Jet to raise capital through PE route

India’s largest private airline Jet Airways is in negotiations with private equity players Blackstone, TPG Capital and Temasek for raising Rs 400-450 crore reported the Economic Times.

The company is raising money for meeting the operational expenses of running the loss-making Air Sahara, which it recently acquired. The operational expenses for Jet are huge since Air Sahara is not very profitable. Reportedly TPG Capital is looking to co-invest along with Singapore-based fund Temasek, while Blackstone is considering going solo.

The promoters currently hold 80% stake in the company which will come down proportionately along with the other shareholders’ stake. The private equity investor may take 8-9% stake.

Jet Airways recently acquired Lucknow-based Air Sahara in a deal valued at Rs 2,300 crore. While Jet had paid Rs 400 crore upfront, it will pay Rs 550 crore in four annual instalments, starting next year. Air Sahara will be renamed JetLite and will be a 100% subsidiary of Jet Airways.

Related Articles:
Jet Airways to buy Air Sahara for around Rs. 1450 crores
Jet Airways seeking $400 mn via private equity

Jet Airways to buy Air Sahara for around Rs. 1450 crores

Jet Airways has agreed to buy out Air Sahara for around Rs. 1450 crores, lower than what it had agreed to pay (Rs. 2300 crores) in January 2006 when the two had signed a contract that got into trouble and litigation.

Both the airlines have seemed to have reached an agreement on the commercial aspects of the deal, which will be submitted to the arbitration panel on 12th April at 5.30 pm, after two days of hectic negotiations. The offer includes Rs. 500 crores that Jet had paid Air Sahara last year. However, it is unclear whether the deal includes the Rs. 300-350 crore-debt on the books of the latter. The offer will not include Rs. 180 crores that Jet had already paid in April 2006 for the normal business operations of Air Sahara.

Jet Airways, in January last year, had signed a share-purchase agreement to acquire 100% equity of Air Sahara. As part of the deal, Jet paid Rs. 180 crores for Air Sahara’s revival and Rs. 500 crores for Air Sahara shares besides depositing Rs. 1500 crores in an escrow account opened for the purpose. However, the deal got into trouble after Jet cited lack of government clearance as the reason to walk out of the deal. The matter then went to court that ordered for the arbitration.

Read more in The Economic Times.

Texas Pacific among other PE firms in race to acquire Air Deccan stake

US-based private equity giant Texas Pacific Group is among three others who are in talks with low-cost carrier Air Deccan for picking up a minority stake. Air Deccan is planning to raise around $100 mn, to be utilized for expansion, by diluting 5-7% stake to private equity firms, and has mandated Edelweiss Capital (see Related Post) for the same.

Edelweiss has short-listed 3-4 players willing to invest in Air Deccan, and a deal is likely to be signed in the next 10 days. Among them, Texas Pacific has emerged as the most aggressive bidder. Texas Pacific has made investments in airlines globally. However, it had dropped its plans to invest $30 mn in Delhi-based budget carrier SpiceJet owing to differences in valuation.

Indian airliners are tapping private equity avenues for shoring up capital to strengthen their balance sheets and to meet their expansion needs. SpiceJet has raised nearly Rs. 300 crores from private equity firms, while the Chennai-based Paramount Airways has managed to get over Rs. 80 crores. Meanwhile, full-service carriers such as Kingfisher Airlines and Jet Airways are also in talks with private equity for raising funds.

Read the article in the Business Standard.
Related Post:
Texas Pacific pulls out of investing in SpiceJet

JP Morgan PE fund to invest Rs. 250 crores in railway engineering firm

New York-based private equity firm JP Morgan One Equity is acquiring 26% stake in Hyderabad-based Patil Infrastructure Holding for around Rs. 250 crores, valuing the firm at around Rs. 1000 crores. The announcement is expected in a couple of weeks.

