Deloitte launches dedicated private equity practice in India

Deloitte Touche Tohmatsu India Private Limited is launching a dedicated private equity practice in India, to be called as Deloitte Corporate Finance Services India Private Limited. Deloitte Corporate Finance will work closely with the Asia Pacific regional practice, UK & US member firms of Deloitte Touche Tohmatsu and the rest of the DTT network.

Deloitte Corporate Finance will address the needs of the growing private equity market and provide investors with transaction-related services across the complete deal cycle from origination to completion. The team comprises professionals with significant experience in the global mergers and acquisitions and private equity services business and is led by Sandeep Gill, Managing Director and Bimal Modi, Director, who prior to transferring to India, were part of the corporate finance practice of Deloitte & Touche in London.

Deloitte Corporate Finance plans to address the needs of the fast-growing private equity market in India by providing specialist services which include due diligence, bid support,
sale and purchase agreement advisory and completion accounts work.

Read the pres release here.

JM Financial’s Infinite India to invest $400 mn in Indian real estate

Infinite India Investment Management, a private equity initiative anchored by the JM Financial Group, has launched a real estate fund. The fund plans to invest $400 mn in residential, commercial and retail sectors. Kartik Sharma, the Chief Investment Officer at Infinite India reveals that his decision is based on the fact that fundamental demand drivers in the realty sector are very strong, with respect to job creation and housing demand.

Kartik Sharma’s view of the Indian real estate market and opportunities:

On avenues of investment – Tier I and Tier II markets, where they have already made 5 investments; with capital being relatively tight in the market, in terms of debt capital and IPO action likely to be relatively slow for a little while, optimistic about private equity funds in providing finance for various real estate development projects

On direct participation in projects or backing existing companies planning to come into IPOs –done both so far and will actually continue to do both; invested in both project level investments as well as entity level deals

Time horizon for completely investing $400 mn and kind of returns expected – to invest the capital in the next 2-3 years; since investing in an emerging market illiquid security, expecting reasonable returns somewhere in the neighbourhood of 30%

On being bullish on the real estate sector given the inflationary pressures and the regulatory problems – fundamental demand drivers in terms of job creation and in terms of housing demand are very strong; also nascence of the Indian market with lots of pockets of inefficiency as well as in-house good expertise in terms of deal structuring

Ahmedabad-based Global Network signs JV with Michael Porter’s OTF Group

Ahmedabad-based Global Network is forming a joint venture company in India with US-based OTF Group, promoted by strategic management specialists Michael Porter and Michael Fairbanks. OTF Group is a management consulting firm specializing in providing frameworks and technology for building competitive clusters, especially in developing countries.

The joint venture will use the expertise and cluster development models of OTF and replicate similar models in the Indian small and medium enterprise (SME) sector. The JV will also provide technology for cluster development, including analysis, foreign marketing research and cluster selection and integration of data. The JV will help OTF to communicate with the government and identify the clusters and the areas to be developed. Under cluster development, the JV will try to create global and regional markets, instead of protected markets, with micro-economic focus, flexible and meritocratic organizations and informed investment choices with support from development partners.

Article in Business Standard.

IL&FS Investment Managers invests $100 mn in real estate startup QVC Realty

IL&FS Investment Managers Limited (IIML), the private equity arm of IL&FS, has invested $100 mn in QVC Realty, a real estate startup, making it the first venture capital-backed real estate start-up in India. QVC Realty is promoted by Prakash Gurbaxani, who was heading the real estate joint venture between Tishman Speyer and ICICI Ventures.

The initial investment has already been deployed to buy a 100-acre plot near Gurgaon. QVC will develop a township on this land in the next three years. Talks are also in an advanced stage for setting up another township of similar size in Bangalore’s periphery. In four years, the combined capital value of the two projects is expected to touch Rs. 3000 crores. The two partners have not yet decided on a fixed profit sharing ratio. However, the management (QVC and IIML) may take their respective stake on delivery of projects. IIML has also committed to partner QVC in all its future real estate projects.

IIML’s investment in QVC will be modular. Depending on the evaluations of the project, IIML will arrive at how much stake will be swapped and the profit sharing ratio. Currently, the equity raised will be used to finance the purchase of land. For the further development, QVC may take the debt route.

Article in DNA Money.

Trent partners PE real estate firm Xander for retail expansion

Trent, a Tata group company, has tied up with global private equity investor Xander for developing real estate properties for its various retail ventures. As per the agreement, Xander will invest in the development of an institutional retail real estate portfolio in the country. Trent will have anchor tenancy rights and manage the portfolio with Xander. Currently, Xander invests in the Indian real estate market through Xander Master Fund, a real estate fund.

Xander Real Estate Partners, part of the Xander Group, recently bought a 20% stake in a joint venture between Reliance Industries and the Maker Group, to develop commercial, residential and retail real estate in Bandra-Kurla Complex in Mumbai. The 20% stake was reportedly valued at over $100 mn.

Read more in The Economic Times article.

Morgan Stanley to acquire 20% in Indian hospitality company IHHR Hospitality for $35-40 mn

Global investment bank Morgan Stanley is close to picking up 15-20% stake in IHHR Hospitality for $35-40 mn. IHHR owns the Ananda and Ista brands of spas and hotels. It is currently in the process of expanding its footprint in Delhi, Hyderabad, Pune and Ahmedabad with plans to have nine properties under the Ista brand over the next three years. Morgan Stanley will have a position on the board of the company,

The company first set up its flagship property Ananda in the Himalayas in 1998. The second spa resort, Shanti Ananda Maurice, was opened in Mauritius late last year. IHHR forayed into the business hotel segment in April 2006 by opening Ista Bangalore.

Read more in The Economic Times article.

Macquarie Bank planning a $1 bn India infrastructure fund

Australia-based Macquarie Bank is setting up a $1 bn India-centric infrastructure fund. Macquarie is one of the largest managers of infrastructure funds in the world, and manages infrastructure assets worth $22 bn worldwide. It is likely to set up the fund through its infrastructure subsidiary, Macquarie Infrastructure Group (MIG). Though the bank is yet to make a formal announcement regarding the fund, it has reportedly already started evaluating deals and projects.

