Jet to raise capital through PE route

India’s largest private airline Jet Airways is in negotiations with private equity players Blackstone, TPG Capital and Temasek for raising Rs 400-450 crore reported the Economic Times.

The company is raising money for meeting the operational expenses of running the loss-making Air Sahara, which it recently acquired. The operational expenses for Jet are huge since Air Sahara is not very profitable. Reportedly TPG Capital is looking to co-invest along with Singapore-based fund Temasek, while Blackstone is considering going solo.

The promoters currently hold 80% stake in the company which will come down proportionately along with the other shareholders’ stake. The private equity investor may take 8-9% stake.

Jet Airways recently acquired Lucknow-based Air Sahara in a deal valued at Rs 2,300 crore. While Jet had paid Rs 400 crore upfront, it will pay Rs 550 crore in four annual instalments, starting next year. Air Sahara will be renamed JetLite and will be a 100% subsidiary of Jet Airways.

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Jet Airways to buy Air Sahara for around Rs. 1450 crores
Jet Airways seeking $400 mn via private equity

Temasek, Crown Castle in talks with Tata Teleservices for stake in towers business

Singapore-based government private equity arm Temasek Holdings and wireless tower operator Crown Castle International are in talks to buy around 15% in the mobile phone towers business of Tata Teleservices Limited. Tata Teleservices is in talks with several firms about spinning off its mobile phone towers into a separate unit, part or all of which could then be sold. The tower business of Tata Teleservices has been valued at up to $1 bn. Temasek already holds nearly 10% of the company, which has more than 5000 mobile phone towers. Tata Teleservices, along with subsidiary Tata Teleservices (Maharashtra) Limited, has more than 15.5 mn subscribers in India.

Rival firm Reliance Communications Limited is spinning off its towers business into a separate unit. American Tower Corporation as well as private equity firms including Blackstone, Carlyle and Temasek have shown interest in Reliance Communications’ towers unit.

Read the article in The Economic Times.

Citigroup, Blackstone, IDFC, IIFC tie-up for $5bn India Infrastructure Financing Initiative fund

US-based financial services giant Citi and private equity major Blackstone have joined hands with infrastructure finance companies IDFC and India Infrastructure Finance Company Limited (IIFC) to set up a $5 bn (Rs. 22,000 crores) fund to finance the India Infrastructure Financing Initiative. According to government estimates, infrastructure development in India would require $320 bn in the next five years. The India Infrastructure Financing Initiative will have equity and quasi-equity of $1 bn and $3 bn long-term debt. The equity financing programme will be managed by IDFC and the fund will be invested in greenfield, brownfield and operating projects. Debt financing will be channeled through IIFC, in several tranches over the next three years for projects appraised by IDFC, certain banks and financial intermediaries. IDFC, Citi and Blackstone will together invest $250 mn while the balance is expected to come from reputable international investors as well as select domestic institutional investors, including IIFC.

Read the article in Business Standard and The Economic Times.

SBI, IDBI and others to sell 11% stake in NSE

State Bank of India along with Indian Overseas Bank, Union Bank of India, Corporation Bank and IDBI are looking to sell upto a combined 11% stake in the National Stock Exchange. This follows the sale of a 20% stake by five other leading financial institutions in the exchange.

Several private equity players such as Blackstone and Actis have shown interest in buying the stake. Earlier, the New York Stock Exchange (NYSE), Goldman Sachs, General Atlantic and Softbank Asian Infrastructure Fund bought 5% each in NSE from a consortium of five domestic financial institutions. IFCI sold 7% for Rs. 779 crores, while both ICICI Bank and IL&FS divested 5% each for around Rs. 550 crores. GIC sold 2% for Rs. 205 crores and PNB sold 1% stake for Rs. 102 crores. The sudden interest in NSE from foreign players comes after the Reserve Bank of India allowed foreign investment of up to 49% in stock exchanges, fixing the foreign direct investment cap at 26% and foreign institutional investor limit at 23%. Rules stipulate that no single entity can hold more than 5% in a stock exchange.

