Deals Buzz: How will IDFC gain from its merger plan?7 min read . Updated: 29 Dec 2016, 11:52 AM IST
In other news, Reliance Infratel minority investors want to give up their stakes ahead of the RCom-Brookfield deal
Mumbai: Mint brings to you your daily dose of top deals reported by newsrooms across the country.
IDFC Bank to merge lending divisions, trim workforce
Private sector lender IDFC Bank Ltd is close to merging various lending divisions with a plan to reduce headcount, two people aware of the matter said.
The bank plans to merge corporate lending and middle market corporate lending into a single division while SME (small, medium enterprises) lending and business banking will also be merged into another division, said the first of the two persons on the condition of anonymity. Each division has 40 to 60 employees across the country, this person said. Revenue generated by each division is not known.
“This is an internal realignment to enhance our client coverage model and increase operating synergies. These changes will build on the significant momentum that the wholesale bank has acquired in the first year of the bank’s operations,"said an IDFC Bank spokesperson. Read more
NSE files draft IPO papers, investors to divest 22.5% stake
National Stock Exchange of India Ltd (NSE) on Wednesday filed its initial public offering (IPO) prospectus with market regulator Securities and Exchange Board of India (Sebi). The share sale is expected to be India’s second-biggest IPO.
According to the so-called draft red herring prospectus (DRHP), available on the website of the investment banks managing the IPO, existing shareholders of NSE are diluting a 22.5% stake in the exchange through an offer for sale.
On 6 December, Mint had reported that investors of the exchange were looking to sell up to a 23% stake through the proposed IPO. The NSE IPO could raise around Rs10,000 crore, Mint reported, making it the largest public listing since Coal India Ltd’s Rs15,200 crore IPO in October 2010. Read more
MCap Fund Advisors set to downsize, shelves plan for second fund
MCap Fund Advisors, the private equity (PE) fund launched by N. Subbu Subramaniam, former partner at Baring Private Equity Partners India Limited, is in the process of downsizing its operations, according to two people in the know.
The fund has decided to drop its plans to raise a second fund and is focusing only on the exits from its existing investments, said the first person.
With the exit of Abhilash Lal, partner and chief operating officer, the six-member team at MCap has been dismantled, said the second person. Subramaniam, who quit Baring in 2009 floated MCap in 2010.
MCap Fund Advisors, an India-focussed private equity fund with a corpus of $60 million, has investments in Jyothy Laboratories Ltd, V-Guard Industries Ltd, Regen Powertech Private Ltd, Omkar Clean Energy Services Private Ltd, TTK Prestige Ltd, City Union Bank Ltd, Hatsun Agro Products Ltd and APL Apollo Tubes.
Although Lal has put in his papers, he will continue with MCap until March 2017. With 21 years of experience, Lal has worked in business head positions at HSBC, A. T. Kearney, Genpact and DTZ. Read more
PE/VC investments slow down in 2016 after scaling a peak in 2015
Private equity (PE) and venture capital (VC) investments in India dropped sharply in 2016 after hitting a peak in 2015, both in terms of volume and value.
PE/VC investments worth about $16.2 billion were recorded in 2016 across 591 deals, against $19.6 billion across 767 deals in 2015. This was a decline of 18% in terms of deal value and 23% in terms of deal volume year-on-year, as per data provided by EY.
The decline was largely on account of lower investments in the e-commerce sector (from $4.2 billion in 2015 to $1.5 billion in 2016 and 188 deals in 2015 to 93 deals in 2016), the data showed.
“Overall, the year was a mixed bag. Despite the expected decline in the e-commerce investments, PE investments in 2016 were close to the earlier peak achieved in 2007. Also, the deal volumes remained the second highest ever after the 2015 peak," said Mayank Rastogi, partner and leader for private equity at EY.
“Positive notes included the step change in investments by Canadian investors, increase in buyout activity, sustenance of the VC activity despite the hit to e-commerce sector, strong PE portfolio company IPOs etc," he added. Read more
RCom-Brookfield deal: Reliance Infratel minority investors want to give up their stake
A group of private equity (PE) and hedge funds representing minority shareholders of Reliance Infratel Ltd, the telecom tower arm of Anil Ambani’s Reliance Communications Ltd (RCom), have demanded that RCom buy their stakes back before going ahead with its majority stake sale to Brookfield Infrastructure Group, two people aware of the development said on condition of anonymity.
