Business This Week This Week 22 Feb 2010.pdf · © 2010 ARC Financial Services Private Limited, All rights reserved. Nishant Rustagi: [email protected] I Strategies for your Success

© 2010 ARC Financial Services Private Limited, All rights reserved. Nishant Rustagi: [email protected] I www.arc-fs.com

Strategies for your Success

Stock Markets: In a volatile week, the Indian Stock market managed to end in the

positive territory on Budget expectations and global cues. The BSE Sensex ended at

16,192 against last weekend’s level of 16,153, registering a marginal gain of 39 points or

0.24%. The NSE also ended higher at 4,845 against last weekend’s level of

4,827, registering a gain of 18 points or 0.37%

Biggest loser and Gainer:

Hindalco was the top gainer for the week with a gain of 8.3%

While Reliance Infra was the top loser for the week with a loss of 5.7%

Foreign Exchange Reserves: India's foreign exchange reserves rose by $485M for the

week ended 12 Feb’10 to $279.2B against $278.7B in the previous week

Inflation: Wholesale price-based inflation rose to 8.56% in Jan’10 from 7.31% in

Dec’09, more than the past RBI’s forecast of 8.5% for this fiscal

Crude oil: Crude oil for Mar’10 delivery finished higher last week, erasing earlier

losses, as energy traders played off the Federal Reserve's surprise move to raise its

discount rate. Oil futures closed the week at $79.81 per barrel

Gold: Gold for Apr’10 delivery on 19 Feb’10gained $3.40 to end at $1,122.10 an

ounce, off its intraday low of $1,099.30 an ounce on the New York Mercantile Exchange.

The metal ended the week 3.1% ahead of the prior week's finish

16,153

16,038

16,227

16,429

16,328

16,192

11 Feb 15 Feb 16 Feb 17 Feb 18 Feb 19 Feb

BSE Sensex

10,099

10,26910,309

10,393 10,402

12 Feb 16 Feb 17 Feb 18 Feb 19 Feb

Dow Jones

20,269

20,534

20,422

19,894

12 Feb 17 Feb 18 Feb 19 Feb

Hang Seng

BSE Sensex P/E

BUSINESS THIS WEEK - India

15 Feb 16 Feb 17 Feb 18 Feb 19 Feb

19.80

20.01

20.2120.09

19.91

22nd February 2010

1

Index Closing

19 Feb’10

Absolute

Change%

Change

BSE Sensex 16,192 39 0.2%

NSE Nifty 4,845 18 0.4%

Dow Jones 10,402 303 3.0%

S&P 500 1,109 34 3.1%

NASDAQ 2,244 60 2.8%

FTSE 100 5,358 216 4.2%

Nikkei 10,124 31 0.3%

Hang Seng 19,894 (375) (1.8%)



Mergers, Acquisitions and Joint Ventures


2

Telecom, Media & Technology:

Reliance Capital Partners, a group firm of Reliance ADA

group, hiked its holding in Fame India to 11%

On 17 Feb’10, the company acquired 1M shares at a price

of INR 75.6 a share to hike its stake from 8.13% to 11%

On 5 Feb 2010, the company acquired 0.48M shares , or

1.37% stake in Fame

Overall the company has spent ~INR 240M to buy 11%

stake at an average cost of acquisition of INR 64.4/share

PVR Ltd, India’s leading cinema chain, terminated its

agreement to buy the cinema exhibition business of DT

Cinemas Ltd, a DLF group company

Earlier PVR had announced a cash-and-stock deal to buy

out DT Cinemas by issuing 2.5M shares to DT Cinemas

(representing 10% of PVR’s fully diluted paid-up capital)

