Sharekhan to sell stake to private equity players

Sharekhan, the retail broking arm of the Mumbai-based SSKI Group, is raising funds from private equity players to finance its expansion. A few private equity players have already started due diligence on Sharekhan. However, there seem to be conflicting reports as to how much stake will be diluted.

As per Business Standard reports, the retail brokerage company may dilute close to 15% stake, as per Shripal Morakhia, promoter of Sharekhan. This will result in a dilution of stakes of all existing shareholders. The company is not disclosing the amount it is planning to raise. At present, the Morakhias hold 37% stake in Sharekhan, while its employees hold 15% and the rest is held by General Atlantic, Intel Capital and a group of funds advised by HSBC Private Equity India. In April 2006, General Atlantic invested about Rs. 144 crores ($31 mn) in the company through a combination of primary and secondary investments through buying out the entire shareholding of First Carlyle Ventures. Sharekhan is looking at expanding its presence in the country through organic growth. It is among the top five retail brokerage outfits in the country with over 100 branches across 150 cities.

Meanwhile, The Economic Times says that the promoters of Sharekhan are looking to dilute a majority stake (around 51%) to a strategic investor. The company is valued at around Rs. 750-850 crores and a 51% stake will be valued at Rs. 375-425 crores. The company is said to be in talks with a few investors and is considering all options including selling a majority stake to an investor or selling the entire company, according to Sharekhan CEO Tarun Shah. It is being said that Credit Suisse is one of the interested parties.

Rajan Raheja-promoted Hathway Investments buys 39% in ING Vysya Mutual Fund

The Economic Times reports that Hathway Investments, a company promoted by realtor Rajan Raheja, has bought out ING Vysya Bank’s entire 39% stake in ING Vysya Mutual Fund for an undisclosed sum. Post this deal, ING will hold 42.5% in the fund, Hathway 39%, and existing Indian shareholder Kirti Equities, will retain 18.5%. The fund would be renamed as ING Mutual Fund. The asset management company’s total assets under management as on March 31, 2007, were close to Rs. 3630 crores. For the year ended March 2006, the AMC had reported a net loss of Rs. 21 crores. This could have depressed the valuation of the fund house, which usually ranges from 4-6% of assets. Hathway, which earlier held a 25% stake in Franklin Templeton, is estimated to have pocketed around Rs. 300 crores from the sale of its stake, less than six months ago.

Barclays Capital appoints Sanjay Mathur as Director

The Economic Times reports that Barclays Capital, the investment banking arm of global financial group Barclays, has appointed Sanjay Mathur from UBS as Director, Rates Research for its Asian operations (excluding Japan). Mathur would lead the firm’s coverage of macro-economic research on the Indian subcontinent, Malaysia and Singapore. Prior to this, Mathur was working as Executive Director in the regional economic team of global financial firm UBS.

IIFC to raise $500 mn through the ECB route; Standard Chartered appointed as lead arranger

India Infrastructure Finance Company Limited (IIFC) will raise $500 mn through the external commercial borrowings (ECB) route. Standard Chartered Bank will be the lead arranger to the issue. The funds are being raised for a period of 10 years. The resource will be used for financing some major infrastructure projects in the country.

During 2007-08, IIFC, a wholly-owned special purpose vehicle of the Indian government for core sector lending, intends to sanction some 46 projects, aggregating Rs. 15,000 crores and disburse nearly Rs. 3000 crores. A major chunk of this Rs. 3000 crores funding requirement will be met through overseas borrowings.

IIFC’s paid-up capital is Rs. 100 crores. It sanctions loans up to 20% of the project cost. Out of the 46 projects which are under the IIFC’s consideration, 31 are road development ventures, 12 are power projects, 2 are port-related infrastructure ventures, while 1 is an airport project. To ensure proper usage of funds, IIFC has appointed ICRA to work out a detailed business roadmap. ICRA is expected to submit the report within a month. It will also recommend an HRD strategy suited to IIFC’s needs.

Apart from some of major infrastructure projects, IIFCL is also working with the municipal corporations and urban local bodies to develop urban infrastructure projects. IIFC has tied up with IDBI, Canara Bank and IL&FS to create a Rs. 3000 crore-pooled municipal debt obligation (PMDO) facility. The fund will be channelized for urban infrastructure development.

Read more in The Economic Times article.
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Calcutta Stock Exchange facing problems in demutualization

The Calcutta Stock Exchange (CSE) seems to be facing a huge problem in its demutualization scheme. After having failed its original deadline for soliciting expressions of interest (EoIs) on March 23, it has again failed in its efforts to rope in strategic investors, as it has received insufficient response to the revised deadline of March 5. It is now further extending the date for submitting EoIs to April 30.

The CSE and its consultant-advisor PriceWaterhouseCoopers are conducting road shows within India and overseas to hard-sell the benefits of picking up a stake in CSE. PriceWaterhouseCoopers has already made presentations to leading bourses in Asia. Some of them are interested, but the main hindrance is the 5% limit in investment

As per SEBI guidelines, all exchanges have to divest 51% to financial institutions (FIs), foreign institutional investors (FIIs) and corporate bodies other than broking outfits before August 2007. The guidelines state that no individual investor, be it FIs, FIIs or corporates, can hold more than 5% in an individual capacity in any stock exchange. The collective holding of the non-brokers would be 51%, whereas brokers would hold 49%.

Currently, there is very little trading which happens on the CSE, which was once India’s third largest bourse with a daily turnover in excess of Rs. 1000 crores.

Read the article in The Times of India article.
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Citigroup in talks to buy to hedge fund Old Lane for $600 mn; fund boss Vikram Pandit may get to head Citi’s alternative investments unit

Global banking giant Citigroup is in talks to buy Old Lane, a hedge fund firm co-founded by ex-Morgan Stanley senior executive Vikram Pandit. If such a deal happens, Mr. Pandit would probably be on his way to heading the bank’s alternative investments unit, and probably, also the top job at the world’s largest bank.