Macquarie is the second global financial services provider looking at an India-dedicated infrastructure fund. The first has been announced by Citigroup which is rolling out a dedicated infrastructure fund in partnership with IDFC and the backing of the Ministry of Finance.

Macquarie Bank started its Indian operations in 2005 and is currently focusing on its securities and research business. The proposed fund would mark its foray in asset management in India. While Macquarie’s infrastructure funds are listed on the Australian Stock Exchange, its proposed India-based entity may not list on the Indian bourses. The company recently started its infrastructure funds in Singapore and Korea both of which are listed on the local bourses.

Read more in The Economic Times article.
Related Post:
Citigroup, Blackstone, IDFC, IIFC tie-up for $5bn India Infrastructure Financing Initiative fund

Hindustan Lever sells Sangam Direct to Spinach promoter Wadhawan Food Retail

Unilever India Exports, a 100% subsidiary of Hindustan Lever, will sell is direct selling business Sangam Direct to Wadhawan Food Retail, for an undisclosed sum. Sangam Direct is a non-store home delivery retail business, while Wadhawan Food Retail operates the Spinach chain of food and grocery stores.

The Sangam business was conceptualized by Hindustan Lever in 2001 to experiment with the direct-to-consumer channel combining the twin benefits of convenience and value. The idea was to test market it in Mumbai under the brand Sangam Direct before taking a decision to extend it across the country. The decision for a larger roll-out was put on hold since Hindustan Lever felt it was not in its strategic interest to continue to be present in this format of organized retail.

Wadhawan Food Retail, is currently present in Mumbai through Spinach, which has about 23 outlets in the city. The Wadhawan Group has diversified business interests including Dewan Housing Finance Limited, a private sector housing finance company.

Read the Business Standard article.
Related Post:
Wadhawan Food Retail close to acquiring HLL’s Sangam Direct

Indian Hotels to acquire US-based Hotel Campton Place for $60 mn

Indian hospitality major Indian Hotels, which manages the Taj Group of Hotels, Resorts and Palaces is acquiring US-based Hotel Campton Place for around $60 mn (Rs. 264 crores). Union Square, San Francisco-based Hotel Campton Place is a 110-room luxury boutique hotel situated on the west coast of the US.

The acquisition cost includes estimated transaction costs and the hotel is intended to be acquired in partnership with financial investors. The board of directors of the Indian Hotels company have approved of the acquisition subject to necessary statutory regulations. The sale-purchase agreement was signed yesterday and the transaction is scheduled to be completed on April 30, 2007.

Indian Hotels has been very active on the acquisition front with regards to its American business strategy. Last year, Indian Hotels had signed an agreement to purchase the Ritz-Carlton Boston for $170 mn. Besides, in 2005, Taj Hotels entered into a 30-year management contract agreement to operate and manage the Pierre on New York’s Fifth Avenue at a lease price of $5 mn a year.

Article in Zee News.

CVC International allowed investing in Flemingo Duty Free Shops by FIPB

Citicorp Venture Capital International’s proposal to acquire 15% stake in Flemingo Duty Free Shops Private Limited (FDSPL) has been approved by the Foreign Investment Promotion Board (FIPB). Flemingo Duty Free runs duty-free shops at various airports and seaports. The deal is valued at more than Rs. 100 crores. The Ministry of Finance had already given the go-ahead to the investment. However, the proposal was awaiting approval pending with the FIPB.

Flemingo would initially issue 1 mn convertible preference shares to CVC International for about Rs. 1000 each, total amounting to Rs. 100 crores. These preference shares would then be converted into equity at a later date for a premium. Citicorp’s shareholding in Flemingo would be up to a maximum of 15% of the paid-up equity of the company.

The current shareholding structure of Flemingo Duty Free Shops includes 51.22% equity stake held by Flemingo International, a company based in British Virgin Islands, and a 24.87% stake held by various NRIs. After conversion of Citicorp’s preference shares; Flemingo International, NRIs and Citicorp would respectively hold 43.54%, 21.14% and 15% in FDSPL, taking the total FDI to 79.68%.

Read more in The Economic Times article.
Related Post:
Flemingo Duty Free Shops sells 15% stake to Citigroup Venture Capital International; awaits regulatory nod

ADM Capital to invest $107 mn in textile firm S Kumar’s and retail arm Brandhouse

Hong Kong-based private equity firm ADM Capital is investing $107 mn into textiles firm S Kumar’s Nationwide Limited and its retail arm Brandhouse Retail. ADM will invest $82 mn to acquire a 10% stake in S Kumar’s and $25 mn will be invested in Brandhouse Retail for another 10% stake in the company. S Kumar’s will issue convertible warrants to ADM Capital. The deal values the S Kumar’s share at Rs. 82.5, while the Brandhouse Retail share has been valued at Rs. 85. S Kumar’s will utilize $30 mn to repay lenders, while $52 mn will be used to fund capital expenditure plans.

S Kumar’s is a Mumbai-based Rs. 1000-crore textiles and apparel conglomerate. It operates in the worsted, ready-to-wear, consumer textiles, home textiles segments. Brandhouse Retail, which was de-merged from S Kumars, will utilize the entire $25 mn to fuel growth plans. It is also expected to be listed on the exchanges as a separate entity by August. Brandhouse will invest Rs. 400 crores to open 1000 stores across the country over the next three years. It owns and operates S Kumar’s apparel and textile showrooms and manages international brands such as Dunhill, Escada and Stephens Brothers.

Read more in the DNA Money article.
Related Posts:
S Kumar’s retail venture to go public in 3-4 months
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Kotak PE invests Rs. 100 crores in logistics firm DRS Logistics, $12 mn in Home Solutions Retail

Kotak Mahindra Bank, through its private equity fund, the India Growth Fund, has invested Rs. 100 crores in Hyderabad-based DRS Logistics, better known by its brand name Agarwal Packers and Movers. The funding would be used to set up logistics parks across six cities where land has already been acquired.

The Rs. 200 crore-company has also applied to the director general of civil aviation (DGCA) to kick off an air cargo airline in the country. Besides, it is in talks for leasing two aircrafts to operate services in six sectors, covering the four metros and Bangalore and Hyderabad.

