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

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.

Standard Chartered may buy stake in sick pharmaco Morepen

A Standard Chartered Bank investment arm may acquire stake in the ailing pharma company Morepen Labs, after New York-based and Asia-focused private equity fund Avenue Asia walked out of the deal last week. As per the latest debt restructuring plan, Standard Chartered and the key promoter of Morepen, Sushil Suri, will infuse Rs. 100 crores each in a bid to revive the company. Avenue Asia had earlier committed to invest Rs. 150 crores in the company, before they walked out of the deal.

The company has informed the stock exchanges that it would issue 24.4 mn equity shares and 53.6 mn warrants. These warrants will be issued to the new investor and the promoter; both will have the rights to subscribe to the equity of the company. However, the company has not officially announced the new investor. The warrants will be issued at Rs. 20 per share.

Read The Economic Times article.

Italian coffee company Lavazza buys Barista Coffee Company and Fresh & Honest Café for $125 mn

Lavazza, Italy’s largest coffee company with a turnover of $1.2 bn has acquired coffee chain Barista Coffee Company and coffee vending business Fresh & Honest for an estimated combined valuation of around $125 mn. The two coffee businesses belonged to the Chennai-based Sterling Infotech Group, controlled by NRI takeover tycoon C Sivasankaran. Lazard was the financial advisor to Lavazza on the deal.

C Sivasankaran had bought 65% in Barista from Turner Morrison three years ago, and later purchased the remaining 35% stake from the Tata Group. His Sterling Group was learnt to have paid around Rs. 65 crores for the acquisition of 100% in Barista. Sivasankaran had put the coffee chain on the block in August last year and had appointed Standard Chartered to look for a buyer.

Lavazza earns two-thirds of its annual turnover from packet sales of roast-and-ground coffee powder and the balance from out-of-home cafe and vending business. The company sells packet coffee under the Lavazza brand name through 24,000 outlets in 80 countries. It imports 12% of its total coffee beans from India.

Read the articles in Business Standard and The Economic Times.
Related Link: Lavazza to pump in Rs. 600 crores in Barista

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.
Related Posts:
IFC, DEG planning to acquire a stake in SICOM
UTI to divest 36.58% stake in SICOM

Syndicate Bank to raise Rs. 240 crores in Tier-II bonds

Syndicate Bank is raising funds to the tune of Rs. 240 crores from the bond markets by issuing upper-tier bonds with a 15-year maturity. It will have the right to call back the bonds after 10 years.

Syndicate Bank will exhaust its capacity to raise Tier-II bonds this fiscal if it raises Rs. 240 crores. The bank is eligible to raise upto Rs. 150 crores through hybrid perpetual bonds which qualify for Tier-I capital. The bank’s Rs. 240 crore-issue includes a Rs. 140 crore-green shoe option. The bank has fixed the coupon at 9.3% for the first 10-year period. After the 10-year period, if the bank decides against exercising the call option, it will step up the coupon by another 50 basis points (bps).

The bond issue proceeds would help Syndicate Bank fund its business growth and augment long-term resources. After the fund-raising, the bank’s capital adequacy ratio, currently at 11.34% will increase by 20-30 bps. The issue is being managed by AK Capital Services, Citibank, Darashaw, HSBC, IDFC, Standard Chartered Bank and UTI Bank. Syndicate Bank, with government holding of 66.5%, will also have the option of going public with a follow-on offer next year. It can offload government stake by another 14.5%.

Read The Economic Times article.

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.

REC to raise $200 mn in ECBs; StanChart gets mandate

The Rural Electrification Corporation (REC) is planning to raise up to $200 mn of yen-denominated loans from the Japanese market in external commercial borrowings (ECBs).
Standard Chartered Bank has been given the mandate for syndicating the loans.

This is the first time that REC will raise funds through the ECB route. REC had earlier raised funds from multilateral funding agencies like Japan Bank for International Co-operation (JBIC) and Germany’s KfW Bankengruppe. But this is the first time that the mini-ratna will borrow directly from the overseas market on commercial terms. The Reserve Bank of India (RBI) has recently cleared the corporation’s overseas borrowing plans.

The funds would be raised at 47 basis points (bps) above the yen-linked six-month LIBOR currently at around 0.60%. The total cost of borrowing including the administrative cost of raising the loan will be around 61 bps over yen-LIBOR. Funds raised through ECB will be used for REC’s core activity to finance and promote rural electrification projects across the country. REC also provides financial assistance to state electricity boards and state government departments.

Read the complete article in The Economic Times.