Read the Business Standard article.
Related Post: NYSE, Goldman Sachs, General Atlantic, SAIF to buy 26% in NSE

NDTV Networks discusses stake sale to Blackstone; may list on LSE AIM

Rumour has it that Blackstone is probably looking at buying a stake in NDTV Networks, an NDTV Group company as part of an investment consortium. NDTV Networks plans to raise $130-160 mn by diluting 25-30% to the consortium, valuing the company at $433-640 mn. The money raised will be used for establishing new channels and businesses. NDTV Networks intends to list on the London Stock Exchange AIM market by the stake sale. Jefferies International Limited is the merchant banker to the issue.

Blackstone had recently invested $275 mn in Hyderabad-based Ushodaya Enterprises, owners of Eenadu and ETV, and Ramoji Rao Film City, one of the largest investments by a private equity fund in an Indian media company (See Related Post).

NDTV Networks will invest $106 mn of the cash in NDTV Imagine Limited, a Hindi mass entertainment channel with film director Karan Johar as partner, and $25.3 mn in NDTV Lifestyle Limited, a channel dedicated to travel, food, shopping, health and wellness. NDTV Networks also owns NDTV Labs, which develops technology and software solutions for TV broadcasting, NDTV Convergence, which owns and operates websites, and 50% in NDTV Media Services Private Limited, a JV with Genpact India Holdings, a media process outsourcing firm for overseas clients.

Read the Business Standard article.

The Blackstone Group invests $275 mn in Hyderabad-based media company Ushodaya Enterprises

The Blackstone Group, one of the world’s biggest private equity firms, has invested $275 mn in Ushodaya Enterprises Limited (UEL). UEL owns Eenadu, ETV and Ramoji Film City. The investment in the Hyderabad-based media house is touted to be the biggest in the Indian media sector. Blackstone will get board representation in Ushodaya. The investment is a part of the fundraising that Ushodaya has initiated upon. The company intends to raise $465 mn of which Blackstone has made an initial investment of $275 mn while the balance $190 mn will be by way of bank financing. The transaction is now subject to regulatory approvals from the Foreign Investment Promotion Board (FIPB) and the Ministry of Information and Broadcasting. Kotak Investment Banking was the sole investment banking advisor to the transaction.

Read the press release here.

Private funds invest Rs. 146 crores in Provogue

Private equity funds have invested Rs 146.25 crores in retailer Provogue. Fidelity, New Vernon, Blackstone, Genesis Capital, Artis Capital and Liberty International have picked up 3.25 mn preference shares at Rs. 450 per share. Provogue’s promoters are also subscribing to 1.8 mn warrants at the same price.

The new allotments will push up the company’s total capital to 21.24 mn shares. In this, foreign funds will now hold around 15.30%. Promoters and friends will hold 47.34% and 18.31% diluting their stakes from 51% and 24%, respectively. The foreign investment comes with a one-year lock-in. It comes on the back of JV partner, Liberty International, investing Rs. 202.5 crores for a 25% stake in its retail infrastructure subsidiary, Prozone-Liberty.

Read the article in The Times of India and The Economic Times.

Ranbaxy Labs to set up SPV for Merck Generics bid

Ranbaxy Laboratories is considering using the frequently-employed technique of taking the special purpose vehicle (SPV) route for launching a bid on Merck’s generic business. If Ranbaxy decides to take the SPV route, the debt and private equity funds as well as Ranbaxy’s own funds will be infused into the SPV.

Merck is looking to sell its generics division, in a deal that could be valued at $5.2 bn. The generics business clocks revenues of around $2.5 bn and if Ranbaxy is able to acquire it, the Indian company’s revenues could nearly triple to around $3.8 bn (See Related Post). The bidding process and due diligence are expected to begin in February. Leading generic companies such as Teva and Sandoz and private equity majors such as Blackstone and KKR could be in the race as well. Ranbaxy has in the past secured shareholders approval to raise $1.5 bn out of which it has already raised $440 mn through FCCBs. Ranbaxy has also taken a 14.9% stake in Hyderabad-based Krebs Biochemicals and Industries for around Rs. 9 crores (See Related Post).