DRS owns warehousing infrastructure in Gurgaon, Hyderabad, Mumbai and Chennai totaling 1.5 mn sq ft in space, and is looking to add an equal amount of space next year expanding to a total of six cities to set up logistics parks. The company plans to invest Rs. 150 crores on this.

Read the DNA Money article.

Kotak’s India Growth Fund is also investing $12 mn in Kishore Biyani’s Home Solutions Retail India Limited, which is set to roll out Home Town, its new format modeled on Home Depot. This is the second round of private equity investment in the company after ICICI Ventures invested $27.3 mn in October 2006.

Home Town will offer everything a customer would need to build, furnish and decorate a home including building material, paints, tiles, electrical and plumbing products and services, furnishings, furniture and consumer durables. According to estimates, the current home market in the country is estimated at between Rs. 75,000 crores and Rs. 100,000 crores which is largely serviced by the unorganized market.

The first Home Town is slated to roll out on March 31 from Noida and thereafter in six other cities within six to nine months in cities, including Hyderabad, Bangalore, Pune, Thane, Surat and Ahmedabad at an investment of Rs. 150-175 crores. Each of the Home Town formats, which will be spread over at least 125,000 sq. ft., will also incorporate e-Zone, the electronics lifestyle format and the Collection-i, furniture and home accessories formats.

Read the DNA Money article.

Credit Suisse forms JV with GE for emerging markets infra fund

Zurich-based universal bank Credit Suisse has entered into a joint venture with General Electric (GE) for an infrastructure fund. The fund will invest in emerging markets with a substantial portion devoted for investments in the Indian infrastructure sector. The size of the fund is estimated to be around a $ bn-plus. The fund-raising is currently going on. The announcement of the fund comes in the wake of the resumption of Credit Suisse’s institutional broking business in India, after a gap of six years. Credit Suisse was suspended from trading in India for two years from April 2001 to April 2003 by the Securities and Exchange Board of India (SEBI) for alleged price manipulation.

The bank has roped in the services of V Anantharaman as head of investment banking in India. Mr. Anantharaman was earlier the head of corporate advisory services at Standard Chartered Bank.

Read the Business Standard article.
Related Post:
Credit Suisse launches Indian brokerage operations

Nakheel, DLF form JV for infrastructure development projects worth $12 bn

Delhi-based real estate giant DLF is reportedly forming a joint venture with Nakheel, the largest property development company in the United Arab Emirates. The JV is being formed for mega infrastructure development projects at an estimated cost of $10-12 bn.

Each project, one near the National Capital Region and the other in Maharashtra, along the coastal region, would be spread over 20,000 acres, and would involve the development of industrial infrastructure and township components, including residential, commercial, retail and recreational centres. Each partner would bring around $3 bn to the table while the remaining would be financed through debt.

Nakheel is behind some of the most iconic projects in the Middle East such as The Palm, The Dubai World and Dubai Waterfront. Nakheel currently has 17 major projects, worth more than $30 bn under development.

Read more in The Economic Times article.

Andhra state government housing firm Deccan Infra to list; to raise Rs. 2000 crores

Andhra Pradesh Housing Board (APHB) subsidiary, Deccan Infrastructure & Land Holdings Limited (DILH) will raise up to Rs. 2000 crores through an initial public offering, most likely to come out in June – July. The company will divest 15-20% equity. The Government of Andhra Pradesh holds 49% equity and the APHB 51% in DILH. Deccan Infra is into the development of integrated townships and urban infrastructure either on its own or through JVs with other public bodies and private-sector companies. The managers to the issue are JM Morgan Stanley, DSP Merrill Lynch and SBI Capital Markets.

Based on the track record of its parent and armed with a land bank of about 8000 acres, Deccan is valued at over Rs. 12,000 crores on the lower side. Property consultants Trammell Crow Meghraj and Cushman Wakefield are carrying out a valuation exercise on the land bank.

Read the article in DNA Money.

Trinity Capital to pump in $10 bn to develop satellite towns around Mumbai, Delhi, Bangalore

Business Standard reports that the New York-based real estate investment fund Trinity Capital has lined up $10 bn, which may go up to $12 bn, to develop three satellite cities on the outskirts of Mumbai, New Delhi and Bangalore. Each of the satellite townships, to be built over a 1000 acre spread, will see an investment of $2 bn – $4 bn. Trinity is also in the process of lining up $2.5 bn for investing across 10,000 hotel rooms in the country over the next five years.

Reliance Industries giving shape to global ambitions; in talks with Carrefour, Dow Chemicals for strategic alliances

Reliance Industries is reportedly in talks with French retail major Carrefour as well as other global players for acquiring controlling stake in these companies to reach out to international consumers with its basket of Indian food produce.

Reliance has created a war-chest of Rs. 100,000 crores and is looking to create international business arms for accessing global markets by leveraging on its supply chain that was put in place as part of the farm-to-fork project. Besides Carrefour, Reliance is also talking to Tier-2 companies like Salisbury and Marks and Spencer for food business.

Carrefour on its part has denied any sort of discussions with Reliance for either a controlling stake in the former or a joint venture. In a related development, Reliance is also in talks with Dow Chemicals and is expected to form a petrochemical JV.

3i in talks to invest $100 mn in Mantri Developers

UK-based private equity major 3i is in talks with Mantri Developers for investing up to $100 mn. Mantri and 3i have had several rounds of talks and the investment could be routed into a special purpose vehicle (SPV) for a specific project. Mantri Developers has already attracted private equity funding in an earlier round from Morgan Stanley Real Estate Fund for 10% stake for $68 mn, valuing the company at $650-680 mn in early 2006.

Some of the biggest PE transactions in the realty space include TPG-Axon investing $100 mn in DivyaSree Developers, Citigroup Property Investors tying up with Nitesh Estates to invest $100 mn to build the 250-room Ritz Carlton in Bangalore, UK-based Trinity Capital infusing £9.1 mn in Hyderabad-based Manjeera Construction, New York-based Och-Ziff Capital which picked up a 25% stake in Nitesh Estates for $ 51 mn and US-based Samsara Capital investing $32 mn in IDEB Projects.

