9 T H - 1 5 T H J U L Y 2 0 1 2 Private Equity TrackResearch4India Weekly update on the Indian PE Sector 100.0 16 PE Activity for the week 14 During the week ended 15th July, 2012, there 75.0 66.5 12 were 5 PE/VC deals worth $66.5mn compared to 8 deals worth $4.1mn (size of 6 deals were 8 10 not disclosed), in the previous week. 50.0 8 Out of the total, 2 were growth stage deals, 2 6 were PIPE deals and one was early stage deal. 25.0 4 5 In the largest deal during the week, Carlyle 4.1 2 bought a 9.96% stake in the Hyderabad-based 0.0 0 IT firm Infotech Enterprises in the open market for a total of Rs 2.1bn ($38mn). 8th July12 15th July12 PE Investments No. of Deals PE Deals During The week Stake Value Investor (s) Target (%) ($mn) Stage Sector Industry Segment Infotech Software & Carlyle 10.0 38.0 PIPE Services IT/ITeS Enterprises services Fidelity Growth Partners, Qualcomm Internet Big Shoe Bazaar NA 18.0 Growth Services Retail Ventures, NVP, Retail Catamaran SAIF Partners Blue Star 2.8 8.8 PIPE Manufacturing FMCG AC Media & Jungle Ventures, Mobikon Asia Digital NA 1.7 Early Services Entertain others Pte Ltd marketing ment Evolvence India Life Dr. Agarwals Health NA NA Growth Services Hospitals Sciences Fund Healthcare Services 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 email@example.com.
Private Equity TrackCarlyle buys 10% stake in Infotech Yebhi.com, has raised Rs 1bn ($18mn) in SeriesEnterprises C funding, led by Fidelity Growth Partners India and Qualcomm Ventures. Existing investorsUS-based private equity firm Carlyle onWednesday bought a 9.96% stake in the Nexus Venture Partners and Catamaran also participated in the round. Yebhi.com is an e-Hyderabad-based IT firm Infotech Enterprises inthe open market at a price of Rs 190 a share, com site offering products across categories like home, lifestyle & fashion and electronics. Inspending a total of Rs 2.1bn ($38mn). Threeinstitutional investors - Kotak India Fund, 2010, the company had received Rs 100mn in Series A funding from Nexus Venture Partners.American Funds Insurance and Small Cap WorldFunds - were the key sellers of the holding This was followed by a second round of funding of Rs 400mn last year, led by Catamaranacquired by Carlyle. Infotech Enterprises is aglobal engineering services company which Ventures.provides engineering solutions, including Four-S Comment: Big Shoe Bazaar is planningproduct development and life-cycle support, a huge push into the mobile commerce spaceprocess, network and content engineering to and is set to create some unique M-commercemajor organizations worldwide and is platforms over the next 6 months. Onlineheadquartered in Hyderabad. Other major shopping is set to receive further boost with thestakeholders in the company holding more than rapid rise of smartphones, tablets and social10% include Carrier International Mauritius and media networks will greatly influence the wayGA Global Investments. people engage in online shopping. Indias current mobile subscriber base stands at 700mnFour-S Comment: Private investment in public subscribers and has been on a rapid growth.equity (PIPE) is emerging as a hot spot for PEinvestors. For PE investors, PIPEs tend to SAIF Partners buys additional stake inbecome increasingly attractive in markets Blue Starwhere control investments are harder to SAIF Partners has bought 25 lakh shares ofexecute. And India has always been one such Blue Star Limited at a price of Rs 190 per sharemarket characterized by growth investments of representing an investment of Rs 475mnsmaller size for minority stakes. It is more ($8.8mn) in the company and raising its stakeadvantageous for a PE fund in India to have a from 1.39% to 4.17%, an additional 2.78%relatively liquid minority position in listed stake purchase. A major seller in the stock wascompanies than in unlisted companies. HDFC Standard Life Insurance Company. TheMoreover, investors are finding listed PE firm had invested Rs 170mn in Blue Starcompanies at increasingly attractive valuations earlier in June this year. Blue Star is a centralrelative to unlisted firms. In addition, such air-conditioning company with an annualinvestments provide greater liquidity and easier turnover of Rs 27bn, a network of 29 offices, 7exit options, which attract investors’ interest, modern manufacturing facilities, over 1,600especially in a market where traditional options dealers and around 2,800 employees. Theof exit, especially IPO market, has almost dried company was planning last year to add oneup. In India, PIPE investments more than more unit to its existing 5 manufacturing units,doubled in 2011 to $1.5 billion in 55 deals with an investment of Rs 500-600mn by thiscompared to $631 million in 30 deals a year year.earlier (Four-S Research). Mobikon raises $1.7mn from JungleBig Shoe Bazaar raises $18mn in Series C Ventures, othersfunding Mobikon Asia Pte Ltd, a digital marketingOnline wholesale cash and carry company Big startup located in India and Singapore, hasShoe Bazaar India Pvt. Ltd, the brand owner of raised $1.7mn in a Series A round led by Research4India 2
