their key strategy this year.
Only 22 per cent have frozen investment and just 2 per cent said they would exit Asia.
In China, deals flow is expected to remain strong although it is forecast to be shy of last year’s $34.6bn. Nearly 70 per cent of companies expect to enter new markets this year, although they remain cautious after a few major international investments, such as the $5bn investment by China Investment Corp, the country’s sovereign wealth fund, in Morgan Stanley, had turned sour.

”The travails of high-profile deals announced at the outset of the crisis will serve as a cautionary tale for those considering potential targets, said Mr Philips. ”[But] from my personal experience in advising a number of Chinese institutions, we are seeing an uptake in interest looking at opportunities overseas

Vedanta to hike stake in Malco to 93%

NRI billionaire Anil Agarwal-led Vedanta Resources today said it will hike stake in its group firm Madras Aluminium by 13.2 per cent to 93.2 per cent for a consideration of Rs 171.35 crore.
"Vedanta has accepted the discovered price of Rs 115 per equity share and intends to acquire approximately 14.9 million shares (representing 13.2 per cent stake) of Malco tendered at the discovered price," the metals and mining major said in a statement here today.

The firm added it will apply to the domestic stock exchanges for delisting Malco from the bourses."Application for delisting Malco will be made to the Indian stock exchanges and Malco shares will be delisted once the requisite approvals have been received," it added.
Last month, Vedanta Resources had made an offer to the shareholders of Malco through its arm Twin Start Holdings to acquire 20 per cent stake in the firm. The metals and mining major at present holds about 80 per cent stake in Malco.

The buy-back offer would start on March 26 and end on April 9, the statement added. -->

BP, Shell eye Santos

Global energy giants BP, Eni and Shell are eyeing possible bids for Australia's No.3 oil and gas firm Santos, which one analyst valued at around $7 billion, but a bid from China looks unlikely, dealmakers say. Takeover speculation has swirled around Santos, which has a strong balance sheet and coveted liquid natural gas (LNG) prospects, since Nov 29 when a government cap on foreign ownership expired. Its shares soared 16 percent on Dec. 8 after a media report said China National Petroleum Corp (CNPC), parent of PetroChina, may bid. But with Australia reviewing a raft of Chinese investments, including Chinalco's contentious $19.5 billion deal with miner Rio Tinto, alarm bells are ringing in Canberra that China Inc might end up owning too much of Australia before the global financial crisis ends. That makes a CNPC bid highly unlikely, dealmakers say. "The Chinese realise they cannot succeed with a hostile bid," said a Hong Kong-based investment banker with direct knowledge of the matter. CNPC spokesman Liu Weijiang said he did not have any knowledge of the situation when contacted by Reuters. The banker added that BP, Eni and Shell are looking at Santos, but a formal process is not yet in place. "The hawks are swirling," the banker said. BP and Shell declined to comment when contacted by Reuters. Eni did not respond to calls seeking comment. "All of those companies have business development departments that are fully on top of Santos," a second Hong Kong-based investment banker said. Both bankers declined to be named because of client sensitivities. STRONG LNG PROSPECTS Santos is planning with Petronas a A$7.7 billion ($5.4 billion) LNG project in Australia's Queensland state which has earned it the envy of peers nurturing LNG growth ambitions in the Asia-Pacific region.

Monday, March 23, 2009

Suncor to Buy Petro-Canada in C$19.3 Billion Takeover

Consolidation in global energy sector now gathers momentum. Suncor Energy Inc., the world’s second-largest oil-sands producer, agreed to buy Petro-Canada for C$19.3 billion ($15.6 billion) in a record takeover that will create the biggest Canadian energy company. Owners of Petro-Canada will get 1.28 shares of the combined company for each of their shares, the Calgary-based oil producers said today in a statement. The transaction values Petro-Canada at C$39.55 a share, 33 percent higher than its March 20 closing price.

The deal is the biggest in history for a Canadian oil company and is the industry’s largest worldwide since January 2007, according to Bloomberg data. It will yield expense savings and help Suncor shoulder high-cost oil-sands projects in northern Alberta after crude prices tumbled more than $100 a barrel from last year’s all-time high.

"It’s a good opportunity for Suncor to snap up some good assets at fairly depressed prices," said Greg Smith, managing director at investment adviser Fat Prophets U.K. Ltd. in London.
"Oil sands are the legitimate solution to the long-term energy problem, but it’s a lot more costly to get the oil out of the ground."