So far, 3i has made seven direct investments in India, the latest being in Indiareit, the real estate fund of the Piramal Group. In the last 18 months 3i has invested over $200 mn in India, and plans to invest a further $1 bn in Asia over the next three years.

Read more in the article in The Economic Times.

Shapoorji Pallonji to raise $400 mn in private equity for real estate ventures

The 140-year-old construction firm, the Shapoorji Pallonji Group has been bitten by the private equity bug. It is raising around $400 mn from private equity investors to fund its real estate ventures. Three government-owned PE funds, Government of Singapore Investment Corporation (GIC), Dubai Capital and Abu Dhabi Investment Authority (ADIA), will pick up 30-40% equity in each project. The group is rolling out at least half-a-dozen projects in various cities with a total project cost of $1-1.2 bn.

Shapoorji Pallonji has a land bank of 2000 acres of prime land in cities like Mumbai, Pune, Chennai, Kolkata, Gurgaon, Nagpur and Mysore. It is currently developing around 550 acres (around 50 mn sq. ft.) of residential and commercial space. The projects include IT parks hotels, shopping malls and residential properties. All these projects are FDI (foreign direct investment)-compliant projects, and are located at prime areas, which will attract substantial premium. Each project is being developed by a different special purpose vehicle (SPV), and equity by SP group is expected to be rooted through one company.

Read The Economic Times article for more.

Flemingo Duty Free Shops sells 15% stake to Citigroup Venture Capital International; awaits regulatory nod

Citigroup Venture Capital International will acquire 15% stake in Flemingo Duty Free Shops Private Limited. Flemingo runs duty-free shops at various airports and seaports. The deal is valued at more than Rs. 100 crores, as per data available from Foreign Investment Promotion Board (FIPB).

Flemingo would initially issue convertible preference shares to Citigroup for about Rs. 100 crores. These preference shares would be converted into equity at a later date for a premium. Citigroup’s shareholding in Flemingo would be up to a maximum of 15% of the paid-up equity of the company.

Flemingo has sought FIPB approval to issue 1 mn convertible preference shares for Rs. 1000 each to Citigroup. The green signal from the Board is yet to materialize since the Finance Ministry plans to go into details of the deal.

FIPB had deferred Flemingo’s proposal pending completion of investigation and due action by revenue department. Currently, Flemingo International, a company based in British Virgin Islands, holds 51.22% equity stake in Flemingo while various NRIs hold 24.87% stake. After conversion of Citigroup’s preference shares, Flemingo International, NRIs and Citigroup would respectively hold 43.54%, 21.14% and 15% in Flemingo, taking the total FDI to 79.68%.

Read more in The Economic Times article.

The Adani Group plans Rs. 1500 crore-IPO for Mundra Port and SEZ

Adani group company Mundra Port and Special Economic Zone Limited will raise money from the capital markets. It has filed a draft red-herring prospectus with SEBI. The issue size of the company would be around Rs. 1500 crores. The IPO is expected to hit the capital market between last week of May and first week of June. The Adani Group has appointed DSP Merrill Lynch, JM Morgan Stanley, SSKI, Enam Financial and SBI Capital Markets as their lead managers to the issue. Mundra Port and SEZ is the first company from the SEZ and the port sector to hit the capital markets. The proceeds of the issue would be utilized for the further development of the Mundra port and SEZ.

Read The Economic Times article.

Carrefour said to be in talks with HDFC Group for Indian retail venture

Carrefour is reportedly partnering with the HDFC Group for it Indian retail operations. The actual entity could be a private equity arm.

In a somewhat complicated yet a highly complicated structure, HDFC could float a separate holding company, most likely a PE fund, which would, in turn, tie up with a third entity for getting Carrefour’s franchising rights for India. Meanwhile, it is understood that Carrefour will completely retain the back-end wholesale operations, as 100% FDI is allowed in cash-and-carry segment. Even though Carrefour cannot invest in the equity of the retailing business, it will get its own people to spearhead the venture. Details of the exact arrangement and modalities that the two companies are looking at could not be found. Both Carrefour and HDFC have declined to comment on the issue.

It is to be noted that Carrefour cannot do business in India in general retail on its own as foreign direct investment is not allowed in the sector. At the same time, RBI regulations prohibit HDFC or HDFC Bank from getting into retailing.

Carrefour has particularly evinced interest in HDFC because of obvious real estate considerations. For retailers like Carrefour, who generate most of their business from large format hypermarkets, getting viable real estate is the prime concern. HDFC, on its part, has a separate realty fund, which has access to a huge land bank in various parts of the country. In addition, this fund has an equity stake in some large scale projects of prominent real estate developers, such as Ansal API, Pune based realtor Vascom Engineers and L&T Urban Infrastructure. The holding company could leverage its relationship with these developers in getting access to prime real estate for the retail business.

Read The Economic Times article.

Indiareit funds invest $32 mn in Mumbai-based Neptune Developers

Indiareit Offshore Fund and Indiareit Fund Scheme I, real estate private equity funds with a joint corpus of $300 mn, made investment of approximately $32 mn in a project involving development of commercial properties in Kurla, Mumbai by Neptune Developers Private Limited. Neptune, one of the renowned real estate developers in Mumbai, is engaged in the business of real estate construction and development in India. Nishith Desai Associates acted as legal counsel to Indiareit Offshore Fund and Indiareit Fund Scheme I for this investment.

Wadhawan Food Retail close to acquiring HLL’s Sangam Direct

Wadhawan Food Retail Private Limited (WFRPL), which operates the Spinach chain of food and grocery stores, is leading the race to acquire Hindustan Lever’s Sangam Direct business. Reliance Retail, Subhiksha and RPG Retail are reportedly the other interested parties.

Sangam Direct is a unique e-tailing format very exclusive to Unilever across the globe. It has been operational for over three years and has been very popular with households in Mumbai. The service now covers almost 80% of Mumbai.

Read the article in DNA Money.