Patil Infrastructure focuses on railway track engineering. The group has its activities spread in manufacturing of concrete sleepers, rail fittings for normal lines, elevated and underground track for metro rail, switches and crossings, ballast-less track suitable for high-speed lines, bridges, tunnels and aprons.

Read more in The Economic Times article.

Hong Kong-based Kerry Logistics buys 51% stake in Chennai company RFF

Hong Kong-based logistics firm Kerry Logistics Network has picked up a 51% equity stake in Chennai-based logistics company Reliable Freight Forwarders for an undisclosed sum. The Indian promoters will hold 49% in the company now renamed as Kerry Reliable Logistics.

Though the deal has been announced recently, Kerry Reliable Logistics has been in operation in India since October 2006. The focus of Kerry Reliable Logistics in India will be mainly on establishing bonded warehouses and distribution centres. The company plans to establish 2-5 warehouses and distribution centres and the entire exercise will be backed by the Hong Kong company’s IT systems and solution infrastructure. The company will largely look at opportunities in providing four main services – products, sourcing, distribution and project logistics. It hopes to clock revenues to the tune of Rs. 100 crores in 2007-08.

Kerry Logistics Network is part of the Hong Kong-based KUOK Group with diversified interests in logistics, property, hotels & resorts. The 10-year old Reliable Freight Forwarders is part of the Indev Group engaged in providing CFS, transportation, warehousing and container repair services.

Read the article in The Economic Times.

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.

Essar Shipping share buyback fails; company to remain listed

Essar Shipping has failed in its buyback of shares and subsequent de-listing from the bourses. As a result, the company has decided to continue being listed on the stock exchanges. The Essar Shipping share buyback, being facilitated through a reverse book-building process, closed on March 16. The company has notified the exchanges that the buyback offer for its de-listing did not get sufficient bids.

The company had fixed the floor price for the buyback offer at Rs. 31.62. Maximum number of bids was believed to have been received at a price of Rs. 50-51 per share, while 15-20 mn bids were even received at a price of Rs. 75 per share. However, the total number of bids was not adequate to move ahead with the delisting process.

Meanwhile, the delisting process of another two group companies, Essar Oil and Essar Steel has been progressing as planned. The ballot papers have been sent to the shareholders and after they are returned, a public notice would be made and delisting would commence through RRB, after market regulator SEBI fixes the floor price for both the stocks.

Read The Economic Times article.
Related Post:
Essar Group to de-list Essar Steel and Essar Oil

German shipping major inks JV with Shipping Corporation of India

The Times of India reports that German shipping company Peter Dohle Schiffahrts KG, one of the largest privately held shipping company in the world has entered into a JV with India’s largest shipping company, the Shipping Corporation of India (SCI). The 50:50 JV mainly entails jointly operating bulk carriers and container ships. The venture is likely to be kicked-off shortly with the formation of a company either in India or overseas. Initially, both companies plan to deploy bulk carriers in the joint venture company. A little later, the fleet will be expanded to more bulk carriers or container ships, depending on market conditions.

Sical Logistics to receive Rs. 110 crores private equity from IDFC; to hive off non-core activities

Sical Logistics Limited will receive private equity funding of around Rs. 110 crores from IDFC Private Equity from its IDFC Private Equity Fund II. The proposed investment would be through a preferential issue of equity shares. SSKI Corporate Finance was the advisor to Sical for the fund raising exercise.

Sical intends to become a pure play integrated logistics provider. It is now in the final stages of divesting its non-logistics businesses. As part of this process, Sical proposes to de-merge the non-logistics businesses comprising of trading undertakings, services undertaking and coffee plantations as per the de-merger scheme approved by the board. The ratio for issue of shares upon de-merger has been endorsed by Ernst & Young. Additionally, Sical is also hiving off some of the other non-core businesses including palm oil, refractory, auto, drums, agri-bio products, specialty chemicals and flexible shafts. Buyers have been identified and relevant due diligence exercises are currently in the last stages. It is expected that a significant portion of the hive off exercise will be completed within FY 2007.

