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Four s weekly pe track 26th december 2011- 1st january 2012


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Weekly newsletter on Private Equity deals in India

Weekly newsletter on Private Equity deals in India

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  • 1. Four-S Private Equity Track…Issue: 26th December, 2011– 1st January, 2 012 …… Your Eye to Indian Private Equity PE activity for the week 283.3 16 st 280.0 During the week ended 1 January, 2012, there were 6 PE/VC deals 14 240.0 12 worth $283.3mn compared to 8 deals worth $158mn in the 200.0 10 previous week. 158.0 8 160.0 8 120.0 6 Out of the total, there were 2 deals at project stage, and one each 80.0 4 at late, growth, PIPE and early stage. 6 40.0 2 0.0 0 The largest transaction during the week was by Blackstone Group, 25th December11 1st January12 acquiring 100.0% stake in a commercial IT Park, jointly owned by DLF and Hubtown Ltd. for $153mn (Rs 8.1bn) PE Investments No. of Deals Private Equity: Investment Summary during the week Stake Value Investor (s) Target (%) ($mn) Sector Industry Segment Stage Blackstone DLF Ackruti Info Park 100.0 153.0 Construction Real Estate Real Estate Project General Atlantic, Computer Mu Sigma NA 108.0 Services IT/ITeS Late Sequoia Capital Software Multiple Alternate Securities & Stock India Energy Index 10.1 9.7 Services BFSI Growth Assets Management Traders Sun-Apollo Venture Godrej Properties 49.0 8.2 Construction Real Estate Real Estate Project Electrical Sequoia Capital Amara Raja Batteries 1.4 4.4 Manufacturing Capital Goods PIPE Machinery Diversified Viva Capital Polymeric Sensors NA NA Manufacturing Diversified Early Equipment Source: Four-S PE Database Four-S Comment: The transaction is a consequent of DLF, Blackstone buys Pune IT SEZ for Rs 8.1bn which held the majority stake in the IT Park to divest non- Global PE major, Blackstone Group has struck its second big strategic assets to raise money for cutting its outstanding private equity deal in real estate sector this year by debt. DLF has a net debt of Rs 225.19bn as on September acquiring DLF Ackruti Info Parks (Pune) Ltd, an IT SEZ in 30, 2011, which was primarily due to delays in receiving Pune, from DLF Ltd and its JV partner Hubtown Ltd payments from its non-core assets sales. The firm plans to (formerly Ackruti City) for Rs 8.1bn ($153mn). DLF Ackruti raise up to Rs 70bn through sale of such non strategic assets Info Parks is a 25 acre SEZ, with a built-up area of nearly over the next 3 years to reduce its debt further. The 2.5mn sq. ft. DLF and Hubtown held 67% and 33% equity situation for Hubtown, or for that matter any other major shares. real estate firm is no better and they have all been trying to generate cash through selling non-core assets, instead of reducing project prices of ongoing projects. Indian Private Equity Weekly Update 26th December, 2011– 1st January, 2 012
  • 2. General Atlantic, Sequoia Capital puts $108mn in Oilwell Varco in Sara Sae. The PE fund was also planning toMu Sigma invest in listed Dhanlaxmi Bank but could not seal the dealBangalore-based data analytics firm Mu Sigma has raised as other investing partners backed out later on.$108mn in an investment round led by General Atlantic andSequoia Capital, which happens to be an existing investor Sun-Apollo takes 49% in Godrej’s Gurgaon Projectand invested $25mn earlier in April, 2011. The company Mumbai-based real estate firm Godrej Properties Ltd haswould use the funding to purchase shares held by the sold 49% equity stake in its subsidiary Godrej Premiumexisting shareholders, acquiring new clients and developing Builders Ltd to SUN-Apollo India Real Estate Fund for Rsmore services. 