Your Eye to Indian Private Equity

Transcription

1 Four-S Private Equity Track Issue: Your Eye to Indian Private Equity PE activity for the week During the week ended 10th June, 2012, there were 9 PE/VC deals worth $232.4mn compared to 8 deals worth $32.1mn in the previous week. Out of the total, 3 were growth stage deals, 3 were early stage deals, and 1 each were PIPE, mezzanine and buyout deals. In the largest deal during the week, Future Group announced that it will sell its 53.67% stake in consumer finance company Future Capital Holdings Ltd (FCH) to PE firm Warburg Pincus for $126mn. Private Equity: Investment Summary during the week Investor (s) Target Stake (%) rd June'12 PE Investments 10th June'12 No. of Deals Value ($mn) Sector Industry Segment Stage Warburg Pincus Future Capital Holdings Services BFSI NBFC Buyout August Capital, DFJ, Nexus Venture, Helion Ventures and Silicon Valley Bank PubMatic NA 45.0 Services Media & Entertainment Digital media Mezzanine Samara Capital Monte Carlo Fashions Manufacturing Textiles Apparel Growth AMP Capital Altavista Capital Blume Ventures, VentureEast Partners IndoUS Venture Partners Shalivahana Green Energy Ltd Taj GVK Hotels & Resorts Electricity Services Electricity Generation Travel & Tourism Reviews42 NA NA Services IT/ITeS Renewable - hydro, wind Hotels & Tourism Misc. Services - online reviews Growth Growth Hushbabies.com NA NA Services Retail Internet Retail Early Nalanda Capital V-Guard Industries 0.04 NA Manufacturing Capital Goods Sequoia Capital India Citrus Payment Solutions Electrical machinery Early PIPE NA NA Services BFSI Online payment Early Source: Four-S PE Database Kishore Biyani to exit Future Capital by selling stake to Warburg Future Group has announced that it will sell its 53.67% stake in consumer finance company Future Capital Holdings Ltd (FCH) to private equity firm Warburg Pincus in an allcash deal worth Rs 6.92bn ($125.8mn). Warburg Pincus will initially buy 40% of shares from Pantaloon, which will be followed by an open offer to buy another 26% in the company. Warburg Pincus will also infuse Rs 1bn in FCH through a preferential allotment, which, if approved by the shareholders, will take Warburg s stake beyond 70%. Four-S Comment: The deal will give the Future Group s retail arm Pantaloon Retail (India) Ltd much-needed cash to help reduce its debt and is a part of the group s intention to exit from non-core businesses of Pantaloon Retail. Pantaloon had debt of around Rs 55bn as of March In

2 Q4 FY12, finance costs for the core retail business were as much as 62% of Pantaloon s earnings before interest, tax, depreciation and amortization (EBITDA). The deal came just a month after Aditya Birla Group acquired 50.01% in Pantaloon for Rs 16bn. The group is also looking for a partner for its life insurance joint venture - Future Generali Insurance. PubMatic raises $45mn in mezzanine financing PubMatic, a digital ad platform for publishers, has raised a mega round of $45mn through mezzanine finance, led by August Capital. Its existing investors Draper Fisher Jurvetson, Nexus Venture Partners, Helion Ventures and Silicon Valley Bank also took part in this round. PubMatic provides a platform for premium publishers to help them manage inventories in real time. In the past, PubMatic had raised around $18mn from VC firms. The mezzanine round will be used to continue with targeted acquisitions and strengthen its balance sheet. Four-S Comment: The mega fundraising comes at a time when the company is said to be preparing for an IPO. Speculation about IPO started gaining ground last November when the company recruited former Kodak Gallery CFO Steve Pantelick as its CFO. It has also made 2 acquisitions recently. In March it acquired Pune-based mobile technology startup MobiPrimo Technologies for an undisclosed sum. In March it acquired Pune-based mobile technology startup MobiPrimo Technologies for an undisclosed sum. Samara Capital invests $32mn in Monte Carlo Mumbai-based private equity fund Samara Capital has invested $32mn to acquire 20% stake in Monte Carlo Fashions Ltd, an apparel manufacturing and retailing company. The funding will be used to meet working capital requirements and Capex needs. Monte Carlo Fashions is a part of the Punjab-based Nahar Group. Apart from winter wear where it has a market share of 5%, Monte Carlo Fashions also offers non-winter categories, lifestyle garments and sportswear for men and women. The company operates through 145 exclusive brand outlets, 800 multi-brand outlets and 60 large-format stores. Four-S Comment: Monte Carlo was carved out of the group s flagship Oswal Woollen Mills (OWM) Limited last year through its demerger in a bid to unlock value of the old brand. Monte Carlo was valued at Rs 8.5bn when it was hived off from the parent. The company was in news last November for seeking Rs bn by diluting 25-30% stake through combination of private equity and IPO for setting up a new garment facility and expanding network. AMP Capital acquires 34% stake in Shalivahana Green AMP Capital Asian Fund has acquired 34% stake in Shalivahana Green Energy for $29mn. The Hyderabad based Shalivahana Green Energy develops, owns and operates a portfolio of power generation assets across the agri-waste, hydro and wind sectors. It has an operating capacity of 80 mega watt (MW) with another 45 MW to be commissioned in the next six months. Existing investors in Shalivahana Green Energy include International Finance Corporation and Infrastructure Leasing and Financial Services Group. Altavista Capital invests in Taj GVK Altavista Capital India Fund has invested Rs 30.5mn to acquire 0.87% stake in Taj GVK Hotels & Resorts Limited through bulk deals raising its shareholdings to 2.82%. TAJGVK Hotels & Resorts Limited is a JV between Indian Hotels Company Limited and the Hyderabad based GVK Group. IHCL holds around 25.52% stake in TGVK while the GVK group holds about 49% stake; balance is held by the public. The company owns and operates five 5-star/D properties with a cumulative inventory of 902 rooms. Reviews42 raises funds from Blume Ventures, VentureEast Product review portal Reviews42, owned by New Delhibased Solvy Tech Solutions Pvt Ltd, has secured funding from Blume Ventures and VentureEast Partners. The amount raised has not been disclosed. Reviews42, a community-based product reviews site co-founded by

