Four s weekly pe track 16 january - 22nd january 2012


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Four s weekly pe track 16 january - 22nd january 2012

  1. 1. Four-S Private Equity Track…Issue: 16th January – 22nd January, 2 012 …… Your Eye to Indian Private Equity PE activity for the week 281.2 16 280.0 14 nd During the week ended 22 January, 2012, there were 10 PE/VC 240.0 12 deals worth $281.2mn compared to 5 deals worth $135.2mn in the 200.0 10 previous week. 160.0 135.2 8 10 120.0 6 Out of the total, there were 3 deals at growth stage, 3 deals at early 80.0 4 5 stage and one deal each at late, project and PIPE stage. 40.0 2 0.0 0 15th January12 22nd January12 The largest transaction during the week was by Temasek Holdings picking up 4.9% in Godrej Consumer Products Ltd. for $135mn. PE Investments No. of Deals Private Equity: Investment Summary during the week Stake Value Investor (s) Target (%) ($mn) Sector Industry Segment Stage Godrej Consumer Temasek Holdings 4.9 135.0 Manufacturing Personal Product FMCG Late Products Olympus Capital DM Healthcare NA 100.0 Services Health Services Health Services Growth IL&FS PE Indiabulls Infraestate 9.4 38.5 Construction Real Estates Real Estates Project Knowlarity Telecommunication Sequoia Capital NA 6.6 Services Telecom Early Communications Services Acumen Fund GUARDIAN NA 1.1 Services BFSI Microfinance Early Songs Investments SV Agro Processing NA NA Services Misc. Services Agri SCM Growth New Silk Route Varsity Education NA NA Services Education Education services Growth Songs Investments Be Well Hospitals NA NA Services Health Services Health Services Growth Nalanda Capital Ratnamani Metals NA NA Manufacturing Metals Ferrous Metal PIPE Seedfund NA NA Services Retail Online Retail Early Source: Four-S PE Database capital infusion would help Godrej Consumer finance its Temasek Holdings buys 4.9% into Godrej aggressive inorganic strategy, wherein it has acquired 7 companies across the world since 2010 and consolidated its Consumers holding in 2 JVs. Singapore’s sovereign wealth fund Temasek Holding is buying 4.9% stake in consumer products firm Godrej Four-S Comment: For Temasek, the transaction is significant Consumer Products Ltd for Rs 6.85bn ($135mn). The fresh considering it is first after the leadership change at Indian Private Equity Weekly Update 16th January – 22nd January, 2 012
  2. 2. Temasek. Manish Kejriwal, who was heading India office Four-S Comment: With the capital infusion, the companysince 2004, left in late 2011 to start his own PE firm, making will be able to kick start its development on land parcels itway to Rohit Sipahimalani, who joined from Morgan bought from National Textile Corp. Ltd, a government-Stanley. Also, the deal is Temasek’s first big investment controlled firm owning large tracts of land across Indiasince 2010, when it invested $200mn in GMR Energy Ltd. comprising defunct textile mills. The company also acquiredThe PE fund spent 2011 in picking up small equity stakes in another tract of land close to Bharat Textile Mills, whichpublic listed companies e.g. Max India and Jain Irrigation belonged to Poddar Mills. The firm is now planning tothrough open market transactions. Temasek’s other develop the 2 pieces of land as a gated residential projectportfolio companies in India include ICICI Bank, Tata Sky, including IT office space.Bharti Airtel and its tower arm Bharti Infratel. Sequoia Capital invests $6.6mn in KnowlarityOlympus Asia invest $100mn in DM Healthcare Communications Ltd.Olympus Capital Asia Investments Ltd has invested $100mn Gurgaon-based Cloud telephony start-up Knowlarityin Kochi based healthcare chain DM Healthcare Ltd for a Communications Ltd. has received Rs 340mn ($6.6mn) fromsignificant minority stake. The transaction is a combination Sequoia Capital. Knowlarity plans to use the funding toof Olympus Capital’s primary investment into DM strengthen its R&D activities and expand marketingHealthcare for the growth and expansion of the company in operations. After establishing its presence in India andIndia and secondary purchase of a portion of India Value Indonesia, Knowlarity is now planning to extend itsFund’s shareholding in the company. India Value Fund had solutions and services to other international markets.originally invested around $50mn in DM Healthcare fouryears ago for a 22% stake. With the fund raised, DM Four-S Comment: Cloud telephony-based services in IndiaHospital will set up greenfield projects and partner with are at an early stage and poised for healthy growth givensmaller hospitals across other tier 2 and tier 3 cities in India. the demand amidst telecom players looking for pan-IndiaIt targets to have close to 3,000 beds by 2015 from 900 at presence. At present, cloud telephony services market ispresent. growing 25% CAGR and