DLF promoters raise Rs3900 cr

DLF promoters have sold 170 million shares at Rs230/share to raise Rs3900 cr. The process, which was being overseen by Deutsche Bank and JP Morgan, started late Tuesday evening and closed before the stock market opened.

Proceeds from the sale are expected to be invested in DLF Assets Ltd (DAL), the promoter-owned real estate trust, which is in the midst of restructuring. Of this, around Rs 2,100 crore will be used to pay hedge fund DE Shaw, which had invested $400 in 2007 through optionally convertible preference shares. The rest will be used to repay part of DAL’s Rs 5,400 crore debt to DLF Ltd.

After the transaction, the promoters’ stake will drop to 78.6 per cent from the current 88.5 per cent. Asked about the sale, DLF Vice-Chairman Rajiv Singh said, “I am not in a position to react because bankers are advising us on the issue.”

Meanwhile, in a separate transaction DLF is expected to acquire DAL for Rs 7,500 crore. This effectively means DAL will have to incur a loss of Rs 2,500 crore, since it acquired assets from DLF for Rs 10,000 crore in 2007-08.

Apart from DE Shaw, DAL raised $700 million from Symphony Capital through optionally convertible preference shares with a coupon rate of 4 to 6 per cent to fund the asset acquisition from DLF.

D E Shaw was assured of an exit route from DAL after a planned listing on the stock exchange in two years. That route has closed since the real estate market has crashed and is unlikely to see a revival of interest from equity investors in the near future.

Although the due diligence of DAL is complete, sources said the transaction would be concluded after DE Shaw is paid. DAL, after getting the fund infusion from promoters is expected to pay off DE Shaw so to conclude the transaction, sources said.

ArcelorMittal to raise $4 bn via public offerings

Steel behemoth ArcelorMittal, which posted consecutive quarterly losses, today said it would raise up to $4 billion through issue of securities as part of efforts to strengthen its balance sheet among other things. The company would look to sell about 140 million common shares through public offerings to raise the amount. "Total aggregate proceeds from the offerings are about $3.5 billion or $4 billion, in each case before deduction of underwriting discounts and commissions," the company said in a statement. The company intends to use the proceeds of common stock offering for general corporate purposes and to strengthen its balance sheet and the proceeds of the convertible senior note offering to lengthen its debt maturity profile and refinance existing indebtedness, it added. ArcelorMittal also said it would be pricing its public offering of $700 million aggregate principal amount of 5 per cent convertible senior notes due May 15, 2014. The offering is scheduled to close on May 6, 2009, it added. The steel giant said it has agreed to sell 125.1 million common shares at a public offering price of euro 17.10 each. The company has granted the underwriters an option to purchase up to an additional 15.7 million common shares in the 30 day period following the date here of, it added. ArcelorMittal yesterday posted loss of $1.1 billion for the first quarter ended March 2009. In the year-ago period, it had a net income of $2.4 billion.

