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.

Ex-Merrill Lynch India i-banking unit head Munesh Khanna starts $300 mn distressed assets PE fund

Former head of investment banking at Merrill Lynch India Munesh Khanna has raised $300 mn-private equity fund to invest in companies that are distressed or need management help to revive their finances.

Munesh Khanna’s new private equity firm Halcyon Group, has been started along with Narayan Seshadri, ex-head of Andersen Business Consulting in India, and Abhay Soi, who oversaw the financial restructuring group at Ernst & Young. Halcyon will target annual returns of 25%, and would make investments in asset-backed businesses, including textile and paper manufacturers.

Munesh Khanna oversaw the Indian unit of NM Rothschild and worked at Arthur Andersen in India for 17 years before he joined Merrill Lynch. Amit Chandra, his former boss at Merrill Lynch, is also starting a private-equity fund, called New Silk Route Partners.

Read more in the Business Standard article.

BPO firm HOV Services acquires US-based firm Lason for $148 mn

Pune-based HOV Services has acquired US-based Lason for $148 mn (about Rs. 660 crores). The acquisition was completed through HOV’s US wholly-owned subsidiary HOV Services LLC and was funded by HOV Capital, Merrill Lynch and Apollo Management; the three of them have invested $63 mn, rest of the acquisition has been funded by debt.

HOV had recently acquired Tracmail and SAM Holdings for $3.74 mn. The Lason acquisition will help HOV gain entry in new business verticals like transaction processing, healthcare and media. Lason has an Indian subsidiary based in Chennai, with a headcount of 8000. It also has presence in China (1200 people), Mexico (250 employees) and North America.

Read more in the Business Standard article.

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.

Deutsche names Sanjay Sharma head of India equity capital markets

Investment banking in India is bearing witness to many high-profile people movements of late. After Citigroup’s investment banking head Surojit Shome’s move to Lehman Brothers India, we now hear of Merrill Lynch old hand Sanjay Sharma quitting Merrill to lead Deutsche Bank’s Indian equity capital markets operations. Sharma’s vacancy is being filled by Sumeet Puri, who will be moving from his post as Asian equity syndicate head from Hong Kong (See Related Post).

Indian equity capital markets volume jumped 22% to more than $19 bn last year, as total investment banking revenue hit a record $413 mn. Indian stocks rose more than 45% in 2006. Deutsche ranked second in investment banking revenues behind Citigroup, with $42 mn in revenues from underwriting stock and bond deals and advising on mergers.

Investment banks like Lehman Brothers, Goldman Sachs and UBS are expanding their
India teams as the country’s companies become bigger global players. Lehman last month poached Citigroup’s Surojit Shome as head of investment banking for India. Bankers, particularly non-resident Indians, are keen to move to Mumbai and New Delhi as top salaries approach the same levels as those in Singapore and Hong Kong, and the market yields increasingly large and interesting transactions. However, intense competition between banks has taken a bite out of fees, with equity deals only paying an average of 1.6%, compared with 2.3% for Hong Kong offerings and up to 7% for initial public offerings in the United States.

Read the article in Reuters.com.

Merrill names Sumeet Puri as head of India equity capital markets

Merrill Lynch has named Sumeet Puri as head of equity capital markets for its Indian operations as Wall Street firms rapidly expand their teams in the booming Indian capital markets. Sumeet Puri has been head of Asian execution and syndication and will also be in charge of Indian structured origination. Puri has partly spent his career in Mumbai, and is one of a growing number of bankers who are returning to India as deal volumes heat up and salaries for top talent become competitive with those in more developed markets like Hong Kong.

Merrill has increased its stake in its DSP Merrill Lynch JV in India to a controlling 90% from 40% for a consideration of $500 mn. Merrill was the fourth-ranked book-runner of Indian equity deals last year, according to market data provider Dealogic.

Indian investment banking revenues rose 23% to a record $413 mn in 2006, although fees on individual deals tend to be lower than in other markets due to intense competition. Indian equity deals had an average fee of about 1.6% last year, compared with nearly 2.3% for an average Chinese deal.

Read the article in Reuters.com.

BSE to stick to May deadline for float

The Bombay Stock Exchange (BSE) will stick to the May 2007 deadline of completing its initial public offering (IPO) and is talking to select foreign exchanges for a possible partnership (See Related Post).

The exchange has appointed Morgan Stanley, Merrill Lynch and Kotak Securities as its merchant bankers for the proposed IPO. For valuation, the exchange is banking on the Sensex brand.

Read the Business Standard article.

Merrill Lynch, ChrysCapital invest in Shriram City Union

Chennai-based Shriram City Union, the financial services arm of the Shriram Group has received private equity funding of Rs. 192 crores from Merrill Lynch, ChrysCapital and Cambridge Place Investment Management. The investors have picked up a 30% stake in the company by way of buying 40 lakh shares each at a price of Rs 160 a share.