Amalgamated Bean Coffee Trading to spin off coffee chain Cafe Coffee Day into a separate company

Amalgamated Bean Coffee Trading Company Limited (ABCTCL) is planning to spin off its coffee chain Cafe Coffee Day into a separate entity. The motive behind such a move would be to list Cafe Coffee Day in the next three years. It is expected that the coffee bar business will have a turnover of a little over Rs. 800 crores by 2010 from the current Rs. 380 crores. It had recently raised close to Rs. 160 crores through a mix of debt and equity from Sequoia Capital and International Finance Corporation.

Cafe Coffee Day has its business spanning the entire value chain of coffee consumption in India. Its different divisions include Coffee Day Fresh ‘n’ Ground (which owns 386 coffee bean and powder retail outlets), Coffee Day Xpress (which owns 500 Coffee Day kiosks), Coffee Day take-away (which owns 7000 vending machines), Coffee Day Exports and Coffee Day Perfect (FMCG packaged coffee) division.

ABCTCL in its roadmap has stated it aims to double the number of coffee bars to 800 in three years, while the coffee powder vending stores will number up to 650 from the current close to 400. The Xpress brand on the other hand will be paced up to 2500 outlets from the current 500 in three years’ time frame. Cafe Coffee Day is present in 70 cities across India, and is branching out to foreign shores by setting up cafes in Vienna, Austria and is planning to set shops in West Asia, Eastern Europe, Eurasia, Egypt and South East Asia in the coming months, besides in Pakistan and the US.

Read the Business Standard article.

The PVP Group picks up 51% in software training and real estate firm SSI

PVP Group has acquired a 51% stake in Software Solution Integrated (SSI) from the promoters, led by Kalpathi Suresh, for Rs. 613.14 crores. The stake sale would be followed by a mandatory public offer which is said to cost the PVP Group an additional Rs. 239.20 crores for 120 acres of prime land bank in Chennai and Ooty.

SSI was started more than 13 years ago as a software training company, which ventured further into software development and later into real estate. The SSI shareholders now have an option to exit when the acquirers make public offer to them at Rs. 208 a share.

For more details, read The Times of India article.

Shoppers’ Stop, Nuance form airport retail JV

Shoppers’ Stop and Nuance Group AG have formed a joint venture to bid for contracts to set up duty-free retail outlets in Indian airports. The JV is among the five short-listed bidders for a contract to set up duty-free retail outlets at Mumbai international airport. In the airport retailing space India, with a projected annual passenger growth of 10.4%, is considered a strong growth potential market. Nuance with an annual turnover of $1.7 bin has a presence in 17 countries with 340 shops across 57 airports operating in duty-free core categories like cosmetics, liquor, chocolates and specialty stores like food and beverage outlets.

Read the Business Standard article.

Changi Airport forms airport modernization JV with Tata Realty & Infrastructure

Singapore’s Changi Airport International (CAI) is entering into a joint venture company with Tata Realty & Infrastructure, a subsidiary of the Tata group, to pursue airport modernization projects in India. The two partners have signed a memorandum of understanding (MoU) to set a joint venture company in which Tata Realty will hold a majority 51% stake and CAI 49%, to invest in, develop and manage Indian airports.

The scope of the venture could include bidding for the impending modernization and operations of the Chennai and Kolkata airports, India’s third and fifth busiest airports respectively, which the government wants to develop as alternative hubs to Mumbai and Delhi. The venture could also extend to investments in some of the 35 smaller airports, as well as the proposed Rs. 4235 crore-Navi Mumbai airport project. Regarding Chennai and Kolkata airports, the government is expected to make a formal announcement of a privatization programme. Chennai handled 6.77 mn passengers and Kolkata 4.4 mn in 2006. The Navi Mumbai airport is expected to absorb 10 mn passengers a year in 2013, its first year of operation, and 40 mn passengers a year by 2030.

CAI is wholly owned by the Civil Aviation Authority of Singapore. It had earlier teamed up with telecom giant Bharti for the Mumbai airport modernization project but later pulled out citing lack of confidence in meeting tender conditions. Besides the Tata group, CAI is exploring the option of teaming up with hotel major Leela Group to develop Kannur airport in north Kerala. Though it had withdrawn from the Mumbai airport project, CAI has teamed up with GVK Group, the present developers of the Mumbai airport, to implement a 100-day improvement programme and assist them in reviewing their master plan.

Read the Business Standard article.
Related Post: Tata Group forms Tata Realty & Infrastructure with Rs. 4500 crore-fund

HDIL in talks with PE funds for pre-IPO stake sale

Mumbai-based real estate developer Housing Development and Infrastructure Limited (HDIL) is in talks with private equity and real estate funds such as ICICI Ventures, Kotak Realty and HDFC Realty for selling a 4% stake for about Rs. 550 crores. It is quite possible that these three firms together can subscribe to the pre-IPO portion.

HDIL is in the process of diluting 4% stake in the company as part of its pre-IPO placement. It plans to do an IPO to raise over Rs. 2000 crores some time soon. HDIL has developed approximately 72.8 mn square feet of saleable area and 5.5 mn square feet of rehabilitation housing area so far. The company is in the process of expanding its property development activities to other parts of India.

Article in The Economic Times.

Tata Group forms Tata Realty & Infrastructure with Rs. 4500 crore-fund

The Tata Group has promoted a real estate arm, Tata Realty & Infrastructure, which will invest in infrastructure and real estate projects. The company has a corpus of Rs. 4500 crores. Dinesh Chandiok, the former CEO of Ansal Properties to head Tata Realty, will lead the initiative.

Apart from the Tatas, foreign investors too would be sponsors of the fund. There would be different fund schemes for different projects in phases. International Consultancy firm KPMG has been involved in strategizing the Tatas’ real estate business. Tata Realty would look at investing in housing complexes, special economic zones and construction of bridges, ports and airports.

Read more in The Times of India article.

Vornado, Uppal Group to finance Rs. 5000 crore-SEZ

New York-based Vornado Realty Trust, a leading operator of office buildings in the US, and Uppal Group, an Indian real estate player is forming a joint venture to fund a 263 acre-tax-free enclave in Gurgaon. The enclave will require a massive investment of Rs. 5000 crores and house information technology and other exclusive service businesses. Vornado will acquire a 50% stake in the project. The project will be paid for through a number of debt, internal accruals, and equity from both companies.

