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

Eagle, Burgmann Merge Indian Businesses in a $70 Million Deal

Germany based Burgmann Industries and Japan based Eagle Industry have merged their mechanical seals operations in India. The new entity will be called EagleBurgmann India Pvt. Ltd. The combined value of the transaction is approximately $70 million. Both Eagle and Burgmann are the makers of mechanical seals and sealing systems, which are used in various industries like power generation, oil and gas production and refinery & petrochemicals etc. Both the companies have been operating in India through separate entities and with different local partners. As part of its global integration strategy, Eagle and Burgmann decided to buyout both the local joint-venture partners and pool the resources of the separate entities into a single vehicle. Both the companies hold equal stakes in the newly formed entity. The combined value of the transaction was approximately $70 Million. The legal and operation integration as well as the negotiations with the local partners were facilitated by BMR Advisors. Besides enlarging the product base, the integration of the operations of the two companies is expected to provide better economic, operational, financial, technological and market synergies. Burgmann Group’s product range includes mechanical seals, gas lubricated seals, seal supply systems, magnetic couplings, stuffing box packings, static seals, automotive seals, rotary kiln sealing systems and expansion joints. The product portfolio of eagle Industry includes mechanical seals, valves, plant devices, marine products, bellows devices, and related installation work.

Source: VCCIRCLE

India Infrastructure Fund invests $50 mn in two toll road projects

India Infrastructure Fund, or IIF, has invested $50 million (around Rs250 crore) in two companies floated by Nashik’s Ashoka Buildcon Ltd to build two stretches of road connecting two cities of Maharashtra and Chhattisgarh, according to M.K. Sinha, president and chief executive officer of IDFC Project Equity Co. Ltd, which manages the fund. The fund has taken a 49% stake in these two entities, both structured as so-called special purpose vehicles, or SPV, which will build two stretches of toll roads totalling 162km between Nagpur in Maharashtra and Raipur in Chhattisgarh. SPVs are limited to the financing of specific assets. This is the third investment from IIF, sponsored by IDFC, Citigroup Inc. and India Infrastructure Finance Co. Ltd (IIFCL). The first investment was for $70 million across four road projects, which acted as seed assets for the fund, and the second was a $70 million investment in Essar Power Ltd in March. IIF was conceived in 2007 by IDFC, Blackstone Group LP, Citigroup and IIFCL to invest in India’s fledgling infrastructure projects. Going by government estimates, India needs $500 billion of investments in the infrastructure sector through 2012. The fund was to raise up to $5 billion—$2 billion equity and $3 billion long-term debt—but the corpus was subsequently reduced, with IIF garnering $875 million in commitments from investors in June 2008, and on the road to close another $50 million. Blackstone pulled out of the fund as the economics did not work in the US buyout fund’s favour. “Almost 60% of our fund will be deployed between power generation and road projects,” said Sinha of IDFC Project Equity, adding that ports, airports, telecom infrastructure and power and gas distribution and transmission projects will make up the remaining. The fund, according to him, will make investments at the project level, compared with private equity, which typically comes in at the holding company level, potentially exposed to several undeveloped projects. “Our investments will be in projects that are either under construction or up and running, and are likely to generate dividends quickly. Our focus is more on regular cash flow by way of dividends, not just capital appreciation. Private equity can live without dividends and generate returns upon exit over three-five years. We would like to generate dividend income over the lifetime of the asset,” said Sinha. That will mean that returns may not be as high as private equity, but a return mix that’s a blend between dividend income and capital appreciation on exit. “When I say low returns, it’s still in the 18-20% range, but we’re not looking to generate those returns in two or three years. We’re looking to generate those returns over 8-10 years,” said Sinha. The fund term for IIF is 12 years, extendable by another three years. Even as many listed infrastructure funds globally are hurting, there are not too many options for funds such as IIF to exit project-level investments, other than listing. “We do not borrow as a fund. Most of the other listed infrastructure funds that are hurting are those that have borrowed and do not have matching cash flows to service that borrowing. We do not intend doing that,” said Sinha. IIF is negotiating exit options at the investment level as well. This could involve transferring its equity from the SPV level into a holding company at the time of the initial share sale or a put option or even a tag-along, which enables the fund to sell when the promoters are selling out. A put option will give the fund the right to sell its holding back to the promoter at a pre-determined price. “There are various ways of exiting SPV investments as well. The most optimal one would be to list the fund, but we don’t know whether that will happen,” Sinha said.

Source: Livemint

Suzlon pays 30 mn euro for REpower stake

Suzlon Energy Ltd, India’s largest maker of wind turbines, paid €30 million (around Rs200 crore) to Martifer SGPS SA as part payment for a stake in a REpower Systems AG, the Portuguese company said in a statement on its website. The money was received on Thursday. Suzlon needs to pay the remaining €175 million this month to complete the purchase of the 22.4% stake in REpower, Martifer said. Suzlon paid €65 million in December as the first instalment for the stake, Martifer said.