Private Equity TrackSingapore-based Jungle Ventures. Angel on investing and managing a number of quickinvestors including Ravi Mantha, a member of service and casual dining restaurant chains.the board of trustees at The Indus Quadria Capital to raise healthcare fundEntrepreneurs (TiE), and others also took partin the round. The funds will be used for Quadria Capital and Investment Management isexpansion in India and across South-east Asia. planning to raise $300mn healthcare fund.The company is opening new offices in Religare Global Asset Management hasBangalore, Mumbai and Delhi, as well as in committed to invest $15-20mn and become theThailand, Indonesia and Australia. Jungle anchor investor in the fund. The plan is to raiseVentures is a venture capital firm in Singapore one third of the funds in next 5 months and thethat provides early-stage investments and rest by end of 2013 from investors rangingbusiness-building infrastructure to startups from FIIs, fund of funds and HNIs. Quadriaacross the Asia Pacific. The firm focuses on Capital Investment Management is an Asianearly-stage funding across Singapore, India and healthcare PE fund with offices in New Delhi andthe South-east Asia. Singapore. Its target investments include mid- sized healthcare companies with half the fundsEvolvence Life Sciences invests in Dr. deployed in India and the rest in South andAgarwals Healthcare Southeast Asia.Life Sciences-focused private equity fund EILSF(Evolvence India Life Sciences Fund) has Private Equity Newsacquired a minority stake in Chennai-based Dr.Agarwals Healthcare, its second investment in Karbonn Mobile to raise PE investmentthe healthcare services segment. Dr. Agarwals Karbonn Mobile is planning to raise Rs 10bn byEye Hospital is a comprehensive eye hospital, diluting 15-20% stake to PE investors. It isoffering one stop solution for eye ailments. planning to set up a manufacturing plant and acquiring a Korean R&D firm. Karbonn Mobiles Fund Raising & Liquidity Events will invest Rs 6bn in the mobile device manufacturing plant in Chennai over 2013-14,Bain raises $2.3bn for second Asia fund for which land has been acquired. The balanceBain Capital has completed fundraising for its of Rs 4bn will be used in acquiring the R&Dsecond Asia fund, closing at $2.3bn. Bain is centre based out of Korea, for which due-offering investors three options on the fees it diligence was going on. As of now, all ofcharges to manage the money they invest from Karbonn’s handsets, like for most domesticits latest global fund, and the concept was first players, are imported largely from China andtested on its second Asia fund. Bain offered Taiwan while the designing is done in India.Bain Capital Asia Fund II investors the option of Alliance Dental to raise funds foreither a 2% management fee and a 20% expansioncarried interest with a 7% hurdle rate, or 1%management fee and 30% carried interest with Alliance Dental Care is planning to raise Rsa 10% hurdle rate. Bains first Asian fund raised 300mn through PE route. The funds will be$1bn but the firm has invested $4.4bn in total utilized for expansion of the dental-care chain.so far in the Asian region. The company is in talk with two domestic PE players which are interested in healthcareSAIF Partners floats $18mn restaurant space. Alliance Dental Care, a subsidiary ofinvestment vehicle Alliance Medicorp, is engaged in the business ofSAIF Partners (which invested in Mainland running dental clinics. Alliance Medicorp is a JVChina in 2007 and made a killing on their between Apollo Hospital and medical technologyinvestment during their IPO a month ago) has company-Trivitron Healthcare. Currently, Apolloannounced a Rs 1bn investment vehicle focused Hospital holds around 70% stake and TrivitronResearch4India 3
Private Equity TrackHealthcare holds the rest. This February, institutional placement, has sold 4.45 millionAlliance Dental rebranded its dental care shares or 5.7% stake. SKS Microfinance openedbusiness to White Dental Care. a QIP on July 12 at a share price of Rs 75.40. The deal would increase the stake held byOmshakthy planning to raise PE funds fornew projects WestBridge in SKS Microfinance to approximately 12.5%, making it one of theOmshakthy Agencies (Madras) Pvt Ltd. is largest shareholders in the company.planning to raise Rs 1.5bn through PEinvestments for its proposed project at Avantha Power revives plan to raise Rs 10-Tirumudivakkam near Chennai. The fund raised 15bn through IPOwould comprise half the amount of initialinvestment of Rs 3bn. The company had Avantha Power and Infrastructure is planning toentered into a 50:50 JV last year in Oct. with revive plans to hit the capital market with anFire Capital to develop