Four s weekly pe track 3rd september - 9th september 2012
3 R D - 9 T H S E P T ’ 1 2 Private Equity TrackResearch4India Weekly update on the Indian PE Sector 10500 500 PE Activity for the week 8969.3 9000 The year 2012 has so far aggregated $6.07bn 6066.2 400 7500 298 (317 deals) of PE investments compared to $8.97bn (298 deals) during the same period 6000 300 last year. 4500 317 200 During the week ended 9th Sept, 2012, there 3000 were 7 PE/VC deals worth 199.6mn compared 100 to 4 deals worth $21.2mn in the previous week. 1500 In the largest deal during the week, Jain 0 0 Irrigation Systems Ltd raised $73mn (Rs Till date 2011 Till date 2012 4.05bn) through an issue of equity shares to PE Investments No. of Deals Mount Kellett Capital Management and IFC. PE Deals During The week Stake Value Investor (s) Target (%) ($mn) Stage Sector Industry Segment Mount Kellett Capital Irrigation Capital Jain Irrigation 11.4 73.0 PIPE Manufacturing goods equipment Management, IFC Chemical Fragrance and Blackstone S.H. Kelkar & Co 33 44.0 Growth Manufacturing & Allied flavour Carlyle, Multiples South Indian Bank 6.56 41.0 PIPE Services BFSI Banking Prestige Estates’ Real Red Fort Capital NA 36.0 Project Construction Real estate residential project estate Norwest Venture Primary Healthcare Health NA 4.5 Early Services Clinics Partners Services Pvt. Ltd. Services responsAbility Ventures, DesiCrew Solution NA 1.1 Early Services IT/ITeS BPO Ventureast Indian Angel Online Aurus Network NA NA Early Services Education Network education Source: Four-S PE Database Research4India is the research services arm of Four-S Services Pvt Ltd. Here we provide regular research reports on key sectors of the Indian economy, and large unlisted companies in these sectors. For subscription / custom queries, please contact Seema Shukla at firstname.lastname@example.org.
Private Equity TrackMount Kellett and IFC invest $73mn in Jain two years ago, will continue to hold a 65%Irrigation stake while another 2% will be with a few minority investors.Jain Irrigation Systems Ltd is raising $73mn (Rs4.05bn) through an issue of equity shares to Four-S Comment: The company is said to beMount Kellett Capital Management and IFC. The the leader in the domestic fragrance marketcompany is also raising another $130mn (Rs with over 2,000 customers and is the only7.21bn) through external commercial Indian player of scale. It has unique intellectualborrowings (ECBs) and foreign currency property and a strong market presence for overconvertible bonds (FCCBs). The funds will be eight decades. The company is professionallyused to cut the high cost short-term loans of managed with CEO B Ramkrishnan at the helmthe company besides long-term loans due this of the affairs. Ramkrishnan is a chemicalfiscal. A part of it will be also invested in one of engineer from IIT Madras and a flavour andits subsidiaries – a new non-banking financial fragrance industry veteran. The deal values thecompany, focused on agriculture and rural company at Rs 7.36bn, nearly 1bn higher thanmarkets. its annual sales in the past year. In fiscal 2012, it posted an operating profit of Rs 1.1bn onFour-S Comment: Jain Irrigation is Asiasbiggest irrigation equipment maker but there sales of Rs 6.4bn.are concerns about its cash flow situation. Itmakes drip and sprinkler irrigation systems, Multiples, Carlyle invest $41mn in Southwhich the government subsidises to farmers. Indian Bank QIPThe company collects these subsidies butpayments take longer leading to problems with Multiples Alternate Asset Management hasworking capital and rising interest costs. To picked up over 5 per cent stake in the recentlyrationalize receivables in the micro irrifation closed qualified institutional placement (QIP) ofservice (MIS) business, the company has South Indian Bank, where the old generationstarted implementation of a change in its bank has raised Rs 4.43bn. The QIP has alsobusiness model wherein it is asking farmers to seen participation from The Carlyle Group,pay a higher proportion of the cost upfront which started picking up stake in the Thrissur-besides seeking them to collect receivables based bank in May this year. South