and also pay a cash component of INR 200.2M, putting the

total deal value at roughly INR 50 0M

SinglePoint, a US-based mobile interactivity and SMS

advertising services company, acquired M2Junction, a

leading mobile advertising startup , for an undisclosed

amount

M2Junction provides SMS marketing solutions in

voice, data, and video category to advertisers via mobile

platform

22nd February 2010


Telenor Asia Pte Ltd, a Norway-headquartered telecom

major, hiked its stake in Uninor, a JV company with

Unitech Wireless, with a fresh investment of around INR

20.2B

Post this transaction, Telenor stake has increased to

67.25% in Uninor, from 60.1% earlier

With this fresh round of funding, Telenor’s total investment

in Uninor stands at INR 61.4B

Currently, Telenor has an option to increase to increase its

stake to 74% in the company

Blue Coat Systems, Inc, a California-based technology

provider in application delivery networking, acquired

majority stake in S7 Software Solutions Pvt Ltd., for an

$5.25M in cash

The company further intends to acquire the remaining

stake in S7 after getting regulatory approval from the

Indian government

Bharti Airtel offered up to $10.7B for the African assets

of Kuwaiti telecom group Zain

Bharti Airtel has entered into talks with Zain for acquisition

of its African operations

Currently, Bharti Airtel is working on raising $6-7B in debt

to finance an all cash acquisition of Zain Telecom's African

operations

The deal will involve a total payout of $9B on account of

net debt of $1.7B





2

Consumer Goods & Retail:

Ruchi Soya acquires Palm Tech India Ltd (PTIL), an

Andhra-based company with a palm mill, for an

undisclosed amount

As per the deal, Palm Tech India will be merged with Mac

Oil, a holding company of Ruchi Soya

Earlier in Jan’10, the company acquired Gemini Edibles

and Fats India Pvt Ltd.

Capital Foods Ltd, a leading maker of ready-to-eat

foods, acquired all brands of celebrity chef, Sanjeev

Kapoor

The deal will enable Capital Foods to add a new line of

products in its ready-to-eat segment, frozen

foods, jams, pickles and papads

The deal seems to be an all stock deal with Kapoor

getting 10% in Capital Foods post transaction

Education:

Career Launcher India Ltd (CL),invested $1M in 361

Degree Minds Consulting Pvt Ltd (361 DM), a Chennai-

based start-up in the training space

361 DM offers training to company officials and college

students

The company could raise another $1-2M in a second

round in a few months

22nd February 2010

Hospitality:

MakeMyTrip (MMT), India's largest online travel

company, plans to buy Ticketvala.com, a Mumbai-

based provider of online bus ticket reservation services

The deal will help the MMT to strengthen its reach in bus

servicing in North and Central India

Earlier in 2007, Ticketvala.com had raised venture capital

funding of $2M from Footprint Ventures

Healthcare & Life sciences:

Abbott Labs made an open offer to acquire 20% stake

in Solvay Pharma India for INR 3.05B

The offer has been made at a price of INR 3,054.73 a

share

Promoters’ holding in Solvay Pharma was at 68.85% as of

Dec’09 end and an open offer, if it’s fully successful, will

give Abbott over 88% holding

– Post that Abbott may consider to delist the firm

Parenteral Drugs India Ltd (PDIL), a Mumbai-based

drug manufacturing company, acquired majority stake

in Mascareignes Pharmaceutical Manufacturing Co. Ltd

in Mauritius

PDIL is acquiring over 35M million shares of

Mascareignes, following which the latter would become a

wholly owned subsidiary of the company





2

Banking, Financial Services & Insurance:

Aditya Birla Financial Services Pvt Ltd, the non-

banking financial services arm of diversified Aditya

Birla Group, plans to acquire 75% stake in Aditya Birla

Money Ltd

The company plans to acquire around 41.5M equity

shares of Aditya Birla Money from Aditya Birla Nuvo Ltd

through an off market transaction

The move is part of company’s plan to consolidate all the

group financial services companies under one umbrella

brand to get easier access to funds

The company is expecting to complete the transaction on

23 Feb’10

PNB bought a controlling stake in the small Kazakh

lender Danabank

The joint bank plans to focus on financing small and

medium-sized businesses in Kazakhstan, particularly in

the agricultural sector

Dhanalakshmi Bank plans to buy ~70% stake in a

mutual fund firm

The bank is also looking at 30-40% loan growth in the

current financial year by lending to low-risk large

corporates

22nd February 2010

Industrials:

Tube Investments of India (TII), a Murugappa group

company, acquired controlling stake in France-based

Sedis Group for €6.8B

TII acquired 77% equity of Sedis Group’s Holding

Company, Financiere C10

This acquisition is expected to help TII to create its base in

European market

– It will also give TII access to superior technology of

Sedis for manufacturing Special and Engineering

class chains

Sedis has a strong presence in 100 countries and a very

strong Brand equity


Strategies for your SuccessBUSINESS THIS WEEK - India

Capital Raising (PE, VC, Right Issue)

2

Consumer Goods & Retail:

Sequoia Capital India, a venture and growth capital

fund, plans to invest INR 500M in Bangalore-based

kitchen appliances company Stovekraft Pvt Ltd.

Sequoia could be investing up to INR 500M ($10.7M) in

Stovekraft for around 25% stake

Stovekraft had earlier raised INR 220M from SIDBI VC in

2007 and will use the second funding round to fuel its

expansion plans

Karuturi Overseas Ltd., a subsidiary of world's largest

rose exporter Karuturi Global, plans to raise $100M from

PE funds

The company plans to utilize the funds to fuel its expansion

plans in Africa

Standard Chartered Bank's Africa PE arm and a unit of

Reliance Capital are in talks to invest in the Dubai-based

Karuturi Overseas

Vishal Retail received a proposal from buyout giant TPG

to acquire the stake for INR 2.5B

If TPG is indeed going to pick shares worth INR 2.5B at the

existing share price, it would be subscribing to 36M fresh

shares giving it a 62% stake post equity dilution

Promoters currently hold 60% that would decline to 20% on

the diluted basis

22nd February 2010

Education:

Nadathur Group, the family office of Infosys co-founder

N S Raghavan, invested ~$10M in test preparation firm

Career Point Infosystems Ltd.

Career Point Infosystems Ltd. provides coaching for

entrance examinations for engineering institutions such as

IITs and medical colleges

Healthcare & Life sciences:

Milestone Religare Investment Advisors plans to invest

~$10M in Bangalore-based specialty hospital HealthCare

Global Enterprises Ltd (HCG)

The deal would be the second investment in a healthcare

firm in the last three months

The HCG has previously raised INR 1.5B from IDFC

PE, Evolvence and PremjiInvest

FIL Capital Advisors (India) Pvt. Ltd., the Indian PE arm

of Fidelity International, plans to pick up a minority stake

in Ahmedabad-based mid-sized biopharma player Intas

Biopharmaceuticals for a $20M

Intas has previously raised $10M from Kotak Private Equity




2

Banking, Financial Services & Insurance :

Qinvest, Qatar's largest investment bank, picked up 25%

stake in Mumbai-based Ambit group for INR 2.5B

QInvest also plans to come in as an anchor investor in a

hedge fund and Shariah compliant fund to be raised by

Ambit

QInvest plans to put $25M in Ambit Frontier Fund, a Long-

short India dedicated equity fund based out of Mauritius

– It will also help Ambit to raise another $150M Shariah-

compliant fund

IFC, the investment arm of the World Bank, plans to take

20% stake in a new company, being set up by Dewan

Housing Finance Corporation Ltd (DHFL)

DHFL is planning to set up a housing finance firm targeting

the low-cost home segment

The total cost of the new project is expected to be $20M

NetAmbit InfoSource & e-Services Pvt. Ltd., a financial

products distribution company, raised INR 500M from

Helion Venture Partners

Bessemer Venture Partners, which invested in the

company in 2007, has also participated in this round by

investing INR 100M

NetAmbit plans to utilize the finds to expand into newer

markets through diversified distribution channels

Industrials:

Samara Capital Partners increased its stake in Asian

Oilfield Services Ltd. to 35.9% from 13.3%

Samara Capital has picked up an additional 4.05M shares

through a preferential allotment

Samara has announced the open offer at INR 61.2 a

share, the same price at which it is subscribing to the pref

allotment

Samara had picked up stake in Asian Oilfield for INR 285M

at INR 190 each in Dec’07

Aditya Birla PE Fund, part of diversified Aditya Birla

Group, invested INR 500M in Anupam Industries Ltd, a

Gujarat-based manufacturer of material handling

equipments

The company plans to utilise the proceeds for its expansion

plans

Templeton Strategic Emerging Markets Fund III, LDC, a

fund managed by US-based Franklin Templeton Asset

Management, invested $19.95M (~iNR 934M) in Shiv-Vani

Oil & Gas Exploration Services Ltd.