residential projects and initial public offer (IPO) to raise Rs 10-15bn,townships in and around Chennai named after having failed in its first attempt about twoOmshakthy FIRE Realty Pvt. Ltd. The company years ago. Avantha Power & Infrastructure hashas acquired more than 4,000 acres of land 191 MW of operational thermal power capacity,since its inception in 1991, and currently has a 2,460 MW of generating capacity under variousland bank of around 250 acre distributed across stages of implementation and 1,320 MW ofvarious locations. generating capacity under planning. Global private equity giant KKR has invested in theBlackstone to acquire Embassy Propertys company. Avantha Power had filed draft IPOoffice portfolio documents with SEBI way back in March 2010Blackstone Group is set to acquire 36% stake in and the regulator gave its go-ahead a fewthe tenanted office space portfolio of Embassy months later in August that year for the publicProperty Developments Limited for $230mn. offer. While the company had firmed up itsEmbassy would be demerging the FDI plans to hit the market in October, adversecomplaint office buildings in which the PE firm market conditions forced it to postpone the IPO.will acquire a significant minority stake. Thetransaction values Embassys new holding Fitch assigns grade 4 to Rashtriya Ispatcompany for office buildings at $900mn after Nigam IPOrolling over Blackstones earlier investment in Fitch Ratings has assigned Fitch 4(ind) gradeone of the projects. Embassy had shelved a to Rashtriya Ispat Nigam Ltds proposed Initial$500mn IPO last year on account of sluggish Public Offering out of a maximum of Fitchstock market. It had entered into a Rs 56bn JV 5(ind). The grade indicates above-averagewith MK Land Holding, a Malysian realty fundamentals of the issue relative to othercompany and had set a Rs 60bn capex for new listed equity securities in India. The gradingprojects in next 3 years in November 2010. reflects RINLs position as one of Indias largest producers of long product steel, the favourable IPO, Other Offerings medium-to-long-term demand outlook for its products - driven by increasing infrastructureSKS Microfinance opens QIP spend and a healthy balance sheet. TheSKS Microfinance Ltd is raising Rs 335.5mn company was conferred Navratna status bythrough a preferential allotment to a fund GoI in November, 2010, which provides amanaged by the existing investor WestBridge certain degree of operational and financialCapital Partners. SKS Microfinance, which is autonomy.also mobilising funds through a qualifiedResearch4India 4
Private Equity TrackM&A Activity for the Week During the week ended 15th July, 2012, there were 11 M&A deals worth $258.1mn (size of 6 deals were not known). In the largest deal during the week, Sutherland Global Services is acquiring Apollo Health Street, a health care BPO arm of Apollo Hospitals for Rs 8.75bn ($157mn). Stake Deal valueAcquiror Target Sector (%) ($ mn)Sutherland Global Services Apollo Health Street IT/ITeS 100 157.4Tube Investments of India Shanthi Gears Manufacturing NA 52.5CHD Developers Empire Realtech Real estate NA 18.0Providence Educational Academy Myra Mall Management Company Real estate 100 17.6 Cosme Farma Laboratories - someAdcock Ingram Healthcare Healthcare NA 12.7 assetsKPIT Sankalp Semiconductor Private IT/ITeS NA NAParker Hannifin Corporation John Fowler (India) - filtration biz Manufacturing NA NASolving Efeso Q-Spread IT/ITeS NA NAInMobi MMTG Labs Media & Entertainment 100 NAGenpact Triumph Engineering IT/ITeS NA NA Tamco Switchgear Henikwon Corporation Manufacturing NA NASource: Four-S PE DatabaseMarket UpdateKey Domestic Indices Indian Market Movements 52 WeekIndex 6-Jul-12 13-Jul-12 Change (%) High LowBSE Sensex 17,521.12 17,213.70 -1.79% 19,619.65 15,135.86S&P CNX Nifty 5,316.95 5,227.25 -1.72% 5,740.40 5,263.35CNX Nifty Junior 10,334.65 10,185.95 -1.46% 11,526.10 10,102.75Nifty Mid Cap 50 2,190.35 2,147.75 -1.98% 2,515.70 2,137.95CNX IT 6,027.25 5,713.90 -5.48% 6,835.25 6,114.75Bank Nifty 10,655.35 10,594.45 -0.57% 11,451.25 10,303.65CNX Infrastructure 2,471.05 2,424.95 -1.90% 3,191.60 2,415.10CNX Realty 233.05 230.90 -0.93% 302.20 222.75Key Global Indices Global Market Movements 52 WeekIndex 6-Jul-12 13-Jul-12 Change (%) High LowNASDAQ 2,937.33 2,908.47 -0.99% 3,134.17 2,298.89Dow Jones Industrial Average 12,772.47 12,777.09 0.04% 13,338.66 10,404.49S&P 500 1,354.68 1,356.78 0.15% 1,422.38 1,074.77NIKKEI 225 8,896.88 8,724.12 -1.98% 10,255.20 8,135.79Hang Seng 19,800.64 19,092.63 -3.71% 22,835.03 16,250.27Straits Times Index 2,937.56 2,995.56 1.94% 3,227.28 2,521.95FTSE 100 5,662.63 5,666.13 0.06% 6,084.08 4,791.01Source: Google Finance, Yahoo financeResearch4India 5
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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.firstname.lastname@example.orgGurgaon 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