The purchase price for Old Lane is estimated to be around $600 mn. Old Lane is thought to have more than $4 bn of assets under management. The alternative investments unit is the smallest of Citigroup’s four main businesses. In 2006, profit at the unit fell 11% to $1.28 bn, and revenue dropped 15% to $2.9 bn. The unit at year-end oversaw $49.2 bn of assets, including $10.7 bn of Citigroup’s prop money.

Vikram Pandit is a former head of Morgan Stanley’s institutional securities division. Once considered a potential successor to former Morgan Stanley chief executive Philip Purcell, Pandit left the investment bank in March 2005 as part of an exodus of senior bankers and traders. He later founded Old Lane with his Morgan Stanley colleagues John Havens and Guru Ramkrishnan.

Read more in The Economic Times article.

Major financial houses in race to acquire UTI Securities stake

Major international financial powerhouses Citigroup, Macquarie Bank, Standard Chartered, Societe Generale and Kuwait-based Global Investment House are in the race to acquire 49% stake in UTI Securities. UTI Securities is currently owned by the Securities Trading Corporation of India (STCI).

STCI had bought 100% stake in UTI Securities for Rs. 265 crores in 2006 from the Specified Undertaking of UTI (SU-UTI). It is now looking to sell 49% stake to a strategic partner. As per the deal, STCI has a minimum lock-in of 51% stake in UTI Securities for three years, which will end in 2008.

The company will now divest 49% stake to a strategic partner, preferably a foreign investor, considering the expertise they would bring in. The talks were at an advanced stage and a prospective strategic partner would be short-listed soon.

Read more in the Business Standard article.

JP Morgan to form asset reconstruction business with Yes Bank, Bank of Baroda, Bank of India and Union Bank

JP Morgan is setting up an asset reconstruction company in India along with public sector banks Bank of India, Bank of Baroda, Union Bank of India and private sector bank Yes Bank. The group has applied to the Reserve Bank of India (RBI) for its approval. JP Morgan will act as the knowledge partner in the joint venture, which will have an initial capital of Rs. 100 crores. If and when the RBI’s approval is received, the four India banks will form a company in which JP Morgan will pick up a 27% equity stake. For this, it will have to get the permission of the Foreign Investment Promotion Board, since the investment will be treated as foreign direct investment. At present, the cap on FDI in asset reconstruction companies is at 49%.

Union Bank was earlier supposed to partner Standard Chartered Bank in the latter’s ARC set-up. However, due to delays, Union Bank has now switched over to the JP Morgan side of the business.

Read more in the Business Standard article.
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ICICI Bank re-jigs i-banking operations

India’s largest private sector bank ICICI Bank has restructured its investment banking division, giving it a ‘global’ appellation and new functional lines. The reason cited for the exercise has been the global opportunities emerging through Indian corporates, and the bank’s need to grow beyond trade finance and working capital to corporate advisory, deal origination and M&A funding. Investment banking provided roughly 30% of ICICI Bank’s profit of Rs. 2285 crores in the nine months to December 31, 2006.

The restructuring of i-banking operations has been as follows: Corporate Products & Investment Banking Group has been renamed as the Global Investment Banking Group (GIBG). ICICI Securities, the existing wholly-owned investment banking arm of ICICI Bank, will now focus only on equity markets and research. The investment banking business of I-Sec will shift to GIBG, while the retail equity brokerage part of ICICI Bank, called ICICIDirect.com, is now a part of ICICI Securities. GIBG will have three groups under it: Global Structured Finance & Advisory Group (GSFAG), Financial Institutions and Syndications Group (FISG) and International Syndications Group (ISG).

GSFAG will be responsible for banking products across India and all international markets. FISG will work with GSFAG and ISG for domestic syndication, and with the Balance Sheet Management Group for resource-raising and securitization. It will handle the needs of financial institution clients. For deals where the approving authority requires an amount of the facility to be sold-down or syndicated in the domestic market, the FISG will approve the terms of the facility. It will also originate deals for sell-downs directly, along with GSFAG. FISG will include the Capital Markets Division and the Global Custodial Services Group of the bank. ISG will work with GSFAG and FISG for all international syndications of corporate issuances for Indian as well as international clients. It will approve terms for sell-downs / syndications in the international market and also, along with GSFAG originate deals directly for the specific purpose of sell-downs.

Read the article in DNA Money.

Saraswat Co-operative Bank planning to acquire 4 regional banks

After its successful merger with Mandvi Co-operative Bank in October 2006, Saraswat Co-operative Bank is eyeing four other banks to merge with by June 2007. The banks under consideration are Murgha Rajendra Co-operative Bank and Annasaheb Karale Bank based in Sangli, and the Nashik People Co-operative Bank and Kolhapur Janta Sahakari Bank based in Nashik and Kolhapur, respectively.

Saraswat has already signed a deal with Murgha Rajendra and Annasaheb Karale, whereas the due diligence is on for Nashik People and Kolhapur Janta Sahakari Bank. 11 branches each of Annasaheb Karale, Murgha Rajendra and Kolhapur Janta and 14 branches of Nashik People will be taken over. Saraswat Bank will absorb 200 employees from Murgha Rajendra and 160 employees from Annasaheb Karale.

Read the article from DNA Money.

Financial Technologies sells 1% in Dubai commodity bourse for $12.5 mn

Indian IT company and MCX promoter Financial Technologies has sold a 1% stake in its Middle East-based venture, the Dubai Gold and Commodities Exchange (DGCX), to its partner, the Dubai Multi Commodities Centre (DMCC). The size of the deal is around $12.5 mn valuing the year-and-a-half old DGCX at $1.25 bn. Financial Technologies would now hold a 49% stake in DGCX.

DGCX is an electronic futures and options exchange which utilizes trading, clearing and settlement technology developed by Financial Technologies. The exchange lists futures contracts in gold, silver, currencies and fuel oil. It has recently announced the imminent launch of futures contracts in steel and options contracts on gold. DGCX has also foreshadowed the future listing of various agricultural, metal, and energy products.

Read the article in Business Standard.
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Central Bank to come out with IPO; issues 5 merchant bankers for the issue

Mumbai-based public sector bank Central Bank of India is coming out with an initial public offering of Rs. 1000 crores, expected by end-May 2007. The bank has finalized five merchant bankers for the issue. The bank has appointed IDBI Capital Markets, Kotak Securities, ICICI Securities, Citigroup Global Markets and Enam Financial as the lead managers to the issue.

