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October 27, 2010

Deal Alert: DEG picks up stake in Deepak Fasteners

DEG – Deutsche Investitions - und Entwicklungsgesellschaft mbH has taken a minority stake in Deepak Fasteners Ltd., a leading manufacturer of high end specialty industrial fasteners.

Deepak Fasteners owns the ‘Unbrako’ brand, which it acquired two years back from SPS Technologies of USA. Unbrako is an engineers’ preferred choice for all safety and mission critical applications.

“We are very happy to partner with a world class Indian company with strong international brands. Deepak’s products support a wide range of high growth key infrastructure industries and we believe the company is in a good position to capitalize on the opportunities offered by the next round of growth in India and elsewhere. DEG’s investment would generate additional employment opportunities and would help the Indian Company establish itself as a global player. ”, said Amit Goyal, Investment Manager at DEG’s office in Delhi.

Earlier this year, Deepak Fasteners raised first round of capital for its expansion project from BanyanTree Growth Capital LLC, a Mauritius based private equity fund.

DEG, member of KfW Bankengruppe (KfW banking group) and one of the Europe's largest development finance institutions, finances investments of private companies in developing and transition countries. DEG has been committed to private-sector
investments in India since 1964. Drawing upon its many years of experience in India as well as in other developing countries, it can provide valuable assistance to companies in realizing their investment projects. DEG invests in profitable companies across the sectors that contribute to sustainable development in the economy. DEG’s current India portfolio stands at nearly EUR 380 million spread across 42 companies across the sectors.

For more information, please contact Amit Goyal of DEG at +91 11 4725 0205 or amit.goyal@degindia.com

Forbes India profile of Rupa Publications

From the profile of India's largest publisher of English books, which releases over 250 titles a year.
But it was in 2004 that Rupa really hit it big with Chetan Bhagat’s Five Point Someone. The book rewrote the rules of the publishing industry in India. An English book was considered a bestseller if it sold 10,000 copies. Five Point Someone and each of the other books he wrote sold a million. Priced at Rs. 95, it negated the threat of piracy.

How does Rupa do it? There are three key factors that help Rupa sell so many books. The first one is a very strong distribution chain. Mehra has a tie-up with A.H. Wheeler, the railway bookstore chain that has outlets across the length and breadth of India...Rupa has been growing at 50 percent for the last three years against an industry average of 30 percent.

...A key reason that Mehra is able to understand young India is because he is the same age as his readers...Authors get 10-15 percent royalty on sales of every book. If he feels that the author is a good bet, he pays them an advance.


Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

October 25, 2010

Indian Private Investors Conference; Nov.12-13, 2010; Mumbai

Partner Conference Promotion

The Indian Private Investors Conference is a director level, interactive conference with speakers and panellists being industry leaders drawn from India and abroad. The speaker line up for this event boasts of some reputed and eminent professionals such as;

Anubha Shrivastava, Managing Director - Asia, CDC Group
Bharat Bakhshi, Partner, Jacob Ballas Capital India Pvt Ltd
Gautam Mehra, Executive Director, PricewaterhouseCoopers
Jasmin Patel, Managing Director, Fidelity Growth Partners - India
Manish Chhajed, Vice President, Reliance PE
Mritunjay Kapoor, Managing Director, Protiviti
Nakul Zaveri, Senior Investment Officer, Climate Change Capital
Pankaj Dutt, President, Welkin Partners
Percy Billimoria, Sr Partner, AZB Partners
Raj Pai, Managing Director, GEF Advisors India
Rajesh Begur, Managing Partner, ARA Law
Dr. Subir Gokarn, Deputy Governor, RBI*
Samir Inamdar, Founding Partner, Forum Synergy PE Fund
Sandeep Aneja, Managing Partner, Kaizen PE Fund
Suneet Maheshwari, CEO, L&T Infrastructure Finance
Usha Thorat, Deputy Governor, RBI*
Vijaydeep Singh, Director, Welkin Partners
Vivek Tandon, General Partner & Founder, Aloe Private Equity
*awaiting confirmations

These professionals will share their knowledge and industry experience accumulated over the years with the audience present at the event from 12th to 13th November’2010 at Vivanta by Taj - President, Cuffe Parade, Mumbai.

In short it can be categorically stated that IPIC 2010 is a high profile event that offers an experience wherein ideas, intelligence and relationships will be strategically leveraged to affect a notable difference to you and your customers’ business endeavours.

