Macquarie and IFC share the limelight to launch a $1 bn Infrastructure fund
Source: AVCJ October 15 issue
Saturday, February 16, 2008
Wednesday, April 18, 2007
Friday, April 13, 2007
Jet Airways takes over Air Sahara
The Jet-Sahara deal has been nothing short of a ludicrous parody, where the merger has been beleaguered with problems since inception. A year later, amidst much renewed bonhomie, the deal has finally come through at an enterprise value of 1950 crore. It had initially paid 500 crore as cash advance, and bled another 180 crore into spares, lease renewals and other costs. It will now pay another 400 crore by April 20. It will use 120 crore from the assets of air sahara, and take on bad debts of 200 crore in its balance sheet. The remaining Rs 550 crore will be paid in four installments before March 30, 2008.
Air Sahara and jet airways both are contemporaneous airlines that commenced operations in 2003 with two aircrafts. They both have come a long way from flying in the northern states, to across the country, and both have forayed into international routes as well. The positives were in place for Air Sahara, before it decided to focus on core areas such as Housing and Para banking, and decided to exit the aviation industry in view of an environment of cut throat competition, excess capacity, dwindling margins, rock bottom prices, coupled with degenerated aircrafts. A strategic partnership was sought and jet airways was the indubitable fit.
On January 18, 2006, Jet Airway’s Naresh Goyal signed the share purchase agreement to take over the airline. With the June 18 deadline for payment approaching, it was struggling with the roadblocks and costs related to the integration. To avert its predicament, it conveniently spun from its ineluctable stance, and decided to withdraw its offer on the premise that the conditions precedent had not been met. The acrimony turned rancorous with arbitration underway.
The deal has been consummated now, but may not offer the synergies of integration as planned before. The combined entity will now hold a market share of 35% only and will face combined yearly losses of 75-80 crore. The period of convalescence has begun…!
Air Sahara and jet airways both are contemporaneous airlines that commenced operations in 2003 with two aircrafts. They both have come a long way from flying in the northern states, to across the country, and both have forayed into international routes as well. The positives were in place for Air Sahara, before it decided to focus on core areas such as Housing and Para banking, and decided to exit the aviation industry in view of an environment of cut throat competition, excess capacity, dwindling margins, rock bottom prices, coupled with degenerated aircrafts. A strategic partnership was sought and jet airways was the indubitable fit.
On January 18, 2006, Jet Airway’s Naresh Goyal signed the share purchase agreement to take over the airline. With the June 18 deadline for payment approaching, it was struggling with the roadblocks and costs related to the integration. To avert its predicament, it conveniently spun from its ineluctable stance, and decided to withdraw its offer on the premise that the conditions precedent had not been met. The acrimony turned rancorous with arbitration underway.
The deal has been consummated now, but may not offer the synergies of integration as planned before. The combined entity will now hold a market share of 35% only and will face combined yearly losses of 75-80 crore. The period of convalescence has begun…!
Thursday, April 12, 2007
PE Investments surge!
The Indian private equity scene is storming with fresh influx of funds from the private equity industry. With the dwindling returns of developed economies, investors are now turning towards developing economies such as India. From a tepid start, the industry is steadily turning extravagantly agog about companies in India with ever expanding options of sectors available for investment, and with burgeoning profits of domestic companies coupled with the support of a booming stock market. Substantiating this fact, the total private equity funds raised in India have grown from a meager $260 million in 2003 to $3820 million in 2006. The total private equity investments made in 2006 were 278 of which 238 were disclosed.
The year 2006 has by far been the most promising year as far as private equity is concerned. A case-by-case description of the Indian VC/PE deals of 2006 will follow in the posts to come.
The year 2006 has by far been the most promising year as far as private equity is concerned. A case-by-case description of the Indian VC/PE deals of 2006 will follow in the posts to come.
Tuesday, January 30, 2007
The Scrimmage for Corus
One of the most coveted and dramatic acquisition wars is that of India’s largest private sector steel company Tata Steel in its attempt to acquire Europe's second largest steel producer, Corus through its wholly-owned indirect subsidiary, Tata Steel UK.
Why is it so keen on Corus?
The integration would create a vertically integrated global steel group and would catapult it to the rank of the fifth largest global steel producer. It will also continue the consolidation in the industry post the recent takeover of Arcelor Steel by Mittal Steel which has 10% market share. Tata Steel is globally renowned for its high quality, low cost model and would enable it to build a strong platform for further growth by combining with a leading European steel player with the support of a strong and committed combined management team.