The bank has received all regulatory clearances for converting about 71% of its large equity base into preference shares. The proposal for conversion of shares, which was stuck at the Reserve Bank of India (RBI), was recently cleared by the government. The bank is negotiating with the government for the coupon rate on the preference shares. The government wants a floating coupon rate of 100 basis points above the RBI’s repo rate, which is currently at 7.75%.

Of the Rs. 1124.14 crores equity capital, Rs. 800 crores would be converted into preference shares. The conversion will lower the bank’s paid-up equity capital to Rs. 324.14 crores. Central Bank, which had planned to get listed in the fourth quarter of 2006-07, as on December 31, 2006, had a total business of Rs. 121,301 crores, comprising deposits of Rs. 74,974 crores and advances of Rs. 46,327 crores.

Read the article in Business Standard.

Sequoia Capital invests $11.5 mn in Indian MFI SKS Microfinance

Leading Indian microfinance institution SKS Microfinance has received $11.5 mn of venture capital funding from Sequoia Capital. This is “the first pure for-profit private equity play” ever seen in the micro-lending world, according to SKS Microfinance CEO Vikram Akula, in an interview with CNBC. Sequoia’s investment makes SKS the largest for-profit microfinance institution in the world. Sequoia’s investment also makes it SKS’ lead investor. Other stakeholders include Unitus Equity.

The concept of microfinance, which is providing small business loans to poor borrowers who lack credit, was made famous by Nobel peace prize winner Mohammed Yunus, founder of the not-for-profit Grameen Bank of Bangladesh. While the foundations are similar in concept, SKS’ version of micro-lending provides loans that carry interest rates to its 600,000 members in 7200 villages in rural India.

However, it is to be noted that Sequoia’s investment comes with a rider: in the next 3-5 years, SKS will either have an initial public offering or be acquired.

Magma Leasing to raise $15 mn from the Netherlands-based financial institution FMO

Magma Leasing Limited will make a private placement of $15 mn or around Rs. 65 crores of redeemable preference shares to The Netherlands Development Finance Company (Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden – FMO). This follows an earlier investment of Rs. 21 crores by FMO in Magma preference shares in February 2006. The investment will be treated as Tier-2 capital in the company, as per RBI guidelines. The funds raised would be used strengthen the balance-sheet and drive business volume growth.

Magma had received an investment of Rs. 105 crores in August 2006 from the UK-based Cambridge Place Investment Management and following its merger with Kolkata-based Shrachi Infrastructure Finance Limited, Magma now had a branch network at 154 locations and over Rs. 5500 crores worth of assets under management.

Magma finances commercial vehicles, cars, construction equipment, and multi-utility vehicles, and users in semi-urban and rural markets contribute a significant proportion of its business. It also has fee-based businesses like distribution of insurance and personal loan products.

Read the article in Business Standard.
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Mayfield Ventures to invest $15 mn in domestic i-bank Avendus Advisors

Mumbai-based investment bank Avendus Advisors has received a private equity investment of around $15 mn, for a stake of 20%, from US-based venture capital fund Mayfield Ventures. The fund is being infused as fresh equity, and the term sheets would be signed in a week’s time. Other details of the deal have not been disclosed. Avendus, founded in 1999, has been valued at around Rs. 330 crores. Before the equity sale, the three initial promoters, Ranu Vohra, Gaurav Deepak and Kaushal Aggarwal, and the employees of Avendus held around 70% stake, while Spanish institutional investor Americorp held 20% and entrepreneur-investor from California, Anil Godhwani held the remaining 10%. Once the deal is finalized, there will be corresponding reduction in the stake held by each promoter.

Mayfield has already partnered Avendus to raise a $200 mn offshore fund which would invest in Indian projects, and is expected to be set up by July-August. Avendus has seen a strong growth over last couple of years. Its annual revenues are expected to cross $12 mn in 2006-07. The organisation employs approximately around 40 professionals.

The investment bank focuses on wealth management, institutional broking and debt solutions. It is also offering private equity syndication, advice on M&As, and strategic advisory services to corporates and funds. It is now in the process of expanding its operations abroad by opening offices in New York and Munich. Avendus focuses on industries where Indian companies have a strategic growth advantage including IT services, IT-enabled services, pharmaceuticals and healthcare, media and consumer products and services. The most recent deal cracked by Avendus was to help AnandRathi Securities to dilute around 20% stake in favour of CVC International, for around Rs. 100 crores (See Related Post).

Read The Economic Times article.
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Marwadi Shares raises second round of funding from UK-based Caledonia Investments

Rajkot-based equity broking house Marwadi Shares & Finance Limited has completed a second round of private equity placement from another UK-based Caledonia Investments Plc, after its first phase of investment from India Capital Growth Fund Limited in December 2006. Caledonia Investments has picked up a 19.67% stake in Marwadi Shares for around Rs. 42 crores. Marwadi Shares and Finance is a decade-old financial services group offering stock broking and commodity broking firm on the NSE, BSE, NCDEX and MCX.

Marwadi Shares has emerged as the fifth broking house in the country and the first broking house from Gujarat to have private equity placement from a foreign player. It had initially planned a route into the capital markets and raise about Rs. 60 crores through and initial public offering, but postponed the plan and instead decided to raise funds through private equity placement. The company has now revised its equity raising pattern from Rs. 60 crores to Rs. 73.5 crores and has managed to disburse a 33% stake.

Read the article in Business Standard.
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Tarun Kataria to head HSBC’s India CIB operations

The Economic Times reports that Tarun Kataria, a managing director at HSBC in Hong Kong, will move to India for heading the Indian corporate and investment banking, and capital markets operations of HSBC. Mr. Kataria is an MBA in finance from the Wharton School, and had earlier worked for Merrill Lynch and Chase Manhattan in the United States.

CVC International to pick up 19.9% stake in Mumbai-based brokerage firm AnandRathi

Citigroup Venture Capital International, one of the prominent private equity investors in Indian businesses has agreed to pick up a 19.9% stake in leading Mumbai-based broking firm AnandRathi Securities. The funds will be utilized for expansion purposes and also for meeting working capital requirements. The company has not disclosed the size of the deal and the price at which the stake is being acquired by CVC International.

