2i Capital Sells Part Stake in Titagarh Wagons To Hedge Fund

Bangalore-based private equity fund 2i Capital has sold nearly half of its stake in railway freight wagon manufacturer Titagarh Wagons. The fund sold a 2.71% stake in Titagarh for a total sum of Rs 9.55 crore on Wednesday when Sensex reached a six month high. The shares weresold at a price of Rs 191 per share to hedge fund Indus Capital Advisors. At the time of listing, 2i Capital held a little more than a million shares. The PE fund's average stock acquisition price stands at Rs 191 per share, Vivek Sekhar, CEO of 2i Capital (India) Pvt. Ltd, told VCCircle in an email response. This means that 2i Capital has sold its stake exactly at par to its acquisition price. The private equity firm, which is currently raising its second fund of $200 million, still has a little more than 3% stake in the firm. Sekhar also said that 2i Capital's average sale price is higher as it sold some stake in a trade sale. Titagarh Wagons listed on April 2008 with a price band of Rs 540-610. The Kolkata-based firm also sold stake to GE Capital International and JPM Morgan Mauritius in a pre-IPO deal. It had reached a 52-week high of Rs 907 last year before slipping as markets melted. Titagarh Wagons had raised Rs 24.7 crore from 2i Capital in March 2006, by selling stake at a price of Rs 1711 per share. ChrysCapital also picked up a stake in the firm for around Rs 55 crore in 2006, buying stake both from the promoters and through fresh equity. The number of shares held by 2i Capital later increased due to a bonus issue in January 2007.
The stake has been sold by 2i Capital soon after one year lock-in period post listing has completed.

PE Funds Continue To Exit

Private equity funds continue to selectively pare their shareholding in various listed portfolio companies, making best of what is tipped to be a bull rally. The funds may also see this as good time to exit as markets are expected to see volatility post-elections, especially between 16 to 30 May, when the government is to be formed. Besides 2i Capital, IL&FS India Leverage Fund also sold a little more than 2% stake in IBN18 Broadcast, which operates general news channels CNN-IBN and IBN7. The stake has been sold for Rs 35.8 crore between September 2008 and April 2009, IBN18 said in a filing earlier this month. Last month Citigroup Venture Capital International sold nearly a 5% stake in Techno Electric & Engg Company and UK-based 3i Group also sold 1.42% stake in Mundra Port and Special Economic Zone Ltd. Earlier this month also IDFC Private Equity sold a small part of its stake inGujarat State Petronet Ltd via open market deals.

Source: VCCIRCLE

India-focused M&A at $7.4 bn; lowest in 4 yrs

Mergers and acquisitions (M&A) involving Indian firms in 2009 so far have been the lowest in four years for comparable periods, touching just $7.4 billions, thanks to the global economic slowdown. M&A volume of $7.4 billion represents a massive 51 per cent decline from the corresponding period a year ago, global deal tracking firm Dealogic said. Out of $7.4-billion M&A deals involving Indian firms, inbound deals amounted to $1.6 billion where foreign firms bought stake in Indian companies. "Inbound cross-border M&A fell to $1.6 billion via 70 deals so far this year, down 77 per cent from last year. The US remained the biggest investor in Indian firms with $483 million via 21 deals," Dealogic added. Outbound M&A activity fell drastically to just $334 million through 34 deals, a 96 per cent fall from the same period last year. The US was the most targeted nation as M&As worth $157 million were carried out through 10 deals, as compared to $1.6 billion via 29 deals last year to date. The oil and gas sector was the most active segment this year. The space cornered as many as six deals worth $2.1 billion. Besides the largest M&A transaction -- Reliance Industries’ open offer to acquire the remaining 25 per cent of Reliance Petroleum for $1.7 billion also happened in this section.