Read more on Sical Logistics in Moneycontrol.com.

IDFC invests Rs. 45 crores in logistics company DARCL

Logistics company Delhi Assam Roadways Corporation Limited (DARCL) has raised Rs. 45 crores through stake sale to private equity firm IDFC Private Equity for part funding its expansion plans, which include starting container train operations.

The company has entered into an agreement with the Indian railways to operate container trains throughout the country and expects the new business to push it overall revenues to the Rs. 1000 crore-mark by 2008-09. The company would invest Rs. 50 crores in acquiring three rakes and 600 containers and the container freight business expected to be operational by September 2007.

The company expects the container train business to contribute Rs. 300 crores to its overall revenues in the next two years. The company operates over 5000 trucks through out the country and caters to a host of corporate and public sector companies.

Read more in The Economic Times article.

HAL forms aerospace joint venture with US-based VC firm Edgewood Ventures

Government-owned defence aerospace manufacturing company Hindustan Aeronautics Limited (HAL) has formed a 26:74 JV with US-based venture capital firm Edgewood Ventures. Edgewood Ventures has obtained permission from FIPB for the same. Edgewood Ventures would invest in JV through its Indian arm, Edgewood Technologies.

The JV will design and develop high-tech products in the fields of electronics, software, hardware and aeronautical systems required for aviation, aerospace and satellite projects. It will set up a manufacturing facility of multi-chip module vertical integration and system-in-package to create products for customers in the defence and space segments. The joint venture company will invest Rs. 1.56 crores in the various activities in India. The JV will design, develop, manufacture and promote high-tech projects and products to promote research and development in various fields ranging from electronics and aviation to space. The company will also set up a centre for design and development of chip data encryption and digital design. It will further develop secured communication between aircraft and ground, and radar systems design and development. The modules to be executed by the JV, known as 3D System will be licensed from France-based firm 3D Plus, under a technology collaboration arrangement.

Article in The Economic Times.

Jupiter Aviation may pick up stake in Airbus’ Indian MRO outfit

Bangalore-based aviation venture development company Jupiter Aviation may pick up a stake in the proposed maintenance, repair and overhaul (MRO) unit of European aircraft manufacturer Airbus Industrie. Jupiter Aviation has been promoted by ex-BPL chief Rajeev Chandrasekhar and is a venture development subsidiary of Jupiter Capital, a venture development and investment firm. Jupiter Capital has invested in infrastructure, entertainment, technology and aviation. State-run aerospace major Hindustan Aeronautics Limited (HAL) is also planning to team up with Airbus for the MRO that will come up in Nashik and Bangalore.

The Rs. 450 crore-MRO project is a commitment by Airbus to the Indian government for buying 43 aircrafts for Indian Airlines, costing nearly Rs. 10,000 crores. Airbus is in talks with eight international MRO operators to run the project in India. The talks are at an advanced stage. The investment details and nature of the MRO unit will be finalized by the international MRO operator, who will pick up a stake in the project.

Earlier, Jupiter Aviation and Airbus’ parent company and aerospace group EADS had signed a strategic memorandum of understanding (MoU) to collaborate in aviation ventures focusing on lifecycle support and training. Jupiter investments in these aviation ventures are expected to exceed $250 mn (nearly Rs. 1100 crores). The company is also investing in and launching the country’s first fractional share aviation company, to be called PrivateAir, and is negotiating the purchase of a fleet of business jets and corporate helicopters.

Read the Business Standard article.

L&T, EADS form JV to tap aerospace & defence markets

Larsen & Toubro (L&T) and European aerospace and defence group EADS have formed a JV for joint exploration of business opportunities in defence and aerospace.L&T and EADS have signed a Memorandum of Understanding (MoU) to establish a “long-term, profitable and stable relationship” to better address the needs of the aerospace and defence markets in India and around the world. The signing took place at the Aero India 2007 exhibition in Bangalore.

Read the Business Standard article.