AnandRathi offers broking and other market-related services to its customers through a network of 150 branches and over 200 business associates spread across the country.
AnandRathi has achieved reasonably good presence in retail, institutional broking and has taken a foothold in segments like wealth management, IPO and insurance products distribution. Broking accounts for 50-60% of the business while non-broking activities like investment banking, MF, IPO distribution and advisory services account for the rest.

AnandRathi follows a long list of other Indian brokerage and i-banking firms that raised monies through the private equity route in the recent past. Motilal Oswal Securities, India Infoline, Edelweiss Securities, IL&FS Investsmart and Indiabulls Financial Services are some names that have raised funding from PE firms for growth and expansion.

Read The Economic Times article.
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ASK calls off JV with Raymond James

The ASK-Raymond James JV is no more. Brothers Asit and Sameer Koticha-owned ASK Investment & Financial Consultants has bought out the 50% strategic stake from Raymond James Financial, Inc. for an undisclosed amount. Raymond James will not have any presence in India post-deal. The Kotichas have kept their options open on having financial partner or strategic investor in the future.

Subsequent to the buyback, the 50% shares will remain with the two brothers-Asit and Sameer. In the new holding pattern, the two brothers will hold 75% shares and another 25% will stay with Bharat Shah, who will be heading the ASK Investment Managers Private Limited. The ASK Group also plans to enter mutual fund, real estate and NBFC businesses.

Read the Business Standard article.

Edelweiss to start asset management and NBFC businesses; recruits senior people for the same

Leading domestic investment bank Edelweiss will commence asset management and non-banking financial company (NBFC) businesses by investing a total of Rs. 400 crores in the new ventures. Edelweiss would invest Rs. 300 crores for the NBFC business and another Rs. 100 crores for the asset management business. The NBFC would be looking at mortgage business and other credit instruments. Edelweiss had received in-principal approval from SEBI for the asset management company.

Edelweiss also announced the appointment of senior executives for its new business of NBFC and AMC businesses. R Balakrishnan, who will head the NBFC business, has been appointed executive vice-president of Edelweiss. Mr. Balakrishnan earlier worked as Senior VP & Head of Equity Research at DSP Merrill Lynch. Prior to Edelweiss, he was an independent consultant and part of the senior management team at credit rating agency CRISIL. For the AMC business, Edelweiss appointed Jimmy Patel as the CEO. Patel’s earlier stints include CEO and COO of JM Financial Mutual Fund and with the Principal Group, where he was in-charge of their pension initiative in India. Edelweiss also took on board Peeyoosh Chadda of Barclays as co-head of the AMC business.

Read the Business Standard article.

Merrill Lynch eyes stake in India Infoline distribution arm

US-based brokerage and investment bank Merrill Lynch has initiated talks with India Infoline for acquiring a significant stake in its distribution subsidiary, India Infoline Distribution Company Limited (IILD). Merrill had recently hiked its stake in India Infoline to 14.10%. It may pick up to 26% in IILD for over Rs. 150 crores. In December 2006, India Infoline sold its stake in the subsidiary Khambhat Investment & Trading Company Private Limited, a non-banking finance company, to Merrill Lynch.

Merrill Lynch plans to enter into the Indian mortgage business, and is accordingly planning a tie-up with India Infoline for the same. The company expects to create synergies with India Infoline as it has a wide retail network of over 200 branches. IILD, apart from the distribution of financial products such as mutual funds, IPOs and fixed deposits, also distributes mortgages and loan products.

Read more in the article in Business Standard.

Raymond James to buy out Indian partner ASK Investment Financial Consultants from ASK-Raymond James JV

US brokerage Raymond James Financial, Inc. may buy out the stake of its Indian partner, ASK Investment Financial Consultants. Competition in India’s investment banking market has heated up dramatically, and foreign securities houses are now scrapping joint ventures to chase deals by themselves.

Last month, Morgan Stanley said it would spend a net $425 mn to split from its Indian partner, JM Financial. Merrill Lynch agreed to pay $500 mn to lift its stake in its DSP Merrill Lynch joint venture to 90% from 40% in December 2005. Goldman Sachs announced plans last year to set up its own Indian investment banking and securities business after selling its stakes in two joint ventures to partner Kotak Mahindra Bank.

Read The Economic Times article.

Credit Suisse launches Indian brokerage operations

Zurich-based global bank Credit Suisse has launched of its securities brokerage operations in India. Credit Suisse holds a broker dealer license in the Bombay Stock Exchange and National Stock Exchange and will focus on equity sales and trading and research in India. Initially, the India operations will be run by about 40 people with addition of 20-30 more over the year.

The company would later bring the full range of its products including asset management and private banking as regulations for financial services in India open up. The company would also offer investment banking services in new equity issuance and merger and acquisition activities at a later stage.

Credit Suisse acted as the lead financial adviser to the UK-based steel major Corus in its acquisition by Tata Steel. Credit Suisse is also leading the provision of financing Tata Steel in the deal.

Read The Economic Times article.

AIG Capital India acquires housing fiancé company Weizmann Homes

AIG Capital India will acquire Bangalore-based housing finance company Weizmann Homes Limited. AIG Capital India is the wholly-owned Indian subsidiary of US-based financial services giant American International Group, Inc. the company is being bought from Weizmann Limited, Federal Bank, Asian Investment & Finance Corporation Limited and other minority shareholders. The transaction is expected to close in April 2007.

Weizmann Homes is a 12-year-old, Bangalore-based housing finance company, with a branch network across 33 cities in India.

This is the second acquisition this year by AIG Capital India in the Indian retail finance industry. Earlier, it had earlier acquired a controlling stake in Chennai-based Vivek Hire Purchase and Leasing.

For more, read the press release on Moneycontrol.com.

Dutch firm Robeco to buy 49% in Canbank MF

Dutch asset manager Robeco Groep NV, a part of European banking giant Rabobank Groep, will buy 49% stake in Canara Bank’s asset management arm to gain a foothold in the Indian mutual fund industry.

