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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JP Morgan to set up asset reconstruction business in India

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.

Havell’s acquire German lighting firm Sylvania for $300 mn

Havell’s India has acquired Germany’s SLI Sylvania’s lighting business for $300 mn (about Rs. 1350 crores) in an all-cash deal, from a group of private equity firms. This is the biggest overseas takeover by an Indian electrical equipment manufacturer in the lighting business.

The acquisition was made through Havell’s Dutch subsidiary, Havell’s Netherlands BV and would be funded through a mix of debt and internal accruals. The combined revenues are expected to be $1 bn. Deutsche Bank was the advisor to Havell’s on the transaction and Barclays Capital would provide the financing to the deal.

SLI Sylvania operates in key geographies of Europe, Latin America and Africa through 10 manufacturing facilities. The company would get access to all of Sylvania’s markets across the world except Mexico, US, Australia and New Zealand where the business is owned by German lighting firm Osram, one of the largest lamp manufacturers in the world. Sylvania Osram had sold its lighting business to a consortium of three private equity funds comprising Subros, JP Morgan and DDG Capital and Havell’s has acquired the business from this consortium.

Read more on this in Moneycontrol.com.
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Havell’s may buy UK lighting company for Rs. 1000 crores

Apollo Hospitals has UK-based Abbey Hospitals on its radar

Indian healthcare major Apollo Hospitals may bid for Abbey Hospitals, a UK-based hospital chain. Abbey Hospitals has been put up for sale by its parent company, the British healthcare group Covenant. It operates a chain of six hospitals. Any sale would happen at an estimated deal size of $100-150 mn. JP Morgan’s private equity arm, One Equity Capital is likely to partner Apollo Hospitals in the buyout. The fund already has investments in the Apollo Group companies.

Covenant Group is controlled by the Cognetes Fund. Cognetes acquired Covenant from Phoenix Private Equity for about $170 mn in 2005. Capio, the other identified target is also controlled by private equity funds Apax Partners and Nordic Capital. Deloitte is managing the sale process of Abbey and is expected to kick off the procedure in the next few weeks.

Read The Economic Times article.

JP Morgan, AIG to launch mutual funds in India

JP Morgan Asset Management, a manager of over $1.013 trn assets across the world, and the AIG group that manages $670 bn will be launching their mutual funds for local investors in India. Both have received the Securities and Exchange Board of India (SEBI) approval for opening shops in India. Fidelity Investment in early 2005 was the last big global player that entered the Indian mutual fund space. Aegon Global, Dawnay Day, Nikko Asset Management, a JV between Ambit Capital and Nikko AMC of Japan, Bharti-AXA, another JV between Bharti Enterprises and asset management firm AXA of France are some of the other players wanting to float funds in India. Currently, the domestic mutual fund industry has 30 players managing Rs. 339,000 crores of assets. JP Morgan plans to start the domestic business with an initial net worth of Rs. 45 crores, AIG has earmarked $20 mn. The Indian regulator requires asset management companies to have a minimum net worth of Rs. 10 crores.

JP Morgan is headed by Krishnamurthy Vijayan, who was heading the JM Financial Mutual Fund for five years. Nandkumar Surti, also of JM Financial, will be heading JP Morgan’s fixed income business in India. Similarly, Saurabh Sonthalia, who heads AIG Global Investment Group, was earlier with DSP Merrill Lynch Mutual Fund. On the investment management side, Tushar Pradhan, who was earlier with HDFC Mutual Fund, will be the Chief Investment Officer, Equities at AIG.

Read the article on livemint.com.

JP Morgan to set up asset reconstruction business in India

JP Morgan is planning to set up an asset reconstruction company (ARC) in India and is seeking regulatory approval for the same. It has already identified and tied up partnerships for the proposed venture, but declined to name them. The company has already picked up around six distressed assets and is looking out for more.

JP Morgan has invested around $700-800 mn in distressed assets and principal investments in the Asian markets; it is not disclosed as to how much has been invested in the Indian market. The existing Indian assets might not be transferred to the new company immediately

JP Morgan is the second player in the recent months to announce the setting up of an ARC. Anil Ambani’s Reliance Capital has already approached the Reserve Bank of India for approval to promote an ARC, Reliance Asset Reconstruction Company. It has tied up with Corporation Bank, Indian Bank, General Insurance and some foreign players as equity partners. A number of foreign banks and funds have shown interest in the country’s bad loan market. US-based George Soros and US fund Blue Ridge have acquired 26% stake in Reliance Asset Reconstruction, while Barclays is close to picking up a nearly 10% stake in ICICI Bank-promoted ARCIL.