Read the article in Indianrealtynews.com.

Indian Tourism Infrastructure acquires Gem Tours for Rs. 400 crores

Mumbai-based Indian Tourism Infrastructure Limited (ITIL) has taken over city-based Gem Tours & Travels Private Limited for a consideration of Rs. 400 crores. Gem Tours will get a 26% stake in ITIL. Gem Tours is acquiring 1000 acres of land in Mandangadh and 1400 acres in Sindhudurg along the Konkan coastline. ITIL plans to establish special economic zones, especially for tourism, at Mandangadh and Sindhudurg. The company proposes to apply for necessary permissions for these proposed SEZs.

ITIL plans to purchase luxury yachts, helicopters and create the necessary tourism infrastructure. The company is planning a time share concept for yachts for the first time in India. Besides, it would start 40 hotels across the country and set up a convention centre, which can accommodate 10,000 people at a time. ITIL plans to recruit 10,000 agents all over India to carry out diverse business interests like packaged tours, air tickets, time share vacations, real estate, hotel chains, chartering of private jets, helicopters, cruise sailing, and yacht hiring. ITIL may enter the capital markets soon.

Read the Business Standard article.

IDEB Projects gets PE funding of $32 mn from Samsara Capital and Fortune Partners

Bangalore-based engineering construction and property development company IDEB Projects has received a private equity funding of $32 mn (Rs. 150 crores) from Samsara Capital of USA and Fortune Partners of Singapore. IDEB has been involved in the construction of infrastructure projects like roads, bridges, build-operate-transfer (BOT) projects, high-rise buildings, mass housings, elevated and intricate RCC structures and treatment plants since 1998. PricewaterhouseCoopers were the financial advisors to the transaction.

The funding will be used by IDEB for building land banks in 6-8 cities. At present, the company has a construction business order book of Rs. 1100 crores and is developing over 8 mn square feet of real estate projects in Bangalore, Chandigarh, Goa, Jaipur, Mysore, Pune and Uttaranchal. The company is building a 4 acre-IT Park in Dehradun in a joint venture (JV) with the state government through the State Industrial Development Corporation, a Rs. 165 crore-design-and-build contract for Delhi Metro for an elevated viaduct of 4.55 km, and five elevated stations for Phase II of the Delhi Mass Rapid Transport System in a JV with the Shanghai Urban Construction Group.

After the fund infusion, the company is targeting consolidated revenues of over Rs. 1500 crores in 2007-08. The company is expected to achieve consolidated revenues of about Rs. 550 crores in 2006-07 from its engineering construction and real estate businesses. It is looking at an IPO sometime in 2008-09.

Read the article in Business Standard.

Jain Irrigation to acquire US-based Aquarius Brands for $21.5 mn

Jain Irrigation Systems will buy 100% stake in California-based Aquarius Brands from Habasit Holdings for $21.5 mn (Rs. 94.7 crores) in an all-cash deal. With the acquisition, Jain irrigations will become the second largest drip irrigation firm in the world. The acquisition will be made through Jain Irrigation, Inc., the wholly-owned US subsidiary of the company. Earlier, Jain Irrigation had acquired Chapin Watermatics, a leading manufacturer of drip taps in Watertown, New York in May 2006.

Read the article in Business Standard.

Bangalore-based floriculturist Karuturi to acquire Netherlands-based rose grower Sher

Bangalore-based floriculture company Karuturi Networks is close to acquiring the Netherlands-based Sher, the world’s largest producer and supplier of roses, for about $50 mn (Rs. 220 crores). Sher has greenhouses in the Netherlands, Kenya and Ethiopia with an annual production of 600 mn roses.

The acquisition will be funded through internal accruals and the proceeds of a $25 mn FCCB issue. UTI Bank and the London-based Silverdale Services are advisors to the transaction. Established in 1994, Karuturi Networks currently processes 12 mn roses annually. Karuturi Networks has 60 hectares of greenhouses in India and Ethiopia for rose cultivation. With this acquisition, Karuturi will get a strong brand in Sher as well as European facilities.

Read The Economic Times article.

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.

Singapore-based real estate firm Ascendas to raise $1 bn fund for India & China

Singapore office and industrial parks landlord Ascendas is in talks with potential private equity investors to raise a combined $1 bn for two private-equity funds it is setting up for its expansion in India and China. The initial size of the India investment fund, which will focus on developing land into industrial parks, will be $500 mn. Ascendas has assets valued at $640 mn in its India properties representing about 3.6 mn square feet. Ascendas already manages an office real estate investment fund in India fund that invests in information technology (IT) parks. General Electric (GE) Commercial Finance Real Estate, a unit of conglomerate GE, is one of the investors in the India fund. Ascendas is in talks with banks for a Singapore listing of the first India fund.

Article in The Business Times, Singapore.

Boutique i-bank Atherstone to raise infrastructure, real estate funds

Atherstone India Invest (AII) is raising two India-dedicated funds. These would include an infrastructure fund of $1 bn and an exclusive real estate fund of €250 mn. The funds will be partnered by European pension funds and insurance companies that are increasingly hungry for India’s infrastructure and real estate sectors. AII is an asset management and business advisory firm dedicated to European and Indian cross investment businesses.

AII is a joint venture between the Mumbai-based Atherstone Group and India Invest, a firm based in Switzerland. AII is promoting commercial ties between India and Europe through India-focused funds, business consulting and merger and acquisition advisory. Atherstone Group is a two-year old global investment banking firm with an India focus. The real estate fund will be raised by March-end, followed by the infrastructure fund. The real estate fund is an open-ended fund; it will keep raising funds and deploying them in various projects.

The infrastructure fund will target a judicious mix of infrastructure service companies, technology-based vendors and project development companies. Target firms would be mid-market Indian firms having turnover up to $30 mn. Infrastructure service companies could include those engaged in toll road management, billings and collections in the power sector, demand-side energy management, logistics, and water conservation. However, AII is likely to avoid project development companies, except in sectors that offer higher returns, and where limited funds leveraged with project finance can have an impact. Similarly, technology-based vendors could include specialized vendors in railway signaling, automated tolling, electronic power meters, solar applications, energy efficiency, and pollution control.

