GTL to buy Genesis Consultancy for USD 9 mn

From Myiris.com

October 19, 2006

GTL will be acquiring Genesis Consultancy, a UK based firm, through IGTL Solutions (UK), a 100% subsidiary of its international arm, International Global Tele-Systems (Mauritius). The acquisition is valued at USD 9 million in an all cash deal with 100% buy-out. It is expected to contribute significantly to GTL`s service offerings in network management and professional services and strengthen its presence in European market. Genesis enjoys strong relationship with Nokia networks for worldwide support and has presence in European, USA and APAC markets. The company provides network management and professional services to telecom operators and OEMs. For the calendar year 2006, Genesis` revenue is expected to be USD 14 million and is likely to grow at a rate of around 35% for calendar year 2007. The company has zero debt and around USD 1.9 million in cash.

BCCL buys stake in NowPos

From The Times of India
October 19, 2006

Bennett Coleman and Company publishers of The Times of India, and The Economic Times acquired a stake in NowPos Online Services, (NowPos short for Now Possible), a niche voice technologies products company based in Hyderabad. Incorporated in 2005 by a group of entrepreneurs led by Ayyappa Nagubandi, the company launched its first innovative product in February 2006 the world’s first voice email (vMail) in Hyderabad. The firm was rated by Frost & Sullivan at the top of Top 20 Broadband Innovations in Asia Pacific, the only Indian firm to be named in the list. NowPos was also named by Red Herring as the Top 8 Indian Start-ups to watch out for. Apart from its track record and aggressive growth plans, BCCL’s decision to acquire a stake in NowPos was influenced by the professional management at the company and their commitment to excellence. Ayyappa Nagubandi, leader (title equivalent of CEO), NowPos, said, “The partnership with BCCL has come at the right time for NowPos, which is poised for a major expansion in India in terms of its technological products, and its first expansion abroad. NowPos has ambitious growth plans and is a valconic fountainhead of innovation and continuing to enjoy premier investor confidence is a proof of our strong strategic plans and management and operational abilities.” N Prasad, chairman of Matrix Lab and the spearhead of the incubating investors of NowPos, said, “The continuing all-round strides being made by NowPos and its string of early successes reiterates my faith in this company as a leader in the making. I am delighted to note the coming in of BCCL as a group alongside us at NowPos, which will make the future success ever greater.” Ayyappa added, “Voice in mail was the start of our declaration of what is Now Possible and we are now working to achieve our mission with an aggressive launch of several innovative products, applications and tools which will transform the content format predominance of text and move it to voice.”

Swiss Re to buy 3.57% in Yes Bank for Rs 120 cr

From Business Standard

October 19, 2006

Leading global reinsurer Swiss Reinsurance Company will buy a small “strategic” stake in Yes Bank, which would be a prelude to co-operation in areas like risk mitigation products for rural and micro-finance sectors. Swiss Re will buy 3.57 per cent stake in the newest private sector bank for Rs 120 crore, subject to necessary approvals. Rana Kapoor, managing director & CEO of Yes Bank, said, “The areas of future co-operation would include risk mitigation products for agri-rural markets and the micro-finance sector. The other area would be weather derivatives. We would also look at sustainability through corporate social responsibility initiatives.” The capital raising committee of the board of directors of Yes Bank today approved allotment of up to one crore equity shares on a preferential basis at Rs 120 per share to Swiss Re. The price is at 17 per cent premium over yesterday’s closing price of Rs 102.50 of Yes Bank shares on the Bombay Stock Exchange. An EGM of the shareholders of the bank will be held on November 20 to consider the preferential allotment. “We see this as a strategic financial investment and see Swiss Re as a long-term partner,” said Rana Kapoor. The bank would sign a memorandum of co-operation with Swiss Re for risk mitigation products after the closure of the share purchase agreement. Launch of the products would happen in the following two-three months. Peter Gujer, executive team member, Swiss Re Asset Management, said, “The investment represents a good opportunity to build a long-term partnership with a rapidly developing banking platform in India.” “The Indian macro economy in general and the banking sector in particular have significant growth potential and we believe that Yes Bank, based on its operating principles and a strong execution culture, is particularly well positioned to establish a successful business model within the sector,” he said. Post- issue, the promoters’ holding will come down to 37.2 per cent from 38.6 per cent. Rabobank’s stake will fall to 19.3 per cent from 20 per cent and the holding of private equity investors including Citicorp International, Russell AIF and ChrysCapital to 17.9 per cent from 18.5 per cent. “We planned to raise $150 million of capital by March 2007. We have already raised $26.5 million through this investment and another $40 million through a lower Tier II issue from the domestic market. We will raise another $90 million before March 2007,” said Kapoor. Dhananjay Date, MD of Swiss Re India, said, “I think once the proper closure of the agreement is done, there could be further dialogue for India. But first we need to be given a branch licence in India for which we are struggling since the last four years. Swiss Re is always on the look out for opportunities to invest,” he added.

