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Weekly newsletter

  1. 1. Top Headlines The Indian Public School buys US South Hills Academy for $10M IvyCap Ventures’ debut fund makes first close at $19M; investing $4.5M in two companies Microqual to raise $100M from IFC CHD Developers buys Empire Realtech for $18M Shareaholic raises $3M Series A funding led by Kepha Partners. RIM hit with $147.2 million verdict in wireless patent lawsuit Weekly Economic Review Earnings season kicked off this week, and India’s top IT firms, TCS and Infosys gave a contrasting picture of the IT sector. Infosys shocked investors with a steeper-than-expected cut in its guidance. Its growth forecast was slashed to just 5% for the current fiscal. Its estimate in April was 8-10%. The company’s performance in the three months to June also remained flat when compared to the previous quarter. Net profit dropped 1.2% to Rs. 2,289 crore, while revenue rose 8.6% quarter-on-quarter to Rs. 9,616 crore. Infosys did not provide a guidance for September because of the volatile conditions. Infosys CEO S.D. Shibulal told Mint the company was falling behind in the short-term because of discretionary spending. He added that Infosys’ long-term strategies would pay off and take it ahead of rivals. Speaking of rivals, Tata Consultancy Services has raced past Infosys for a thirteenth quarter in a row. Consolidated net profit for the first quarter rose 14.6% quarter-on-quarter to Rs. 3,318 crore. And revenue climbed 12.1% to Rs. 14,869 crore. TCS says it saw growth across business segments, even from clients in the financial industry. And while TCS doesn’t provide guidance, it says it will continue to beat the 1
  2. 2. Nasscom forecast of 11-14%. Still, analysts have warned that the ITindustry as a whole faces problems of declines in pricing power andcurrency volatility.Switching to telecom, Norwegian firm Telenor is on the lookout for anew joint venture partner in India. Two people familiar with thedevelopment have told Mint that the company has hired Citi GlobalMarkets India to find a new partner. Telenor wants to control the newventure by holding a 74% stake in it. Its existing partner, Unitech, hasbeen resisting its attempts to end the joint venture. The dispute is nowwith the Company Law Board and the Delhi high court. In February, aSupreme Court decision cancelled more than a hundred telecomlicenses including 22 used by Uninor.Moving to the economy, new factory output data shows little cause tocheer. The index of industrial production for May climbed 2.4%compared to the same period, a year-ago. The revised figure for theprevious month shows a contraction of 0.9%. In addition, any potentialrevival in growth could be neutralized by this year’s poor monsoon.Loss-making carrier Jet Airways is taking several measures to cut costs.Executives from the airline have told Mint it could sell and lease-back upto five planes this quarter. The arrangement could yield at least $50million. Jet also plans to phase out a hundred out of its 200 expat pilots.Ratan Tata, the chairman Tata Sons, has revealed his post-retirementplans. Tata said he would work on child nutrition and ruraldevelopment. He said helping children this way would change India’smental and physical health in the coming years. Tata is will step downas chairman on his 75th birthday this December. 2
  3. 3. Inside The StoryThe Indian Public School buys US South Hills Academy for$10MTamil Nadu-based The Indian Public School (TIPS) has acquired SouthHills Academy, a Los Angeles-based school for $10 million (Rs 54.3crore). This acquisition will help TIPS to expand its presence globally.This is the first overseas acquisition in the education space by an Indianfirm in more than three years. A little over half a dozen outbound M&Adeals were struck during 2006-09. However, education has been one ofthe hot sectors for private equity investors in India. Over the past 12months, as many as 24 deals worth $147 million were struck in IndiaIvyCap Ventures’ debut fund makes first close at $19M;investing $4.5M in two companiesIvyCap Ventures Advisors, started by former Ajay Piramal Groupexecutive Vikram Gupta, has made a first close for its debut fund IvyCapVentures Trust Fund - I, at Rs 105 crore ($19 million) and is set to investRs 25 crore ($4.54 million) in two target companies.One of thesecompanies provides agri-related information to rural focused businessand farmers and has been on a high growth path in the past four years.This target company recorded a topline of Rs 12 crore in CY 11 and aimsto reach Rs 22 crore for CY 12. The company has already covered morethan a million farmers across 35,000 villages in 13 states.Microqual to raise $100M from IFCForeign ownership in telecom tower company Microqual will climb tonearly 65% after World Bank arm, International Finance Corporation(IFC), and a clutch of overseas PE investors pump in investments of$100 million into the company. It already has a $25-million fundingcommitment from IFC and is in advanced talks with a clutch of overseasPE firms to raise another $75 million. Existing investors include Jafco 3
  4. 4. Asia, BTS Advisors, Headland Capital Partners and Indo-US VenturePartners.CHD Developers buys Empire Realtech for $18MNew Delhi-based real estate developer CHD Developers Ltd hasacquired Empire Realtech Pvt. Ltd for Rs 100 crore ($18 million). CHDwill convert the 12.34 acres of land it gets from the acquisition into aresidential project in Gurgaon, a company statement said.While thecompany plans to develop a residential project on the land it got from aclutch of individual land owners in Gurgaon, Saund claims thatresidential development is going to be the focus area of the company fornext five years. The land that company acquired is in Sector 106 inDwarka Expressway, Gurgaon has got all clearances and approvals.Theacquisition will be funded through internal accruals and fresh moneyfrom sales will take care of the Rs 200 crore ($36 million) ofinvestments that the company will make to develop the property.Shareaholic raises $3M Series A funding led by KephaPartnersBoston and New Delhi-based Shareaholic, Inc., which runs the contentsharing site Shareaholic Inc., has raised $3 million in Series A fundingled by Kepha Partners. All existing investors including General CatalystPartners, NextView Ventures, 500Startups, Boston Seed Capital, andangels also participated in the round.The company had earlier raised $2million from General Catalyst Partners, NextView Ventures, DaveMcClure of 500 Startups, Nicole Stata of Boston Seed, Edward Roberts ofMIT, Dharmesh Shah of HubSpot and others. Prior to this, the companyhas raised $355,000 as angel funding in 2009, when it crossed the 100-million user mark. The new investment takes Shareaholic’s total fundingto $5.35 million. 4
  5. 5. RIM hit with $147.2 million verdict in wireless patentlawsuitA northern California jury directed Research in Motion Ltd to pay$147.2 million in patent litigation over a remote management systemfor wireless devices, according to an attorney for the plaintiff,Mformation Technologies Inc.The verdict on Friday in a San Franciscofederal court comes at a bad time for RIM, whose stock has fallen morethan 70 percent in the past year as customers abandon the BlackBerryin favor of Apples and a slew of devices using Google Incs Androidsoftware.Amar Thakur, an attorney for Mformation, said the jurydirected RIM to pay an $8 royalty for every BlackBerry deviceconnected to RIMs enterprise server software, which brings the totalaward to $147.2 million. The verdict only covers U.S. sales through trial,Thakur said, and not future or foreign damages. 5