450mn. The deal is a structured one wherein SUN-Apollo will pay Rs 183mn to Godrej Properties for direct stake inFour-S Comment: The investment is unique as its one of the the parent firm and the balance Rs 267mn will go towardbiggest private equity investment made till date in the Godrej Premium Builders, which is currently developing aemerging market for analytics services, which is growing project in Gurgaon. Project specific details are not known.anywhere between 20-30% per annum. Also, the companyis fast emerging as a one pure provider of analytics anddecision support services with revenue growth of over 9x in Four-S Comment: While the overall private equitypast 2-3 years. Today, it focuses on areas like marketing, sentiment in real estate has been low during 2011, theresupply chain and risk analytics through the use of applied have been few large deals in between, besides a string ofmathematics, business applications and technology tools. It small and mid-sized deals across income-generatinghas more than 50 Fortune 500 clients (Microsoft and Dell developments. Amongst the major PE deals in real estateare among those) and employs 1500 analytics professionals. during 2011, in February, Ascendas India Trust entered aThe recent growth has earned the company a place in Inc deal to acquire a portfolio of five buildings in Phoenix500 list of America’s fastest-growing private companies. Infocity Pvt. Ltd’s SEZ for Rs 8.55bn. Kotak Realty Fund sold Peepul Tree Properties (an IT park in Goregaon) to TataMultiple Assets buys 10% in India Energy Index Realty and Infrastructure Ltd and Tata Realty InitiativesMultiples Alternate Asset Management, a PE fund floated Fund 1 for Rs former ICICI Venture CEO Renuka Ramnath, has acquired10.1% stake in Indian Energy Exchange Ltd (IEX) from PTC Blackstone has been particularly busy buying real estateIndia Financial Services for Rs 509mn ($9.7mn). The deal is assets this year. The PE giant has invested Rs 8.75bn to buynow awaiting regulatory sanction. The firm has sought 37% stake in Manyata Promoters Ltd, a SEZ promoted byapproval from the Foreign Investment Promotion Board Bangalore-based real estate developer Embassy Property(the nodal body monitoring foreign investment in India) as a Developments Ltd, and the landowner Veeranna Reddy.cautionary move as power exchanges are not covered under Blackstone has just struck another large deal where it hasany specific FDI norm acquired Pune SEZ of DLF and Hubtown for Rs 8.1bn.Four-S Comment: The deal was the second deal for Sequoia Capital takes 1.4% stake in Amara RajaMultiples Private Equity Fund, which raised its maiden fund Sequoia Capital India, has acquired 1.4% stake in domesticof $450mn this year. It also picked up a significant minority second largest battery maker Amara Raja Batteries for Rsstake in Dehradun-based Sara Sae Ltd In August this year. 240mn. Sequoia Capital picked up stake in the secondarySara Sae, which manufactures drilling equipment for land market through a 2 bulk lot of shares at Rs 200 each.and jack-up rigs, will use bulk of the money to finance thebuyout of 76 per cent stake, held by NYSE-listed National Polymeric Sensors raises funding from Viva Capital Indian Private Equity Weekly Update 26th December, 2011– 1st January, 2 012
  • 3. Mumbai-based Polymeric Sensors Ltd (PSPL), which equity firms are out on road to raise money for their first ordevelops and markets testing systems for agriculture, follow-up funds, expecting to mop up over $13bn.environment and healthcare sectors, has secured anundisclosed sum from new VC firm Viva Capital. The PTC India in talks with sovereign wealth fund tocompany has recently developed Polysense Aqua, a low- launch a PE fundcost, handheld electronic device with electrochemical State run power trading firm PTC India is in talks with asensors to test water purity and soil fertility. The funding sovereign wealth fund for setting up a private equity fundwill be used to complete the product’s pilot and launch it with an initial capital of about $100mn. However, talks arecommercially. in very initial stages and nothing has been finalised as yet.Four-S