Source: Business Standard

PE firms allowing warrants to expire

Following the steep decline in the equity market in 2008, some private equity (PE) firms that had invested in companies through warrants are now left with no option but to let them expire because shares on the open market are cheaper than the exercise price of the warrants.
Warrants are securities that stakeholders use to purchase or increase equity in a company at a future date. An investor pays 10% of the value of the investment up front, and acquires the option of converting the warrants into shares any time within 18 months at a pre-decided price. This price is known as the exercise price.
A Mint analysis of data provided by Delhi-based investment banking outfit SMC Capital Ltd shows that there are at least 13 companies in the National Stock Exchange’s S&P CNX 500 index in which PE investors had warrants exercisable after 1 January 2007. The S&P CNX 500 represents about 95% of the total market capitalization of the stocks listed on the exchange. This index declined by 57.13% in 2008.
In at least six firms, warrants have been allowed to expire by their PE investors. The six are Abhishek Industries Ltd, Anantraj Industries Ltd, KPIT Cummins Infosystem Ltd, Nagarjuna Construction Co. Ltd, RSWM Ltd and S Kumars Nationwide Ltd. These warrants, if converted into shares before they expired, would have been worth Rs550.04 crore.
For RSWM Ltd, the expiry date of the warrants issued to New Vernon Bharat Ltd, an investment vehicle of New Jersey-based private equity and hedge fund New Vernon Capital Llc, was 29 May 2007. This could mean that the conversion did not happen because of some reason other than the market fall, which began only around January 2008. For the other five, the expiry date was either late last year or early this year.
Investors have fully converted their warrants into shares in only two companies—KS Oils Ltd and Oracle Financial Services Software Ltd.
Warrants issued to PE investors in at least five other companies are yet to expire and haven’t been fully converted. These firms are Everonn Systems India Ltd, Havells India Ltd, Shriram City Union Finance Ltd, SpiceJet Ltd and Uflex Ltd. The collective value of these warrants, if converted, works out to Rs377.93 crore.
The expiry date for Shriram City Union Finance’s warrants, originally set for mid-May, has been extended by six months. The investors are Bessemer Venture Partners, Asiabridge Fund I Llc, ICICI Venture Funds Management Co. Ltd and ChrysCapital. On whether it would convert in that time, senior managing director of ChrysCapital Ashish Dhawan said in an email: “We don’t need to decide for six months.”
“There is little likelihood of these getting converted for the reason that all these warrants are out-of-money or the current share price in all these cases is at a discount of between 17% and 77% to the exercise price,” said Jagannadham Thunuguntla, head of equity at SMC Capital.
In February 2009, the capital markets regulator Securities and Exchange Board of India changed the rules for warrant-conversion, saying that in forthcoming warrant issues, the holder would need to pay 25% up front. All the companies reviewed by SMC Capital had issued their warrants before February 2009.
However, at Rs1,251 crore, the conversion value of warrants issued to PE investors and exercisable after 1 January 2007 is minuscule compared with those for promoters.
Mint had reported on 15 April that out of warrants worth Rs25,153.04 crore issued to promoters of 34 companies, only Rs3,886.41 crore worth had been converted to equity. This was because the warrants were out of money, meaning that the share price of these companies was at a steep discount of anywhere between 15% and 86% to the exercise price of the warrants issued to promoters.
Source: Livemint

Inbound merger and acquisitions set to increase: Assocham

Strong financials of domestic companies and robust demand in sectors like telecom, pharma and capital goods will kickstart inbound merger and acquisition (M&A) activities in India in the next six to nine months, an industry lobby report said Thursday. The report by the Associated Chambers of Commerce and Industry (Assocham) said: 'Inbound M&As, which had witnessed a steep fall of 85 percent due to the global financial crisis, and consolidation deals are expected to show signs of revival by October-December period 2009.' Assocham president Sajjan Jindal said in the report: 'Indian companies could attract greater number of inbound M&A deals as the equity valuations of certain sectors like telecom, pharma, and capital goods offer lucrative strategic option to bigger foreign companies.' In January-March 2009, the inbound M&A deals, which had the maximum share in total M&A deal size during October-December 2008, contracted by a whopping 85.28 percent. The outbound M&A deals shrunk 48.62 percent as the number of deals declined from 28 in October-December 2008 to 16 in January-March 2009, the report said. The aggregate M&A deals size plunged more than 70 percent in the first quarter of 2009. The number of deals also declined from 58 to 45 during the period. The Study also found that if it was the telecom sector that attracted the maximum share in the M&A deals in the last quarter of 2008, the pharmaceutical and IT sectors dominated the corporate M&A activities in the first three months of 2009.

