BackDeals Buzz: Trouble brews as key Coffee Day lender Yes Bank stalls Blackstone deal
In other news, education tech startup Unacademy is in talks to raise $100 million in a Series E round at a valuation of $400 million
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Trouble brews as key Coffee Day lender Yes Bank stalls Blackstone deal
Coffee Day Group’s proposed sale of its Global Village Technology Park to private equity firm Blackstone Group Llp has hit a hurdle, with the debt-laden group’s largest creditor, Yes Bank, signalling its reluctance to give approval to the ₹2,800 crore deal, Mint reported citing three people familiar with the sale process. The sale of the 90-acre tech park on the outskirts of Bengaluru is to be used for repaying the debts of Cafe Coffee Day’s (CCD) associate firms and their promoters. Founder V.G. Siddhartha committed suicide in July. Coffee Day Group firms and their promoters have total debts of at least $1 billion and Yes Bank is the single-largest lender to the group and its promoters, with an exposure of at least ₹1,500 crore. Yes Bank has put a condition that it will give its “no objection" to the Blackstone deal only if Coffee Day agrees to repay the entire loan taken by the group from Yes Bank or at least the loans taken by Coffee Day’s subsidiaries Tanglin Developments Ltd (which owns the tech park) and Sical Logistics. Tanglin Developments and Sical Logistics owe around ₹100 crore and ₹50 crore, respectively to Yes Bank. Among more than a dozen lenders, Yes Bank, which is dealing with its own liquidity crisis, is the only one yet to approve the deal with the New York-based private equity giant.
General Atlantic, GGV Capital in talks to invest in Unacademy
Education tech startup Unacademy is in talks to raise $100 million in a Series E round at a valuation of $400 million, Mint reported citing three people aware of the matter. New investors expected to participate in the round include New York-based private equity firm General Atlantic (GA) and GGV Capital, a global venture capital firm with more than $6 billion in assets under management. The four-year-old startup allows educators to create videos on its website and app for users for courses from school level learning to college entrance exams across streams, besides for more advanced courses such as civil service exams and MBA entrance tests. While its content was mostly free so far, earlier this year, it started Unacademy Plus, a subscription-based service. Unacademy posted ₹11.6 crore in revenue and a loss of ₹90 crore in FY19, according to a report from Entrackr, an online news portal. However, its entire revenue came from subscriptions, and rose 6.6 times compared to the previous year, while losses grew nearly four times. It had last raised $50 million in a Series D round in June 2019 led by hedge fund Steadview Capital, along with existing investors Sequoia Capital, Nexus Venture Partners, SAIF Partners and Blume Ventures.
Stride Ventures marks first close of ₹500 crore venture debt fund
Stride Ventures, which provides loans to startups raised ₹100 crore to mark the first close of its maiden venture debt fund, Mint reported. A first close allows a fund to begin deploying the capital raised, even as it raises more. It plans to raise ₹500 crore for the fund, with current investors (limited partners) including high net worth individuals and family offices. The firm was founded was Ishpreet Gandhi, who was earlier with IDFC First Bank, leading the coverage of foreign multinational firms’ debt opportunities. The fund plans to invest in 35-40 startups over the next 3 years with loan tenures of 1-1.5 years. The other partners at Stride Ventures include Avtar Monga, who was earlier Chief Operating Officer and Executive Director at IDFC First Bank, and Abhinav Suri, who headed corporate credit at IDFC First. Venture debt has become an increasingly important source of funding for startups. It helps founders raise money without diluting stake, provides runway for a few months, and provides a boost prior to an equity fundraise. However, debt generally makes sense for businesses with a stable cash flow and cannot be seen as a substitute to venture capital, but as an addition. Three firms currently dominate the Indian venture debt landscape- Temasek-owned InnoVen Capital, Alteria Capital and Trifecta Capital. While Alteria is currently deploying from its ₹960 crore first fund, Trifecta is currently in discussions to raise a ₹750 crore second fund. InnoVen raised $200 million from its parent Temasek and United Overseas Bank to invest in startups across South East Asia and China.
Sanofi to buy US biotech firm for $2.5 billion in cancer push
French pharma giant Sanofi agreed to buy US biotech company Synthorx Inc. for $2.5 billion, almost triple its market value, accelerating a push into cancer under new Chief Executive Officer Paul Hudson, Bloomberg reported. Sanofi will pay $68 a share in cash for Synthorx. Shares of the unprofitable San Diego-based company closed at $25.03 Friday, having surged 40% last week. The deal underscores the Paris-based drugmaker’s efforts to build its portfolio of innovative therapies in the fast-growing and lucrative cancer field. It was unveiled a day before Hudson outlines his pipeline and acquisition priorities, along with his initial plans for the consumer-health, diabetes and other units. The purchase marks Sanofi’s first multibillion acquisition since early 2018. Investors are counting on Hudson to fire up Sanofi’s research operations and step up the search for novel products to reduce its reliance on Dupixent, a standout medicine for severe eczema and asthma. Hudson, the former pharma head at Novartis AG, is credited with launching key medicines at his previous job before becoming CEO of Sanofi in September. The purchase is the latest sign of big pharma’s increasing bet on oncology medicines with drugmakers including Roche Holding AG, Bristol-Myers Squibb Co. and Merck & Co. leading the pack. Big premiums have become the norm as companies place riskier bets on acquiring potentially lucrative treatments from biotech startups.