The global recession in the last two years had led to a major pull back by consumers throughout the world. Even the Indian consumer was not immune to this fallout. The retail funk fuelled by economic uncertainty contributed by rising unemployment and a general lack of confidence in any significant recovery in the foreseeable future. However, contrary to popular perception, the global risk capital allocation post global financial meltdown has changed significantly, owing to the wake of the industry & economy’s resilience and strength in managing through the crisis. This conference focuses on allocation trends and preferences of global and regional sector-agnostic and sector-focussed funds looking at investing in India through Indian private equity funds.

This conference focuses on allocation trends and preferences of global and regional sector-agnostic and sector-focussed funds looking at investing in India through Indian private equity funds. Through this conference the organizers aim to facilitate investors to:-
1. Know capital allocation trends and preferences
2. Meet global and regional investors
3. Understand sectors which are attracting capital providers
4. Understand sectoral trends in ‘HOT’ sectors
5. Understand valuation and structuring aspects

The premise of this conference is to facilitate top ranking officials from the private equity industry to assemble at a common ground to exchange information, share knowledge, network with their peers and also to discuss issues of critical concern that are being commonly faced by the industry on the whole. Through debate and discussion, the delegates will attempt to arrive at mutually beneficial solutions to common issues of critical concern. Some of the issues that are slated to be discussed during the event are:-

 Current macro economic factors affecting the industry
 Fund allocations to India post GFC
 Deal Flows, Exits & Deal Structuring
 Secondary Markets & its Liquidity
 Corporate Governance & Talent Management
 Discovering Sector Specific Opportunities in Education, Cleantech,
 Healthcare and Infrastructure
 Fund Structuring, Tax & Regulatory Issues

For further details regarding this exclusive conference you can visit conference website: http://www.inkbusinessmedia.com/ipic2010/ or you may also write to us jayesh@inkbusinessmedia.com

October 22, 2010

AZB & Partners, Ernst & Young Continue to Top 2010 League Tables

Corporate law firm AZB & Partners continues to top the Venture Intelligence India League Tables as the Most Active Legal Advisor for both Private Equity and M&A deals – advising a total of 69 transactions - in the first nine months of 2010. Ernst & Young topped the League Tables as the Most Active Transaction Advisor (both PE and M&A) for the nine months ended September 2010.

The Venture Intelligence League Tables, the first such initiative exclusively tracking transactions involving India-based companies, are based on volume of PE and M&A transactions advised by Transaction and Legal Advisory firms.

Private Equity Deals

Among PE transactions, AZB advised 36 deals worth over $2 billion during the period including SBI-Macquarie’s $304 million investment in Viom Networks; the $300 million investment by Olympus Capital in Tata Power's coal mine SPVs in Indonesia and the $217 million investment by Standard Chartered PE, KKR and New Silk Route in Coffee Day Resorts. Other legal advisors who advised a significant number of PE transactions during the period include Indus Law with 15 deals, ALMT Legal and Trilegal with 9 deals and Amarchand & Mangaldas, DSK Legal and Nishith Desai Associates with 8 deals each.

Ernst & Young advised 7 PE deals worth $309 million during the period, including TPG Growth's $86 million investment in Lilliput Kidswear; Warburg Pincus’ $85 million investment in Metropolis Healthcare and Actis' $78 million investment in Tata Realty and Infrastructure's road project SPV. Other transaction advisors who advised a significant number of PE deals during the nine months ended Sep’10 include Intellecap (with 6 deals), and Edelweiss and Veda Corporate Advisors with 5 deals each.

M&A deals

Among M&A transactions, AZB advised 33 deals worth almost $21.8 billion during the period, including the Bharti’s acquisition of Zain’s African operations, Jindal Steel’s acquisition of Oman’s Shadeed Iron & Steel and Vedanta Resources’s acquisition of Cairn India. Other legal advisors who advised a significant number of M&A transactions during the nine months ended Sep’10 include Trilegal (10) Tatva Legal (11 deals) and Khaitan & Co and Rajani Associates with 8 deals each.

Ernst & Young advised 19 M&A deals worth almost $17.5 billion during the period, including Abbott Laboratories’ acquisition of Piramal’s domestic formulation business, Legrand’s acquisition of Indo Asian Fusegear’s Switchgear business and Bharti’s acquisition of Zain’s African operations. Other transaction advisors who had advised a significant number of M&A deals during the nine months ended Sep‘10 include Kotak (10), Ambit Corporate Finance (8) and Deloitte (11).

