Corporate Finance Newsletter September 2012 ICRA Management Consulting Services Limited Page 1
Disclaimer This report and the analysis herein are based on data and information collected by ICRA Management Consulting Services Limited (IMaCS) from sources believed to be reliable and authentic. While all reasonable care has been taken by IMaCS to ensure that the information and analysis contained herein is not untrue or misleading, neither IMaCS nor its Directors shall be responsible for any losses, direct, indirect, incidental or consequential that any user of this report may incur by acting on the basis of this report or its contents. IMaCS makes no representations or warranties in relation to the accuracy or completeness of the information contained in the report. IMaCS analysis in this report is based on information that is currently available and may be liable to change. This report and the analysis herein should not be construed to be a credit rating assigned by ICRA Limited for any securities of any entity. Other than as expressly stated in this report, we express no opinion on any other issue. Our analysis/advice/recommendations should not be construed as legal advice on any issue. Page 2
Table of Contents Transaction activity... 4 Domestic M&A transactions..... 8 Inbound M&A transactions...... 11 Outbound M&A transactions. 14 Private equity transactions... 17 Venture Capital transactions.... 21 About IMaCS....... 24 Page 3
Transaction activity Page 4
Transaction activity in September 2012 (1/3) Total number of deals in the month decreased to 66 from 89 deals in August The number of Private Equity deals decreased to 24 from 41 in August The number of Inbound M&A deals decreased to 11 from 13 in August Total value of deals in September was US $ 2.53 billion as compared to US $ 3.27 billion in August and US $ 2.23 billion in July Total value of Outbound deals increased to US $ 1.5 billion from US $ 624 million in August Total value of Private Equity deals decreased to US $ 496 million from US $ 2.2 billion in August Average deal size of M&A deals was US $ 118.9 million for 17 disclosed deals. Average deal size of Private Equity deals was US $ 21.6 million for 23 disclosed deals. Volume August 2012 September 2012 Value (US $ mn) Volume Value (US $ mn) M&A Domestic 10 72.9 10 191.1 Inbound 13 367.9 11 353.7 Outbound 10 623.8 9 1476.2 Private Equity 41 2187.7 24 496.4 Venture Capital 15 16.2 12 8.9 100% 80% 60% 40% 20% 0% Total 89 3268.5 66 2526.3 0.4% 19.7% 58.4% 14.0% 7.6% Transaction activity break-up Value wise Volume wise Private Equity Venture Capital Note: The value given is only for disclosed deals. 18.2% 36.4% 13.6% 16.7% 15.2% M&A Domestic M&A Inbound M&A Outbound Page 5
Transaction activity in September 2012 (2/3) Real Estate 11% Pharma & Healthcare 14% Oil & Gas 40% Sector wise break-up (Volume) IT/ITeS 17% e-commerce 9% BFSI 7% Others 42% Sector wise break-up (Value) IT/ITeS 18% BFSI 8% Pharma & Healthcare 7% Others 21% Manufacturi ng 7% The number of deals in IT/ITeS sector were highest, followed by Pharma & Healthcare, Real Estate and e-commerce sectors Number of deals in IT/ITeS sector, however, decreased to 11 from 12 in August In Pharma & Healthcare sector, number of deals decreased to 9 from 10 in August The number of deals in Real Estate sector increased to 7 from 3 in August Total value of deals in Oil & Gas was US $ 1 billion, followed by IT/ITeS and BFSI sectors Total value of deals in IT/ITeS sector decreased to US $ 457 million from US $ 1.1 billion in August Total value of deals in BFSI sector increased to US $ 193 million from US $ 112 million in August Page 6
