1. Top Headlines
 Indiabulls Merging NBFC Arm With Housing Finance Unit
 Forum Synergies In Debut Deal; Puts $3M In Captronic
Systems
 Nagpur Automotive Buys Adhunik Metaliks' Forging Arm
For $44M
 Anand Rathi & Knight Frank Eye $100M In Second Realty
Fund
 Greenko Group Promoters Hiking Stake To 14.4%
 Jacob Ballas Capital Invests $39M In Marg Karaikal Port
 Pune Developer KUL Raises $39M For Township Project
 FC May Invest $12M In Ahmedabad NBFC MAS Financial
 Sunil Sharma Quits BDO India After 25 Yr Stint; Manoj
Daga Takes Over
 Phoenix Mills Looking To Raise Up To $187M
 BCCL Raising Stake In Pantaloon Retail To 7.7% For
$37.5M
Weekly Economic Review
A major consolidation is underway in India’s fragmented retail industry.
On Monday the Aditya Birla conglomerate announced it would acquire a
controlling stake in Pantaloon Retail’s chain of clothing stores. As part of
the deal, Pantaloons Retail will hive off its apparel chain into a separate
unit. Then Aditya Birla Nuvo will infuse Rs1,600 crore into the new
entity through a subscription of debentures. Once the separation
process is complete, those debentures will become equity. Aditya Birla
Nuvo will also make an open offer for at least 25% of the resulting unit.
That will give it at a stake of at least 50.01% in the retail chain, and
make it a subsidiary.
Switching to other news, the troubles of India’s telecom industry may
have just become sharper. On Monday Norwegian firm Telenor
announced it was writing down $681 million in what remains of its
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2. Indian assets. Telenor said the decision came because the new
proposals for re-auctioning 2G spectrum make it nearly impossible for it
to participate. Telenor’s Indian joint venture, Uninor, was among the
companies that lost key spectrum licenses in a February Supreme Court
decision. SigveBrekke, the managing director of Uninor, has said the
proposal for a re-auction for spectrum was effectively a price setting
balloon.
India’s biggest consumer goods company, Hindustan Unilever, has
beaten estimates with robust quarterly numbers. Resurgent demand
and stable price tags have helped the company ride through the storm
of rising input costs across the sector. Net profit for the fourth quarter
rose 21% to Rs. 687 crore. That came on the back of a rise in net sales of
16% to Rs. 5,660 crore. Also, the company’s operating margin rose by
170 basis points
In other news, fresh figures indicate a grave economic challenge for
India. On Tuesday, the commerce ministry announced the trade figures
for March, and those for exports aren’t very promising. They fell 5.7%
during the month to $28.7 billion. This is the first time exports have
fallen since 2009. Meanwhile imports continued to expand, going up
24.3% to $42.6 billion in March. That meant a trade deficit of $13.9
billion.The services sector index fell from 56 in March to 53.5 in April.
According to Market Watch it’s the worst reading since December. S&P
500 lost 0.77% to 1,391 on selling in stocks of commodities and
technology companies.
Back home, high capital requirements prescribed under Basel III
guidelines are estimated to hit growth and return ratios of public sector
banks. The norms are expected to force banks to plough back a large
chunk of their profit into their balance sheets.
Finally, beer consumption in Australia has fallen to a 65 year low as
consumers shift to wine and other forms of alcohol. According to
Bloomberg, beer consumption fell to 4.23 liters per person in the year to
30 June 2011, the weakest reading since 1946.
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3. Inside The Story
Indiabulls Merging NBFC Arm with Housing Finance Unit
Indiabulls Financial Services Pvt Ltd (IFS) on Friday announced plans to
merge itself with its fully owned subsidiary Indiabulls Housing Finance
Ltd (IHF) in order to consolidate capital with the fast-growing housing
finance business in its portfolio The commercial vehicle finance
business, the loan against property and corporate loans businesses of
the non-banking financial arm will be transferred to a separate entity. In
this reverse merger, shareholders of IFS will get one share of the
subsidiary company for each held in the listed non-banking finance
company. The listed entity will be renamed as IHF and will continue to
be traded on the bourses.“There were regulatory restrictions on the
amount of capital infusion into the housing finance company and hence
to make an efficient use of capital and to consolidate balance sheets, the
Merger will take place,” Gagan Banga, chief executive officer of
Indiabulls Financial Services said over phone.
Forum Synergies in Debut Deal; Puts $3M In Captronic
Systems
Forum Synergies (India) PE Fund Managers, a private equity firm set up
by former CEOs, has made its debut deal by investing Rs 15 crore or
around $3 million in Captronic Systems Pvt Ltd. The Bangalore-based
Niche technology firm specializes in the design and development of
custom automated test, control and acquisition systems for R&D, design
validation and production testing.Captronic’s products were also used
For testing certain aspects of Chandrayaan-1, India's first unmanned
lunar probe.The investment has been made through India Knowledge-
Manufacturing Company and Axon Capital's India Opportunities Fund,
both of which are advised by Forum Synergies. The Bangalore-based
private equity firm has a parallel investment relationship with Axon
Capital, a Madrid-based private equity firm.
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4. Nagpur Automotive Buys Adhunik Metaliks' Forging Arm
for $44M
Clearwater Capital Partners-backed Adhunik Metaliks Ltd, has sold its
forging subsidiary Neepaz V Forge to Nagpur Automotive Industries Pvt
Ltd for Rs 230 crore ($44 million). The transaction is part of strategy to
divest the non-core assets.Neepaz V Forge, manufactures forged
products for automobile players such as Tata Motors, Ashok Leyland,
Renault and Mahindra & Mahindra besides railways, oil & gas, defence
and agriculture sectors. Its product profile includes front axle beams,
crank shafts, cam shafts, connecting rods, stub axles, steering knuckles,
axle arms, differential case, differential covers, differential housings,
pistons, yokes, gears, track links etc.