The full league tables can be viewed online at
http://ventureintelligence.in/league.htm

About Venture Intelligence

Venture Intelligence, a division of Chennai, India-based TSJ Media Pvt. Ltd., is the leading provider of data and analysis on Private Equity and M&A transactions in India. For more information, please visit http://www.ventureintelligence.in

October 20, 2010

Business Standard Interview with Renuka Ramnath

As part of its "Lunch with BS" series, Business Standard has an interview with Renuka Ramnath of Multiples Alternate Asset Management.
...ICICI Venture was also a trendsetter under Ramnath who invested in emerging sectors such as retail, biotech, media and aviation much ahead of others and pushed the firm from just venture funding to late-stage investing and even buyouts. She was also credited with creating a highly-successful structured finance portfolio that, within two years of its existence, contributed more than 40 per cent of ICICI’s incremental assets.

..Ramnath says Multiples will be sector-agnostic and make investments in Indian companies, management-led buyouts and spin-offs of divisions from large Indian groups — something she did at ICICI Ventures with great success.

...Her expectations about her own skills have, however, toned down a bit. At ICICI Ventures, she was known to give her investors outsized returns — the India Advantage Fund realised an internal rate of return of over 70 per cent. She says she would consider a job well done if she can give investors in Multiples a 25 per cent return.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in

October 07, 2010

M&A activity increases 72% during the 9 months ended Sep 2010

During the nine months ended September 2010, Indian companies were involved in a total of 474 M&A deals, up 72% from the same period in 2009, according to a study by Venture Intelligence (http://www.ventureintelligence.in), a research service focused on Private Equity and M&A transaction activity in India.

The median deal value during the first nine months of 2010 (for the 206 deals which had announced transaction values) at $16 million was however down from the median deal value of $20 million for the same period in 2009, the Venture Intelligence study found. In the largest deal during the period, Reliance Natural Resources agreed to merge with Reliance Power in a deal valued at $11 billion. This was followed by Bharti Airtel’s $10.7 billion acquisition of Kuwaiti-based Zain's African assets; Vedanta Resources’ $8.5 billion bid to acquire oil & gas firm Cairn India and Mundra Port’s $5.48 billion amalgamation with Adani Enterprises.

About 30% of the deals in the nine months ended Sep ’10 were outbound acquisitions, as against only 26% for the same period in 2009. Domestic deals continued to be the major contributor with a 56% share.

The most preferred destination for Indian acquirers was USA with 41 of the 144 outbound targets in the nine months ended Sep’10 located in that country, followed by the UK (with 28 deals). The acquirers in nineteen of the 67 inbound deals were US-based companies, followed by French firms with nine deals and British firms with seven deals.

The IT & ITES and Manufacturing industries accounted for majority of acquisitions during the nine months ended Sep ’10 with a 21% share each. The activity in the Manufacturing industry grew from 19% during the same period last year while the share of IT & ITES deals fell marginally (from 23%).

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Venture Intelligence, a division of Chennai, India-based TSJ Media Pvt. Ltd., is the leading source of information on private equity and M&A transactions in India. For more information, please visit http://www.ventureintelligence.in

PE investments double in Q3’ 10 to over $2-B; dip Q-on-Q

Private Equity firms invested about US$2,047 million across 88 deals during the quarter ended September 2010, according to a study by Venture Intelligence (http://www.ventureintelligence.in), a research service focused on Private Equity and M&A transaction activity in India. The latest numbers take the total PE investments in 2010 to $6,566 million (across 231 deals) more than twice the $2,502 million invested (across 179 deals) during the same period in 2009. (Note: These numbers do not include PE investments in Real Estate.)

The amount invested in Q3 ’10 was little over twice that during the same period last year (which witnessed $976 million being invested across 65 deals), but lower compared to the immediate previous quarter ($2,364 million across 71 deals). “For the first time since Q1’09, the amount invested by PE firms has dipped when compared to the immediate previous quarter,” noted Mr. Arun Natarajan, MD & CEO of Venture Intelligence. “Given the rapidly rising public markets and strong prospects for IPOs, this is probably a better time for PE investors to focus on exits rather than place big investment bets” he added.

The largest investment during Q3 ’10 was SBI-Macquarie’s $304 million investment into Viom Networks. Other top investments reported during Q3 ’10 included Blackstone’s $300 million investment into Moser Baer Projects followed by Actis’ $100 million investment in IDFC.

The IT & ITES industry registered 24 deals worth $126 million during Q3 ’10, followed by BSFI (13 deals worth $312 million) and Energy (9 deals worth $522 million). Venture Capital and Late Stage investments accounted for 31 and 28 deals each during Q3 ’10. Late Stage deals accounted for 56% of the investments in value terms.