Source: Business Standard

ITC raises stakes in hotel rivals

ITC’s appetite for hotel rivals continues unabated. The diversified company from Calcutta has built up further positions in Hotel Leelaventure and EIH Ltd. Russel Credit, the investment arm of ITC, bought around 27.1 lakh shares in Leelaventure between January and March. During the same period, it acquired 93,943 shares in EIH, raising its holding to 14.98 per cent. This is the highest ITC has held in EIH, which owns Oberoi Grand in Calcutta, in the last seven years. ITC is now just 78,333 shares away from triggering an open offer. According to the Substantial Acquisition of Shares and Takeovers regulation of the Securities and Exchange Board of India, a company has to make a mandatory open offer for an additional 20 per cent once its holding in an entity reaches 15 per cent. As on December 31, 2008, ITC held 14.96 per cent in EIH. ITC has maintained that the share purchase is not strategic. In Leela, its stake is 3.72 per cent, which is not significant, though it is steadily acquiring shares. ITC checked into the Bangalore-based hotel chain in the September-December quarter of the last fiscal with a 3 per cent stake, as The Telegraph had first reported. When contacted to comment on ITC’s buying spree, an ITC spokesperson said, “These are routine treasury operations.” In the past, the EIH management had not given much importance to ITC’s shareholding in the company. ITC’s stake had remained near 15 per cent for a long period. Unless the cigarette-to-hotel conglomerate crossed the threshold, there was nothing for EIH to talk about, EIH officials had said. Leela has also remained silent on ITC’s overtures so far. “We do not disclose our plans. But as you can see, it is listed as a long-term investment in the balance sheet,” ITC chairman Yogi C. Deveshwar had said, while commenting on his company’s strategy for EIH at the annual general meeting in July 2008. ITC had picked up a stake in EIH — which owns and manages the Oberoi chain of hotels in India and abroad — in 2001, fuelling speculation of a hostile takeover. However, ITC held on to its stake without threatening to replace the EIH promoters or the management during the period. In the meantime, it strengthened its presence by setting up hotels. Promoters P.R.S. Oberoi and his family own a 46.42 per cent stake in EIH. If ITC decides to make an open offer for another 20 per cent, it cannot hope to get control of EIH unless a section of the promoter family offload their stake. ITC’s stake purchase in Leela would also not give the Nairs — the promoters of Hotel Leelaventure — any cause for worry as they hold a majority 51.56 per cent in the company. ITC ranks somewhere in the middle between EIH and Leela. EIH, formerly East India Hotels, has a bigger presence than ITC in India and abroad. ITC does not have an overseas hotel. Leela, on the other hand, is on an expansion mode, building on its oldest and most successful hotel in Bangalore.

Source: Telegraph

Nomura to start proprietary trading in India

Japanese financial services giant Nomura, which acquired Lehman Bros’ European, Middle Eastern and Asian operations including India last year, is entering proprietary trading business in the country. Nomura Financial Advisory & Securities (India) Pvt Ltd, a wholly owned arm of Nomura Holdings, is getting into the new business. The firm is already registered with SEBI as a merchant banker and with BSE and NSE as a stock broker. It entered the big league in I-banking when it got involved in one of the marquee deals of 2008 where Daiichi Sankyo acquired the country’s largest drug maker Ranbaxy. Nomura had earlier advised another Japanese firm Mitsui in selling its stake in Sesa Goa to Sterlite and also formed a part of the consortium that helped Sterlite to raise $1.2 billion ADS two years ago. The significance of Nomura’s rise can be fathomed by the fact that in 2007, it was not even among the top 20 investment banks operating in India. Besides the merchant banking and broking activities, Nomura also has three separate units -- Nomura Services India Pvt Ltd which is into business and technology process outsourcing, Nomura Fin Services (India) Pvt Ltd conducting investment and securities research for overseas clients, Nomura Structured Finance Services Pvt Ltd set up last year to get engaged in investment advisory services. Nomura has now applied to the foreign investment promotion board (FIPB) to expand into proprietary trading business. This would mean Nomura will get into actively trading stocks, bonds, options, commodities, derivatives or other financial instruments with its own money as opposed to its customers' money, to make a profit for itself. This could mean inflow of money into the firm from the parent.

Source: VCCIRCLE

Fidelity reduces stake in Satyam Computer to 6.47 pc

Foreign fund house Fidelity has offloaded 12 crore shares of the beleaguered IT firm Satyam Computer through open market transactions. In a disclosure on the National Stock Exchange, Satyam said Fidelity through its direct and indirect arms sold 12 crore shares representing 1.78 per cent stake of the company. Post sale, foreign fund Fidelity now holds 6.47 per cent stake in the company that is over 4.35 crore shares of Satyam Computer. The transaction was worth Rs 54.24 crore as calculated on the basis of Satyam's closing market price on April 6 (the date of sale). At the end of March quarter, Fidelity through its arms -- the Fidelity Diversified International Fund and the Fid Funds (Mauritius) Ltd -- held 8.71 per cent stake in the company. Yesterday, IT firm Tech Mahindra has said its Rs 1,154.66- crore open offer for an additional 20 per cent stake at Rs 58 a share in Satyam Computer would begin on June 12 and close on July 1, 2009. Tech Mahindra has proposed to the additional 20 per cent in Satyam at Rs 58 per share. Tech Mahindra is set to acquire 31 per cent stake in Satyam Computer Services at a price of Rs 58 a share. Pursuant to successful completion of the open offer, Tech Mahindra's holding in Satyam would go up to 51 per cent. Last week, Tech Mahindra had outbid others in the race to acquire a controlling stake in tainted Satyam.