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Weekly newsletter

  1. 1. Top Headlines HKEx to buy London Metal Exchange, NRI family Bagris to get $205M. Jyothy Labs to merge Henkel to consolidate biz Air Works India invests $22M in Dubai’s Empire Aviation group Sharma to launch $500M London hedge fund Swedens IKEA to invest $756M in India Vinod Khosla’s SunBorne Energy raises $5M VC funding. DJB fined Rs 5,000 for imposing undue penalty on consumer Weekly Executive Summary Stocks and commodities plunged as fears over the outlook for global growth mounted following weak manufacturing data from Germany and China. Moody’s Investors Service downgraded the ratings of several global banks citing risks and volatility in the capital markets. Brent crude fell to a 18 month low of $89.64 per barrel after China’s manufacturing sector contracted for an eighth consecutive month to 48.1 in June due to a fall in exports. Manufacturing activity in Germany was also weakest in three years. In other news, it’s not been a good day for India’s cement industry either. A clutch of top companies in the industry face a steep fine for allegedly colluding to raise prices. The Competition Commission of India has fined 11 cement companies a total of $1.1 billion. It says they kept production artificially low to create shortages. The companies being fined include the Aditya Birla Group’s UltraTech Cement, ACC, Ambuja Cement and the Indian arm of French company Lafarge. News of the CCI’s decision came after markets closed for the day. But industry watchers had been anticipating the penalty for some time now. 1
  2. 2. RIL has decided to sell its textiles business, including its iconic brandOnly Vimal. RIL has hired NM Rothschild to manage the sale of thebusiness. The Only Vimal brand is being sold to make the textiles unitmore attractive for potential buyers.The Competition Commission of India verdict is out. CCI has severelycensured cartelization in the cement industry by imposing a penalty ofat least Rs. 6,300 crore on the top 11 makers of the material. Amongthese, the worst-hit are ACC Ltd, Ambuja Cements Ltd, UltraTechCement Ltd and Jaiprakash Associates Ltd, which have been fined inexcess of Rs. 1,000 crore each. All the 11 firms were fined 50% of theiraverage profit for fiscal years 2010 and 2011.The coal ministry will push for significant dilution of the provisions ofCoal India’s current fuel supply pacts with power companies during themeeting at the Prime Minister’s Office today.The ministry will proposelowering CIL’s supply commitment under new FSAs to 65% of thecontracted quantity for the first 3 years, 72% for the fourth year and80% for the fifth year and will increase the penalty level for reducedcommitment.Pipavav Defence and Offshore Engineering will be on the radar afterDCNS, the French defence major said that it is likely to buy little lessthan 10% stake in Pipavav Defence for around Rs. 800 crore, The dealvalues the shares of Pipavav Defence at a substantial premium of morethan 32% to its last closing price.Lastly, there is competition for WalMart as LanMark is gainingpopularity in retailing in south India. LanMark, which has broughttogether 160 small dealers of white goods in Kerala under a commonbrand, has quietly made its debut in Tamil Nadu with 12 stores under itsfold. That aremeans it has more stories under its umbrella, than Cromaand Reliance Digital do. 2
  3. 3. Inside The StoryHKEx to buy London Metal Exchange, NRI family Bagris toget $205MHong Kong stock exchange has sealed a deal to acquire LME HoldingsLimited, the parent company of the world’s largest non ferrous metaltrading bourse London Metal Exchange, in a deal worth £1.38 billion($2.18 billion). This would be one of the most high profile acquisitionsof a financial services company in the developed world by an emergingmarkets company. As per the deal, HK Investment (UK) Limited (HKExInvestment) and Hong Kong Exchanges and Clearing Limited (HKEx)have entered into an agreement to buyout LME Holdings. The dealinvolves purchase of £107.60 per LME ordinary share in cash.Jyothy Labs to merge Henkel to consolidate bizConsumer goods company Jyothy Laboratories Ltd is merging HenkelIndia Ltd with itself to consolidate its personal care products businessunder a single