Comment: Mumbai based Viva Capital is an early- Further, earlier in May 2010, PTC India had announced thestage investment firm, started by Kamath, an alumnus of launch of an infrastructure fund in a JV with specialistBITS Pilani and Jamnalal Bajaj Institute of Management, emerging markets asset manager Ashmore, which was toMumbai. The VC fund aims to fund companies who have provide equity financing to power projects, did not take offraised angel rounds but not yet opted for institutional due to various reasons.funding. As per its website, the VC firm has so far fundedHyderabad-based Shri Shakti Alternative Energy Ltd and Private Equity and M&A Newsheadhunting firm Venator Search Partners. Jacob Ballas PE to invest Rs 2bn in Religare Finvest Private equity firm Jacob Ballas India is close to acquiring a Fund Raising & Liquidity Events 5% stake in Religare Finvest, a non-banking financial services arm of Religare Enterprises, for about Rs 2bn. The company provides debt capital to MSMEs (micro, small and medium enterprises) in form of loans against property, working capital loans, loans against plant and machinery, vehicles and construction equipments and loan againstRajesh Khanna’s Arka Capital to shut down marketable securities and would utilise the funding for itsoperations. Ceases fund raising working capital requirements.Due to difficult fund raising climate globally, Arka Capital, aPE firm founded by former Warburg Pincus MD Rajesh Lanco Infratech to raise $600mnKhanna along with 2 other partners has decided to cease Hyderabad based Lanco Infratech Ltd. is in talks with PEthe fund raising and has shut down operations. The PE firm firms to raise $600mn over the next 6 months and hashad hit the road to raise around $400mn some 8 years ago. mandated Macquarie as an investment banker for theWhere the aforesaid entrepreneurs are headed to, is not same. The company is in aggressive capacity addition modeknown as of now. at present and require funding for the same. The company is looking to build an additional 5000 MW plant, which isThe whole episode goes to show that global fund raising already under process in various stages.environment has not improved at all. Very few first timeIndian funds have raised capital in the recent past including Purvankara Projects to sell 3 projects to cut debtRenuka Ramnath, former head of ICICI Venture, and Ajay Bangalore based listed real estate developer, PuravankaraRelan, former India head of Citi Venture Capital Projects Ltd. is looking to sell 3 commercial properties inInternational. Besides, as many as 60 India-based private Bangalore and Chennai for Rs 2.5bn to partly pay off its Indian Private Equity Weekly Update 26th December, 2011– 1st January, 2 012
  • 4. mounting debt, which stands at Rs 9.33bn as on IPO, QIPs and other capital raisingSeptember’11. The properties in questions includes 1.5mnsq ft built-to-suit plots and is in talks with information Goodwill Hospital to raise Rs 620mn through IPOtechnology firms to strike a deal. Goodwill Hospital and Research Centre Ltd, engaged in running a multi-speciality hospital at Noida has fixed priceFurther, the company is targeting cash inflows of Rs 14bn band of Rs 175-185 for its proposed IPO offering. Thefrom the sales of apartments in the coming fiscal year company intends to raise around Rs 620mn and use thethrough its real estate businesses over the next 18 months. same for setting up of diagnostic centre at Faridabad withBut if anything goes wrong, the company may look at a an outlay of Rs 162.2mn, establishment of 6 polyclinics at astructure deal to raise $250mn from private equity fund to cost of Rs 339.7mn and repayment of loans of Rs 100mn.reduce debt The company also plans to set up a wellness and cosmetology centre at Gurgaon offering solutions for wellness and aesthetics under one roof, M&A Activities During the week ended 1st January, 2012, there were 5 M&A deals worth $188.6 (size of 3 