The real estate fund will focus on townships, special economic zones (SEZs), large commercial projects and also Tier-II cities like Hyderabad and Pune. UK-based asset management group Belgravia Financial Services will help AII in risk management and asset management process.

Article in The Economic Times.

US-based boutique hotel brokerage Molinaro Koger plans $300 mn India-dedicated hotel fund

The Economic Times reports that Molinaro Koger, a US-based hospitality advisory and brokerage firm, is raising a $250-$300 mn fund for investing in hotel assets in India. Molinaro Koger has facilitated around $3 bn of hotel transactions and funding globally in 2006. it will launching the fund towards the end of 2007. The fund would largely target greenfield hospitality projects, especially those in the under-served markets such as religious tourist hotspots and beaches. The fund will be managed by Molinaro Koger’s Capital Markets Group. Molinaro Koger opened its India office in January this year in Mumbai and is in the process of ramping up the India team that would include hospitality advisors, analysts and brokers. Abhijit Das will be the Managing Director of Molinaro Koger India.

Citigroup Property Investors to invest $120 mn in Nitesh Estates’ luxury hotels business

New York-based Citigroup Property Investors (CPI) will invest around $120 mn in Bangalore-based Nitesh Estates’ luxury hotels. CPI would partner with Nitesh Estates on the latter’s forthcoming hotel properties. CPI reportedly also has committed itself to 30% in the group’s recently announced $100 mn 5-star hotel property on Bangalore’s Residency Road. Nitesh Estates is planning to build four more hotels in Goa, Chennai, Hyderabad and Kochi. The company is believed to have acquired land in Goa and is in the process of acquiring land in other locations. CPI has already invested close to $250 mn in India and plans to invest a further $500 mn. Of this, around 40% is expected to be invested in hotels and service apartments. Nitesh Estates had earlier received a PE funding of $100 mn from New York-based Siachen Capital for an undisclosed stake and was also known to have divested a 25% stake for $55-60 mn to New York-based hedge fund Och-Ziff Capital Management Group.

Read the Business Standard article.

Ambit RSM merges tax practice with PriceWaterhouseCoopers

Indian accounting firm Ambit RSM Private Limited and global accounting major PriceWaterhouseCoopers (PwC) are merging to form India’s largest accounting firm with a total staff strength of around 4000 people. The deal size has not been disclosed. RSM Advisory Services Private Limited, the taxation advisory arm of Ambit RSM Private Limited, would merge with PwC’s tax practice effective April 1; the combined operations would be under the common brand of PwC. RSM managing partner Ashok Wadhwa will not join the combined firm and will continue to manage the Ambit group of businesses. The Ambit Group comprises of Ambit Corporate Finance, Ambit Capital and the new joint ventures of Ambit with TV18 and Centurion Bank of Punjab for online broking and with Nikko Asset Management for asset management business in India. Current revenues of PwC are at about Rs. 650 crores and would scale up to Rs. 800-900 crores post-merger. RSM has some large clients such as General Electric, Wal-Mart, Microsoft, Sony, British Airways, Bayer Group, Visa, Dell Computer, and in India companies from the Tata Group.

Read the article in The Economic Times.
Related Post:
Ambit RSM up for sale; may tie with UK-based accounting firm BDO International

HCC to raise Rs. 5000 crores for real estate business

Hindustan Construction Company (HCC), a construction company is planning to raise Rs. 5000 crores for investing in HCC Real Estate Limited, its real estate arm through a combination of private equity participation, FCCB issue and a possible IPO. The company is also mulling setting up its own real estate fund for India.

The funds will be used to expand the company’s real estate business in India, which will include developing a land bank of about 5000 acres, building IT parks and other commercial spaces and large townships.

HCC has been traditionally into mega power projects and tunnels. It has recently started giving more thrust to its real estate, roads and infrastructure projects. Over the years, the company’s margins have been declining due to the dwindling share of power in its order book, and rising cost of raw materials. The company at present has six hydro power projects in its portfolio. Real estate, on the other hand, presents an exciting opportunity, with higher purchasing power and an economy growing at a fast pace.

The company will focus on developing townships outside Mumbai and start developing IT parks in Mumbai, Navi Mumbai and Thane, apart from the ongoing project to develop 2 mn sq. ft. of IT park in Vikhroli. With an investment of Rs. 500 crores in developing the IT Park, the company is expecting revenues worth Rs. 100 crores a year. Within the city, the company will also undertake slum redevelopment projects covering an area of 4 mn sq. ft. in Maharashtra in the Mumbai Metropolitan region.

Read The Financial Express article.

SEBI prohibits Gammon Infrastructure IPO for a year

The Securities and Exchange Board of India (SEBI) has blocked the Rs. 450 crore-public offer of Gammon Infrastructure, restraining the company from tapping the capital markets for a year. This follows the December 21, 2006 order barring the parent company of Gammon Infrastructure, Gammon India from accessing the capital markets.

SEBI had stopped Gammon India and four others including promoter-chairman Abhijit Rajan and two companies controlled by him, from accessing the capital markets for a year for routing Gammon funds to subscribe to its rights issue in 2001. However, back then, it had not named Gammon Infrastructure Projects in the order. Gammon India will now appeal against the SEBI order with the Securities Appellate Tribunal (SAT). The SEBI has communicated to Gammon India that since the parent company holds significant stake in Gammon Infrastructure, the one-year prohibition on Gammon India would be applicable to Gammon Infrastructure as well.

At present, Gammon India holds 82.5% in Gammon Infrastructure, which following the IPO was supposed to come down to 20%. US hedge fund Och-Ziff also owns 12.5% in Gammon Infrastructure. The company is debt-free and has around Rs. 100 crores cash and sees no funding issues to delay its ongoing projects.

Read the article in Business Standard.

IFC to assist private companies in railway operations

International Finance Corporation (IFC), the private equity arm of the World Bank, is interested in participating in the new public-private partnership (PPP) framework of the Indian Railways. Private operators interested in entering the container train business and the dedicated freight corridor project of the Indian Railways and IFC seeks to assist private players in fulfilling their financial commitments. The Railway Ministry has already asked IFC to consider investing in the dedicated freight corridor as well as the container train segment. IFC already has investing experience in the railways of Latin America and Europe.

