Warburg, Premji to buy $432 million SBI insurance arm stake
Insurance Australia Group Ltd (IAG) is looking to sell its entire 26% stake in SBI General Insurance (SBIG) to Warburg Pincus and Premji Invest for $432.38 million, Mint reported on 18 October. While Premji Invest has agreed to acquire 16% in the general insurer, Warburg Pincus plans to buy the remaining 10%. The transaction, subject to regulatory approvals, is expected to be completed by 30 June 2020. The country’s largest lender, State Bank of India (SBI), will continue to own 70% in its general insurance arm. The remaining 16.01% will be held by Napean Opportunities Llp (an affiliate of Premji Invest) and 9.99% by WP Honey Wheat Investment Ltd, an investment vehicle of Warburg Pincus. Besides, PI Opportunities Fund-1 will hold 2.35% and Axis New Opportunities AIF-I will hold 1.65% stake in the company. SBI chairman Rajnish Kumar said the bank had dropped a plan to take its general insurance unit public, citing no immediate need for additional capital. India’s largest bank was earlier looking to list SBI General Insurance in fiscal 2021. In November 2018, SBI sold 4% stake in SBI General Insurance for ₹482 crore (around $66 million) to two alternative investment funds (AIFs)—Axis New Opportunities AIF-I and PI Opportunities Fund-I, an AIF of Premji Invest. The transaction valued SBIG at over ₹ 12,000 crore.
Subhash Chandra scrambles to retain Zee reins amid VTB’s stake sale talks
VTB Capital Plc, a unit of Russia’s state-controlled lender VTB Group, is in talks with two potential investors to sell a 10.71% stake in Zee Entertainment Enterprises Ltd, Mint reported on 16 October citing two people directly aware of the development. Both the investors are large business groups with presence in media and broadcasting. One of the interested buyers is an Indian conglomerate, while the other is an international corporation. Earlier on Tuesday, VTB Capital said it has secured rights to sell Essel Media Ventures Ltd’s 10.71% stake in Zee Entertainment to recover loan dues. If the deal goes through, it may threaten promoter Subhash Chandra’s control over the company he founded and could expose Zee to hostile takeover bids. Chandra is also in negotiations with VTB to buy back the shares. The promoter group led by Subhash Chandra has offered to prepay a portion of VTB’s outstanding loan of around ₹2,000 crore from the proceeds of the remaining stake sale to Invesco Oppenheimer, which already owns a substantial stake in the company.
Adani Gas gets Total on board in ₹5,700-crore deal for a 37.4% stake
Total SA has agreed to acquire a 37.4% stake in city gas distributor Adani Gas Ltd for around ₹5,700 crore, in the French energy major’s biggest bet on India’s clean energy push, Mint reported on 15 October. The proposed acquisition also marks the largest foreign direct investment in India’s city gas distribution industry, with the deal giving Total joint control of Adani Gas, along with the Adani group. Total, the world’s second-largest liquefied natural gas company, will buy the stake in Adani Gas through a combination of tender offer to public shareholders and from the Adani family. The French company plans to acquire as much as 25.2% from the public and the rest from the Adani family. Eventually, the Adani family and Total shareholders will hold 37.4% stake each and public shareholders will hold the remaining 25.2%. The expanded partnership will develop re-gasification terminals, including Dhamra LNG on the east coast, sell liquefied natural gas (LNG) and through Adani Gas distribute gas to 7.5% of India’s population. The latest announcement comes a year after the two firms agreed to set up an equal joint venture to import and retail natural gas. As part of that, Adani and Total will build a fuel retail network of 1,500 stations along highways and intercity connections over 10 years.
IRCTC makes stellar stock market debut
Shares of Indian Railway Catering and Tourism Corp. Ltd (IRCTC) surged nearly 128% on BSE from their issue price on 14 October, the biggest stock market debut for any company in nearly two years, Mint reported. The initial public offering (IPO) of state-run IRCTC, the sole provider of catering services and online bookings for Indian Railways, was subscribed 112 times at a price band of ₹315-320. The ₹645-crore issue was open for subscription between 30 September and 4 October. The stock opened 101.25% higher above the issue price of ₹320 at ₹644. It jumped 132% to touch a high of ₹743.80 and a low of ₹625 during the day, before closing at ₹728.60, an increase of 127.68%. This is the biggest listing gain for any stock since Astron Paper & Board Mill Ltd made its debut with gains of 139.40% on 29 December 2017. Earlier in the same year, Salasar Techno Engineering Ltd had jumped 151.94% on the day of listing, and Avenue Supermarts Ltd surged 114.30% on listing. In 2019, a dozen stocks debuted on the stock exchanges. Of them, only four fell on their listing day. Among the others, Indiamart Intermesh Ltd, Neogen Chemicals Ltd and Polycab India Ltd had listing gains of 33.87%, 22.58% and 21.75% respectively.
Bhushan Power sale to JSW Steel halted in test for bankruptcy law
A bankruptcy appeals court halted the transfer of Bhushan Power and Steel Ltd (BPSL) to JSW Steel Ltd and stayed the Enforcement Directorate’s (ED) move to attach assets of the insolvent steel maker, scuttling hopes of a swift resolution of the distressed asset, Mint reported on 15 October. The National Company Law Appellate Tribunal (NCLAT) stayed the transfer of the payment by JSW Steel to the creditors of BPSL till investigation into allegations of fraud and money laundering by the former owners of the steel mill is decided. NCLAT will issue final orders on 25 October. The tribunal’s ruling could have far-reaching implications, especially for BPSL’s lenders, as the resolution process has lingered on for more than two years. In court, Sanjay Shorey, director (legal prosecution)at the ministry of corporate affairs (MCA), argued that ED has no jurisdiction to attach the property of BPSL, which is undergoing corporate insolvency resolution process. MCA argued that the rights of secured financial creditors (banks) are to be protected through the resolution process. A person privy to discussions within JSW Steel indicated that if the ED attachment on BPSL’s assets holds firm, then the value of JSW Steel’s bid will also fall proportionately, forcing a much larger haircut on bankers in their ₹47,000 crore exposure to the bad loan.