deals were not known). The largest deal during the week was by Chines oil and gas major Da Qing Oil Field acquiring a majority stake of 51% in Varun Industries Oil & Gas blocks in Medagaskar, for $150mnM&A Activity: Summary during the week Stake Deal value Acquirer Target Target business (%) ($ mn) Da Qing Oil Field Varun Industries Ltd. OIL & Gas Block 51.0 150.0 Petronas Power SdN GMR Energy Singapore Power Generation 30.0 38.6 EDB ErgoGroup Ionnor Solutions Software Solutions 49.0 NA Tata Power Tata BP Solar India Solar Power 51.0 NA Mars Group of Companies 5 Tea Estates in Bengal Tea Production NA NA Source: Four-S Database, Acquisition price is in $mn Indian Private Equity Weekly Update 26th December, 2011– 1st January, 2 012
  • 5. Stock Market UpdatesKey Domestic Indices Indian Market Movements 52 WeekIndex 23-Dec-11 30-Dec-11 Change (%) High LowBSE Sensex 15,738.70 15,454.92 -1.84% 20,664.80 15,135.90S&P CNX Nifty 4,714.00 4,624.30 -1.94% 6,051.20 4,531.15CNX Nifty Junior 8,467.45 8,333.10 -1.61% 11,865.10 8,258.50Nifty Mid Cap 50 1,785.00 1,753.40 -1.80% 2,867.85 1,722.45CNX IT 6,058.60 6,139.00 1.31% 7,591.90 5,011.10Bank Nifty 8,296.45 7,968.65 -4.11% 11,978.05 7,766.35CNX Infrastructure 2,126.15 2,124.90 -0.06% 3,397.70 2,045.70CNX Realty 191.70 184.20 -4.07% 362.35 181.75 Source: BSE, NSE Key Global Indices Global Market Movements 52 WeekIndex 23-Dec-11 30-Dec-11 Change (%) High LowNASDAQ 2,618.64 2,605.15 -0.52% 2,887.75 2,298.89DJIA 12,294.00 12,217.56 -0.63% 12,928.50 10,362.30S&P 500 1,265.33 1,257.60 -0.61% 1,370.58 1,074.77NIKKEI 225 8,395.16 8,455.35 0.71% 10,891.60 8,135.79Hang Seng 18,629.17 18,434.39 -1.06% 24,468.60 16,170.30Straits Times Index 2,676.47 2,646.35 -1.14% 3,280.77 2,521.95FTSE 100 5,512.70 5,572.30 1.07% 6,105.80 4,791.00 Source: Yahoo Finance Indian Private Equity Weekly Update 26th December, 2011– 1st January, 2 012
  • 6. About Four-S ServicesFour-s is a boutique firm focusing on cutting-edge Financial Research, Business Advisory and Investment Banking services forclients. Through our deep research into Indias high growth industries and accurate and objective advice we have helped manymarquee institutional investors take informed investment decisions in private equity and public markets. Four-S has provensuccess in business advisory, investment banking and investor relations mandates with 100+ corporate clients and large PEfunds. For further information on the company please visit www.four-s.comDisclaimerThe information contained herein has been obtained from sources believed to be reliable but is not necessarily complete and itsaccuracy cannot be guaranteed. No representation, warranty, guarantee or undertaking, express or implied, is made as to thefairness, accuracy or completeness of any information, projections or opinion contained in this document or upon which anysuch projections or opinions have been based. Four-S Services Pvt. Ltd. will not accept any liability, whatsoever with respect tothe use of this document or its content. This document has been distributed for information purposes only and does notconstitute or form part of any offer or solicitation of any offer to buy or sell any securities. This document shall not form the basisof and should not be relied upon in connection with any contract or commitment whatsoever. This document is not to bereported or copied or made available to others. The Company may from time to time solicit from, or perform consulting, or otherservices for, any company mentioned in this document.For Further details/clarifications please contact:SeemaShuklaEmail- seema@four-s.comAddress:Gurgaon MumbaiFour-S Services Pvt. Ltd. Four-S Services Pvt. Ltd.214, UdyogVihar 101,Nirman Kendra,Phase-I, Gurgaon -122016 Near Famous Studios, Off Dr. EHaryana, INDIA Moses Road,Tel: +91 124 4251443 Mahalaxmi, Mumbai+91 9810408474 Tel: 022 - 42153659 Indian Private Equity Weekly Update 26th December, 2011– 1st January, 2 012