Source: Reuters

India Inc's March deal value at $2.27 bn - Grant Thornton

Merger and acquisition deals' volume of India Inc soared about nine fold to $2.27 billion in March over the previous month, the first upsurge in about a year on monthly basis, on a large number of consolidation and reorganisation activities. The total number of M&A and group restructuring deals for March 2009 stood at 21 with an announced value of $2.27 billion, a nine-fold jump from that in February, global consultancy firm Grant Thornton said in the issue of Dealtracker. The volume of M&A deal in February 2009 stood at around $250 million. "One of the key reasons for the surge in deal values is an increase in the announced value of consolidation and reorganisation activities, in addition to a more positive outlook towards strategic acquisitions. "We expect the consolidation initiatives to increase in future," Grant Thornton Specialist Advisory Services Partner C G Srividya said. During March, there were 11 domestic deals where both acquirer and target company were Indian with an announced value of $86.89 million and eight cross-border deals with an announced value of $296.67 million.

Source: Economic Times

Asia Pacific financial services firms adapt to new terrain and maintain a cautious optimism to M&A

Asia Pacific financial services firms are actively investigating expansion opportunities and maintaining a cautious optimism towards M&A, according to the latest data from a survey conducted by the Economist Intelligence Unit (EIU) for PricewaterhouseCoopers.
According to a survey of 215 senior financial services executives conducted in January and February 2009, Asia Pacific financial institutions are, surprisingly, marginally more optimistic about M&A than in the previous year, with 42% still expecting to make an acquisition in the next year. This is compared to a similar survey conducted in 2008, in which 38% expected to undertake M&A over the next year.
Respondents in Taiwan (70%) and mainland China (68%) are the most likely to make an acquisition in the next year. The lowest percentages were recorded in Japan (25%) and Hong Kong (22%).
Financial institutions in India remain optimistic about expansion, with many firms actively planning to take advantage of the unprecedented opportunities arising as a result of the financial crisis. Forty four percent of respondents cite expansion as their key strategy in the current economic climate, with 50% saying they plan to invest further in their own businesses, 25% planning to enter into new business lines and 50% into new markets. 33% of respondents have frozen new investments.
Commenting on the Indian scenario, Bimal Tanna, India leader for private equity practice, PricewaterhouseCoopers, said:
“A new stable government committed to economic reforms, wider bank and institutional credit, better management of fiscal deficit, continued investments in infrastructure development and some good news on the global economic front could see M&A in India back on the fast track in a year or so. It is expected that this time M&A will be led by a need for consolidation and profitability rather than increasing scale of operations.”
Meanwhile, a greater percentage of respondents in China and Australia (both 63%) are seeking to take advantage of opportunities to grow their business than are those based in Japan (26%) and Singapore (37%). The more active stance in these countries may be the result of the comparatively stronger bank balance sheets and lower levels of outbound M&A activity in recent years which has left them with more powder amid the effects of the financial crisis.
Few respondents expect current market conditions to improve soon: 83% expect the credit crunch and resulting economic downturn to persist for a further one to two years. A significant majority suggest that the pricing of assets will become more attractive to their companies within 12 months. Pakistan (67%), China (63%), Taiwan and Indonesia (both 60%) are the most optimistic, expecting assets to become more attractive in the next six months.
For India, Bimal Tanna, added:
“The global credit crisis, the resulting economic sluggishness and the uncertainty arising out of events such as the terrorist attacks / threats, upcoming elections, mounting fiscal deficit etc, have made investors hold back and have forced them to adopt a wait and watch approach. All these have certainly impacted the strong M&A trend witnessed in India in the past few years.
However, given that the long term underlying growth story remains intact, India can be one of the first economies in Asia to come out of this crisis. This optimism is evident from the survey result, wherein 73% of the respondents in India, as compared to 50% in Asia Pac, believe that the credit crisis and the resulting economic down turn will not persist for more than a year. The market is moving to realism, with 39% of the respondents believing that their company will make an acquisition in the coming year.”
Almost half of all respondents (49%) in the survey identify difficulty in valuing assets in the current environment as the principal barrier to undertaking M&A deals in Asia. Lack of clarity on the financial position of many institutions was cited by 42% of respondents as the most significant obstacle to fair valuation, while 40% cited continued market volatility.
Of those respondents planning acquisitions, 32% said they will be targeting distressed assets. However, to account for the increased risks in today’s environment, 73% said they would conduct additional due diligence and 62% said they would rely on price adjustment tools. Similarly, 57% of all respondents said they thought the current environment would encourage buyers to conduct more robust due diligence to help develop integration priorities and 39% said they thought there would be a greater focus on cost synergies.
The survey also identifies those countries likely to see increased M&A activity. Indonesian investments are now the most favoured, with 18% respondents expecting to do a deal there in the next year. China, previously the most favoured destination for strategic investment, slipped to third with 12% and India saw the most dramatic change with only 8% of respondents expecting to do deals here.
By sector, insurance and private equity are more bullish than others on expansion with two thirds (67%) actively seeking expansion opportunities.
The main external drivers of M&A are increased competition from domestic players (43%) and the unprecedented opportunities offered by the current climate (36%). Competition from foreign players was cited by only 15%, down from almost half in 2008 (46%).
While looking for opportunities, financial services firms are also seeking to shore up their operations. In light of the fall-out from the financial crisis, many institutions will be focusing on overhauling risk management systems (84%), changing reward structures to reflect longer term performance (78%), bringing customer relations in house in order to improve service functions (75%) and retrenching staff (67%).