Transaction activity in September 2012 (3/3) Deals of the month Infosys acquires Swiss consultancy firm Lodestone for US $ 350 million o Lodestone offers advisory services in life science, chemical, financial services, investment, automotive and consumer goods sectors o o Acquisition will lead to expansion of Infosys presence in Europe Will strengthen Infosys management consulting and systems integration capabilities Tech Mahindra s acquisition of Hutchison Global Services for US $ 87 million o o The deal will increase revenue of Tech Mahindra, US $ 845 million contract for next five years to service the unit s existing customers Hutchison Global Services operates out of Mumbai and Pune, among the largest captives in the telecom domain IDFC s US $ 27.9 million investment in Parag Milk Foods o o o 35% stake to be held by IDFC and existing investor Motilal Oswal PE This is the largest private equity investment in the country s dairy sector The company planned to raise funds through IPO last year, withdrew because of adverse stock market conditions Page 7
Domestic M&A transactions Page 8
In US $ Mn Domestic M&A transactions in September 2012 (1/2) 20 20 Deals (Volume) Top 5 sectors (Volume) 15 Sector Volume Value (US $ mn) 10 10 10 Engineering 2 15 Manufacturing 2 2 5 Cement 1 105 Telecom 1 48 0 July August September Retail 1 11 Deals (Value) 350 300 337 Top 5 sectors (Value) 250 200 150 100 50 0 191 73 July August September Sector Value (US $ mn) Volume Cement 105 1 Telecom 48 1 Engineering 15 2 Retail 11 1 BFSI 10 1 Note: The value given is only for disclosed deals. Page 9
Domestic M&A transactions in September 2012 (2/2) Target Arohan Financial Services Private Limited Acquirer IntelleCash Microfinance Network Company Private Limited Deal Value (in US $ mn) % stake acquired 9.5 - BFSI Adhunik Cement Dalmia Cement Bharat Limited 105.0 - Cement DoctorsTime Health Services Private Limited Comp U Learn Tech India Limited - 51% e-commerce Vaksh Steel Private Limited, Foundry division Pitti Castings 15.0 - Engineering Wipro s water purification and treatment business Earth Water Group - - Engineering Sector Neela Systems Ltd Praj Industries Ltd 2.3 9.8% Manufacturing Innovative Technomics Private Limited Innoventive Industries Limited - 51% Manufacturing Excel Hospitals Pvt Ltd Nova Specialty Surgery - - Pharma & Healthcare Express Retail Services Private Limited Future Ventures India Limited 11.3 100% Retail Comviva Tech Mahindra 48.0 51% Telecom Page 10
Inbound M&A transactions Page 11
In US $ mn Inbound M&A transactions in September 2012 (1/2) 15 10 5 0 400 300 200 100 0 Deals (Volume) 14 13 11 July August September Deals (Value) 368 354 29 July August September Top 5 sectors (Volume) Sector Volume Value (US $ mn) Pharma & Healthcare 2 128 IT/ITeS 2 - Manufacturing 1 97 BFSI 1 87 Engineering 1 39 Top 5 sectors (Value) Sector Value (US $ mn) Volume Pharma & Healthcare 128 2 Manufacturing 97 1 BFSI 87 1 Engineering 39 1 Shipping & Ports 3 1 Note: The value given is only for disclosed deals. Page 12
Inbound M&A transactions in September 2012 (2/2) Target Acquirer Deal Value % stake (in US $ mn) acquired Sector Religare AMC Invesco Limited 87.0 49% BFSI Mahindra Ugine Steel Company Ltd Mitsui & Co. Ltd, Sanyo Special (Musco) Steel Co. Ltd 39.0 49% Engineering Godrej Hershey Limited The Hershey Company - 43% FMCG, Food, Beverage NewsPage Pte Ltd Accenture - - IT/ITeS TheMobileGamer SingTel, Softbank - 82% IT/ITeS BOPP film biz, Max India Treofan 97.0 - Manufacturing Arch Pharmalabs Mitsui & Co 67.2 25% Pharma & Healthcare Bilcare Ltd, US & UK arm United Drug plc 61.0 - Pharma & Healthcare Solaris ChemTech, bromine assets Chemtura Corporation - - Plastics & Chemicals Propylene plant, Kochi LG Chemicals - 51% Power & Energy CTI Shipbrokers (India) Limited ICAP Shipping 2.5 - Shipping & Ports Page 13
