Adani Power files for IPO; 3i's Investment in positive zone

Adani Power, a part of Gautam Adani-led business conglomerate with interests spanning from FMCG to infrastructure, has approached the market regulator SEBI with a revised IPO plan, estimated to raise more than Rs 2,000 crore. This is the second time Adani Power is planning to come out with an initial public offer (IPO), as its previous attempt was scuttled due to adverse market conditions. In its revised draft prospectus filed with SEBI, Adani Power has proposed to sell over 330 million equity shares of Rs 10 face value each, which would account for about 15% of the company's post-issue equity capital. While the price of the shares to be offered in IPO would be decided later, the company has said in the draft prospectus that it expects to utilise Rs 2,193 crore of net proceeds from the public issue to fund its power projects - Mundra IV in Gujarat and Tiroda in Maharashtra.

What about 3i's investment?

With this development, it is now confirmed that UK-based 3i’s investment in Adani Power remains in the positive zone. The average cost of acquisition for 3i is pegged at Rs 59.5/share. Adani Power seeks to raise Rs 2,193 crore through the issue which would translate into per share price of around Rs 65-70 given that the issue comprises 33.05 crore shares including 80 lakh shares reserved for the employees. Though 3i would be sitting on profit at this valuation, looking at the opportunity cost of the fund(had it been invested in some debt instrument) it could have earned a higher return.

Earlier, the private equity fund had invested Rs 900 crore in Adani Power in two tranches-- October 2007 and April 2008. The PE firm subscribed to 8.4 crore shares as a result of these two transactions which now stands at 15.14 crore shares due to a 4:5 bonus issue at Adani Power last year. 3i holds 8.22% stake in Adani Power before the IPO which would become 6.92% post issue.

Source: Business Standard, VCCIRCLE

SafeNet India Takes Over Aladdin India Operations

SafeNet, a global provider of information security, has established common management for Aladdin Knowledge Systems and SafeNet. This comes as a result of Aladdin's acquisition by Vector Capital, SafeNet's private equity owner. With this, the Indian operations of both the companies will now be looked after by Rana Gupta, Business Head, India & SAARC, SafeNet. Aladdin is expected to be fully integrated into SafeNet in the future. "This acquisition has brought in great opportunities for the customers as well as the channel partners. With this acquisition, SafeNet has become the clear leader in the rights management and enterprise data protection solutions space," informed Gupta.

Source: Channel Times

StanChart eyes Mideast and Africa Private Equity deals

Standard Chartered bank is bidding for private equity deals in Asia, the Middle East and Africa after an 18-month hiatus as it looks to benefit from higher yields in the aftermath of the financial crisis. The bank's Middle East & North Africa Managing Director and regional head of private equity Hossam Shobokshi told Reuters it was focusing on areas including real estate and infrastructure mainly in Asia and the Middle East. "We are active, but we are disciplined, and we are putting in bids," Shobokshi said on the sidelines of a conference in Abu Dhabi on Tuesday. "Deals done in the next two years will yield high returns." Stock markets in the Middle East and North Africa have been hard hit by global turmoil and valuations have dropped. Private equity funds in the region have $11 billion (7.54 billion pounds) to invest after raising a record $6.4 billion in 2008, the Gulf Venture Capital Association said. The bank, which is managing a fund with India's Infrastructure Leasing and Financial Services, is looking at companies with at least three years of operation and minimum profits of $5 million, Shobokshi said. "Over the last one and a half years, we have not invested in a single deal," he said. "We looked at 180 deals, (but) did not invest to avoid the speculative valuations in the market. We are here to produce returns." Standard Chartered has 60 percent of its business in Asia, 20 percent in the Middle East and the rest in Africa, Shobokshi said. "Emerging markets are important for us," he said.
Source: Reuters

Piramal Health eyes acquisitions in US, Europe

Piramal Healthcare Ltd is looking for acquisitions in the US and Europe, a senior official said, adding that business should grow during the current fiscal year at about the same pace it did in 2008-09.
Piramal recently acquired US-based inhalation anaesthetics maker Minrad International Inc to boost its presence in the global critical care business and director Swati Piramal said they were looking for more.
“We expect to buy 2-3 companies in advanced markets like the US and Europe,” she told reporters on the sidelines of a conference.
Piramal Healthcare reports results for its fourth quarter ended March on Friday.
Piramal Healthcare and a related firm Piramal Life Sciences Ltd would together invest about Rs1 billion during the 12 months to March 2010, mostly on new drug development and research, she said.
The company is in the process of phase II trials of a cancer drug and expect to get approvals in the US, Australian and Indian market this year, Swati Piramal said, adding 14 new drugs were in the pipeline.
The firm plans to add 300-400 professionals in the super-speciality marketing division, she added, ruling out any plan to sell stake in Piramal Healthcare or Piramal Life Sciences Ltd.
Piramal Healthcare employs about 7,000 employees in total, she said.
Shares in Piramal Healthcare closed 0.1% higher at Rs211.05 in a Mumbai market that ended 0.74% down, while Piramal Life Sciences shares fell 1.9% to Rs48 rupees.