3 Surjendu Kuila and Neeraj Jain in 2011, works by aggregating user reviews in as many as 6,000 products in a variety of categories including computers and accessories, mobile phones, clothes, baby products and kitchen utensils. The company is looking for Series A funding in the next 4-5 months. Its source of revenue is lead generation, apart from advertisements. It is also looking to expand its 16-member team. Hushbabies raises Series A funding from IndoUS Venture Partners Lapis Marketing Pvt Ltd, which runs the baby products e- com portal Hushbabies.com, has raised Series A round of funding from IndoUS Venture Partners (IUVP). This is the second round of investment from IUVP. It had earlier participated in a seed round, along with Nexus Venture Partners. Hushbabies is said to have grown 10 times over the past 6 months and is doing as many as 1,000 transactions on any given day. Four-S Comment: More risk capital is flowing in online babycare product companies as an increasing number of Indian parents begin to shop online. In April 2011, two startups running online baby products stores raised funding. Accel Partners and Tiger Global invested $2.5mn in online babycare products retailer BabyOye.com. SAIF Partners invested $4mn in online kids and babycare products retailer, FirstCry.com. Kids and babycare is a $5bn market in India with around 25 million babies born per year in the country. Homeshop18.com has also added baby and kids product categories to its online shop. Nalanda Capital acquires additional stake in V- Guard Nalanda Capital has increased its stake in V-Guard Industries Limited to 5.03%. It acquired stake of 0.04% through open market transactions. Kochi-based power systems maker V-Guard operates in three segments Electornics, Electrical/Electro mechanical Products, others. The Electrical/Electro Mechanical division is mainly constituted by cables, pumps and electric water heaters, ceiling fans and UPS among others. Sequoia Capital invests in Citrus Payment Solutions Sequoia Capital India has invested an undisclosed amount into Mumbai-based Citrus Payment Solutions Pvt Ltd, an online payments solution provider. Set up in 2011, Citrus offers online payments and invoicing solutions. According to the company s website, it is in partnership with Riya.travel, Yebhi.com, SkoolShop, BeStylish.com, TicketNew.com, ManoramaOnline.com, HealthKart.com, HostIndia.net and Indiatimes Shopping. Fund Raising & Liquidity Events ICICI Venture raises $47mn for second real estate fund ICICI Venture, which had launched its second real estate fund (India Advantage Fund Real Estate Series 2) with a target of Rs 10bn, has finally managed to raise Rs 2.6bn. This fund will be used to invest in residential projects in the mid-income segment, with preference for brownfield projects. The PE firm will ideally invest in projects where land acquisition and zoning have been completed but will also scout for opportunities in late stage projects. It will invest mostly in the big metro cities of Delhi, Mumbai, Bangalore, Pune and Chennai. SBI, FMO launch $80mn financial services fund Japan's SBI Holdings and Netherlands Development Finance Company (FMO) have jointly rolled out a new fund that will invest in financial services across emerging Asia. The SBI- FMO Emerging Asian Financial Services Fund is targeting up to $80mn in capital and is seeking to make a first close on $60mn. The new fund will be managed by Singapore-based SBI Ven Capital, a mid-market regional VC player affiliated with the eponymous financial conglomerate. Also based in Singapore, the vehicle will invest mainly in growth-stage companies.