is expected to grow at the same pace over the next 3-4 years. Besides, the company isFour-S Comment: The transaction happens to be a single growing fast to keep pace with the growing demand. Today,largest independent deal in Indian healthcare sector it’s catering to larger enterprises, through its hosted IVR(in rupees terms). Although Apax Partners had invested solutions integrated with its existing IT systems. Knowlarityaround a similar amount in Apollo Hospitals 5 years ago, but has also serviced social projects such as m-Governance forthen the Indian currency was much stronger against the US the Mid-Day Meal scheme.dollar. The Apax-Apollo deal was for $104mn or around Rs4.25bn back then. The latest deal value is around Rs 5.1bn. Acumen Fund invests $1mn in GUARDIAN Social VC investor Acumen Fund has invested $1mn (RsIL&FS takes 9.4% in Indiabulls real estate project 52mn) in GUARDIAN (Gramalaya Urban and RuralThe real estate fund of IL&FS Private Equity has invested Rs Development Initiatives and Network), a Tamil Nadu-based2bn (~$38.5mn) to buy 9.36% stake in Indiabulls Infraestate microfinance institution focusing on lending to communitiesLtd, a 100% SPV floated by Indiabulls Real Estate Ltd to who lack access to water and sanitation facilities. The funddevelop a realty project on a 8.39 acre parcel of land in raised would be used by GUARDIAN to build its portfolioLower Parel Mumbai, earlier occupied by Bharat Textile and transition from a partially grant-funded NGO to a fullyMills. Further details of the projects were not known. self-sustaining microfinance institution (MFI). In addition, the capital raised would be utilized to scale up potentially Indian Private Equity Weekly Update 16th January – 22nd January, 2 012
  3. 3. path-breaking models for expanding water and sanitation Varsity Education offers varied education services includingfacilities across poor communities. curriculum development, teacher recruitment & training and facilities management, and has a 10,000 employeeFour-S Comment: Acumen Fund is a VC firm specializing in base. The company claims to have served over 300,000growth investments in water, healthcare, energy, agro, students across Karnataka, Andhra Pradesh, Maharashtracleantech and housing segments, and prefers to invest in and Tamil Nadu.India, Pakistan, South Africa, East Africa (focus on Kenya)and West Africa. The firm typically invests between $0.3- Four-S Comment: In recent times, education has been one2mn with exit period ranging from 5-7 years. Its India its of the top priority sectors for New Silk Route. Prior to thisportfolio include Kochi-based ayurvedic chain Ayur Vaid deal, New Silk Route invested in Beaconhouse SchoolHospitals, Hyderabad-based LifeSpring Hospitals, Mumbai- System, one of the world’s largest K-12 chains catering tobased ambulance start-up service ‘Dial 1298 For over 200,000 students. In January 2011, it had also investedAmbulance’ and Drishtee, a rural communications company. up to $25mn in Hyderabad-based Sri Chaitanya Educational Group.Song Investments backs 2 portfolio firmsPE firm Song Investment Advisors Ltd. has invested in 2 new Nalanda Capital raises stake in Ratnamani Metalscompanies: secondary care hospital chain Be Well Hospitals Nalanda Capital, a Singapore-based PE firm focused onand potato supply chain management company SV Agro secondary market transactions has increased its holding inProcessing. Both companies would utilize the capital Ratnamani Metals and Tubes Ltd to 10.47%. The firminfusion for growth purposes. Be Well Hospitals is a chain of manufactures high frequency welded & submerged arcsecondary care medical facilities targeted at tier II and tier welded (SAW) carbon steel pipes, seamless tubes & pipes,III cities, as well as metro suburbs. SV Agro Processing is an welded tubes & pipes and electric fusion welded stainlessend-to-end potato supply chain management company steel pipes. The company has manufacturing plants athandling everything from input selling, contract farming to Mehsana (Gandhinagar) and Kutch district of Gujarat.infrastructure facilitation and logistics to ensure productdelivery to processors and retail clients. Four-S Comment: Nalanda Capital, which has $875mn under management across 2 funds, appears to be looking toFour-S Comment: Songs Investment Advisors Ltd. is an early bring down the average cost of share acquisition in itsand growth stage investment firm based out of Hyderabad portfolio firms as stock market valuations have tanked tomanaging $17mn of capital. The fund is backed by search near 2 year low. The company originally picked up stake ingiant Google Inc., Soros Economic Development Fund and Ratnamani Metals in early 2010 and has been slowlyOmidyar Network. It typically invests between Rs 5-200mn increasing its exposure in the firm ever a