Read the article in The Economic Times.

Oberoi Constructions receives Rs. 675 crores from Morgan Stanley Real Estate Fund

Morgan Stanley Real Estate Fund has invested Rs. 675 crores (approximately $152 mn) in Mumbai-based Oberoi Constructions for an undisclosed stake. The private equity deal is said to be the largest in the Indian real estate sector. Fourteen other funds, including Blackstone, Carlyle, and GE, were in the race to acquire the stake in Oberoi Constructions. Morgan Stanley Real Estate Fund recently invested $67.4 mn in Mantri Developers. The fund looks at a return of more than 30% annually.

The company has projects lined up for Pune, Hyderabad and Bangalore for which it will acquire land. It has interests in both commercial and residential projects. It plans to diversify into shopping malls, hotels, hospitals and education centres. It has ongoing residential and commercial projects in Mumbai’s suburbs – the Oberoi Mall in Goregaon, Oberoi Chambers and Garden Estate in Andheri, among others.

The real estate company has been valued at $1 bn by Kotak Mahindra Capital, the advisors to the deal. Anand Madduri, Executive Director, Morgan Stanley Dean Witter Asia, will be joining the Oberoi Constructions’ board.

The real estate sector is growing at a whopping 35-40% and has seen large private equity deals in the last few months with nearly $350 mn in investments flowing into the sector. Siachen Capital has invested $100 mn in Bangalore-based Nitesh Estates, HDFC Real Estate has invested $35 mn in the Ansals IT City and Parks and another $31 mn in Pune-based developer Vascon Engineers. More than 20 funds are interested in the sector.

Read The Economic Times article for more details.

Norwegian company to buy MTR Foods for Rs. 350 crores

Norwegian food company Orkla Foods may turn out to be the acquirer of South-based MTR Foods. The deal size is said to be around Rs. 325-350 crores. Earlier, US spice company McCormick was widely tipped to take over MTR. However, the deal fell through at the last minute due to differences over structuring of the deal, particularly on certain intellectual property issues relating to the brand name.

Orkla is keen on acquiring MTR as it will provide a launch pad for Indian operations. The Norway-based company has presence in bakery, seafood, pizzas, pies, taste enhancers and snacks. In the past, Orkla has grown its international presence through acquisitions in Romania, Sweden, Denmark and Iceland. Orkla Foods is part of Orkla ASA, one of Norway’s largest listed companies with its core businesses being branded consumer foods, specialty materials and financial investments.

MTR’s brand pull is such that several large Indian corporates, including Tata Coffee, ITC, Godrej and several PE funds like Blackstone, Indivision and Actis had shown interest in the company. NM Rothschild was the investment banker for MTR, and had estimated a value of Rs. 300 crores on the company when it called for bids earlier this year. The Maiya family controls 59% stake in the company directly and indirectly, with JP Morgan holding 26% stake. Another fund, Aquarius, holds 14-15%. MTR’s portfolio comprises ready-to-eat, ready-to-cook food ingredients and spices.

Read The Economic Times article for more details.

Ranbaxy Laboratories to bid for Merck’s generic drug business

Ranbaxy Laboratories, India’s third-largest drug maker by market value, is planning to buy German pharma major Merck’s generic drug business, estimated to be worth more than €4 bn ($5.2 bn). If a deal is struck, Ranbaxy will become the third largest generic drug manufacturer in the world, behind Teva Pharmaceuticals of Israel and Swiss pharma company Novartis, with combined sales of $4 bn. Ranbaxy itself is valued at $3.5 bn, and aims to be one of the top five generic players in the world with $5 bn in annual sales by 2012.