Outbound M&A transactions Page 14
In US $ mn Outbound M&A transactions in September 2012 (1/2) 15 15 Deals (Volume) Top 5 sectors (Volume) 10 5 0 1500 10 9 July August September Deals (Value) 1,476 1,274 Sector Volume Value (US $ mn) IT/ITeS 3 437 Oil & Gas 1 1000 Retail 1 38 Manufacturing 1 1 Education 1 - Top 5 sectors (Value) 1000 500 0 624 July August September Sector Value (US $ mn) Volume Oil & Gas 1000 1 IT/ITeS 437 3 Retail 38 1 Manufacturing 1 1 Education - 1 Note: The value given is only for disclosed deals. Page 15
Outbound M&A transactions in September 2012 (2/2) Target Acquirer Deal Value (in US $ mn) % stake acquired Alta Vista EdServ Softsystems Limited - - Education Lodestone Infosys 350.0 - IT/ITeS Hutchison's BPO Tech Mahindra 87.1 100% IT/ITeS Sabre's Philippines Development Centre NIIT Technologies - - IT/ITeS Sector Linea De Seguridad Superhouse Limited 1.11 - Manufacturing Digital Domain Media Galloping Horse, Reliance MediaWorks Inc. - - Media & Entertainment Caspian Sea oil & gas block, pipeline ONGC Videsh Limited 1000.0 2.72% Oil & Gas Healthcare BPO, Deloitte Hinduja Global Solutions Inc - - Pharma & Healthcare Woolworths Limited, India wholesale unit Infiniti Retail 38.0 - Retail Page 16
Private Equity transactions Page 17
In US $ mn Private equity transactions in September 2012 (1/3) 50 40 30 20 10 0 2500 2000 1500 1000 500 0 Deals (Volume) 41 24 24 July August September Deals (Value) 2,188 541 496 July August September Top 5 sectors (Volume) Sector Volume Value (US $ mn) Real Estate 7 127 Pharma & Healthcare 4 52 BFSI 3 96 FMCG, Food, Beverage 2 46 Media & Entertainment 2 36 Top 5 sectors (Value) Sector Value (US $ mn) Volume Real Estate 127 7 BFSI 96 3 Manufacturing 73 1 Pharma & Healthcare 52 4 FMCG, Food, Beverage 46 2 Note: The value given is only for disclosed deals. Page 18
Private equity transactions in September 2012 (2/3) Target Acquirer Deal Value (in US $ mn) % stake acquired Religare Enterprises IFC 75.0 - BFSI Mahindra Insurance Brokers Limited LeapFrog 15.0 12.27% BFSI Sonata Finance Private Limited Creation Investments, yourstory.in 6.35 - BFSI Zomato Media Private Limited Info Edge India Limited 2.31 - e-commerce Altus Learning Kaizen 4.5 - Education Parag Milk Foods Private Limited IDFC 27.88 - FMCG, Food, Beverage Prabhat Dairy Rabo PE, Abraaj Capital 17.99 - FMCG, Food, Beverage Capillary Technologies Pvt Ltd Covacsis Sequoia Capital, Norwest Venture Partners Blume Ventures, Indian Venture Partners 15.5 - IT/ITeS 0.45 - IT/ITeS Sector Jain Irrigation Mount Kellett, IFC 73.0 - Manufacturing Great Indian Nautanki Company L Capital 35.97 - Media & Entertainment DB Corp Nalanda Capital - - Media & Entertainment SH Kelkar & Company Blackstone 43.7 33% Others Thyrocare Technologies Ltd Norwest Venture Partners 22.0 10% Pharma & Healthcare Thyrocare Technologies Limited Norwest Venture Partners 21.58 10% Pharma & Healthcare NationWide Primary Healthcare Services Private Limited Norwest Venture Partners 4.5 - Pharma & Healthcare Super Religare Laboratories (SRL) Avigo Capital Partners 4.0 - Pharma & Healthcare Page 19
Private equity transactions in September 2012 (3/3) Target Acquirer Deal Value (in US $ mn) % stake acquired Prestige Estates Projects Limited Red Fort Capital 35.97 - Real Estate Shriram Properties, Bangalore project ASK Property Investment Advisors (ASK PIA) 18.2 - Real Estate Amrapali Developers JP Morgan 18.18 - Real Estate Lalbagh project, Bangalore, Mantri Developers Private Limited. ASK Property Investment Advisors Private Limited 18.1 50% Real Estate Earth Water Group CLSA Capital 15.0 20% Real Estate Semi-luxury residential project, Bangalore ASK Property Investment Advisors 14.0 - Real Estate Century Real Estate Reliance Capital 7.25 - Real Estate Sector Page 20