Corus’s viewpoint-
As rising raw material and energy costs in the Britain and the Netherlands chip away at profits, Corus is keen to access low cost production and high growth markets. Consistent with this, the Company held talks with a number of parties from Brazil, Russia and India.
The background of the deal-
Tata Steel made an initial offer to Corus at 455 pence per Corus Share representing approximately 7.9 times underlying EBITDA from continuing operations for the twelve months to 1 July 2006.
The financial advisors representing Tata for the transaction are ABN Amro, NM Rotchschild and Deutsche Bank
A Twist in the story!
In the third week of November, another rival Brazilian firm Companhia Siderurgica Nacional (CSN) entered the fray and outbid Tata Steel’s $7.4 billion bid. In the second week of December, the Tatas raised their bid to 500 pence per share amounting to $9.2 billion which was again outstripped by CSN which offered 515 pence per share amounting to $9.6 billion a day later. While the EU approved the bids in January, the Takeover Panel set Jan 30 deadline for naming the winner. It has asked Corus to sell itself to the highest bidder; consequently, an eight round closed-door bidding auction will take place, where the two rivals will try to outstrip each other for the takeover. Each bid should be atleast 5 pence apart. If a conclusive winner doesn’t emerge on 30th, a ninth round will take place on 31st if needed.
A caveat for the precarious situation-
While both parties are aggressively keen to acquire Corus, but they must not go overboard on the bidding process.
Recent revelations
A legal row that has emerged recently may help Tata succeed in its ambitions. Brazilian mining group CVRD (Companhia Vale do Rio Doce) would challenge CSN's ability to supply iron ore to Corus, should its bid succeed.
Why is it so keen on Corus?
The integration would create a vertically integrated global steel group and would catapult it to the rank of the fifth largest global steel producer. It will also continue the consolidation in the industry post the recent takeover of Arcelor Steel by Mittal Steel which has 10% market share. Tata Steel is globally renowned for its high quality, low cost model and would enable it to build a strong platform for further growth by combining with a leading European steel player with the support of a strong and committed combined management team.
Corus’s viewpoint-
As rising raw material and energy costs in the Britain and the Netherlands chip away at profits, Corus is keen to access low cost production and high growth markets. Consistent with this, the Company held talks with a number of parties from Brazil, Russia and India.
The background of the deal-
Tata Steel made an initial offer to Corus at 455 pence per Corus Share representing approximately 7.9 times underlying EBITDA from continuing operations for the twelve months to 1 July 2006.
The financial advisors representing Tata for the transaction are ABN Amro, NM Rotchschild and Deutsche Bank
A Twist in the story!
In the third week of November, another rival Brazilian firm Companhia Siderurgica Nacional (CSN) entered the fray and outbid Tata Steel’s $7.4 billion bid. In the second week of December, the Tatas raised their bid to 500 pence per share amounting to $9.2 billion which was again outstripped by CSN which offered 515 pence per share amounting to $9.6 billion a day later. While the EU approved the bids in January, the Takeover Panel set Jan 30 deadline for naming the winner. It has asked Corus to sell itself to the highest bidder; consequently, an eight round closed-door bidding auction will take place, where the two rivals will try to outstrip each other for the takeover. Each bid should be atleast 5 pence apart. If a conclusive winner doesn’t emerge on 30th, a ninth round will take place on 31st if needed.
A caveat for the precarious situation-
While both parties are aggressively keen to acquire Corus, but they must not go overboard on the bidding process.
Recent revelations
A legal row that has emerged recently may help Tata succeed in its ambitions. Brazilian mining group CVRD (Companhia Vale do Rio Doce) would challenge CSN's ability to supply iron ore to Corus, should its bid succeed.
Reliance Retail
Reliance Retail, the Mukesh Ambani floated retail venture on Monday, aggrandized its national presence by launching nine new Reliance Fresh Stores in the National Capital Region in Noida, Greater Noida, Gaziabad, Faridabad and Gurgaon. The total number of retail outlets across the country has billowed to 50 covering 109,000 sq feet of retail space. However, the company is yet to open its first retail store in Delhi owing to several regulatory hassles. Reliance Industries has a 100% stake in Reliance Retail, and is looking at mushrooming 1000 new retail stores of 4000 sq feet by year end.
On December 5, 2006, the company acquired Gujarat-based Adani Retail for Rs 100-110 crore. Reliance will soon re-brand the 54 Adani Retail stores across nine cities in Gujarat to Reliance Fresh. The company is also in talks with Delhi based Super bazaar, Mumbai based Maratha stores, and according to some inconclusive sources, the south India based Subhiksha retail chain.