Warburg co-head Prasad quits

From Daily News & Analysis

October 18, 2006

A cold call made seven years ago from Express Towers in Nariman Point to an office bang opposite Qutub Minar remains the defining moment in private equity in India. Pulak Prasad, then an associate with Warburg Pincus, was reaching out to Akhil Gupta, then group director of Bharti Enterprises. The call – and due-diligence later – came the most famous deal to have been struck in the domestic investment banking firmament to date. Warburg Pincus decided to pay $300 million — about Rs 1,300 crore — for a 20% stake in Bharti Tele-Ventures, then a New Delhi-centric cellphone operator, owned by Bharti Enterprises. The New York-based global venture capital and buyout firm has made gains six-and-a-half times that – or around Rs 8,000 crore — in the six-and-a-half years since. But on Tuesday, the man behind the deal put in his papers. Speculation is rife that continuing ‘joint leadership’ at Warburg may be why he is exiting. One of the most revered investment bankers locally, Pulak is planning to raise a hedge fund and will perhaps be based out of Singapore. He will stay on at Warburg till December. A peer running his own advisory in Mumbai, who did not wish to be named, told DNA Money: “Pulak’s one of the rare investment bankers who has it all – great intellect, great ethics and is a great person.” The 37-year-old IITian started life in a Hindi-medium school in Bihar, cantered through IIM Ahmedabad, and was one of the first recruits of McKinsey & Co from its hallowed portals. Interestingly, it was a head-hunter’s cold call that persuaded Pulak to join Warburg Pincus in 1998 as an Associate. The army-man’s son was named managing director for India in September 2002, along with Rajesh Khanna. Both were shifted to Mumbai from Singapore in 2002, where they had been transferred in the interim. But it has not been apple pie and fatherhood all the way. Perhaps the biggest drag among Warburg’s picks has been Moser Baer, where money was pumped in twice in the last 6 six years. Warburg may not have lost money here, but it indeed lost out on the opportunity costs.The dotcom bust also hit Warburg – sources say it may have invested as much as $50 million plus during that period, but by then Bharti was gaining traction. Pulak himself has often said the key reason for Bharti’s success has been Sunil Mittal and his team. But rest assured, Mittal knows Pulak’s value. India’s telecom czar is insistent on keeping Pulak on Bharti’s board, though traditionally, private equity players resign from boards once they exit their investment in the company. He also remains a director of Aryan Coal Benefications, dotcom major Rediff, Sintex Industries, Radhakrishna Foodland (another Warburg underperformer), Venture Infotek, and BPO major WNS (another big winner).

Sequoia to pick up Paras Pharma stake

From Daily News & Analysis
October 18, 2006

After Actis, it’s the turn of Sequoia Capital India to invest in Paras Pharmaceuticals, the owners of leading over-the-counter brands such as Dermi Cool, Moov and D’Cold. The private equity fund will invest $13 million for a minority stake in the company. Earlier, Actis invested $42 million in Paras, which is ranked 40th in India in terms of turnover in 2005. Sources said with the Sequoia move, the promoters of Paras have managed to place nearly 35% of their stake with the two private equity investors. “The investments are a mix of both, a buyout of stake from the promoters and some new equity,” investment banking sources said. Paras is founded by Girish Patel and Devendra Patel, who built a strong business through a combination of excellent brand building and the development of a strong distribution network. Paras is credited to have developed innovative brands and within a short span created leading national brands. There are at least 15 brands in its portfolio, two of which, Moov and D’Cold, are in the top ten of OTC brands in India. Paras is well placed to ride the boom in the fast moving consumer goods and pharmaceutical sector space. The FMCG sector is expected to register a compounded annual growth rate of 9% until 2010, while personal care is expected to grow at 14%.