Templeton is acquiring 2.45M shares of Shiv-Vani at INR

380 a share

Post this transaction, Templeton will hold a 5.6% stake in

Shiv-Vani

22nd February 2010




2

Outsourcing:

Actis, an emerging markets-focussed PE firm, invested

$50M in Integreon, a Mumbai-based back office

outsourcing firm backed by Ayala Corporation of

Philippines, for a substantial minority stake

Integreon will use the funds to invest in new

services, technologies and acquisitions

Integreon offers services to corporations, law firms, and

investment banks and has around 100 clients in its portfolio

Real Estate & Infrastructure:

ICICI Prudential, India Opportunities Real Estate Fund

will take 49% stake in Shriram's Bangalore project

Shriram Group has raised INR 400M from ICICI Prudential

AMC Ltd. and India Opportunities Real Estate Fund

(Mauritius) for their 16-acre residential project in

Yelhanka, the northern suburb of Bangalore

Temasek Holdings acquired 4% stake in Shoba

Developers

Promoter of Sobha Developers Ltd. sold a 4% stake via a

block deal to Aranda Investments, a unit of Singapore's

Temasek Holdings at INR 251 per share

Post-sale, Chairman P.N.C. Menon holds 12.7% stake

while the total founders' stake stands at 60.5%

22nd February 2010

Rights Issue:

Kingfisher Airlines plans to mop up INR 4B through 1:1

right issue

The company proposes to retire mounting debt

Jayshree Chemicals plans to float rights issue in the ratio

9:2

The company proposes to raise funds to part finance the

company's expansion project



PE Exist

2


Elephant Capital sold 1.9M shares in NIIT

The PE firm sold 1.9M shares in NIIT achieving an IRR in

excess of 25%

Its residual holding in NIIT is 0.66M shares, representing a

shareholding of 0.4% in the company, is worth INR 45M or

around $1M

Earlier the PE firm had picked up around 1.5% stake in NIIT

for around INR 155M through secondary market purchases

between Mar’08 and Nov’08

Siva Ventures Ltd, the flagship company of C

Sivasankaran's Sterling Infotech Group, sold ~10% stake

in Sahara One Media and Entertainment in an off market

transaction for INR 391M

Siva Ventures stake in Sahara One dropped to 4.95%

Siva Ventures, which was earlier known as Aircel

Televentures Ltd, had picked up a 14.98% stake in Sahara

One in May’06 for INR 1.2B (INR 372 per share)

Nalanda Capital sold ~2% stake in Sun TV for INR 2.9B

The funds sold 7.7M, which accounts for nearly 2% stake

for a price of INR 370 per share

Earlier in Dec’08, Nalanda picked up a 2.22% stake in Sun

TV with a total investment of between INR 1.2B – 1.3B

The PE firm has made returns of 2.5x on its part exit

22nd February 2010


ChrysCapital and Morgan Stanley to make part exit from

Hathway Cable and Datacom Ltd.

At the IPO price band of INR 240 per share, ChrysCap will

be pocketing returns of 48% - 63% on its investment made

in May’07, while Morgan Stanley will generate return of

13% to 25% on its investment made in Jun’08

The average cost of acquisition of shares stands at INR

162 a share for ChrysCap while it is INR 213 a share for

Morgan Stanley

Post the IPO, ChrysCap and Morgan Stanley stake in the

company will drop to 6.4% and 2.9% respectively

Real Estate & Infrastructure:

India Globalization Capital (IGC) reduced stake in Sricon

from 63% to 22%

The company is also looking to exit the company in the

future while concentrating on its other firm Techni Bharathi

Ltd (TBL) where also it owns a majority stake

Earlier in Mar’08, IGC bought 63% stake in Sricon for $30M



PE Exist

2

22nd February 2010

Logistics:

2i Capital sold three-fourths of its 6% stake in Pipavav

Shipyard at an average of INR 55 a share

Earlier, it had sold around 2% stake between Oct’09 and

mid-Jan’10, encashing around INR 700M -770M

2i’s remaining 1.16% stake in Pipavav is valued at INR

410M



3

IPOs Listing

Year IPOs*

2010 Till Date 9

2009 17

2008 37

2007 103

2006 75

2005 39

Date of Filling Company Name Industry

8 Feb’10 Man Infraconstruction Real Estate & Infrastructure

19 Feb’10 United Bank of India BFSI**

*IPO’s on the basis of listing

22nd February 2010

**Banking, Financial Services & Insurance

Company Issue Price (INR) Issue Size (M Shares) Listing Price (INR)

Vascon Engineers 165 10.8 170

Jubiliant Foodworks 145 22.7 162

Syncom Healthcare 75 7.5 88

Thangamayil Jewellery Ltd 75 1.4 70

IPOs Closed

Company Issue Price (INR) Price Band (INR) Issue Size Subscription

ARSS Infrastructure Projects 450 410 – 450 INR 1.03B 47.60x

Hathway Cable & Datacom Ltd. 240 240 – 265 27.7M shares 1.36x

Future Plans

Company Issue Size (INR) Shares Issue Opens Issue Closes Rating Price Band (INR)

United Bank of India 3.3B – 3.6B 50M 23 Feb’10 25 Feb’10 Grade 4 60 – 66

Man Infraconstruction 1,367M – 1,418M 5.6M 18 Feb’10 22 Feb’10 Grade 3 243 - 252

Rural Electrification Corp (FPO) 34.9B 17.2M 19 Feb’10 23 Feb’10 NA 203***

DRHP Filled

IPOs Listed

***Floor Price



4

In Focus

M&A deal volume in Jan’10 increases 50% as compared to Jan’09

53 M&A transactions were struck last month, over 50% against an average of 35 deals per month in 2009

Telecom, logistics and BFSI were the most targeted sectors and accounted for over 85% of total M&A deal value in Jan’10

– Telecom, logistics and banking, finance & insurance witnessed investment worth $2.18B, $164M and $117M respectively

In terms of deal volumes, the most active sectors were banking, finance & insurance with seven deals followed by

manufacturing & IT/IT services with six deals each in Jan’10

PE deals in India witnessed a strong growth momentum in the Jan’10 and almost quadrupled to $1.24B, from its year ago

period

The total value of PE transactions and qualified institutional placement (QIP) deals amounted to $1.24B in Jan’10, against

$309M in the year ago period, registering an over four-fold jump

29 PE and QIP transactions were registered, against 16 deals registered in same period in 2009

India to spend $200B on Defence by 2022

India needs to replace its outdated Soviet-vintage inventory.

The report suggests that the forces need new combat aircrafts, ships, new guns, rocket launchers, multi-terrain vehicles, sub-

marines etc.

Indian Government authorized FIPB to allow FDI up to INR 12B

FIPB authorized to approve applications up to INR 12B

All other applications over and above INR 12B will be decided by the Cabinet committee

Indian Industry grows at 16.8 % in Dec’09

Driven by growth of Automobile, Electricity, Steel ,Cement, Export sector

Manufacturing growth at 18.5%,Consumer growth at 12%

India’s Exports grow at 11.5% in Jan’10

Estimated revenue of INR 14.3B

22nd February 2010



ARC Financial Services Private Limited

311, Ansals Majestic Tower

PVR Complex, Block G, VikasPuri

New Delhi – 110018

India

Tel: +91 11 4560 1622

Tel: +91 11 4562 2127

Website: www.arc-fs.com

Email: [email protected]

Documents

Business This Week This Week 22 Feb 2010.pdf · © 2010 ARC Financial Services Private Limited, All rights reserved. Nishant Rustagi: [email protected] I Strategies for your Success