firm over the life of the investment. So far, it has Last week it picked up additional stake in another portfolioinvested in K12 Techno Services Ltd, which manages over 60 company, Great Eastern Shipping Company.schools run by 15 different trusts under the GowthamModel School. Seedfund invests in online e-commerce portal HandsPick.comNew Silk Route invests in Varsity Education Seedfund, an early-stage VC fund has invested anNew Silk Route Partners, an Asia-focused private equity and undisclosed sum to acquire a significant minority stake ingrowth capital firm, has acquired a significant minority stake, a fashion apparel and accessories e-in Hyderabad-based education support services provider commerce brand owned by Delhi-based start-up IntuitentVarsity Education Management Ltd for an undisclosed sum. Online Venture Ltd. The capital raised would be used for Indian Private Equity Weekly Update 16th January – 22nd January, 2 012
  4. 4. design, manufacturing, sourcing, brand creation, logistics India Equity Partners raising $500mn for secondand customer satisfaction assurance. HandsPick, at present, fundhas over 60 brands online, including Lee, Puma, Spykar and Mid-market focused PE firm, India Equity Partners (IEP) isWrangler, among others. Members can also place orders planning to raise its second private equity fund targeted atover the phone and opt for trials before the actual $500mn and has already received commitments for aroundpurchase. HandsPick has a 30-day return policy and backs a $130mn from a group of more than 50 investors. Atmandatory cash-on-delivery payment mode. present, IEP is investing out of its first fund worth $350mn. It has been chasing investments in sectors like consumer Fund Raising & Liquidity Events products, food services, healthcare, education and consumer finance, as well as logistics and utility services. For the second fund, IEP is expected to focus on its existing strategy. Magnetar to raise $100mn Cleantech Fund SEBI registered Magnetar Venture Ltd plans to launch aRed Fort raises $500mn for its second realty fund $100mn fund focused on clean technologies by March 2012Delhi based real estate focused PE firm Red Fort Capital has to funnel growth capital into budding enterprises. To startraised $500mn from overseas investors for its second real the proceedings, it will raise $20mn in its first phase. As anestate fund focused on residential properties. With the fund investment strategy, Magnetar will look to invest in state-closure, Red Fort Capital has around $900mn under run firms working in the field or their, making it one of the largest independentprivate equity real estate investment specialists in India. Of Private Equity and M&A Newsthe $500mn corpus, around $400mn had been raised by thefund and another $100mn has been raised via co- New Silk Route to invest $300mn in Indiainvestment pools. What may have also attracted investors Asia-focused PE firm New Silk Route (NSR), is looking toto Red Fort is its track record. In March 2011, Red Fort said invest as much as $300mn (~Rs 15.51bn) this year, primarilythat it had returned over $100mn to investors since 2009 as in medical devices firms and restaurant chains. Besides, NSRits fund I portfolio reached the harvesting stage. is looking to raise capital for Ascend Telecom Infrastructure Ltd, a telecom infrastructure company controlled by it.StanChart IL&FS Infra fund partially exit IL&FS Ascend recently merged its telecom tower business withTransportation that of India Telecom Infra Ltd. The merged entity hasStandard Chartered IL&FS Asia Infrastructure Growth Fund nearly 3,700 towers and needs funds to scale up operations.has made a partial exit from IL&FS Transportation NetworksLtd by selling 1.25% stake for a little over Rs 400mn. The Prestige Construction may raise Rs 18bn through astake sale has been done at a profit of 25% or 1.25x. Thefund still holds over 3% stake in IL&FS Transportation. stake sale in Bangalore SEZ A slew of global PE players have envinced interest in buyingStandard Chartered IL&FS Asia Infrastructure Growth Fund out “Cessna Business Park”, a 4.5mn sq ft SEZ beingacquired the stake in March 2008 at Rs 133 per share while developed by Bangalore based Prestige Construction Ltd.the stake sale has been done at Rs 166 a unit. for a Rs 18bn. The project is one of Prestige’s landmark commercial space developments in the city, strategically Indian Private Equity Weekly Update 16th January – 22nd January, 2 012