Indian Bankfrom the government. The formation of a non- launched its share sale on September 3, andbanking financial company, Sustainable Agro- has sold 200 million shares or nearly 15 perCommercial Finance, is also a part of this plan. cent stake at Rs 22.13 apiece to investors. TheThis will help Jain Irrigation borrow at a lower QIP has been subscribed by eight investors,cost and get paid up front. which also include IFCI Ltd and SBI Magnum Sector Fund. Four-S Comment: PE investors areBlackstone acquires 33% stake in SH increasingly taking bets on older generationKelkar & Co for Rs 2.43bn private sector banks with strong regional focus.Blackstone has bought a 33% stake for 243 Some of the banks, which have seencrore in SH Kelkar & Company (SHK), a Mumbai investments in CY12, include Karur Vysya Bankbased maker of specialty fragrance and flavour (Chrys Cap - $31.3mn, Olympus - $38.3mn),ingredients that are used by leading consumer Development Credit Bank (Tano Capital, TVSgoods companies like ITC, Emami and Marico. Capital, Wolfensohn Capital Partners - $20mn),The company aims to consolidate its position in South Indian Bank and Federal Bank (ChrysIndia besides expanding its presence in the Cap - $8.7mn). Given their low asset base andglobal markets. The Vaze family, which bought low market share, some of these banks are bestco-founder Kelkar familys stake in the company placed to deliver high growth. Their core Research4India 2
Private Equity Trackstrengths in terms of geographic focus or than 130 people across five centres in Tamilproducts are expected to drive their growth. Nadu and expects to expand its workforce to 1,000 employees in the coming years.Red Fort Capital invests in PrestigeEstates’ residential project Red Fort Capital invests in PrestigeRed Fort Capital has invested Rs 2bn (~$36mn) Estates’ residential projectin a residential project of Bangalore-based India’s largest angel investors group, Indianpublic listed real estate player. In January this Angel Network, has invested an undisclosedyear, Red Fort Capital had raised a fresh $500 amount in Delhi-based virtual classroommillion fund from international investors to solution provider Aurus Network Infotech Pvt.invest in residential and commercial real estate Ltd. The start-up has a cloud based virtualin India. The transaction with Prestige Estates classroom solution which connects teachershas been done at the land acquisition stage for with students across the country, eliminatinga greenfield development. As per news reports the need for hardware based video conferencingthe fund has exhausted nearly half of the new or satellite based equipment and networks andfund and is back on the road to raise another works at Internet speeds as low as 75kbps. Itreal estate fund of the same size. currently has tie-ups with more than 20 test prep and training centres.Norwest Venture invests in NationWide Fund Raising & Liquidity EventsPrimary Healthcare ServicesNorwest Venture Partners has invested Rs Nexus Venture Partners raises $270mn for250mn ($4.5mn) for a minority stake in Indias third fundNationWide Primary Healthcare Services Pvt Nexus Ventures Partners has announced theLtd. NationWide plans to use the funds to close of its third fund with commitments ofincrease the number of its primary healthcare $270mn, taking the assets under managementcentres to 120 from present 15 over the next of the early-stage venture capital firm to nearly18 months. NationWide also offers corporate $600mn. Investors in the fund includeservices, including on-site consultations and endowments, foundations, and financialhealth education initiatives that are currently in institutions across North America, Europe anduse by companies, including Capgemini, Idea Asia. Nexus Venture Partners will continue itsCellular, Madura Coats and others. focus on early-stage investments across technology, Internet, media, consumer andRural BPO DesiCrew raises $1.2mn from business services sectors. Besides investing in Indian firms, Nexus has also followed a strategyresponsAbility Ventures, Ventureast of investing in US-based companies leveragingIIT Chennai-incubated rural BPO service the India-US