Indian listed property funds 6 months away – IL&FS

From ndtvprofit.com
October 18, 2006

Listed property funds will probably make their debut in India early next year, according to asset management firm IL&FS, which plans to launch such a fund as well as a $500-$750 million infrastructure investment fund. India said in June it wanted to allow real estate mutual funds (REMFs) to set up to give individual investors access to a thriving property market, but market regulators are still drawing up guidelines for the listed securities. Industry players said plans to force the funds to disclose their net asset value on a daily basis, like other mutual funds, were unworkable because the assets were buildings rather than traded shares. Shahzaad Dalal, managing director of IL&FS and a member of a consultative panel to regulators, said it would take around six months to finalise the rules. “It’ll be in March or April next year,” Dalal told Reuters in an interview on the sidelines of a conference in Hong Kong. REMFs are likely to be similar to real estate investment rusts (REITs) in other countries, paying out income as dividends, but India will allow them to be more active in property development than is the case in many Asian markets. The funds will offer a valuable exit option for a slew of international property investors who have pledged an estimated $5 billion to build property in the country since it eased rules on foreign funding in the construction industry early last year. IL&FS closed a private equity property fund this year worth $525 million, 85 percent of which was provided by foreign investors, including U.S. pension fund CalPERS. Dalal said assets built by the fund would be sold into an REMF around the end of 2007, adding that investors should expect India’s first listed property funds to be worth around $100 million to $200 million. In the meantime, IL&FS’s private equity fund, with around $1.5 billion of spending power after debt leverage, is building townships in cities such as Pune and Hyderabad, and some commercial property in technology hubs such as Bangalore. “We’re involved in all types of property, focusing on mid-income housing, with some IT buildings in special economic zones, and a bit of retail,” Dalal said. IL&FS is also planning an infrastructure fund, with foreign investors expected to stump up 80 percent of the equity. “We’ll launch an infrastructure fund shortly. It’ll be worth somewhere between $500 million and $750 million,” Dalal said.”It’s for India’s infrastructure privatisation — roads, ports, oil and gas, water, power — mostly existing assets but some brownfield and greenfield.” He added that the companies set up to funnel the investment into India would use debt to double or treble the fund’s buying power.

India needs US$40bn in next 5yrs for infra financing: ASSOCHAM

From Indiainfoline.com
October 17, 2006

The Infrastructure Committee of ASSOCHAM says domestic savings need to be supplemented by limited access to foreign savings with priority for foreign equity capital as India would need foreign equity of US$5-7bn per year in infrastructure. The Infrastructure Committee of The Associated Chambers of Commerce and Industry of India has projected infrastructure financing requirement of foreign equity capital to the extent of over US$40bn in next five years and has suggested that the role of long-term financial institutions such as insurance companies, provident and pension funds and NBFCs be enhanced for financing infrastructure projects. The ASSOCHAM Infrastructure Committee chaired by Dr. Rajiv B Lall, MD & CEO, Infrastructure Development Finance Company (IDFC) and its other members drawn from JM Morgan Stanley, World Bank, SREI Infrastructure Finance who submitted the Chamber’s recommendations to Dy. Chairman, Planning Commission says that domestic savings need to be supplemented by limited access to foreign savings with priority for foreign equity capital as India would need foreign equity of US$5-7bn per year in infrastructure. ASSOCHAM President, Anil K. Agarwal said, “In addition, targeted access to long term debt finance from overseas would help. As for intermediation, the Committee observed that even though the bank credit to infrastructure has been growing rapidly, it would be neither feasible nor desirable for banks to finance the bulk of incremental financing needs. Therefore, the role of long-term financing institutions such as insurance companies, provident and pension funds and NBFCs has to be enhanced. To do so, the corporate bond market needs to be strengthened by implementing the Patil Committee recommendations expeditiously”. Agarwal added that priority needs to be given to the recommendations relating to the development of market for securitized assets. Some liberalization is necessary in the investment guidelines of these institutions, matched by greater reliance on the judgment of the Boards managing them. Rajiv Lall said, “in policy and regulation, the committee focused its attention primarily on road, urban and power sectors, while acknowledging the Government’s increasing commitment to establish clear and stable regimes in all infrastructure sectors. In the road sector, the Committee noted that the state highways–which constitute 4% of road network, but carry 40% of traffic—are grossly under-funded and recommended that the facilitating framework created by Madhya Pradesh should be replicated in other states. The key components of the Madhya Pradesh model include a special legislation for state highways, a master-plan (including a comprehensive database, a schedule for implementation based on prioritization and identification of corridors for PPPs) and creation of a state highway authority. The Central Government needs to play a more active role in steering development of state highways and formulating a common framework. The Infrastructure Committee of ASSOCHAM has identified some initiatives that would strengthen the three pillars of infrastructure: availability of long-term finance, policy and regulatory frameworks and capacity to implement those frameworks, said Lall. In the urban sector, it was noted that fiscal autonomy of urban local bodies is critical for efficient delivery of urban infrastructure services and that to promote autonomy, there is a need for a new (own) tax for ULBs. The Committee recommended the introduction of a Local Benefit Tax (say 1 % of the sales turnover at the final stage), while reiterating the need to continue with the ongoing property tax reforms. The new tax would piggyback on VAT and would not require any new skills, manpower or rules on the part of urban local bodies. While boosting the revenue of all local bodies significantly, the new tax would help JNNURM cities to meet their financial obligations for availing JNNURM projects. Further, there is a need to create specialized nodal units for the urban infrastructure in every state, which would act as repository of scarce project development skills and help small local bodies to access capital markets through pooled financing. Appropriate lessons can be learnt from TNUDF in this regard. Agawral said that in the power sector, the Committee noted that although the legal, policy and regulatory frameworks are already in place, the implementation issues have not been adequately addressed. Payment security is still a major constraint to financial closure of large projects, underscoring the need for accelerated distribution reforms with accent on private sector participation. On the fuel front, the Committee recommended expeditious development of coal resources and creation of a clear framework for privatization of coal mines for use in power generation. As regards rural electrification, the committee noted with concern that the problem of groundwater depletion can potentially become more widespread if the current program to expand rural access to power becomes successful, unless the institutional problems relating to groundwater extraction are expeditiously addressed. While the so-called public sector functions are becoming more open to private sector participation, actual transfer has been slow. In many cases, this has been due to the lack of capacity in the public sector to implement new frameworks. To provide hand-holding to state government departments on a continuous basis, cross-sectoral PPP units need to be set up at the state level in every state. They would be responsible for: disseminating lessons and experiences across sectors, improving the quality of PPPs by making available better transactions skills, and assisting in inter-departmental coordination. The Central Government should provide financial and technical assistance to states to set up these units. Further, managers in public sector organizations (at different levels) need to be trained and sensitized to more effectively design, assess, market and execute viable PPP projects. One way of implementing the training process is through government funding of specialized PPP programs in the top training and academic institutions in the country. The other alternative is to have dedicated institutes which could be the subsidiaries of leading infrastructure financing companies. These institutes would have the advantage of accumulated domain knowledge (in private financing) and well developed relationships (with both government entities and prominent private sector sponsors) of their parent companies.