Robeco has assets under management of €139 bn worldwide and posted operating profits of €233 mn in 2005. It will pay Rs. 115 crores to Canara Bank for its stake in Canbank Investment Management Services Limited (CIMS).

Reserve Bank has given its assent to the proposed venture, and approval from market regulator SEBI and Foreign Investment Promotion Board would be sought soon.

In all, India has 32 mutual fund players with total AUMs of more than Rs. 350,000 crores. Canbank is a relatively smaller player with AUMs of about Rs. 2200 crores.

The asset management company, to be called Canara Robeco, would aim to capture 5% market share in the next five years. The JV would float five new products, especially equity-based, in the coming months.

Read The Economic Times article.

Sharekhan to raise funds for expansion

Sharekhan is planning to raise funding for its aggressive expansion plans. Sharekhan is the retail broking arm of Mumbai-based financial services group SSKI. The company has held discussions with investment banks for raising resources. These may be in the form of an initial public offering, private placement, debt or a combination of all of these.

As earlier reported in the media, the promoters of the firm, the Morakhia family, also the single largest shareholder in the company, are not planning to quit the firm as yet. Private equity firm General Atlantic had invested about Rs. 144 crores ($31 mn) in April 2006 in the company through a combination of primary investment in the company and secondary investment through buying out the entire shareholding of First Carlyle Ventures. The other investors in the retail and online brokerage outfit are Intel Capital and a group of funds advised by HSBC Private Equity India.

Sharekhan is among the top five retail brokerage outfits in the country with over 100 branches across 150 cities. The investment banking and the institutional brokerage outfit of the group, SSKI has no fund raising plans.

Read the Business Standard article.

IndusInd Bank to issue GDRs worth Rs. 140 crores by March-end

The Hinduja Group-controlled IndusInd Bank is planning to raise around Rs. 140 crores through global depository receipts (GDR) by March 2007. The bank will issue close to 30 mn shares which will listed at the Luxembourg Stock Exchange. CLSA has been appointed as the lead manager to the issue. The fresh infusion of capital will bring the promoter holding down to about 28% from 31.3%. The foreign holding in the bank will increase to 25 % from about 17%. The GDR issue will help enable the bank to boost its capital adequacy ratio to 11.25% from 11.10%. It is also planning to raise Rs. 50 crores through issuance of lower Tier-II bonds. The post-issue paid-up capital of the bank will rise to Rs. 320 crores from Rs. 290 crores.

The capital raising will enable IndusInd to pursue new business lines like wealth management and asset reconstruction. It is also planning to expand its presence overseas by setting up an offshore banking unit in Singapore. At present, the bank has representative offices in Dubai and London.

Read more on IndusInd Bank in the article in Business Standard.

JP Morgan in talks with Enam for strategic alliance; may buy stake in the latter

Vallabh Bhansali-controlled Enam Financial Consultants, one of the leading home-grown investment banks in India, is learnt to be in talks with JP Morgan for a strategic alliance, and might also include acquisition of equity in Enam, with talks being at an advanced stage.

Lehman Brothers, which had also expressed interest in Enam earlier, is learnt to be out of the race, making JP Morgan the sole candidate for a strategic tie-up. JP Morgan was looking at buying 50 % stake in Enam. JP Morgan had ended its joint venture with ICICI Securities in the late nineties, and has not been very active in the Indian capital market since then.

While JP Morgan is among the top five players in the institutional broking business in India, Enam is a major player in investment banking and in the equity capital market. With its network of over 5000 dedicated franchisees, Enam mobilizes approximately 25% of all funds raised in the Indian equity markets. It is also one of the largest underwriters in India. The company also provides investment banking, corporate advisory, equity, debt and capital market services to companies and institutions.

Read more in the article in Business Standard.

Daiwa Securities plans India Equity Fund for Japanese investors

Business Standard reports that Daiwa Securities SMBC Company Limited, the investment banking joint venture between two of Japan’s largest financial groups, is planning to launch an India Equity Fund to enable Japanese investors invest in India’s emerging market. The fund likely to be launched within by 2007 would invest only in the listed stocks. Daiwa had earlier raised $750 mn of Japanese funds for Indian markets. The current value of the fund stood at $1 bn following the growth in the market.

RBI refuses Catholic Syrian Bank to let PE firm AIF Capital Development up stake above 5%

The Reserve Bank of India (RBI) has refused clearance to allow the preferential allotment of about 15% stake in Thrissur-based Catholic Syrian Bank to Asian private equity firm, AIF Capital Development. This has made a dent in (CSB) capital raising plans. The Foreign Investment Promotion Board (FIPB) has cleared the proposal but the RBI guidelines restrict any single private equity firm’s holding in a private sector bank to 5%.

Strangely, AIF Capital has 5.56% stake in Yes Bank, a new generation private sector bank. In addition to Yes Bank, AIF Capital’s portfolio in India includes Bharti Tele-Ventures and GVK Industries.

CSB had a capital adequacy of 11.24% at the end of March 31, 2006 and has been struggling to raise capital. It is imperative for CSB to raise capital to adhere to the RBI’s norms on minimum capital requirements for private sector banks, which require all private sector banks to increase their net worth to a minimum of Rs. 300 crores. CSB’s net worth in at the end of 2005-06 was around Rs. 215 crores.

Read more in the Business Standard article.
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BNP Paribas buys 34.4% stake in broking firm Geojit Financial Services

BNP Paribas, the French banking giant has bought 34.35% in Geojit Financial Services for about Rs. 207 crores ($47 mn). The deal at Rs 26 per share is a combination of equity shares and warrants that could be converted into shares. The bank will also make an open offer to the shareholders of Geojit for another 20% in the company.

With its entry into the retail broking space, BNP has completed another leg of its financial services business in India. BNP already has presence in the life insurance sector through SBI Life Insurance and in the asset management business through Sundaram BNP Paribas Mutual Fund. Riding on Geojit’s experience in Indian stock market, BNP is now considering entry into institutional broking business.

In October, Geojit’s board had approved issuance of up to 79.6 mn shares (of Re. 1 face value) to BNP Paribas. The financial services firm has now issued 56.8 mn shares to BNP Paribas at Rs. 26 per share. It has also issued 22.8 mn warrants to the bank, which would be converted to as many shares at the same price in 18 months.