Source: Mint

Blackstone Advisors exits small-cap stocks

US-based Blackstone Advisors, a leading foreign institutional investor (FII), is exiting some of its small-cap stocks in India, including more than half of its stake in Indo Tech Transformers. Blackstone is selling the stakes in these companies through its Asia and India funds. A senior executive of Blackstone Group said the company has decided to sell stakes to raise cash for various distributions. “Also, we might find other, more attractive names that we need to rotate into. Some sales can also be due to company-specific reasons,” the official said.It is not known whether Blackstone is making profit from the sales, though it is clear that share prices of all these companies have come down significantly in the past one year.In the case of Indo Tech Transformers, the US fund house had bought 86,871 shares on October 27 at Rs 169.90 a share. It has sold nearly three lakh shares in the company in three transactions at an average price of about Rs 302 a share.“The total cost of investment may be higher. The buying seen in October may have been to average the cost,” said a stockbroker. At present, shares of Indo Tech Transformers is about 34 per cent down from their one-year high of Rs 590 in April last year.Prices of Blackstone’s other small-cap holdings have also come down. HBL Power Systems is down to Rs 132 a share from Rs 330 in May last year. Blackstone has liquidated 3.27 lakh shares of the company.In the quarter ended December 31, 2008, Blackstone held 2.72 per cent equity stake (6,60,000 shares) in HBL Power Systems. Blackstone’s name, however, does not figure on the shareholders’ list for the March 31, 2009 ended quarter, indicating that the fund house’s stake has come down to less than 1 per cent.In Sujana Tower, Blackstone, through the India Fund, held 6.20 per cent stake (2,570,767 shares) at the end of December quarter. Last month, the company sold a part of the stake at a paltry Rs 8.44 per share, against the 52-week high of Rs 132.70 on April 22 last year. Octav Investments is another stock from which Blackstone has partially exited. In the October quarter, the fund held 1.56 per cent stake (46,997 shares) in the company, which has now come down to less than one per cent. Share price of the company is at present quoting at Rs 13.32 compared with Rs 650 on August 8 last year. “Our strategy has not changed. We have more exposure to large-cap names and keep some exposure to mid and small-cap names that we believe have the most potential,” the Blackstone official said. Blackstone India Fund’s top 10 holdings at the end of March 31, 2009 include Reliance Industries, Infosys Technologies, Bharti Airtel, Hindustan Unilever, ITC, HDFC, ONGC, BHEL, HDFC Bank and State Bank of India.

Source: Business Standard, Team M&A

HDFC fund eyes investment in Puravankara unit

HDFC’s real estate fund is understood to be in advanced stages of investing around Rs 200 crore in a low-cost housing project being developed by the Bangalore-based Puravankara Projects. Puravankara Projects is executing the low cost housing project through a wholly-owned subsidiary Provident Housing & Infrastructure, set up last year. Investment banking sources indicate that HDFC is carrying out a due diligence of the project and the investment is likely to be funnelled into a special purpose vehicle floated by Provident for a 4,500 flats project in Bangalore. Provident is expected to launch the first phase of the project this quarter. The company is rolling out its Bangalore project after a relatively decent success it met with its low-cost housing project in Chennai. The company was able to sell close to 700 flats within a week of its launch. With these two projects, Provident is expected to roll out 6,000 houses in Bangalore and Chennai.Provident Housing during August 2008 had envisaged an investment of Rs 8,000 crore over five years and company officials maintained they are not going slow on the project. Provident is also looking to enter Mysore and Kochi markets at a later stage and is looking to acquire 200 acres for the expansion at a cost of around Rs 2-3 crore per acre.The company already has 70 acres and is looking at a total land bank of 550 acres in all for the project which will see the roll-out of close to 65,000 homes sized 750-1,000 sq feet. The houses will be priced between Rs 12 lakh and Rs 20 lakh.

Morningstar starts India operations

Morningstar Inc, an independent investment research company, said it has started its India operations as part of a plan to expand business in Asia. The Chicago, Illinois-based company operates in more than 20 countries and has offices in Taiwan, Singapore, China, Malaysia and Hong Kong Special Administrative region. The Indian office also controls business interest in the Middle-East region. Morningstar has hired Aditya Agarwal as managing director to run its India operation. Agarwal was one of the founders of MutualFundsIndia.com, which was later acquired by rating company ICRA. “For the first two years the focus is to create a brand and establish ourselves as an independent research organisation,'' Agarwal said. The company has already hired half-a-dozen people to track key segments and is expected to ramp up manpower after it finalises plans to offer stock ratings and related advisory services. The company already runs a data centre with 150 people, which it inherited from acquisition of Hemscott data, media, and investor relations Web site businesses from Ipreo Holdings LLC for $51.6 million in cash.
Morningstar, founded by chairman and chief executive, Joe Mansueto in 1984 from a one-bedroom Chicago apartment with an initial investment of $80,000 has made a name in rating mutual funds, hedge funds and stocks. The firm's star rating system for mutual funds is coveted by industry. Morningstar sold share in an initial public offering on May 2005. Mansueto owns about 57 per cent of the company. Morningstar's entry into India comes amid a global meltdown in stocks and growing risk averseness among investors towards equity. India's benchmark Sensitive index has declined more than 30 per cent in the past year. Reflecting the bearish sentiment investors have invested less in mutual fund schemes resulting in the average assets under management (AAUM) declining for the first time in five years. The AAUM of fund houses fell by 7 per cent or Rs 36,798 crore to Rs 4.93 lakh crore in the financial year 2008-09, as against Rs 5.30 lakh crore in 2007-08, according to data from the Association of Mutual Funds in India (Amfi). But Agarwal is unperturbed. ''In such times it is critical that investors know the quality of funds they have invested their money in.'' The mutual fund product that Morningstar is offering has also been tailored to suit the Indian requirement.

Source: Business Standard