TechMahindra - Satyam deal - Why there is wide divergence in the bids

Tech Mahindra - Rs58/share - Winner
L&T - Rs45.9/share
WL - Rs20/share

The wide variation in the bid prices submitted by the three contenders for Satyam Computer Services has set off a debate on whether this could be due to the several “unknowns” with respect to Satyam (whose accounts are yet to be restated), or due to the varying priorities of the bidders themselves. The highest bid, from Tech Mahindra, was for Rs 58 a share; the second highest, from L&T, was 21 per cent lower, at Rs 45.90. The third bid, by WL Ross, was way lower at Rs 20 a share.

“Acquisition transactions are based on assumptions and there are assumptions with reference to the future, customers, employees, lawsuits… there are so many variables. And considering the past of this company, it becomes somewhat difficult to make these assumptions and make judgment calls. I guess that is the main issue,” said Mr Y.M. Deosthalee, Chief Financial Officer of L&T.

When the number of bidders is very low, it boils down to quoting the lowest price that you can get away with. Had there been more bidders, one would not have such a huge divergence, say merchant bankers. As for WL Ross and Co’s low bid, this was in line with their profile as a distress buyer globally, bidding at very low prices in the hope of a bargain buy, an investment banker remarked. However, if one were to discount WL Ross, the divergence between the bidding parties is not very huge, he said.

“This is a very unusual situation; there are different reasons for people to acquire this company,” said independent investment analyst Mr R. Balakrishnan, “The three-year lock-in period appears to have acted as a mind block for some bidders.

“WL Ross’ bid came at a lower price because even though they are a private equity fund, they would have probably liked to flip it over after some time rather than wait for three years.”

Source: BusinessLine

Capital raising activity picks up in real estate

The risk appetite is back! otherwise how could we see real estate companies/REITs gobble up a few billion dollars in capital raising over the last 2 weeks- Prologis, a warehousing REIT has raised $1 billion in stock offering.

This definitely sounds good news for Indian developers who are saddled with debt (DLF has Rs15,000 cr and Unitech has Rs8,500 cr debt) and would wish to raise capital as and when possible. Unitech has already moved fast to lap up the opportunity and is doing a road show for its $250 million QIP.

ProLogis raises $1 billion in stock offering
ProLogis PLD.N, a U.S. owner and developer of warehouses, raised $1 billion in a stock offering and plans to use the proceeds to pay down debt.
The company sold 152 million common shares for $6.60 per share in a public offering. The underwriters have a 30-day option to buy up to 22.8 million additional shares to cover over-allotments.
ProLogis shares have suffered more than most REITs because of its huge debt load. The REIT said the money will be used to reduce the balance due on the $3.8 billion of its debt that matures during the next two years. The company has vowed to reduce its debt by $2 billion in 2009. Last week Standard & Poor's Ratings Services took ProLogis off of CreditWatch. The outlook is negative.
Source: http://uk.reuters.com/article/bondsNews/idUKN0851479820090408

Kimco raises US$717 mn in stock offering; larger than expected demand
Shares of shopping center owner Kimco Realty Corp KIM.N closed up 25.5 percent on Friday after strong demand for its stock offering prompted the company to increase the number of shares offered, lifting the badly beaten real estate investment trust (REIT) sector. Kimco sold 91.5 million shares, up from the previously expected 70 million, after demand was stronger than expected. The shares were offered at $7.10 each. After the close of the market, the company said its underwriters exercised an option to sell an additional 13.725 million shares, up from the previously planned 10.5 million over-allotment,

Unitech plans $250mn QIP issue to part-pay debt
http://mergers-in-india.blogspot.com/2009/04/unitech-plans-250mn-qip-issue-to-part.html

DLF, DAL raise Rs 1,100-cr debt from HDFC Bank
http://mergers-in-india.blogspot.com/2009/04/dlf-dal-raise-rs-1100-cr-debt-from-hdfc.html

Pack of falling cards—number of deal talks failed in the past week

Over the last few days we have seen many deals-talks failing. Where in some cases there were issues on operational management, there are number of cases in which there were valuation concerns. Team M&A gives you an exclusive summary of the same.