The company which has ventured into the food and grocery at present will be entering into the non food FMCG segment in a couple of months by launching categories such as laundry, personal care and apparel. It will start with multi brand retailing and then launch some private labels as well. In specialty formats it will start with consumer durables and has signed some deals with companies in China, besides Videocon in India.
The company faces competition from several players such as Bharti-Walmart, the AV Birla Group, Future Group, Tesco’s, Carrefour, Spencers, Subhiksha, Trinetra and food world. The Kishore Biyani-promoted retail chain Pantaloon, is also rolling out 40 stores in the national capital region by next June in over 18 formats.
Organised Retail is yet in an inchoative stage in India. India’s organised retail market is likely to grow from the current $4 billion to $64 billion by 2015. The first phase has been to provide customers with an innovative shopping experience by providing a better deal to customers. It is expected to restructure agriculture and small scale and medium scale manufacturing enterprises which suffers from gross inefficiencies. Organised Retail is faced with the challenge of increasing its top line by attracting customers with greater variety and lower costs, and at the same time increasing its bottom line by reducing the costs related to inefficiencies in the supply chain. Public investment in agriculture as a percentage of GDP has been gradually declining. Outdated machinery and poor infrastructure has let to wastages, losses in transit, and increased prices. The retail venture will thus usher in a revolution by promoting modern machinery, infrastructure thereby increasing productivity and jobs.
On December 5, 2006, the company acquired Gujarat-based Adani Retail for Rs 100-110 crore. Reliance will soon re-brand the 54 Adani Retail stores across nine cities in Gujarat to Reliance Fresh. The company is also in talks with Delhi based Super bazaar, Mumbai based Maratha stores, and according to some inconclusive sources, the south India based Subhiksha retail chain.
The company which has ventured into the food and grocery at present will be entering into the non food FMCG segment in a couple of months by launching categories such as laundry, personal care and apparel. It will start with multi brand retailing and then launch some private labels as well. In specialty formats it will start with consumer durables and has signed some deals with companies in China, besides Videocon in India.
The company faces competition from several players such as Bharti-Walmart, the AV Birla Group, Future Group, Tesco’s, Carrefour, Spencers, Subhiksha, Trinetra and food world. The Kishore Biyani-promoted retail chain Pantaloon, is also rolling out 40 stores in the national capital region by next June in over 18 formats.
Organised Retail is yet in an inchoative stage in India. India’s organised retail market is likely to grow from the current $4 billion to $64 billion by 2015. The first phase has been to provide customers with an innovative shopping experience by providing a better deal to customers. It is expected to restructure agriculture and small scale and medium scale manufacturing enterprises which suffers from gross inefficiencies. Organised Retail is faced with the challenge of increasing its top line by attracting customers with greater variety and lower costs, and at the same time increasing its bottom line by reducing the costs related to inefficiencies in the supply chain. Public investment in agriculture as a percentage of GDP has been gradually declining. Outdated machinery and poor infrastructure has let to wastages, losses in transit, and increased prices. The retail venture will thus usher in a revolution by promoting modern machinery, infrastructure thereby increasing productivity and jobs.
UB Group and Whyte & Mackay
Since October 2006, the Vijay Mallaya promoted United Breweries group has been negotiating with Glasgow based distillers Whyte & Mackay for a possible acquisition. It had earlier made a bid at GBP 400 million for the company which was not accepted. There were talks that the deal may be settled around GBP 500 million, but the company has now raised the price tag to GBP 600 million.Citigroup is advising Whyte & Mackay while UBS is advising UBGroup on the deal.UBGroup is the largest player in the IMFL (Indian made foreign liqueur) segment and Whyte & Mackay is the seventh-largest Scotch maker in Scotland.UBGroup is interested in taking over Whyte & Mackay as it will help take his global operations to the next level and add value to its business in the Indian market which has recently faced with a number of global players opting to introduce the variety in the Indian market. For example, Diageo, the world’s no. 1 spirits company and the makers of Johnny Walker whiskey has launched its local version of the global brand Haig.The UB Group began its global operations with the acquisition of Bouvet-Ladubay, a wine company in France. This acquisition of champagne major Taittinger’s subsidiary was struck at GBP 400 million. UB Group chairman Vijay Mallya is planning to ship French wine in bulk to India, where it will be blended with Indian-made wines to cater to the growing number of wine drinkers.
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