AFL, Dachser form cargo services JV

Air Freight Limited (AFL), the logistics and express service provider, has hived off its cargo arm into a JV with Dachser, a leading logistics major. Dachser is a German logistics company with a turnover of €2.8 bn in 2005 and operates in the air, sea and food logistics segment. Both partners have a 50% stake each in the new entity christened as AFL Dachser. However, the actual size of the JV and investments put in by both players have not been disclosed as both are family-owned businesses.

Read The Economic Times article.

Go Air to divest 26% stake to Gatx Corporation, Wellington Management

Low cost carrier Go Air, owned by the Wadia Group, is in talks with to private equity firms for divesting as much as about 26% stake. Go Air may sign a deal with Chicago-based Gatx Corporation and Boston-based Wellington Management fir offloading 26% stake in the company. The valuation of Go Air is pegged at around Rs. 400 crores.

The Gatx Corporation, through its arm Gatx Air, is into leasing narrow-body aircraft to commercial airlines worldwide. Gatx Air owns 150 aircraft, 46 owned and ownership interest in 104 aircraft through joint ventures. Wellington Management holds significant equity in several global airlines including US Airways, Northwest Airlines, and Continental Airlines besides equity stake in AMR – the parent company of American Airlines. Go Air has had discussions with Jet Airways as well for an equity stake sale.

Read the article on ndtvprofit.com.
Related Posts:
Texas Pacific pulls out of investing in SpiceJet
Air Deccan seeks $75-100 mn private equity; hires Edelweiss for PE syndication

Air Deccan seeks $75-100 mn private equity; hires Edelweiss for PE syndication

Air Deccan is planning to raise around $75-100 mn for its expansion plans, and has reportedly approached the Reliance ADAG Group and a Delhi-based conglomerate for the same. Investment bank Edelweiss Capital has been mandated by the low-cost airline to help raise private equity. Texas Pacific Group, Carlyle Group, Standard Chartered Private Equity, Macquarie Capital, ChrysCapital, Lehman Brothers, General Atlantic and GIC of Singapore are some of the investment firms that have been sounded out. The process is expected to be completed over the next three months.

Additionally, Air Deccan is also looking to raise money by securitizing its future receivables or by issuing bonds, and is in talks with global players like International Lease and Finance Corporation (ILFC) and GE Commercial Aviation Services (GECAS).

Read the complete article in The Economic Times.

Air India, Indian merger to be cleared by Union Cabinet by Feb-end

The merger of India’s international airline Air India and domestic carrier Indian may get clearance by the Union Cabinet by February-end. The Committee of Secretaries has submitted its recommendations regarding the merger to the Group of Ministers (GoM) headed by External Affairs Minister Pranab Mukherjee. The GoM will meet soon for a final consideration of the recommendations before sending it for the Union Cabinet’s approval. Once the Cabinet approval is received, the two carriers will undertake the legal steps necessary for the merger which should be completed within 3-4 months. However, complete operational and manpower integration will take as much as 12-18 months. Total integration of the two carriers would be completed by end-2008.

The merged entity will become one of Asia’s largest airlines with a fleet strength of more than 100 aircrafts. It will have one chairman and one board of directors. It will also add more aircrafts and introduce new routes. The advantages accruing from the merger would comprise additional capacity, additional routes and staff rationalization as excess staff could be deployed on new routes. Following the global trend, the merged entity will cater to both international and domestic markets.

Read The Economic Times article.

Reliance Capital picks up 31% stake in logistics firm BLR

Reliance Capital has picked up a 31% stake in BLR India, one of the top five logistics companies in India, for an undisclosed amount. Reliance Capital already owns a 44% stake in the courier and cargo business of DTDC.

BLR offers manifold transport and logistics services and is among the largest players in corporate surface transportation. It owns over 250 vehicles including a truck fleet of more than 130. It contracts another 800 on a daily basis. It has a network of more than 50 offices across the country.