  5. 5. located on Sarjapur-Marathalli outer ring road and already NMCE in talks with PE players to raise Rs 300-house marquee technology majors like Cisco as its clients. 350mnIf Prestige decides to go ahead with the sale, it will be the National Multi-Commodity Exchange of India (NMCE), 4thsecond major such deal after global private major largest exchange domestically, is in talks with 5 privateBlackstone picked up a significant stake in another tech park equity investors and banks to raise Rs. 300-350mn todeveloped by the Embassy Group for $200mn in 2011. comply with minimum capital rule. Forward Markets Commission, the commodity futures regulator, has askedClearwater makes open offer for 20% stake in commodity exchanges with 5 years of operations to have aKamat Hotels minimum equity capital of Rs. 1bn by 31 March this year.PE firm Clearwater Capital Partners is all set to make anopen offer to acquire another 20% in hospitality chain Australia firm forms JV with PE firmKamat Hotels Ltd, after it exercised a right to convert 5,966 Australia-based Water Resources Group Ltd (WRG) hasforeign currency convertible bonds into equity. It was entered into a JV with Mandala Water Ltd, a 100%allocated 1.95mn shares in Kamat Hotels (India) Ltd at Rs. subsidiary of global PE fund Mandala Capital AG Fund Ltd.135 apiece. Post allotment, Clearwater and its associates The JV will use Water Resources Group’s products andhold 32.23% of the total shareholding of Kamat Hotels. technologies in India, Pakistan, Sri Lanka and Bangladesh.Kamat Hotels issued FCCBs worth $18mn to Clearwater last Water Resources Group will own 49% in the JV, which willyear. The PE firm exercised some of those bonds the same allow it to tap the growing South Asia desalination marketyear at Rs. 135 apiece to hold a 24.5% share in Kamat for both industrial and municipal applications. The JV willHotels. also look to develop new markets in seed & food preservation and food logistics.TVS Logistics in talks for PE fundsChennai-based TVS Logistics Services Ltd is in talks with PE BCCL eyes majority stake in Neo Sports, Neo Cricketfirms including global PE giants KKR and Temasek for a Bennett, Coleman and Co Ltd (BCCL), part of the Timessecond round of funding roughly estimated at $50mn. The Group, has joined the race to pick up a majority stake in thefirm plans to use the funds to achieve scale which would 2 sports channels of Nimbus Communications namely, Neoenable the firm raise capital from the primary markets. Cricket and Neo Sports. Both the channels are housed underBesides, the company is looking to expand its footprint in Neo Sports Broadcast Ltd, a subsidiary of Nimbus. Timesthe domestic market and globally which might inlclude Group has also shown preliminary interest in buying out theexpansion in Southeast Asia, Turkey and South Africa. Hyderabad-based Associated Broadcasting Company. M&A Activities During the week ended 22nd January, 2012, there were 8 M&A deals worth $336mn (size of 6 deals were not known). In the largest transaction during the week, Japan based life insurance major, Nippon Life Insurance announced picking up 26.0% in Reliance Capital Assets Management for $290mn. Indian Private Equity Weekly Update 16th January – 22nd January, 2 012
  6. 6. M&A Activity: Summary during the week Stake Deal value Acquirer Target Target business (%) ($ mn) Nippon Life Insurance Reliance Capital Asset Management Assets Management 26.0 290.0 Dalmia Cement (Bharat) Ltd. Calcom Cement India Cement Manufacturing NA 46.0 Nomura Research Anshin Software Software Development NA NA Automatic Data Processing Randstad Holding NV HR BPO Services NA NA eYantra Industries Ltd Privilege Corner Corporate Rewards 100.0 NA Dishman Pharma Creapharm Parenterals Bulk Drug Maker NA NA Sundar Garments George Street London Apparel Brand NA NA Malabar Trading Co Protect Nature Agriculture & Food Products 50.0+ NASource: Four-S Database, Acquisition price is in $mn Market Update Key Domestic Indices Indian Market Movements 52 Week Index 13-Jan-12 20-Jan-12 Change (%) High Low BSE Sensex 16,154.62 16,739.01 3.49% 19,811.10 15,135.90 S&P CNX Nifty 4,866.00 5,048.60 3.62% 5,944.45 4,531.15 CNX Nifty Junior 9,101.50 9,414.35 3.32% 11,758.15 8,224.15 Nifty Mid Cap 50 1,965.50 2,022.30 2.81% 2,657.10 1,722.45 CNX IT 5,872.60 5,897.95 0.43% 7,344.90 5,011.10 Bank Nifty 8,975.05 9,516.85 5.69% 11,978.05 7,766.35 CNX Infrastructure 2,343.15 2,466.90 5.02% 3,217.50 2,045.70 CNX Realty 213.75 231.70 7.75% 344.05 179.85 Source: BSE, NSE Key Global Indices Global Market Movements 52 Week Index 13-Jan-12 20-Jan-12 Change (%) High Low NASDAQ 2,710.67 2,786.70 2.73% 2,887.75 2,298.89 DJIA 12,422.06 12,720.48 2.35% 12,876.00 10,404.50 S&P 500 1,289.09 1,315.38 2.00% 1,370.58 1,074.77 NIKKEI 225 8,500.02 8,766.36 3.04% 10,891.60 8,227.63 Hang Seng 19,204.42 20,110.37 4.50% 24,468.60 16,170.30 Straits Times Index 2,791.54 2,849.38 2.03% 3,236.93 2,521.95 FTSE 100 5,636.60 5,728.50 1.60% 6,105.80 4,791.00 Source: Yahoo Finance Indian Private Equity Weekly Update 16th January – 22nd January, 2 012
  7. 7. 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 16th January – 22nd January, 2 012