Garnett & Helfrich Capital expands operations to India

From AltAssets.com
October 18, 2006

Garnett & Helfrich Capital, a US private equity firm specialising in venture buy-outs, has announced that it will expand its operations to India. Garnett & Helfrich will locate their new office in the financial centre of Mumbai with the aim of supporting its portfolio companies in the region and identifying new acquisition targets for its venture buy-out fund. Garnett & Helfrich has also announced that it has acquired a controlling stake in Celunite, a privately-held company with headquarters in Sunnyvale, California and development centres in Pune and Hyderabad, India. Garnett & Helfrich is a $350m private equity fund focused exclusively on the emerging venture buy-out segment for mid-sized technology spin-outs. The firm specialises in spinning out businesses from large global technology companies and growing them as focused, standalone businesses. Terry Garnett, managing director, Garnett & Helfrich, said, ‘India is a hub of technology innovation and talent, thus it is critical that we continue to expand our portfolio companies’ presence in the region by helping them build new partnerships, recruit local talent, and identify and evaluate acquisition targets.’ ‘We will also leverage our Mumbai-based operations to identify new investments in leading technology sectors such as open source mobile platforms like Celunite,’ Garnett continued. Garnett & Helfrich investments include Wyse Technology, Ingres and Blade Network Technologies.

DQE to raise $100 mn for spread

Business Standard
October 18, 2006

Hyderabad-based gaming and animation major DQ Entertainment Limited (DQE) is planning to raise around $100 million to provide its private equity investors an exit route and support its major expansion plans. “We are keeping all options open, including an IPO, to raise funds to the tune of $100 million. The company currently has five private equity investors, and this fund-raising will provide an exit route to them. Besides, we intend to utilise a major portion of the funds for our expansion plans. An announcement with regard to our fund-raising plans will be made by next month,” DQE managing director and chief executive Tapaas Chakravarti, told reporters here on Tuesday. DQE’s private equity investors include IL&FS Investment Managers Limited, India Value Fund, International Finance Corporation (IFC) and TDA Capital Partners. The company is constructing a campus on a three-acre land allotted by the state government at Hitec City in Hyderabad. It has tied up with a city-based realty major for developing the 8 lakh-sqft project. Under the agreement, the developer would provide 2 lakh-sqft of space to DQE, Tapaas said. “We are currently investing $30 million in installing hardware, software and other equipment, and in training gaming and animation professionals. Once the campus is complete, we plan to ramp up our headcount to 6,000, from the existing 3,000, by the year 2008,” he said. The company is also setting up a plug-and-play animation facility in Visakhapatnam that will house around 300 professionals, besides opening an office in Singapore to market and publish its products shortly. DQE currently has marketing offices in Paris, London, California, New York and Tokyo. DQE opened a new gaming facility in Hyderabad on Tuesday, involving an investment of $6 million. The facility will create next-generation gaming assets exclusively for the UK-based $3.3-billion Electronic Arts Limited, the world’s leading interactive entertainment software company. Inaugurating the facility, state IT secretary Ratna Prabha said the government was contemplating setting up an ‘Animation City’ in an extent of 100 acres to house an animation training academy and companies that are into animation and gaming industry.