Anand Rathi & Knight Frank Eye $100M In Second Realty
Fund
Anand Rathi Financial Services and property consultancy Knight Frank
India are planning to launch their second real estate fund by end of this
months and looking to raise around Rs 500 crore ($100 million).Unlike
its peers who are hitting foreign shores to raise new funds, the joint
fund rental yield and appreciation portfolio (RYAP) fundwill be raised
from the domestic market. Like its predecessor, it will invest in
commercial assets in tier I cities which include Mumbai, Pune,
Bangalore, National Capital Region (NCR) and Chennai.The fund would
be targeting returns of 10-12 per cent from its investments and expects
to stay invested in an asset for four-five years.
Greenko Group Promoters Hiking Stake To 14.4%
The promoters of Greenko Group PLC, one of India's largest
independent power producers in renewable energy space, have
increased their shareholding in the AIM-listed firm by 4.5 per cent and
have the option to raise it by an additional 1.3 per cent in two months.
The combined holding of the two executive directors -
Anil Chalamalasetty and Mahesh Kohli – through their holding entity
ACMK Enterprise Limited has increased to 13.1 per cent stake as a part
of fresh share issue under a long term management incentive
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5. plan announced in 2008.The shares have been issued after the firm hit
milestones in terms of power capacity.
Jacob Ballas Capital Invests $39M In Marg Karaikal Port
Private equity firm Jacob Ballas Capital has invested Rs 200 crore (~$39
million) to pick an undisclosed minority stake in Marg Karaikal Port Pvt
Ltd, which is developing a port in India's south east coast in Puducherry.
The investment has been made by NYLIM Jacob Ballas India Fund III,
LLC through a mix of subscription to fresh shares and secondary
purchase of shares. It could not be immediately ascertained if the
promoters (BSE-listed Marg Ltd) sold more shares or one of the
financial investors part exited in the latest transaction. The company did
not share how much of the investment is through primary issue which
and how much went to the selling shareholder.
Pune Developer KUL Raises $39M For Township Project
Kumar Urban Development ltd (KUL), the Pune based realty company
promoted by Lalit Kumar Jain, has raised Rs 200 crore for its first
residential township project, called KUL Ecoloch, said a source close to
the development.The source said the transaction was concluded last
month: “It has raised equity of Rs 50 crore from LIC Housing Finance
Ltd
FC May Invest $12M In Ahmedabad NBFC MAS Financial
International Finance Corporation (IFC) is planning to invest up to $12
million or a little over Rs 60 crore in Ahmedabad-based MAS Financial
Services Ltd. The investment in the non banking financing company
(NBFC) could be through compulsorily convertible preference shares
(CCPS).IFC has an existing exposure in a few other NBFCs including
Rajasthan-based Au Financiers, which recently attracted a $50 million
round led by private equity major Warburg Pincus. Last year, it also
invested in Kolkata-based NBFC Magma Fincorp along with KKR.
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6. Sunil Sharma Quits BDO India After 25 Yr Stint; Manoj
Daga Takes Over
Sunil Sharma, CEO of public accounting firm BDO India, formerly known
as BDO Haribhakti Consulting Pvt Ltd, has stepped down after a 25-year
career in the company. Manoj Daga, another senior partner in the
company, has replaced Sharma as CEO. Daga joined BDO in 2006 and
will assume his responsibilities for the management and development
of BDO’s business in India. “I intend to follow the benchmarks that
Sharma has set and pledge to contribute to the further growth and
success of BDO,” said Daga on his appointment."BDO is grateful for
Sunil’s unrelenting service over the years and we wish him and his
family the very best in their future endeavours," said Shailesh
Haribhakti, Chairman, BDO.
Phoenix Mills Looking To Raise Up To $187M
Mumbai-based realty company The Phoenix Mills Ltd is planning to
raise as much as Rs 1,000 crore ($187 million) through various equity
or equity convertible route including a QIP or an overseas bond or
equity issue in one or more tranches.The company is raising the money
to augment working capital requirements, to fast track the completion
of the existing projects, financing acquisitions of new projects and for
funding requirements for investments in subsidiaries or consolidation
of holdings in project special purpose vehicle, it disclosed on
Thursday.Two analysts actively tracking the public listed company, who
did not wish to be identified, said the company’s city assets are
maturing and it makes sense to increase its stake in those projects.“In
most cases they hold anywhere between 35 to 70 per cent which they
may want to increase,” said one of the analysts.
BCCL Raising Stake In Pantaloon Retail To 7.7% For
$37.5M
Ad-for-equity media investor Bennett Coleman & Co Ltd (BCCL) is
increasing its bet on the country’s largest retail company Pantaloon
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7. Retail (India) by subscribing to fresh shares worth Rs 200 crore ($37.5
million).BCCL which picks minority equity stakes in private as well as
public companies in lieu of ad space on its various media properties, is
already an investor in Pantaloon Retail. It held a little over 4 per cent
stake in the public firm through two entities.With the fresh share
purchase, BCCL’s holding will move up to 7.7 per cent on a diluted
equity base. This will make it the single largest non promoter
shareholder of the company. At the current market price its stake would
be valued at Rs 300 crore, making Pantaloon one of the biggest portfolio
company for the media group.
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