Read the article in Business Standard.

Tata Consultancy Services to raise funds to hedge forex risk

The Times of India reports that Tata Consultancy Services is planning to raise funds reportedly of around $200 mn to manage risks on its foreign exchange exposure. TCS earns nearly all its income in foreign exchange and volatile exchange rates impact its margins. J P Morgan will be managing the transaction. Citigroup, ABN-AMRO, Standard Chartered and HSBC are in touch with TCS on the same. The exercise is part of TCS’ treasury management as it includes significant forex component. The possibilities include of either going in for a forward contract or a mix of forward contract and options.

Reliance Communications raises India’s largest FCCB issue worth $1bn

Reliance Communications (RCL) has raised $1 bn through foreign currency convertible bonds (FCCBs). This is the largest-ever FCCB issue from India and was oversubscribed 3-4 times by investors from Asia, Europe and the US. The bonds have a maturity of 5 years and would be convertible to equity shares at a 30% premium to the then prevailing market price.

The proceeds from the issue will be utilized to part-finance the company’s $2.5-bn expansion programme. The company has announced the expansion of coverage to 15,000-20,000 new towns and was proposed to be funded through a mix of internal accruals and debt.

JP Morgan and HSBC advised the firm on this FCCB issue. This is the second FCCB offering by RCL within a year. In March 2006, RCL had completed an FCCB issue to raise $500 mn. In December 2006, RCL raised $1 bn in debt from international markets. The five-year unsecured loan was facilitated by ABN-AMRO, Standard Chartered and Citibank.

Read the article in The Economic Times.

MindTree Consulting IPO opens on Feb 9; priced at Rs. 365 – 425

MindTree Consulting Limited, an IT services company, is coming out with its maiden public offering of its equity shares, which opens on February 9, 2007 and close on February 14, 2007. The company proposes to offer 55.9 mn equity shares of Rs. 10 each at a price band of Rs. 365/- to Rs. 425/- per equity share through a 100% book building process method. The issue will constitute 15.00% of the post-issue capital of the company. Kotak Mahindra Capital, JM Morgan Stanley, JP Morgan and Macquarie are the managers to the issue.

MindTree is organized into two divisions – IT Services and R&D Services. IT Services comprise IT strategic consulting, application development and maintenance, package implementation and product engineering services. The IT Services business unit offers such services mainly to industries such as manufacturing, travel and transportation, banking, financial services and insurance. R&D Services are organized into two divisions – Engineering, which provides product realization services including architecture and design, re-engineering and product assurance to technology and product firms; and Research, which conceives and develops intellectual properties, primarily in the short-range wireless communication segment and licenses and customizes such intellectual properties for clients.

Read the press release here.

In a related development, MindTree is about to acquire a domestic semiconductor design company in an all-cash deal. The target company is reported to employ around 200 people. It has a sales presence in the US and a delivery centre in India. MindTree has signed a non-binding term-sheet with this firm and due diligence is on. It expects the acquisition to add to its IC (integrated chip) design capability and will also bring in new customers. This will be MindTree’s third acquisition in its seven-year history. The company had earlier made two acquisitions, the software division of ASAP and its subsidiary in September 2004 and Linc Software Services in June 2005.

Read the article in Business Standard.

T Rowe Price plans mutual fund business in India

T Rowe Price, one of the world’s largest investment management companies, plans to enter the mutual fund business in India. They follow a slew of global asset management companies such as Credit Suisse and JP Morgan eyeing a pie of the country’s booming asset management market. T Rowe Price is already invested in companies such as Bharti Airtel, Balaji Telefilms, Financial Technologies, ICICI Bank and Moser Baer through T Rowe Price New Asia Fund.

T. Rowe Price provides a broad array of mutual funds, sub-advisory services, and separate account management for individual and institutional investors, retirement plans and financial intermediaries. The company also offers a variety of sophisticated investment planning and guidance tools. It manages over $308.1 bn assets combining the assets of T. Rowe Price Associates, Inc., T. Rowe Price International, Inc., T. Rowe Price Global Investment Services and T. Rowe Price Global Asset Management. Several global majors are seriously looking at the country’s AMC business, buoyed by the rising stock markets and the low penetration of the mutual fund products among retail investors. Last week, UBS acquired Standard Chartered’s Indian AMC business. Korean company Mirae Assets Group and AIG are also awaiting the regulator approval, as all these companies plan a solo entry into the country.

Read the Business Standard article.

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.