The Shriram City’s equity capital base would increase to Rs. 43 crores from Rs. 27.1 crores, and promoters’ holding would come down to 54% from 73.37%. Spark Capital facilitated the deal.

Shriram City reported a net profit of Rs. 22.34 crores in the half year ended 30 September 2006 on a total income of Rs. 143.75 crores against PAT of Rs. 14.81 crores on income Rs. 94.03 crores during the same period last year. On BSE, it closed at Rs. 160.05 a share down 0.22% from the previous close of Rs. 160.40 a share.

The Shriram Group companies have been attracting a lot of private equity funding of late. Its engineering company Shriram EPC has attracted financing from TPG Newbridge, UTI Venture Funds, Bessemer Ventures, ChrysCapital are some of the PE firms that have been investing in the Shriram Group companies.

Read The Economic Times article.

BE Billimoria & Co. receives funding from Indivision

Indivision, the private equity fund promoted by Future Capital, has acquired a 26% stake in Mumbai-based contract construction company BE Billimoria & Co. for an estimated Rs. 75 crores. This is the $425 mn-fund’s first investment in the real estate sector and Future Capital has announced plans to enter the hospitality sector. The management of BE Billimoria estimates turnover for this year to be around Rs. 200 crores and is looking at trebling this figure in the next five years through a pan-India presence. The company is also considering a possible IPO in a year.

Currently, the promoters, Kaiyoze Billimoria and Digant Kapadia, each hold 16.5% stake in the company, while the rest is held by Merrill Lynch Capital Markets (4%), Indivision (26%) and other equity investors.

BE Billimoria has worked on residential and commercial projects with different partners. Some of the major projects that that the company has completed are IDBI Towers, Imax Theatre, Hotel Leela, Hotel Hyatt Regency and Reserve Bank of India among others, in the commercial space and Cadbury House, Hinduja Plaza and Palm Beach are some of the company’s projects in the residential space. The company has partnered with HDFC, Sun Group, IDFC and other real estate funds for various projects. This is the first time they have received private equity funding. The real estate sector, valued at $12 bn, is growing at 35-40% per annum. The sector has seen some large equity deals in the last few months with nearly $350 mn in investments flowing into the sector.

Read the article from The Economic Times.

BE Billimoria & Co. receives funding from Indivision

Indivision, the private equity fund promoted by Future Capital, has acquired a 26% stake in Mumbai-based contract construction company BE Billimoria & Co. for an estimated Rs. 75 crores. This is the $425 mn-fund’s first investment in the real estate sector and Future Capital has announced plans to enter the hospitality sector. The management of BE Billimoria estimates turnover for this year to be around Rs. 200 crores and is looking at trebling this figure in the next five years through a pan-India presence. The company is also considering a possible IPO in a year.

Currently, the promoters, Kaiyoze Billimoria and Digant Kapadia, each hold 16.5% stake in the company, while the rest is held by Merrill Lynch Capital Markets (4%), Indivision (26%) and other equity investors.

BE Billimoria has worked on residential and commercial projects with different partners. Some of the major projects that that the company has completed are IDBI Towers, Imax Theatre, Hotel Leela, Hotel Hyatt Regency and Reserve Bank of India among others, in the commercial space and Cadbury House, Hinduja Plaza and Palm Beach are some of the company’s projects in the residential space. The company has partnered with HDFC, Sun Group, IDFC and other real estate funds for various projects. This is the first time they have received private equity funding. The real estate sector, valued at $12 bn, is growing at 35-40% per annum. The sector has seen some large equity deals in the last few months with nearly $350 mn in investments flowing into the sector.

Read the article from The Economic Times.

NYMEX initiates talks to acquire 9% stake in MCX

Multi-Commodity Exchange (MCX), whose IPO is one of the most looked forward to, is about to bring in a new strategic investor. The New York Mercantile Exchange (NYMEX) is said to be in discussions with MCX for a 7% stake. Earlier, Fidelity International had picked up 9% stake in MCX for $49 mn (Rs. 220 crores). Merrill Lynch is the advisor to MCX on the deal, as well as the manager to the issue. The deal may be valued anywhere upwards of $60 mn (Rs. 270 crores). Both exchanges have declined to comment on this issue. NYMEX had earlier tried to acquire ICICI’s 7% equity stake in NCDEX, which eventually went to Goldman Sachs. Founded by Financial Technologies India, MCX is India’s largest commodity exchange. It accounts for 56% of the total Indian commodity and futures market with an average daily turnover of about $1.5 billion. Indian exchanges are waiting for clarity on the FDI norms for exchanges, even as the government formulates the policy on foreign holding in Indian commodity bourses. SEBI recently issued guidelines for the BSE, proposing a cap of 49% on foreign holding, which includes 26% FDI and the balance 23% for FIIs. Industry anticipates that SEBI would maintain these norms for commodity exchanges in the country as well.

For more details, read the article from The Economic Times.