Spice-Spanco BPO merger falls through

Natue: Spice Group’s plan to set up India’s largest domestic BPO unit by merging its BPO unit with that of Spanco Telesystems and Solutions. The three-way merger would have brought together Omnia BPO of Spice, Spanco’s BPO arm and Bharat BPO, the existing joint venture of Omnia and Spanco, which has got the call centre business of Indian Railways. It would have created India’s largest domestic BPO firm in terms of numbers, employing over 10,000 people

Reasons: Issues over operational management.

Sanofi, Piramal proposed merger deal falls through

Nature: France's Sanofi-Aventis to buy a majority stake in Indian drug maker Piramal Healthcare Ltd. Also, GlaxoSmithKline Plc was eyeing the company. News paper reports suggested that deal could be valued as high as US$1.5 bn

Reasons: Though the promoters of the company repeatedly denied any sale talk, newspaper reports suggested that the deal failed due to concerns on valuations.

Subhash Chandra Withdraws From Race For United News Of India

Nature: Two years back, media mogul Subhash Chandra (Zee group) made a bid to acquire the floundering news agency United News of India.

Reason: Subhash Chandra lost interest in the venture due to dispute with ABP Group and The Hindu publisher Kasturi & Sons Ltd, who contested Chandra’s acquisition of a controlling stake in the news.

IBM and Sun broke off acquisition talks

Nature: In recent years, the market for servers has shifted from the huge, custom-built "mainframes" that IBM dominates to vast numbers of standardized computers. Sun had approached a number of large tech companies in the hopes of being acquired. However after HP declined the offer, IBM showed its interest to expand its positioning in the industry

Reasons: Valuations is the key concern.

IBM pulls out of Satyam race

Nature: IBM entered the bidding process last month through a law firm, which is a common practice in the West. IBM is understood to have conducted due diligence on some of Satyam’s major customers and was considered a good fit for the Indian company, principally because of its brand-name and overlap in service offerings. Satyam’s low-cost structure, it was said, could have given IBM the leverage to take on Indian IT service providers. In its annual report filed with the New York Stock Exchange in February 2009, IBM had named Satyam, along with Infosys and Wipro, as its main competitors.

Reasons: Lawsuit fears. Satyam currently faces 13 class action suits by holders of the company’s American Depository Receipts in the US, after Satyam founder Ramalinga Raju confessed to a large-scale accounting fraud on January 7.

Mediator fails to resolve issue between Sun Pharma and Taro

Nature: Sun Pharma has invested about $100 million in Taro and holds 36 per cent in the Israeli generic-drugs company. The impasse between the two companies was triggered by Taro’s unilateral termination of Sun Pharma’s $454- million proposal to acquire it.

Reason: Valuations is the key concern. However the matter is now with Israel’s Supreme Court.

Spice-Satyam saga

Nature: Uncle Modi was all over the business news channel expressing his interest and was looking forward to acquire 51% state in the troubled company. The group was planning to acquire the stake through Spice Innovation, its New Delhi-based holding company, and was ready to shell around Rs 2,000 crore (around $400 million).

Reason: Lack of transparency in bidding process

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

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

M&A activity in India will significantly increase over next 12 months; Unveiling top-5 themes for 2009

High potential growth and deperessed valuations - India is at the center stage of global M&A oportunities. We attempt to explore sectors which can have maximum M&A action over next 12 months. We believe there are mainly five themes to look-out for in 2009.

Theme 1: Intense competition
Theme 2: Shrinking market/excess capacity, rising cost
Theme 3: Depressed commodity prices
Theme 4: Cash hunger of conglomerates
Theme 5: Global consolidation

We will come with detailed analysis on companies to watch-out for in our next posting..
Keep visiting..

LIC bets big in India's equity markets - invests heavily in Indian banks

When the whole lot of FII investors is looking forward to dump Indian stocks (as well as other emerging markets stocks), Life Insurance Corporation of India bets big in Indian equities. "LIC is looking to invest approximately Rs17,000 crores (US$3.4 bn) in Indian equities in January-March 2009 quarter" LIC's managing director Thomas Mathew. This will significantly erase the excess stock from the system.