Petro-Canada produced about 409,000 barrels of oil equivalent a day in the fourth quarter, 46 percent more than Suncor’s total, from its operations in Canada, the U.S., the North Sea and Africa.

The Ontario Teachers’ Pension Plan increased its stake in Petro-Canada to 3.3 percent in the fourth quarter and said it would push for ways to boost the share price after the stock lost half its value last year. The stock underperformed the Standard & Poor’s/Toronto Stock Exchange Composite Index five years in a row, a period when oil prices almost tripled.
"If you look at how badly Petro-Canada has underperformed over the last five years, you’d say it’s a fair deal," said Gavin Graham, director of investments at Bank of Montreal Asset Management in Toronto. "Suncor has to demonstrate that it can actually run those assets better. Given their track record, they are very likely to do so." Suncor, which lost 56 percent of its market value last year, had jumped 30 percent this year before today, the most among Canadian oil companies valued at more than C$1 billion.

ICICI Prudential says consolidation is way forward for industry

Mumbai (PTI): With capital becoming scarce due to the global economic meltdown, ICICI Prudential on Sunday said that consolidation and raising FDI limit to 49 per cent were the way forward to fuel the life insurance business.
"Now access to capital is shrinking and this is likely to continue for the next six months to one year...consolidation makes sense in this scenario," ICICI Prudential Life Insurance's Managing Director Shikha Sharma told PTI.

In every business, there will normally be four to five major players and 10-12 players altogether. There is, therefore, an immense potential for consolidation within the industry here, Sharma said.

Margins in India were thinner and customers more value-conscious and hence, companies needed scale to remain competitive.

"In this scenario, consolidation makes sense," she said. While ICICI Prudential Life was ready for acquisitions, there were no immediate proposals, she said, adding that the company was, however, always ready to consider any proposal that provided some synergy benefit to it.
On the need for hiking FDI limit to 49 per cent from the present 26 per cent, Sharma said that this would help the industry to access global capital.

Hindustan Glass mulls more acquisitions

MUMBAI, March 22: Hindustan National Glass and Industries, India's largest player in the container glass industry, is mulling more acquisitions in the country and overseas to expand its footprint. “We are very keen on acquisitions in India. We are also looking for acquisitions abroad to increase our footprint overseas. However, we are yet to identify any target,” Hindustan National Glass and Industries (HNGI) assistant vice-president Mr Sanjay Jain said. Sources, however, said that HNGI was looking for acquiring companies which could produce at least 250-300 tons of glass a day and eyeing overseas acquisition in countries like Indonesia, Thailand, Malaysia and Egypt. HNGI, which currently manufactures 2,575 tons of glass a day, has six manufacturing facilities in Rishra (near Kolkata), Bahadurgarh in Haryana, Rishikesh, Neemrana in Rajasthan, Nashik in Maharashtra and Pondicherry. Barring the two in Bahadurgarh and Rishra, all other facilities had come to its fold through acquisitions. It had bought the Pune (now closed), Pondicherry and Rishikesh facilities from Australian company Owens Brockway in 2001-02, the Nashik facility was owned by the acquisition of L&T Glass Works in 2004-05 and the Neemrana plant from Chandigarh Sheet Glass next year. Mr Jain further said: “We are not looking for mere capacity addition. We are targetting companies which will bring in the right product-mix and a good market to cater to among others.” The company had recorded Rs 1,148 crore income from sales last financial year, which was likely cross Rs 1,500 crore this fiscal, Mr Jain said. HNGI is currently rebuilding a furnace in Rishra with an investment of Rs 120 crore and has plans to carry out the rebuilding job in two furnaces in the Bahadurgarh facility with an outlay of Rs 220 crore. Mr Jain said that the company expected to clock double-digit growth in sales in the next five years buoyed by the increased consumption in the country, the growing culture for ready-to-use foods and large consumption from the pharma, food and beverages sectors. n PTI

SBW plans global buy

PUNE: Systems Biology Worldwide (SBW), a bio-informatics company, aims to acquire bio-research companies globally, string them together and move collaborative research to India. SBW is a collaborative venture between the University of Helsinki and the Pune-based ToolTech, formed in 2007. SBW chairman Atul Khanna believes growth will come through acquisitions and hence, in the past two years, SBW has completed five acquisitions and is now gearing up for two more. “We have acquired five small companies and now we are looking at the big ones, an acquisition each in Cambridge and in Munich,” he said.