Source: Livemint

Escorts Limited to consider merger with American unit on Apr 29, 2009

Escorts Ltd, the agro-machinery arm of the Escorts group, has announced that a meeting of the board of directors of the company will be held on April 29, 2009, to consider and approve the merger of its wholly owned subsidiary, Escorts Agri Machinery Inc (USA) with itself and any other consequential matters therein. The Escorts Group is operating in the high growth sectors of agri-machinery, construction & material handling equipment, railway equipment and auto components. Having pioneered farm mechanization in the country, Escorts has played a pivotal role in the agricultural growth of India for over five decades. One of the leading tractor manufacturers of the country, Escorts offers a comprehensive range of tractors, more than 45 variants starting from 25 to 80 HP. Escort, Farmtrac and Powertrac are the widely accepted and preferred brands of tractors from the house of Escorts. In the auto components segment, Escorts is a leading manufacturer of auto suspension products including shock absorbers and telescopic front forks. Over the years, with continuous development and improvement in manufacturing technology and design, new reliable products have been introduced.

Source: Economic Times

GMR may take over English Premier League Club Liverpool for £450 mn

Indian billionaire Grandhi. Mallikarjuna Rao may take over English Premier League Club Liverpool for £450 million (around Rs3,300 crore), British newspaper ‘News of the World’ has reported. Rao, who owns Indian Premier League cricket team Delhi Daredevils, is considering a major investment in Liverpool after its co-owner Tom Hicks approached him for a sponsorship, the report said. However, a GMR spokesperson denied the reports. “GMR has no interest in Liverpool, and as a policy, we do not comment on speculative news,” the spokesman told Mint.
It all started with the American co-owners, Hicks and George Gillett, wanting to sell the club for £450 million or invite huge investment to back Liverpool’s re-emergence as a title force.
The two have endured a fractious relationship since joining forces at Liverpool, arguing over the governance and direction of the club, but recently have presented a united front as they strive to attract new finance.

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

GE Hitachi in talks with L&T for nuke plans

GE Hitachi Nuclear Energy (GEH) is in talks with Larsen & Toubro (L&T) to engage the engineering and construction firm as a potential vendor for its nuclear power plants in India. GEH had, late last month, announced a tie-up with state-owned equipment manufacturer Bharat Heavy Electricals Ltd (BHEL) for reactor manufacture. “We are in talks with L&T as well. The idea is to develop a supplier base in India for projects based on GEH’s Advanced Boiling Water Reactors (ABWR),” the Chief Executive Officer for GE Energy India, Bangladesh and Sri Lanka, Mr Kishore Jayaraman, said. GEH had, on March 23, announced the signing of two agreements with the Nuclear Power Corporation of India (NPCIL) and Bharat Heavy Electricals Ltd (BHEL) as the companies prepare to collaborate on building multiple GEH-designed nuclear reactors. Under the preliminary agreements, GEH will begin planning with NPCIL and BHEL for the necessary resources in manufacturing and construction management for a potential multiple-unit Advanced Boiling Water Reactor (ABWR) nuclear power station. According to GEH, its 1,350-MW ABWR technology is “the world’s only commercially proven Generation III reactor design”, with the first two of four units entering service in 1996 and 1997 and four additional units under construction currently. In the nuclear space, L&T has taken a first mover advantage and aggressively tied-up with a bevy of partners for reactor manufacture in the last couple of months. L&T has in place a preliminary agreement with Russia’s ZAO Atomstroyexport for manufacturing the ‘VVER series’ reactors.

Source: Business Line

L&T not to dilute holding in Satyam

Engineering major L&T today said it will not dilute stake in IT major Satyam, where it lost the race to Tech Mahindra for 31 per cent strategic holding, and exuded confidence that the new owner of the Hyderabad-based giant would add value for shareholders.

We are not disappointed with the outcome," a top official of the engineering giant told PTI when asked for comments on the company losing out to Tech Mahindra for acquiring Satyam.
"We expect that the new owner (the successful bidder Tech Mahindra) will increase the value of the enterprise and consequently an increase in the value of our holdings," D Morada, L&T General Manager, told PTI. Asked about the 12 per cent holding in Satyam, he said "We are not permitted to buy or sell Satyam equity for a period of six months ... This condition applies to all bidders." The official said that the company would not have gone overboard on the bidding for Satyam where Tech Mahindra emerged successful with an offer of Rs 58 a share, saying, "We bid what we thought was the fair value for the enterprise." L&T, which accumulated its holding to 12 per cent ahead of race, had offered Rs 45.90 a share. It was expected that the value of enterprise, as seen by the bidders, would vary considerably in view of the assessment that had to be made on the basis on incomplete information.

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.

BEML signs MoU with French firm for tunnel-boring machines

BEML Ltd, a manufacturer of construction equipment and metro rail coaches under the ministry of defence, has signed a memorandum of agreement with NFM Technologies, France, to manufacture Tunnel Boring Machines (TBMs) in India.

BEML will be the very first company in India to manufacture Tunnel Boring Machines. NFM Technologies is the second largest manufacturer of Tunnel Boring Machines in the World.
Both BEML and NFM will explore and exploit opportunities for supplying TBMs to various projects in India and ASEAN countries. The on-going Bangalore Metro and the upcoming Metro projects of Chennai, Kolkata, Mumbai, etc., would provide a promising market for the TBMs manufactured by BEML.

The TBMs will also be used in making canals for Irrigation projects and hydroelectric projects. BEML will take up the project at its KGF Plant, the company said in a statement. -->