The post-deal open offer, expected in a few days, could increase BNP Paribas’s stake in Geojit to over 50%. The company’s name will be changed to ‘Geojit BNP Paribas Financial Services’ and three members nominated by the French bank will join Geojit’s board. The current management will continue to be in charge of the company.

Read The Times of India article.

Consulting firm Tholons partners US-based Baird Private Equity

Business Standard reports that investment, advisory and consulting firm Tholons has partnered Baird Private Equity, a global private equity group of investment firm, Robert W Baird & Company. The partnership allows Tholons to expand its footprints in the globalization of services consulting space by helping Baird Private Equity’s portfolio companies leverage the benefits of global outsourcing. The partnership will enable Baird to establish its presence in the fast-growing offshore markets. Tholons will have dedicated resources for Baird to be located at its Bangalore centre. They will work exclusively with Baird Private Equity’s portfolio companies, particularly those in the business services sector, to evaluate, develop and execute appropriate strategies in India. Several of Baird’s portfolio companies including HireRight, TrueAdvantage and Cerillion have a presence in India and stand to benefit from Baird’s presence there.

Malaysian government investment arm acquires 9% in IDFC for Rs. 848 crores

Khazanah Nasional Berhad has acquired 8.97% stake in Infrastructure Development Finance Company (IDFC), a specialized financial intermediary for infrastructure, for Rs. 848.16 crores. Khazanah Nasional is the investment holding arm of the Malaysian Government entrusted to manage the commercial assets held by the Government and to undertake strategic investments. Khazanah was incorporated in 1993 as a public limited company and commenced operations a year later.

Khazanah Nasional Berhad, through Sipadan Investments, acquired around 100.9 mn shares at a price of Rs. 84 each from UBS Securities Asia who sold the shares on behalf of Mauritius based Swiss Finance Corporation. As per the latest shareholding data available on the stock exchanges, Swiss Finance Corporation previously held 101.3 crore shares representing 9% stake in IDFC. Other foreign investors, who hold significant stakes in IDFC, are Indivest Private (3.79%), Nikko Cordial Corporation (2.49%), Morgan Stanley (3.62%), Goldman Sachs (3.73%) and Barclays Capital (4.96%).

Read the article in The Economic Times article.

Domestic investment bank Allegro ties up with UK-based Close Brothers for cross-border opportunities

While the JM Financial-Morgan Stanley JV unravels, another one seems to be in the making. Allegro Capital Advisors, a domestic investment bank with a pan-India presence has tied up with UK-based investment banking firm Close Brothers for cross-border investment banking partnerships in South East Asia.

The alliance would enable Allegro to offer international investment banking services and deliver a global platform of M&A opportunities to Indian businesses. The firm claims to be already sitting on a number of cross border acquisition mandates from Indian corporates.

Close Brothers focus on the mid-market corporate segment. It is UK’s largest listed investment bank with a network of 450 investment banking professionals across 36 offices located in 20 countries.

Read The Economic Times article.

Thomas Weisel plans $200 mn private equity fund-of-funds for India

US-based investment bank Thomas Weisel International is planning a $200 mn, India-dedicated private equity fund of funds. The company is also keen on rolling out its asset management business in India, focusing only on institutional investors. The fund of funds, which is yet to close, has already made two investments worth $25 mn in infrastructure financing company IDFC and private equity firm ilabs.

The fund has invested $15 mn in IDFC’s $400 mn fund and another $10 mn in ilabs. The company’s India office was set up in October 2005 and is its first international office outside USA. Thomas Weisel focuses on mid-cap companies in growth sectors including technology, healthcare and alternative sources of energy. In India, these are the sectors where it will continue to focus on, besides infrastructure. The company is also keen on starting its asset management business in India. This would be a 100% subsidiary of the company.

Currently, the company offers institutional brokerage to its clients. While its PE business is operational, the company’s mutual fund business is expected to be rolled out by year-end. Internationally, the firm offers investment banking, institutional brokerage and equity research. Its subsidiary, Thomas Weisel Asset Management, includes three private equity investments funds and a distribution management service for private equity and venture capital funds.

Read The Economic Times article.

Morgan Stanley, Citigroup, Actis buy 6% in NSE

Global banks Morgan Stanley and Citigroup and private equity firm Actis today collectively bought a 6% stake in the National Stock Exchange (NSE) for an undisclosed sum. The stake sale takes the combined foreign direct investment in the NSE to 26%, the maximum limit for foreign ownership in domestic stock exchanges. Morgan Stanley will buy 3% in the NSE, while Citigroup and Actis will acquire 2% and 1%, respectively.

Domestic financial institutions IDBI (2%), State Bank of India (1.5%), SBI Capital Markets (0.50%), Corporation Bank (0.265%), Union Bank of India (0.125%), Bank of Baroda (0.89%), Canara Bank (0.385%) and Oriental Bank of Commerce (0.335%) are selling their stakes to the three new investors.

Early this year, the parent company of the New York Stock Exchange (NYSE) and three global financial institutions, General Atlantic, Goldman Sachs and Softbank Asian Infrastructure Fund, bought 20% in NSE, valuing the exchange at $2.3 bn. NYSE had paid $115 mn for its 5% stake. Recently, Germany’s Deutsche Boerse and Singapore Exchange (SGX) bought 5% stake each in the Bombay Stock Exchange (BSE) for just over $ 42 mn. Yesterday, it was reported that the Calcutta Stock Exchange also plans to sell a 51% stake and has invited bids from investors and strategic partners, in keeping with Indian regulations that require broker-owned exchanges to reduce the stake held by members to 49%, in a bid to make exchanges professionally run. PricewaterhouseCoopers is the advisor to the proposed sale.