Private Equity firms obtained exit routes for their investments in 27 Indian companies during Q3 ’10, including two via IPOs (that of Gujarat Pipavav Port and MakeMytrip.com). This compares to 23 exits (including 2 IPOs) in the same period in 2009 as well as in the immediate previous quarter (including 5 IPOs). The largest exits via M&A in Q3’10 included JP Morgan, IDFC PE’s exit from L&T-IDPL (via buyback by L&T) and Kubera Partners’ sale of its stake in Venture Infotek (to European IT Services firm Atos Origin). The largest exit via public market sale was ChrysCapital’s exit of its stake in Bajaj Auto Finance.

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Venture Intelligence, a division of Chennai, India-based TSJ Media Pvt. Ltd., is the leading source of information on private equity and M&A transactions in India. For more information, please visit http://www.ventureintelligence.in

Interview: The Sequoia-SKS Saga

For Sequoia Capital India, its 2007 investment in SKS Microfinance, founded by former McKinsey consultant Vikram Akula, was one of its first outside the technology sector. With SKS’ successful August 2010 listing, Sequoia, which had invested $32 million in the company over three years, is now sitting on returns of about 13x (at the mid-September market price).



Extracts from an interview with Sumir Chadha, Managing Director of Sequoia Capital India, , who represents the firm on the SKS board, on the path-breaking investment. This interview was first published in the latest quarterly Venture Intelligence India Roundup Private Equity report.


Venture Intelligence: Tell us how the original investment by Sequoia in SKS come about.

Sumir Chadha: In early 2006, we identified the microfinance sector as an area of interest, and proactively reached out to the top players in the sector. At the time, people forget, but SKS Microfinance was the third largest player in the industry. However, Vikram’s fantastic vision and the quality of the management team really impressed me, and based on that we decided to invest in the company. We saw a large, virgin market opportunity and a very well run company. Since our investment, they have emerged as the dominant market leader in microfinance.

VI: Given that SKS was one of Sequoia's first non-tech investments, how did you and your team go about engaging with and adding value to the company?

SC:
All high growth companies face a similar set of challenges regardless of sector: recruiting high caliber executives to fill in gaps, building strong financial and operating metrics and discipline, creating the right culture for success, etc. Our experience in helping many companies in India over the past decade was helpful. We helped lead the search for SKS’ current CFO, Dilli Raj. We also recruited prominent board members such as Pramod Bhasin from Genpact and Tarun Khanna from Harvard Business School onto the board. We assisted the company in measuring, monitoring and incenting performance. And finally served as a sounding board for important strategic decisions.

However, I don’t want to overstate our role, most of the credit goes to Vikram Akula as well as the key executives including MR Rao and Dilli Raj.

VI: SKS attracted a series of new investments since Sequoia's entry culminating in the August 2010 IPO. Can you tell us about Sequoia's role in raising the further rounds and the IPO process?

SC:
We tend to play an important role in raising additional private capital for our portfolio companies as well as shepherding them through the IPO process, especially since for almost all our companies, it’s the first time that they are raising follow-on private equity or doing an IPO. It includes introductions to investors who are a good fit for the company, assisting in negotiations, selecting bankers for the IPO process and helping manage the key decisions around the IPO.

VI: Apart from SKS, Sequoia has investments in two other microfinance companies - Equitas and Ujjivan. How are these firms differentiated (from SKS)? And are you open to making more new investments in this sector?

SC:
Equitas has built a very operationally efficient model that has scaled extremely well. Ujjivan focuses on urban and peri-urban microfinance and is led by a very capable management team. Never say never, but we are not looking to make additional investments in the sector at this time as we have a fair amount of exposure to three industry leaders.

VI: Is microfinance an unusual sector (in terms of its hyper-growth) or can India throw up several more sectoral opportunities that can provide similar returns?

SC:
Microfinance is unusual in one very important respect in that India is the world’s largest market for microfinance given the size of our population and the number of poor that we have – far greater than China. This means that in the microfinance sector, India will produce companies that will be the largest players in the world and will drive innovation in the sector. SKS has already become the world’s largest microfinance firm by loan book outstanding and continues to grow very fast.

Having said that, there will be other sectors that throw up very good returns and we are already seeing this across our portfolio – for example, we recently exited Manappuram (a leading lender against gold) and Dr. Lal Pathlabs (a leading healthcare diagnostics company) – both at very attractive returns. We also have many other rapidly growing companies in our portfolio in India across many sectors.