4 Private Equity and M&A News Insecticides to raise Rs 1bn for expansion Insecticides India Limited is planning to raise Rs 1bn from PE investors for expansion. The company plans to raise funds by diluting promoter's stake. The fund raised will be used for capacity expansion, growth plans and launching new products. It has investment plans worth around Rs 1.25bn for next two years. Insecticides is engaged in manufacturing and distribution of formulations of plant protection chemicals and house hold pesticides. It have product range of more than 80 types of insecticides, fungicides, weedicides, herbicides and plant growth regulator for all types of crops and also house hold pesticides. Gayatri Projects to divest stake in energy subsidiary Gayatri Projects may dilute stake in its energy holding company Gayatri Energy Ventures to raise funds for it's power ventures. It plans to raise upto Rs 5bn by diluting upto 15% stake in the venture. Gayatri is working on two coal based power projects at Krishnapatnam in AP. It is setting up a 1,320MW thermal power plant in Nellore through a 51:49JV, Thermal Powertech Corporation India Ltd, with Singapore based Sembcorp. Total equity required is about Rs 17bn. The second project is being jointly developed with NCC Ltd. HRH Hotel to raise Ts 1.5bn for expansion Historic Resort Hotels Private Limited is planning to raise Rs 1.5bn through private equity route. The fund raised will be used to expand its capacity in the mid-market segment. The group is planning to double the numbers of rooms in the next two-three years. Udaipur based -HRH Group of Hotels is a chain of heritage palace-hotels and resorts. The group offers regal experiences in island-palaces, museums, galleries, car collections, and much more. Lake Palace hotel, Shiv Niwas Palace and Fateh Prakash Palace in Udaipur and Gajner Palace in Bikaner are some of the Grand Heritage Palaces held by HRH Group. Stanley Lifestyles to raise $20mn through PE Bangalore based Stanley Lifestyle Limited is planning to raise $20mn through PE route. The fund raised will be used in two tranches; the first tranche of $10mn will be used for forward integration expansion by opening new showrooms in New York, Paris, London, Middle East, India and Dubai by The second tranche will go to fund backward integration by setting up a tannery in Tamil Nadu to reduce cost. Bangalore based-stanley Lifestyles Limited (SLL) is engaged in the manufacture of pure leather, customized upholstery and furniture through its two manufacturing facilities in Bangalore. IPO, Other Offerings RINL IPO deferred by 3 weeks Considering volatile market conditions, the Rs 25bn initial offer of Rashtriya Ispat Nigam (RINL) has been delayed by at least three weeks. The RINL issue was slated to hit the domestic market on July 3 and kick-start the ambitious disinvestment process of the government for the current fiscal. The government is expected to dilute its 10% stake in the steel major. The navratna company is the second largest government owned steel company in India. The company has increased its production capacity to 6.3 million tonnes per annum (MTPA) from its earlier capacity of 2.9 MTPA with an investment of Rs 125bn. Goodwill Hospital to retry luck in IPO market After withdrawing its public issue in January 2012, the Operator of multi-specialty hospital - Goodwill Hospital and Research Centre has again filed draft papers with the market regulator Securities Exchange Board of India (SEBI). The company intends to raise Rs 980mn from this issue and utilize the proceeds for setting up of Diagnostic Centre at Faridabad; establishment of six polyclinics; re-payment/prepayment of loan facilities. Hospital withdrew its IPO in January after the issue failed to get subscription of even 1% of its shares on sale. Goodwill was the first company to withdraw its IPO in 2012.

5 M&A Activities M&A Activity: Summary during the week Acquirer Target Target business Stake (%) Deal value ($ mn) Ebix, Inc PlanetSoft IT/ITeS Zoroastrian Co-operative Bank City Cooperative Bank Limited BFSI 100 NA Tree House Education & Accessories MT Educare - pre school biz Education NA NA Prism Informatics Idhasoft Ltd IT/ITeS 20 NA Tebodin Consultants & Engineers During the week ended 10th June, 2012, there were 7 M&A deals worth $40mn (size of 6 deals were not known). In the largest deal during the week, Ebix, Inc, a NASDAQ-listed supplier of software and e- commerce solutions to the insurance industry, has acquired PlanetSoft for $40mn. PlanetSoft provides IT services for the insurance sector with 90% of its employees based in four offices in India. Tebodin Mukesh Consultants & Engineers Engineering and consulting 49 NA CoCubes Technologies Quotient Analyzers Education NA NA FMG Pod1 Media & Entertainment NA NA Market Update Key Domestic Indices Indian Market Movements 52 Week Index 1-Jun-12 8-Jun-12 Change (%) High Low BSE Sensex 15, , % 19, , S&P CNX Nifty 4, , % 5, , CNX Nifty Junior 9, , % 11, , Nifty Mid Cap 50 1, , % 2, , CNX IT 5, , % 6, , Bank Nifty 9, , % 11, , CNX Infrastructure 2, , % 3, , CNX Realty % Source: BSE, NSE Key Global Indices Global Market Movements 52 Week Index 1-Jun-12 8-Jun-12 Change (%) High Low NASDAQ 2, , % 3, , Dow Jones Industrial Average 12, , % 13, , S&P 500 1, , % 1, , NIKKEI 225 8, , % 10, , Hang Seng 18, , % 23, , Straits Times Index 2, , % 3, , FTSE 100 5, , % 6, , Source: Yahoo Finance

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