corridor.provider DesiCrew Solution Pvt Ltd has raisedRs 70mn ($1.12mn) in Series B round offunding from responsAbility Ventures I, and Blume Ventures looking to up fund size byVentureast Fund Advisors India Ltd. DesiCrew as much as 25%offers services including generating, populating Early-stage venture fund Blume Ventures isand moderating content, digitisation, live chat looking to increase the size of its maidenresponses, mail room activities, project investment fund after it has witnessedmanagement, secondary research, oversubscription as part of the final close oftranscription, translation, beta testing of web Blume Ventures Fund I. Blume Ventures’ firstproducts, localisation of web products and fund had a target size of Rs 1bn and it hit thewebsite monitoring. Currently, it employs moreResearch4India 3
Private Equity Trackfirst close for the fund in May 2012, raising Rs820mn in the process. The firm also disclosed Private Equity Newsthat it originally had 20-plus investors (LPs) andattracted interest from more than 30 new Baring, Aditya Birla PE may buy stake ininvestors. Its investors include angel investors, Anu Solar Powerentrepreneurs, executives and senior Baring PE Partners and Aditya Birla PE are twoprofessionals. Its standard investment ranges contenders looking to buy 20% stake in Anufrom Rs 50 lakh-Rs 15mn in each company and Solar Power. The deal could value the companythe investment comes in tranches. at Rs 5bn and Rs 1bn is expected to be invested by the PE players by the end of this month. Anu Solar Power is a concern dedicated to theHelion Ventures to exit Amba Research promotion of renewable energy propagation andHelion Venture Partner is planning to exit its 5 implementation in India. It is an Anu Groupyear old investment in Amba Research India Enterprise which is engaged in diversePrivate Limited and is in talks with multiple commercial activities as exports-imports ofbuyers. Helion Ventures invested $7mn in the solar energy products, energy efficient solutionscompany in 2007 from its first fund, the and solar based telecom products and services$140mn Helion- I. Founded in 2003, Amba among others.Research is a knowledge process outsourcingfirm. The firm is primarily engaged in providingequity research, fixed income research and Med firm Prime India to raise fundsquantitative research for the global capital Prime India Healthcare Services Private Limitedmarkets. It has delivery centres in Bangalore, is planning to raise PE funds through stakeColombo and Costa Rica and sales offices in dilution. The plan was divulged along with theNew York, London and Singapore. companys plans to launch electronic health cards to store patient record. It is aiming to raise around Rs 20mn for capex and opex byActis may sell stake in Nilgiri to Temasek giving out a stake of 15-20%. Prime India is aSingapores Sovereign fund Temasek is looking medical tourism and healthcare recruitmentto buy out Actis stake in The Nilgiri Dairy Farm company. It has an office in Chennai and has aPrivate Limited. Actis had bought 51% stake in team of over 50 employees. The company hasthe company for Rs 3bn ($65mn) in a tie-ups with around 24 healthcare servicemanagement buyout in 2006 and later hiked providers including MedPlus pharmacy chain, Drthe stake to 67%. The promoters are not keen Agarwal’s Eye Hospital and beauty and wellnesson selling the stake. The Nilgiri Dairy Farm Pvt. service provider VLCC.Ltd. operates a chain of retail stores in SouthIndia. It offers dairy products, such as freshwholesome and skimmed milk, cheese, curd, Future Venture backed Mother Earth toetc. and bakery products, including plum cakes, raise fundschocolate coated biscuits, truffles, puff roles Store operator Mother Earth is planning to ropeamong others. It has stores spread out across in private investors for growth purposes andSouth India. has outlined Rs 400mn investment for the same. It is targeting social PE investors to back its expansion plans. Future Ventures had invested Rs 140mn in 2009 for 40% stake which was followed by a second round taking its stake to 60%. Grassroots Business Fund also holds 25% in the company and the rest lying with the promoters.Research4India 4