umbrella, completing the final leg of its strategicacquisition of the Indian arm of German giant Henkel.Jyothy Labs, whichcurrently owns 83.66 per cent stake in Henkel India, will issue 1 sharefor every eight shares owned in Henkel India. If the same is convertedInto shares or treasury stock of Jyothy Labs, it would be worth Rs 288crore as per current stock market price. But the company has decided tocancel them, which would lead to minimal equity dilution for JyothyLabs. Other shareholders of Henkel India would get cumulatively justaround 2.87 per cent stake worth Rs 55 crore.Air Works India invests $22M in Dubai’s Empire AviationgroupAir Works India Engineering Pvt Ltd has acquired a strategic stake inDubai-based Empire Aviation Group for $22 million (Rs 120.9crore).Through this investment, Air Works India plans to expand itsaircraft business in Middle East and provide its services to customers inIndia.Founded in 2007, Empire Aviation, an aircraft asset management 3
  4. 4. company, provides private aviation services such as aircraft sales,aircraft management, charter and finance and insurance. The companyfocuses on a distinctive asset management approach to privateaviation.“The transaction will be financed by taking senior secured debtfrom a consortium of four private equity firms led by KKR & Co. LP,”said Vivek Gour, managing director of Air Works.Sharma to launch $500M London hedge fundSutesh Sharma, the former head of proprietary trading at Citigroup is tolaunch his new London-based hedge fund, Portman Square Capital, witharound $500m this autumn.The fund manager will be one of the largesthedge fund start-ups of 2012, and among the most high-profile of thosethat have spun out of banks’ internal trading operations in response totough new US legislation.Mr Sharma’s new venture has been widelyanticipated by many in the industry since it was conceived last year.Theformer Citigroup trading star was also the former head of proprietarytrading at Morgan Stanley and is a close acquaintance of Citigroup chiefexecutive Vikram Pandit, with whom he founded Old Lane Partners, oneof the biggest hedge fund launches, in 2005. Old Lane was acquired byCiti in 2008 – a deal which propelled Mr Pandit to the top of the bank.Swedens IKEA to invest $756M in IndiaSwedens IKEA, the worlds largest furniture maker, will invest 600million euros in the Indian retail market, a trade ministry official said onFriday.IKEA Chief Executive Mikael Ohlsson met Indian Trade MinisterAnand Sharma in St. Petersburg, Russia, to discuss the investment. Theofficial said the company had filed an application to start operations inIndia.India currently allows 100 per cent foreign direct investment insingle-brand retail, but bars foreign investment in supermarket chains.Vinod Khosla’s SunBorne Energy raises $5M VC fundingVinod Khosla-backed Sun Borne Energy Holdings LLC has raised $5million (Rs 28.4 crore) in VC funding as part of its plan to raise $20million (Rs 113.5 crore) equity funding, according to information fromthe US Securities and Exchange Commission’s Notice of Exempt Offering 4
  5. 5. of Securities. The identity of the investors has not beendisclosed.Massachusetts-based SunBorne Energy, which wasincorporated in 2008, operates in the solar energy spectrum. In India,the company’s business model is based on utility scale projects.SunBorne has successfully bid for several solar projects awarded byGujarat (15 MW), Rajasthan (Phalodi), Andhra Pradesh and Karnataka(10 MW). It has drawn up massive expansion plans in the solar energysegment and aims to build over 1 GW of power in 5-7 years, underliningthe enormous potential of the nascent solar power sector in India.SunBorne plans to commission more than 200 MW of capacity by 2014.DJB fined Rs 5,000 for imposing undue penalty onconsumerA consumer forum here has imposed a penalty of Rs 5,000 on Delhi JalBoard (DJB) for wrongly penalising a consumer for "negligence" of itsofficials, who had sent her cheque for water bill to a wrong bank. Thewoman had issued a cheque drawn on the State Bank of India, but theDJB sent it to the Punjab National Bank, which returned it with thereason that it was wrongly delivered /not drawn on us. The civic body,Subsequently, imposed a fine of Rs 400 on the consumer for not payingthe water bill. 5