Read the Business Standard article.
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NYSE, Goldman Sachs, General Atlantic, SAIF to buy 26% in NSE
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Singapore Stock Exchange takes 5% stake in BSE for $42.7 mn

Singapore Stock Exchange takes 5% stake in BSE for $42.7 mn

Singapore Stock Exchange (SGX) has picked up 5% in Bombay Stock Exchange (BSE). SGX is the second overseas bourse after Germany’s Deutsche Borse to buy a stake into the BSE. SGX has paid Rs. 5200 per share of BSE, totaling to a sale of $42.7 mn. This is the same amount paid by Deutsche Borse, which values the exchange at $855 mn. The BSE stake is the first foreign acquisition by the SGX, which is Asia’s third-largest listed bourse. Earlier, the New York Stock Exchange (NYSE) had acquired 5% in National Stock Exchange (NSE) for $115 mn valuing NSE at $2.3 bn.

Read the article in The Economic Times.
Related Post: Deutsche Borse buys 5% stake in BSE for Rs. 189 crores

DLF forms life insurance JV with Prudential Financial

A day after HSBC, Canara Bank and Oriental Bank of Commerce announced their three-way life insurance tie-up, real estate giant DLF has joined hands with US-based financial player Prudential Financial, Inc. (PFI) for a foray in life insurance business. The two partners will invest about $250 mn (Rs. 1000 crores) over the next ten years in the venture. Under the terms of agreement, Prudential will have 26% stake and the remaining 74% will be held by DLF Group in the JV. The joint venture has been christened as DLF Pramerica Life Insurance Company Limited. Pramerica is a brand name used in select countries by Prudential Financial. The company will initially have a paid-up capital of Rs. 100 crores, including Rs. 26 crores by Prudential. Both the partners would have representatives on the Board, while Prudential would take care of the operations. The company would be based in New Delhi

The company is applying for a license from the Insurance Regulatory and Development Authority (IRDA), and hopes to start operations by early 2008. Prudential is in talks with several banks and non-banking finance companies (NBFCs) to distribute its insurance products, apart from having its own distribution products.

Prudential Financial has about $616 bn of assets under management by December-end 2006 and operates in the US, Japan, Mexico as well as in many countries of Asia and Latin America.

Read articles in The Economic Times and Business Standard.

HSBC forms life insurance JV with Canara Bank and Oriental Bank of Commerce

British banking giant HSBC has formed a life insurance JV with Bangalore-based Canara Bank and New Delhi-based Oriental Bank of Commerce.

Canara Bank will hold 51% stake in the venture with HSBC taking 26% and Oriental Bank of Commerce settling with 23%. The business has been capitalized with a corpus of Rs. 2 bn ($44.97 mn).

HSBC joins a league of global firms such as New York Life, Prudential and Allianz in setting up an insurance venture in India which has a population of 1.1 bn people, and an insurance market that has doubled to more than $20 bn dollars in annual premiums since it was thrown open to foreign investment in 2000.

Read The Economic Times article.

ICICI Bank to transfer stake in insurance and AMC businesses to new company ICICI Holdings

ICICI Bank will transfer its holdings in its insurance and asset management businesses to a new holding company called ICICI Holdings. The bank would transfer to ICICI Holdings its 74% equity holdings in ICICI Prudential Life Insurance Company and ICICI Lombard General Insurance Company and 51% in Prudential ICICI Asset Management Company and Prudential ICICI Trust to the new entity.

The book value of ICICI Bank’s investment in ICICI Prudential Life is Rs. 1300 crores, ICICI Lombard General Insurance Rs. 600 crores and in ICICI Prudential Asset Management Company and the trustee company is about Rs 50 crores.

The decision to move these assets to the new company was prompted by the Reserve Bank of India (RBI) regulation that banks can invest a maximum of 20% of their net worth in subsidiary companies.

The bank has applied for approvals from the RBI and the Insurance Regulatory and Development Authority (IRDA) for transferring its stake in the insurance and mutual fund ventures.

ICICI Holdings may consider a public listing of its equity shares at an appropriate time to meet a part of the further capital requirements of ICICI Life and ICICI General. ICICI Bank intends to retain majority ownership in ICICI Holdings.

Read the Business Standard and The Economic Times articles.

SIDBI issues bonds, raises Rs. 500 crores

SME micro-finance agency State Industrial Development Bank of India (SIDBI) has raised Rs. 500 crores by selling 10-year bonds to a state-run insurance firm.

The coupon on the bonds is 9.6%, payable annually. SIDBI plans to sell another Rs. 500 crores worth of bonds to other investors through a private placement, on the same terms as its deal with the insurance company. The issue is rated AAA by CARE, signifying the highest safety. Bank of America was the sole arranger for this issue.

Article in The Economic Times.

Alagappan Murugappan returns to ICICI Securities as head of equities

Alagappan Murugappan has re-joined ICICI Securities, the investment banking division of The ICICI Group as head of equities. Prior to this, he was with private equity firm Deeva Capital where he was a partner and returns to the ICICI fold after an overall three-year stint in private equity. Before he joined ICICI Securities, Murugappan was with Cazenove, heading its Indian operations; Cazenove was primarily into equities broking. Murugappan began his career with Cazenove in London after qualifying as a solicitor in England. He holds an LLM from Cambridge University.

Murugappan was one of the three founding partners of Deeva Capital and had spent one year at Deeva. Deeva Capital is a start-up private equity firm with about $100 mn secured from international seed funding. Murugappan had left ICICI Securities in early 2004 to pursue a career in the private equity business. Then, Murugappan had joined Actis as an investment principal and was responsible for leading and coordinating fundraising activities relating to South Asia and for deal generation in India. Murugappan quit Actis to form Deeva in early 2006.

Read more in the article in AsianInvestor.net.

GIC, Deutsche Bank, L&T Infra submit bids for SICOM stake

Government of Singapore Investment Corporation (GIC), Deutsche Bank, Standard Chartered Bank and L&T Infrastructure have submitted their bids along with eight others with the Specified Undertaking of Unit Trust of India (SU-UTI) for acquiring its 40% stake in the State Industrial Corporation of Maharashtra (SICOM), the investment arm of the Maharashtra government. The tender invited by the SU-UTI closed in the second week of February and 12 parties have submitted their expressions of interest. Currently, the Maharashtra government holds 49% in SICOM, SU-UTI 36.5% and another 3.5% stake is held by UTI AMC.