Read The Economic Times article.

IL&FS PE arm to raise $900 mn this year; may team with Trikona Capital

IL&FS private equity arm IL&FS Investment Managers (IIML) will raise funds worth $900 mn in 2007 for investments in infrastructure, real estate and hospitality.

In addition to raising a $400 mn-proprietary fund, it’s also in talks with the UK-based PE fund Trikona Capital to raise another $500 mn spread over two sector specific funds. Apart from this, IIML will also set up a $1 bn PE fund with Abu Dhabi Investment Corporation for investments in infrastructure. IIML and Trikona Capital already have two sector-specific PE funds for investments in real estate and hospitality. The corpus of these funds is $100 mn each. IIML’s proposed PE funds with Trikona Capital will also be for real estate and hospitality. The corpus of both the sector-specific funds is expected to be $250 mn each.

The proprietary fund that will be raised by IIML will invest only in infrastructure projects in India. The proposed fund would be raised by the company over the next three to four months.

IIML currently manages assets worth $1 bn in several funds and also manages a $56-mn proprietary fund of IL&FS. IIML has deployed $10 mn of its $100 mn PE fund set up jointly with Trikona Capital for investments in infrastructure and real estate. In October last year, the fund invested $9 mn in IL&FS Transportation Networks Limited for a 2.5% stake. The second fund, jointly promoted by IIML and Trikona Capital, is the hospitality fund which has deployed $60 mn of its $100 mn. The $1 bn PE fund with ADIC will make investments in infrastructure assets in West Asia and North Africa. Both ADIC and IL&FS will commit around $50 mn to the new fund.

Read The Economic Times article.
Related Post: IL&FS to float $1 bn PE fund with Abu Dhabi Investment Company

Indian Government to partner FIIs and PE funds to create National Shelter Fund for the housing sector

The Indian Government along with foreign institutional investors (FII) and private equity funds is planning a special purpose vehicle (SPV) called the National Shelter Fund to provide affordable houses in the country.

The government would raise its contribution for the fund through a proposed 1% cess on stamp duty collections levied by states. The creation of SPV is likely to be announced in the forthcoming Budget.

The proposed SPV will be on the lines of Istithmar of Dubai and Temasek of Singapore, but unlike these funds, the fund would only be used for domestic purposes. This would infuse a fresh leash of life into the country’s crumbling housing sector. The fund, with an initial corpus of Rs 1000 crores, would be invested in middle income group (MIG) housing across the nation.

More in the article in The Economic Times.

Deutsche Bank’s real estate arm in talks with Emaar-MGF for investments worth $200 mn

Deutsche Bank’s real estate arm is in advanced stages of talks with real estate major Emaar-MGF to invest around $200 mn in the company. If the transaction goes through, it could possibly be the biggest deal in the real estate sector in India. As of now, the largest private equity transaction in the realty space has been Morgan Stanley Real Estate Fund’s $125 mn investment in Mumbai-based Oberoi Constructions (See Related Post).

Deutsche Bank’s investment will be done through its New York-based real estate arm RREEF. RREEF is one of the biggest real estate investors in the world with over $65 bn in assets under management. It currently has seven separate funds around the world which make investments in real estate and infrastructure. It provides services in fund management, investment management, asset management, property management, leasing, research, construction and development.

The stake Emaar-MGF will dilute is not known as the transaction is expected to be a quasi-equity deal. RREEF will hold convertible debentures in the company. Last year, Citigroup and New York Life Insurance had picked around 2% equity in Emaar-MGF Land for a consideration of $100 mn. Evolvence India Fund had recently invested $41 mn in Emaar-MGF.

Emaar-MGF is a joint venture between the Dubai-based real estate company Emaar Group and India-based MGF Developments. It plans to hit the capital market sometime in the third quarter of 2007. It is expected that the JV will dilute about 5-10% of its equity in the IPO. On the hospitality front, Emaar-MGF recently entered a 50:50 JV with French hospitality chain Accor. The JV aims to build and operate a chain of 100 budget hotels with an investment of $300 mn. Of this, the first 20 are likely to come up on Emaar-MGF’s existing land bank.

Read The Economic Times article.

Swiss Finance Corporation invests additional Rs. 9 crores in Nitco Tiles

The Economic Times reports that Mauritius-based Swiss Finance Corporation Limited has picked up 380,000 shares of Nitco Tiles for around Rs. 9 crores. Its stake in the company now stands at nearly 6%. The shares were bought in an open-market transaction. Swiss Finance earlier had 4.27% stake representing 951,000 shares in Nitco Tiles. Its total number of shares has now gone up to almost 1.33 mn in Nitco.

Tata Chemicals, Total Produce enter fresh produce distribution JV

Business Standard reports that Tata Chemicals and Europe’s largest fresh produce firm Total Produce Plc have entered into a 50:50 JV to set up distribution facilities for fresh fruits and vegetables across in India. The venture will initially establish facilities in North and East India at a cost of Rs. 26 crores. It would leverage the company’s association with farmers through 500 Tata Kisan Sansar agri-services centres.

IL&FS Investment Managers to invest Rs. 130 crores in Ansal SPVs

IL&FS’ PE arm IL&FS Investment Managers (IIML) will invest in two special purpose vehicles (SPVs) being floated by Ansal Properties and Infrastructure (APIL). IL&FS will reportedly get 49% equity in the SPVs with an investment of about Rs. 130 crores.

The two SPVs will develop projects in Gurgaon. While the first SPV is being floated for an integrated township, the second SPV will develop an IT special economic zone (SEZ). IL&FS is the second private equity fund to commit investments in an APIL SPV in the last six months. Earlier, HDFC Realty Fund had taken 33% equity in an APIL SPV for developing an SEZ in Greater Noida.

In recent times, APIL has also attracted private equity investment in the holding company by diluting promoters’ stake. The company had raised Rs. 175.8 crores through a 5% private placement with Citigroup in October last. Later, in November, George Soros had bought close to 1% equity in the company for Rs. 25 crores through the secondary market.

Read the article in The Economic Times.