BLR’s specialized services include over-dimensional cargo (ODC) and export-import transportation as well as government-approved bonded warehousing and bonded trucking services. The company is expected to use the funds raised through this transaction for investing in warehouses, trucks and trailers. Tower Capital was the investment advisor to the deal.

For more details, read DNA Money.

Jet Airways seeking $400 mn via private equity

Jet Airways is in talks with private equity firms to raise $400 mn (over Rs. 1760 crores) through qualified institutional placements (QIPs) for its aircraft acquisition plans. The QIPs will be used to improve the airline’s balance sheet as well as raise 15% of the cost of its $2.5 bn bill for 20 wide-bodied aircrafts for international operations and 10 Boeing 737s for domestic operations. The rest of the bill will be funded by debt.

The QIP could dilute the promoters’ equity by 10%, who currently hold 80% in the airline. The airline is also considering a follow-on issue or a combination of QIP investments and equity expansion. Interestingly, the airline has dropped plans for a $500 mn FCCBs issue. The airline would extend its international operations to North America, Europe, Africa and Asia once it acquired the wide-bodied jets. Besides its $2.5 bn acquisition programme, Jet Airways also plans to buy 10 Boeing 787-8 Dreamliners. Deliveries are scheduled between July 2011 and December 2012.

Read the Business Standard article.

Goldman Sachs to pick up 5% stake in ITNL for Rs. 90 crores

Goldman Sachs is about to pick a 5% equity stake in IL&FS Transportation Networks (ITNL) for around Rs. 90 crores. ITNL is a vehicle promoted by IL&FS to spearhead its initiative in transportation infrastructure development.

This will be the second private placement in ITNL in the last three months. In October 2006, US-based private equity fund Trikona Capital bought 2.5% stake in the company for around Rs. 40 crores. Trikona also announced a $100-mn partnership with parent company IL&FS for investments in real estate and infrastructure.

ITNL is the promoter of the Noida toll road project and owns 22.6% equity in Noida Toll Bridge Company. Noida Toll Bridge is listed on the AIM market in London Stock Exchange. ITNL currently has a portfolio of 10-11 road sub-sector projects, which are in the development phase and a pipeline of such projects in the planning phase. The company, which has got road projects in Ahmedabad, Rajasthan, has recently won an annuity contract in Chhattisgarh. Incorporated in 2000, IL&FS has domiciled most of its transport sector investments and resources in ITNL for its surface transportation projects. The company also intends to participate in green field projects and provide advisory services. Already, the holdings of IL&FS and existing financial investors in the IL&FS sponsored projects are being transferred to ITNL.

Last week, Goldman Sachs bought a 5% stake in the National Stock Exchange. IL&FS was one of the deal makers in the transaction.

Read The Economic Times article.

Texas Pacific pulls out of investing in SpiceJet

Private equity giant Texas Pacific Group is pulling out of its $30 mn investment in low-cost airline SpiceJet. Reasons cited are as varied as differences over valuation to the US-based fund having expressed its inability to participate in this round of fund-raising by the low-cost carrier as its top management was busy with an ongoing $11 bn deal for buying out Australian airline, Qantas, by a consortium of private equity players.

In its current round of fund raising, SpiceJet has raised around Rs. 300 crores by divesting around 25% stake, giving the company a valuation of around Rs. 1200 crores. The Tata Group, through two of its investment arms, is picking up 7% stake for Rs. 75 crores. Existing shareholder, Istithmar, Dubai government’s private equity arm, is putting in another $25 mn for increasing its stake from 3% to 11%. BNP Paribas will invest $15 mn for a 4% equity stake, while Goldman Sachs is picking up 1.5% stake for around $5 mn. A clutch of small investors will hold another 4% stake between them.

The company is holding its EGM on Thursday to ratify the preferential allotments. The shares were offered at an average price of Rs. 51.36 per share. After this round of dilution, the stake of the promoters including those of the UK-based Kansagra family, director Ajay Singh and associates, will come down from around 18% to 15%.

Read more in The Economic Times article.