Venture Capital transactions Page 21
In US $ mn Venture Capital transactions in September 2012 (1/2) 30 27 Deals (Volume) Top 5 sectors (Volume) 25 Sector Volume Value (US $ mn) 20 15 10 15 12 IT/ITeS 4 3 e-commerce 4 2 Pharma & Healthcare 1 3 5 0 July August September Power & Energy 1 - Hospitality 1 - Deals (Value) 60 53 Top 5 sectors (Value) 50 40 Sector Value (US $ mn) Volume 30 20 10 0 16 9 July August September IT/ITeS 3 4 Pharma & Healthcare 3 1 e-commerce 2 4 Power & Energy - 1 Hospitality - 1 Note: The value given is only for disclosed deals. Page 22
Venture capital transactions in September 2012 (2/2) Target Acquirer Deal Value (in US $ mn) % stake acquired Travelmob Jungle Ventures 1.0 - e-commerce 99labels.com Info Edge (India) Ltd 0.9 - e-commerce DailyObjects Seedfund - - e-commerce Unbxd Indian Angel Network - - e-commerce Poncho Indian Angel Network - - Hospitality Datagres Technologies Nexus Venture Partners 2.0 - IT/ITeS DesiCrew Solutions Private Limited responsability Ventures and Ventureast Tenet Fund 1.2 - IT/ITeS i7 Networks <Angel Funding> 0.25 - IT/ITeS Aurus Network Indian Angel Network - - IT/ITeS Social Deal Factory Seedfund - - Others Vyome Biosciences Private Limited IndoUS Venture Partners, Aarin Capital, Navam Capital Sector 3.3 - Pharma & Healthcare Avani Bio Energy Acumen Fund 0.25 - Power & Energy Page 23
About IMaCS Page 24
About IMaCS 40 countries 600+ clients 1300+ assignments India based management consulting firm with over 18 years of experience in policy advisory, strategy, operations and transaction advisory A wholly-owned subsidiary of ICRA Limited, one of India s leading credit rating agencies Offices across India at New Delhi, Noida, Gurgaon, Mumbai, Chennai, Bangalore, Kolkata, Hyderabad, Pune and Ahmedabad and International office in USA Clients include governments, bilateral/multilaterals, industry associations, financial investors and corporates Significant experience across the consulting continuum with assignments spanning; policy advisory, business strategy, operations improvement and transaction advisory services Knowledge repository with continuous tracking of over 100 industries and sector Policy Advisory Strategy & Operations Capacity Building Transaction Advisory Page 25
Contact us IMaCS offices Shaleen Agarwal Principal - Corporate Advisory, IMaCS Noida, India Phone: +91-99581-11350 Email: shaleen.agarwal@imacs.in Rajesh B V DGM and Head Corporate Advisory, IMaCS Bengaluru, India Phone: +91-98860-21200 Email: rajesh.bv@imacs.in Corporate Office: Noida Logix Park, First Floor, Tower A4 & A5, Sector - 16,Noida - 201 301 Tel: +91-120-4515 800 Fax: +91-120-4515 850 Bengaluru M-01, Prestige Infantry Court, 130,Infantry Road, Bengaluru 560 001 Tel: +91 80 4093 4100/ 4123 Fax: +91 80 4093 4111 Pune: 5A, 5 th Floor, Symphony S.N. 210, CTS3202, Ranga Hills Road, Shivaji Nagar Pune:411020 Tel:+91 20 25561194/25560195/ 0196 Fax: +91 2025561231 Mumbai 4th Floor, Electric Mansion Appasaheb Marathe Marg, Prabhadevi Mumbai 400 025 Tel: +91-22-3047 0047 Fax: +91-22-3047 0081 Kolkata FMC Fortuna, A-10 & 11, 3 rd Floor, 243/3A, AJC Bose Road, Kolkata 700 020 Tel: +91-33-2283 1412 Fax: +91-33-2287 0728 Ahmedabad: 907&908 Sakar II Ellisbridge (Opp. Town Hall) Ahmedabad-380006 Tel: +91 80 4093 4100/2008/4924/5494 Fax:+91 79 26584924 Chennai 5th Floor, Karumuttu Centre, 634, Anna Salai, Nandanam, Chennai - 600035 Tel: +91-44-4596 4300 Fax: +91-11-2434 3663 Hyderabad 116, First Floor, Block-III, White House, Kundan Bagh, Begumpet, Hyderabad- 500 016 Gurgaon Building No.8 Cybercity Phase II Gurgaon-122002 Tel: +91 124 4545800 Fax:+91 124 4545850 Page 26