Advent, Bain, GIC in talks to sell stake in Quest Global
Private equity firms Advent International and Bain Capital as well as Government of Singapore Investment Corp (GIC) are in preliminary talks for a partial or full exit of their stake in engineering services firm Quest Global, valuing the Singapore-headquartered company founded by Indian entrepreneurs at around $2.5 billion, The Economic Times reported citing multiple sources close to the negotiations. The three of them together own around 30% stake in the firm and are expected to make more than two times return from a three-year-old investment. The funds are also weighing an option of a public listing of the firm in the US through which promoters of the company are also likely to trim their ownership. About six investment bankers are hired to run a formal process including JP Morgan, Nomura, Morgan Stanley, Credit Suisse, Citi and Goldman Sachs, who are working on the deal, which is expected in the first quarter of 2020. Founded in 1997 by Ajit Prabhu and Aravind Melligeri, Quest provides engineering outsourcing services to firm in sectors including aviation, automobiles, oil & gas, power, and healthcare. With revenue of around $675 million, Quest is one of the largest engineering services firms and counts Airbus, General Electric, and Pratt & Whitney as some of its clients.
Season Two Ventures looks to raise $100 million fund
Season Two Ventures, an enterprise-focused early stage venture capital fund, has hit the market to raise $100 million, The Economic Times reported citing its founder Sajan Pillai. The fund scouts for startups in the enterprise healthcare, fintech, logistics, energy and utility space. It then works closely with these startups to establish a go-to-market product and connects them to large companies in the US by leveraging its network. For instance, T-Hub-incubated health tech startup Nexrea already sells to Johnson & Johnson, Tech Mahindra, GE Healthcare, Cyient, and Siemens, the company said. Season Two Ventures will make about 30 investments from this fund, starting with an initial cheque size of $500,000 to $1 million, and invest about $1 million in additional capital later on, to scale up the ventures. However, a third of the fund will be deployed towards backing founding teams and seeding in ideas and problem statements that the fund identifies from corporates in the US and to help build those businesses. In such cases, Season Two will hold at least 50% stake in the venture. In less than two months of launch, the fund has made one bet in India — Uvik, a mobile payment platform that enables contactless payments across utilities and transport.
Park Hotels plans to raise ₹1,000 crore via IPO
The Park Hotels, managed by the Apeejay Surrendra Group, is planning a ₹1,000-crore maiden public share sale and will file the initial document, called the draft red herring prospectus, for the issue with the capital markets regulator later this month, The Economic Times reported citing two people aware of the development. According to one of the persons cited above, the company which runs luxury boutique hotels across the country, is planning to raise ₹500 crore through a primary issue and the remaining ₹500 crore via an offer for sale. ICICI Securities and JM Financial are managing the issue. The company aims for a listing by April 2020. Promoters of the company own a tad more than 90% and they plan to divest 20% in it. The Park Hotels currently runs 25 properties, including 12 under a sub-brand called Zone by The Park. It is developing two properties under The Park brand in Indore and Pune and 10 more under Zone in locations such as Tirupati, Dimapur and Srinagar. The company had a turnover of ₹416 crore in FY19, up 10% on year, according to documents filed with the Registrar of Companies. Its net worth stood at ₹589 crore at the end of FY19, up a bit from last year. Debt totaled ₹485.2 crore. The Park follows Lemon Tree Hotels, which went public in March 2018 and Chalet Hotels that listed in January this year. Lemon Tree had a market cap of ₹4,773 crore as of Monday’s closure on the Bombay Stock Exchange whereas Chalet has a market cap of ₹6,815 crore.
Godrej Fund Management to invest ₹700 crore in Century’s commercial project
Godrej Fund Management, a real estate-focused private equity arm of Godrej Group, has signed a strategic partnership with Century Group to develop a commercial project in north Bengaluru in a deal valued around ₹700 crore, The Economic Times reported citing people close to the negotiations. The deal is in the final stage of closure and will mark Godrej Fund Management’s foray in the commercial market in Bengaluru. The investment will come from the ₹3,200-crore ‘Godrej Build to Core-I’ (GBTC-I) fund. The proposed office project is spread over 10 acres with a development potential of 2-3 million square feet. Both the companies are also in talks for more projects. Century Group has many strategic land parcels and local expertise. In some cases, Godrej may also bring in equity and development capability. Bengaluru leads the overall office leasing activity in the country, primarily driven by tech companies. The city contributed 27% of the total absorption in the first nine months of 2019. The deal also marks Century’s foray into commercial real estate. Century Real Estate Holdings, which has the largest land bank of more than 2,500 acres across Bengaluru, is targeting a commercial portfolio of seven million sq ft over the next five years, they said. It plans to build a ₹2,000-crore office platform.
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