Ranbaxy would likely be competing with other pharma companies such as Teva, Sandoz (Novartis’ generics division) and Sanofi-Aventis as well as private equity majors such as Blackstone and KKR, for acquiring the assets of Merck’s generic business. Ranbaxy hopes to be in the fray by January-end. The company is planning to raise finances for the acquisition through a mix of debt, equity and private equity.

In the year 2006, Ranbaxy laboratories had made six acquisitions – Be-Labs (South Africa), Ethimed NV (Belgium), Terapia (Romania) and the unbranded generic business of GlaxoSmithKline (GSK) in Germany and the Mundogen generic business of GSK in Spain.

Merck’s generics business has gross revenues of around $2.5 bn. The German company had announced last week that it was considering the sale of its generics division (Merck Generics) to raise resources for the acquisition of Swiss drug-maker Serono. Merck Generics has sales in more than 90 countries and accounts for the third largest generics business in the world. The division employs approximately 5,000 people world-wide.

A successful acquisition, besides tripling Ranbaxy’s topline, will give it greater access to key markets in the US, Europe and Japan. Moreover, with the Merck business not being vertically integrated, Ranbaxy can use its strengths in the active pharmaceutical ingredient (API) business to bring about greater cost synergies and efficiencies. It will also result in improved product flow, economies of scale and relative enhanced pricing power for Ranbaxy in the highly competitive generic industry.

Read more on this news from Reuters.com, Business Standard and The Economic Times – 1 2.

Citigroup proposes $5 bn infrastructure fund; to tie up with IDFC

Global financial services major Citigroup is in talks with the Indian government to start a $5 bn debt and equity infrastructure fund in partnership with Infrastructure Development Finance Company (IDFC). Blackstone had also proposed a fund for infrastructure in India, the size of which is not known. Citigroup has proposed a total fund of $5 bn, of which $2 bn is intended to be equity and $3 bn for debt. Citigroup would operate the fund in association with IDFC. Citigroup CEO Charles Prince had proposed the fund at a meeting with Finance Minister P Chidambaram in New York earlier this year.

More details on The Economic Times.

Ambani goes for the kill, to buy out Ruia’s stake as well

Finally, Anil Ambani has made his intentions absolutely clear. Reliance Communications will buy out Hutch-Essar in its entirety. Nimesh Kampani, representing the Ruias is believed to have held meetings with Anil Ambani. Various parties as interested in buying out Hutchison’s stake in Hutch-Essar are doing the rounds of investment circles. These include Ruias themselves raising debt from banks and buying Hutch’s stake in the JV. Bharti’s Mittals are also heard to be interested in buying out the company. Even the name of the Tatas has been mentioned. Maxis, the Malaysian telecom company, is also set to bid for Hutch-Essar. The Ruias stand to gain around $4-5 bn if they sell their stake to Reliance Communications. Ruias are being advised by Morgan Stanley and Goldman Sachs. UBS is advising Ambani on the deal. Buyout funds like Blackstone, Texas Pacific, Carlyle and Kohlberg Kravis Roberts, among others, are supporting Reliance to structure the financing. With about $10 billion through cash to buy equity and around $2-4 billion as debt from major foreign banks, Reliance seems to be the frontrunner in getting the Hutch-Essar telecom business.

Read the article from Business Standard.

Reliance Comm dials banks for Hutch deal

Anil Ambani is leaving no stone unturned to acquire the prized 67% stake of Hutchinson Whampoa in Hutch-Essar. As of latest reports, Reliance Communications has tied exclusivity agreements with a number of foreign banks, presumably, Citibank, HSBC, ABN-AMRO and UBS. This means that not only will these banks provide the necessary debt for the transaction, but the agreements will also prevent them from working with any other prospective or existing bidder. This agreement with the said four banks is crucial, as all have expertise in multi-billion dollar cross-border acquisition financing and their experience would have been of enormous use to rivals. RCL is already in talks with private equity funds such as Kohlberg Kravis Roberts & Co (KKR), Blackstone and Texas Pacific Group for equity financing.

For more, read the following articles The Economic Times, The Financial Express and Business Standard.