Private Equity TrackM&A Activity for the Week During the week ended 9th Sept, 2012, there were 5 M&A deals worth $202.1 (size of 1 deal was not known). In the largest deal during the week, Tech Mahindra Ltd has acquired 100% stake in Hutchisons BPO biz, Hutchison Global Services Pvt Ltd (HGS), for $87.1mn. Stake Deal valueAcquiror Target Sector (%) ($ mn)Tech Mahindra Ltd Hutchison Global Services Pvt IT/ITeS 100 87.1United Drug Bilcare Ltd - US, UK biz Pharmaceutical NA 61.0Mitsui & Co. Ltd and Sanyo Special Mahindra Ugine - steel biz Manufacturing-steel 49 39Steel Co. LtdPitti Casting Vaksh Steel - Foundry division Manufacturing-steel NA 15.0 Godrej Hershey Limited - GoderjThe Hershey Company FMCG 43 NA Industries stakeSource: Four-S PE DatabaseMarket UpdateKey Domestic Indices Indian Market Movements 52 WeekIndex 31-Aug-12 7-Sep-12 Change (%) High LowBSE Sensex 17,541.64 17,683.73 0.80% 18,523.78 15,135.86S&P CNX Nifty 5,258.50 5,342.10 1.56% 5,629.95 5,269.40CNX Nifty Junior 9,892.15 10,057.90 1.65% 10,961.35 9,891.95Nifty Mid Cap 50 1,994.30 2,033.70 1.94% 2,481.60 1,995.15CNX IT 6,072.35 6,342.70 4.26% 6,811.30 6,083.35Bank Nifty 9,990.50 10,122.00 1.30% 11,226.75 10,020.70CNX Infrastructure 2,233.85 2,268.30 1.52% 2,868.70 2,237.40CNX Realty 199.00 204.30 2.59% 299.65 199.35Key Global Indices Global Market Movements 52 WeekIndex 31-Aug-12 7-Sep-12 Change (%) High LowNASDAQ 3,066.96 3,136.42 2.21% 3,134.17 2,298.89Dow Jones Industrial Average 13,090.84 13,306.64 1.62% 13,338.66 10,404.49S&P 500 1,406.58 1,437.92 2.18% 1,426.68 1,074.77NIKKEI 225 8,839.91 8,871.65 0.36% 10,255.20 8,135.79Hang Seng 19,482.57 19,802.16 1.61% 21,760.34 16,250.27Straits Times Index 3,025.46 3,011.70 -0.46% 3,088.45 2,521.95FTSE 100 5,711.48 5,794.80 1.44% 5,989.07 4,868.60Source: Google Finance, Yahoo financeResearch4India 5
Private Equity TrackFour-S Services Pvt LtdFounded in 2002, Four-S has a strong & successful track record of genuine, accurate andobjective advice to top Indian & global companies & PE Firms. Four-S has already provensuccess in corporate finance, strategy consulting, fund-raising, investment banking andinvestor relations mandates with 100+ corporates and large PE funds.Four-S, trusted advisor to top Indian & Global CosOffering comprehensive bouquet of services to SMEs, Corporates and PE FundsResearch4India 6
Private Equity TrackAbout Research4IndiaResearch4India is the research services arm of Four-S Services Pvt Ltd. Here weprovide regular research reports on key sectors of the Indian economy, and largeunlisted companies in these sectors. These reports will be available on our upcomingsite www.research4india.com, as well as from leading international research sellers likeThomson Reuters, Bloomberg, Research and Markets, CapitalIQ etc.DisclaimerThe information contained herein has been obtained from sources believed to be reliable but isnot necessarily complete and its accuracy cannot be guaranteed. No representation, warranty,guarantee or undertaking, express or implied, is made as to the fairness, accuracy orcompleteness of any information, projections or opinions contained in this document or uponwhich any such projections or opinions have been based. Four-S Services Pvt. Ltd. will not acceptany liability whatsoever, with respect to the use of this document or its contents. This documenthas been distributed for information purposes only and does not constitute or form part of anyoffer or solicitation of any offer to buy or sell any securities. This document shall not form thebasis of and should not be relied upon in connection with any contract or commitmentwhatsoever. This document is not to be reported or copied or made available to others.The company may from time to time solicit from, or perform consulting or other services for, anycompany mentioned in this document.For further details/clarifications please contact:Seema Shukla Ajay JindalSeema@four-s.com Ajay.email@example.comGurgaon Office: Mumbai Office:214, Udyog Vihar, Phase I, 101,Nirman Kendra, Opposite Star TV,Gurgaon – 122016 Off Dr E Moses Road, Mahalaxmi,Tel: +91-124-4251442 Mumbai – 400001 Tel: +91-22-42153659Research4India 7