ICICI Securities has been appointed as the merchant banker by SU-UTI for the stake sale. It will hold talks with the interested buyers soon. SU-UTI is also said to be in talks with the state government to offload its stake in SICOM.

SICOM has posted a net profit of Rs. 33.98 crores in 2005-06, up 69% from Rs. 20.15 crores in the previous year. SICOM offers advisory services to the state government, Maharashtra Electricity Regulatory Commission and other corporates. It is launching a second venture fund and would be soon offering merchant banking, treasury management and real estate development through subsidiary or joint ventures.

Read the Business Standard article.
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IFC, DEG planning to acquire a stake in SICOM
UTI to divest 36.58% stake in SICOM

MCX promoter Financial Technologies eyes stake in OTCEI, ISE

Financial Technologies, the promoter of the Multi Commodity Exchange of India (MCX), has shown interest in acquiring stakes in the Over the Counter Exchange of India (OTCEI) and the Inter-connected Stock Exchange (ISE). The company had recently applied to the Securities and Exchange Board of India (SEBI) expressing interest in floating a separate stock exchange for small and medium enterprises (SMEs). The company’s move to acquire a stake is seen as a step towards setting up an SME bourse. The OTCEI had placed Financial Technologies’ proposal to buy stake before its promoters and was awaiting their response. The ISE is expected to complete its valuation shortly, with the September 14 deadline for the completion of demutualization process approaching. Apart from Financial Technologies, a few other IT companies and private equity firms are learnt to have approached the exchange to acquire stake. The OTCEI is promoted by financial institutions such as UTI, ICICI, IDBI and LIC, while the ISE is promoted by 13 regional stock exchanges of Bangalore, Kochi, Jaipur, Bhubaneshwar and Mangalore, among others.

Read the Business Standard article.

SREI Venture to raise $250 mn infrastructure fund by April 2007

SREI Venture Capital is raising a $250 mn infrastructure-focused fund by April 2007. The company plans to tap the UK’s Alternative Investment Market (AIM) or the main UK market. This will be SREI’s first overseas fund-raising, with the company’s contribution at 2-5%. The new fund will focus on the entire gambit of infrastructure projects in India right from oil & gas to roads to power projects.

SREI Venture Capital is a wholly owned subsidiary of SREI Infrastructure Finance, which is into financing infrastructure equipment, infrastructure projects and renewable energy projects. SREI Infrastructure manages assets worth of around Rs. 4500 crores.

This is the second time that SREI is attempting to raise a Rs. 1000 crore-plus fund after it launched the India Global Competitive Fund (IGCF) in mid-2005; so far, the fund has raised around $80 mn (Rs. 360 crores) and is in the process of raising further funds.

International Finance Corporation (IFC), DEG, Germany (a financial institution owned by the Government of Germany), FMO, the Netherlands (financial institution owned by the Government of the Netherlands) and BIO (financial institution owned by the Government of Belgium) are among the large stakeholders in the company.

Read the Business Standard article.

Kotak AMC ties up with US-based T Rowe Price

Kotak Asset Management Company has tied up with the US-based T Rowe Price to launch a fund that will invest in the Luxembourg-domiciled T Rowe Price Funds Sicav-Global Emerging Markets Equity Fund.

Baltimore-based T Rowe Price is one of the world’s leading independent investment management firms. The fund is expected to be launched in the next couple of months. The tie-up with T Rowe encompasses only product initiatives.

The size of the fund can be up to $150 mn. The fund will aim to outperform the MSCI Emerging Markets Index over the medium-to-long-term by investing in T Rowe Price fund. The fund invests primarily in a widely-diversified, global portfolio of transferable equity and equity-related securities of companies established or conducting a significant proportion of their business activities in the emerging countries of Latin America, Asia, Europe, Africa and the Middle-East.

Read the article in Business Standard.

Merrill Lynch may up stake in India Infoline from current 14.1%

Merrill Lynch may acquire an additional stake in equity brokerage and financial services company India Infoline, over and above the 14.1% stake currently in the company. Merrill presently is negotiating with the company’s promoters.

If Merrill buys a further stake in India Infoline and its shareholding goes above 15%, it will have to make an open offer to the brokerage firm’s shareholders to pick up an additional 20%. At present, the promoters hold 36% stake, which is valued at about Rs. 600 crores at current market prices. The current market capitalization of India Infoline is Rs. 1670 crores. The deal would mark the entry of Merrill Lynch into retail brokerage business in India.

Read The Economic Times article.

Bank of India forms life insurance JV with Dai-Ichi Mutual Life Insurance and Union Bank

Bank of India has formed a life insurance JV with Japanese company Dai-Ichi Mutual Life Insurance Company and Union Bank of India. Bank of India will hold a 51% stake in the JV, while 26% will be held by Dai-Ichi and 23% by Union Bank of India. The bank is also contemplating a joint venture in Zambia soon. It has also entered into a strategic alliance with Union Bank of India and IDFC for loan syndication, international business, cash management, cheque collection and training.

Article in The Economic Times.

ICICI Bank raises $500 mn via five-year bond

ICICI Bank has raised $500 mn (Rs. 2205 crores) through dollar-denominated five-year bond overseas. The bank will pay a coupon of 62 basis points above the London Inter-Bank Offered Rate (LIBOR). Road shows for the issue were conducted in London, Singapore, Hong Kong, and Paris. Barclays Capital and Deutsche Bank AG were the lead managers to the issue. This is the second time that ICICI Bank is tapping the overseas market in 2007. In January this year, ICICI Bank had raised $2 bn through a bond issue in three tranches.

Read the article in Business Standard.

SBI Capital Markets tops Lead Manager rankings

State Bank of India’s i-banking unit SBI Capital Markets has been ranked as the top mandated lead arranger and advisor in the Asia-Pacific region by Project Finance International (PFI) for the year 2006. SBI Caps has also been ranked 9th and 3rd globally in the ‘Project Finance Arranger’ and ‘Project Finance Advisory’ categories, respectively, in 2006 by PFI. It is the only Indian investment bank to figure among the top 10. Leading global data, news and analytics provider Bloomberg has also ranked SBI Caps as the No. 1 Mandated Arranger for the second year in a row.

Read the Business Standard article.