“The PE funds have invoked a shareholder agreement under which RCom is obliged to buy their stakes back and also seek their approval before a majority stake sale in Reliance Infratel," said the first person, a senior partner in a private equity fund which is one of the minority shareholders of Reliance Infratel.
On 21 December, RCom signed a binding agreement with Brookfield to sell a 51% stake in Reliance Infratel for Rs11,000 crore. RCom currently owns close to a 96% stake in the company, while the remaining ownership is with minority investors.
“The minority shareholders are still in talks with RCom to resolve the matter amicably but have also engaged a Mumbai-based law firm to explore legal options," said the second person cited above. Read more
Cadila Healthcare arm acquires six brands from MSD Pharma
Cadila Healthcare on Wednesday said its subsidiary Zydus Healthcare Ltd has bought six brands from MSD Pharmaceuticals India Pvt. Ltd, the local arm of US-based Merck & Co. Inc., for distribution in the Indian market. The value of acquisition was not disclosed.
The brands—Deca-Durabolin, Durabolin, Sustanon, Multiload, Sicastat and Axeten—belong to therapeutic areas of men’s health, women’s health, wound management and cardiovascular diseases and had combined sales of Rs84 crore in 2015, Cadila Healthcare said in a stock exchange filing.
MSD Pharma has transferred distribution and commercialization rights and assigned trademarks of all the six brands to Zydus Healthcare for the India market, the statement said. The company has also got distribution rights of Deca-Durabolin and Durabolin for Nepal. Read more
Total value of exits by PE and VC funds declines marginally in 2016
The year that is coming to a close has seen total private equity (PE) and venture capital (VC) exits aggregating to $6.3 billion across 198 deals, against $6.5 billion across 249 deals last year, according to data provided by EY.
There was a decline in both secondary exits (PE to PE sales) and strategic exits, or sales to third parties often operating in the same industry as the company in which the investors are selling their stakes.
The top 10 exits accounted for 55% of overall exits value, data shows. “Exits started promisingly with the $1-plus billion exit of KKR (from Alliance Tires) in March 2016 but ended marginally lower than 2015," said Mayank Rastogi, partner and leader of the private equity practice at EY. Read more
Alibaba to soon open its first India office
China-based e-commerce giant Alibaba is setting up its first India office in Mumbai, apparently an indication that it is planning to scale up its investment in the country in the coming year, to capture a pie of the growing e-commerce market here, the Business Standard reported.
Jack Ma-founded Alibaba has invested in Indian e-commerce company Snapdeal, and in Paytm, the mobile payments service platform, through Ant Financials, its payment arm.
So far, the company has been a preferred platform for small businesses in India to source industrial goods from China. And, for vendors selling their products to customers globally.
It has, though, kept its plan to enter e-commerce in India under wraps. By setting up a office at Platina in the Bandra-Kurla Complex (BKC) in Mumbai, closer to that of US rival Amazon,it appears to now be signalling the intent that it is serious on entering, the paper said. Read more
Vatika Hotels raises Rs495 crore debt from Axis Bank
Vatika Hotels Pvt. Ltd, owned by real estate and hospitality firm Vatika Group, has raised Rs495 crore in debt from Axis Bank Ltd, which it will use to expand its hotels and quick-service restaurant chain besides its business centres, a top company executive said.
Vatika Hotels raises Rs495 crore debt from Axis Bank
The Gurgaon-based company will also invest part of the capital in a new venture, Grapes, under which it will launch co-working office spaces.
The first such co-working centre will be opened in Gurgaon soon.
Earlier this month, the real estate development arm of Vatika Group raised Rs700 crore from Altico Capital India Pvt. Ltd, the non-banking financial company of Asia-focused investor Clearwater Capital Partners Llc, for a portfolio of residential projects within its flagship township in Gurgaon. Read more