Exclusive analysis by Team M&A shows that LIC has till date invested Rs2,600 crores in Indian equities. Refer to table above for the company-wise break-up.

Billion dollar marriages (mergers) in India

Here are top 10 billion dollar mergers (marriages) India has seen :

Tata weds Corus
Tata Steel’s mega takeover of European steel major Corus for $12.2 billion. The biggest ever for an Indian company. This is the first big thing which marked the arrival of India Inc on the global stage. The next big thing everyone is talking about is Tata Nano.

Vodafone weds Hutch Esaar
Vodafone’s purchase of 52% stake in Hutch Essar for about $10 billion. Essar group still holds 32% in the Joint venture.

Hindalco weds Novellis
Hindalco of Aditya Birla group’s acquisition of Novellis for $6 billion.

Daiichi weds Ranbaxy
Ranbaxy’s sale to Japan’s Daiichi for $4.5 billion. Sing brothers sold the company to Daiichi and since then there is no real good news coming out of Ranbaxy.

ONGC weds Imperial Energy
ONGC acquisition of Russia based Imperial Energy for $2.8 billion. This marked the turn around of India’s hunt for natural reserves to compete with China.

NTT DoCoMo weds Tata Tele servives
NTT DoCoMo-Tata Tele services deal for $2.7 billion. The second biggest telecom deal after the Vodafone. Reliance MTN deal if went through would have been a good addition to the list.

HDFC Bank weds CBoP
HDFC Bank acquisition of Centurion Bank of Punjab for $2.4 billion.

Tata Motors weds Jaguar Land Rover
Tata Motors acquisition of luxury car maker Jaguar Land Rover for $2.3 billion. This could probably the most ambitious deal after the Ranbaxy one. It certainly landed Tata Motors into lot of trouble.

Suzlon weds RePower
Wind Energy premier Suzlon Energy’s acquistion of RePower for $1.7 billion.

Reliance Industries weds Reliance Petroleum (again)
Reliance Industries taking over Reliance Petroleum Limited (RPL) for 8500 crores or $1.6 billion.

KPMG: Emerging markets continue to narrow the M&A gap

The number of Merger & Acquisition (M&A) deals involving trade buyers from the emerging markets buying into the developed economies is holding up better in the face of the credit crisis than deals going in the opposite direction; yet fears remain over how long this trend can continue. According to the latest Emerging Markets International Acquisition Tracker (EMIAT) from KPMG’s Advisory practice, the second half of 2008 saw a 28 percent decline in the number of emerging-to-developed (E2D) deals, where companies from the emerging markets made an acquisition in the developed markets. This is compared to a 37 percent decline in developed-to-emerging (D2E) deals. Only 107 E2D deals were registered in six months, the lowest total since the second half of 2006. On the other side of the equation, the EMIAT recorded 230 D2E deals; the lowest figure since the beginning of 2003. While E2D deal volumes remain firmly in the shadow of their D2E counterparts, the gap is narrowing. Since the second half of 2006, when E2D deals represented 23 percent of the D2E total, that gap has been steadily closing to stand at 47 percent in the most recent EMIAT. For the purposes of the EMIAT, deals are monitored between a basket of 11 developed economies and a basket of 11 emerging, high growth economies. Deals involving private equity or institutional backing are not included, thereby creating a truer picture of the ability and appetite of trade buyers in a particular country to execute deals.

Commenting on the latest EMIAT, Ian Gomes, Chairman of KPMG’s High Growth Markets practice for KPMG in the U.K, said: “Cross-border deals emanating from the emerging markets appear to be holding up slightly better than those from their developed market counterparts – although both are still in serious decline. However, before we get too carried away with the apparent robust nature of the emerging market trade buyer, it’s worth noting several factors which I expect to further constrain outbound deal activity in the future. First and foremost is the confidence factor. Before the credit crisis struck, trade buyers were swept along by a wave of enthusiasm once they saw their national champions closing landmark deals which gave them a foothold in the developed markets. Emboldened by their countrymen’s success, they looked for a piece of that action themselves. Just as such deals initially inspired confidence, the way in which some of them have subsequently run into trouble has now dented confidence back at home, stifling the collective acquisitive urge.”

2. Private equity investments in India: A Snapshot

1.Broad Sector Themes

We will be posting articles on each of these themes soon. Readers can also send in their comments/articles to h.sandeep.reddy@gmail.com and i will post them on the blog with due attribution.