Paytm to raise $2 billion at a valuation of $15 billion
Financial services firm Paytm is set to raise $2 billion from a group of existing investors at a valuation of $15 billion, Mint reported on 15 October citing a person close to the development. The identity of the investors could not be ascertained independently, but financial news service Bloomberg reported on Monday that the existing investors include Ant Financial and Japan’s SoftBank Group. The valuation of $15 billion is the same as when some of Paytm’s employees had sold their shares to investors earlier this year. In August, Paytm founder Vijay Shekhar Sharma said the company’s employees sold employee stock ownership plans worth $150 million at a valuation of $15 billion. Paytm was valued at $12 billion last year when Warren Buffett-controlled Berkshire Hathaway Inc. invested an undisclosed sum in the company. Although One97 Communications Ltd, the owner of Paytm, had not disclosed details of the deal, regulatory documents sourced from Paper.vc showed Berkshire had invested $300 million. The $2 billion that Paytm is set to raise is likely to help it fend off rivals across various segments of its business. The financial services firm is facing stiff competition from Google Pay, Amazon Pay, BHIM, and others in its payments operations. It is behind Flipkart and Amazon in its e-commerce business housed under Paytm Mall.
China’s Autohome looks to back CarDekho at $700 mn valuation
Online car marketplace CarDekho is in talks to raise $100 million in a Series D round, led by Chinese strategic investor Autohome Inc., valuing it at $700 million, Mint reported on 4 October citing two people close to the deal. Existing investor Sequoia Capital is also expected to invest from its $8 billion global growth fund. This round is mainly being put together for the strategic investor to come in, with Autohome putting in $70 million. Tybourne Capital, a Hong Kong-based hedge fund, is also a common investor in both Autohome and CarDekho. Autohome claims to be the leading online destination for automobile consumers in China. CarDekho is not the only online car retailer that is drawing investor interest. Mint reported on 2 October that online used car retailer Spinny is in talks to raise $35 million in a funding round led by Fundamentum, a fund set up by Nandan Nilekani and former Helion Ventures partner Sanjeev Aggarwal, along with existing investors—Accel Partners, SAIF Partners and Blume Ventures. Also, Cars24, which sells used cars to dealers, is currently raising its Series D round. It has already raised $52 million as part of the round, from Dubai-based cargo company KCK FZE and existing backer Kingsway FCI. Sequoia is an investor in Cars24 as well.
LGT Lightstone looks to fund AMP’s India unit
Attracted by India’s green energy trajectory, LGT Lightstone Aspada plans to invest up to $50 million in Canadian firm AMP Solar Group’s India unit, Mint reported on 18 October citing four people aware of the development. The India-focused impact investment platform will acquire a significant minority stake in AMP Energy. The investment, to be announced shortly, will help form the beachhead for Lichtenstein investor LGT, a bank and fund manager with around $220 billion of assets, to foray into the Indian subcontinent’s energy market. LGT Lightstone Aspada, the world’s largest family-owned private banking and asset management group, has already invested around $180 million in India, including a $12 million investment in Lithium Urban Technologies Pvt. Ltd—India’s first electric cab service. Going forward, it wants to focus on India’s energy-efficiency market, which is estimated at ₹1.5 trillion, in areas such as financing. Formed in partnership with Aspada and LGT in August 2019, LGT Lightstone Aspada is an investment platform of LGT Lightstone. LGT Lightstone is part of LGT Group, owned by the Princely family of Liechtenstein.
CSB Bank may launch share sale next month
Kerala-based private sector lender CSB Bank, formerly The Catholic Syrian Bank, is planning to launch its initial public offering (IPO) in November, Mint reported on 18 October citing two people aware of the development. Last year, Canadian billionaire Prem Watsa’s Fairfax India Holdings Corp. had acquired a 51% stake in CSB Bank for around $168 million. In a first-of-its-kind approval to help turn around a lender, the Reserve Bank of India had allowed a foreign investment firm to invest in a homegrown bank. As the bank is planning to launch the IPO in November, work on the draft red herring prospectus is going on. The specific timelines for the November launch will be decided after factoring in the response received during the roadshows. CSB is trying to mop up ₹500 crore through the initial share sale, he added. The bank received market regulator Sebi’s approval for its IPO on Monday. The bank, according to its draft prospectus, is looking to raise ₹30 crore via fresh issue of shares to increase its tier-1 capital base and to meet future capital requirements, while its existing shareholders will sell 1.97 crore share through the offer-for-sale route. ICICI Lombard General Insurance, HDFC Life Insurance, ICICI Prudential Life Insurance, Federal Bank and Bridge India Fund are expected to sell their stakes, partially or fully, during the IPO.
Amid a funding squeeze, NHAI seeks bids for fourth bundle of road assets
The National Highways Authority of India (NHAI) has invited bids for its fourth bundle of road assets to be auctioned under the toll-operate-transfer (TOT) model, as it looks to meet divestment targets and raise funds for new projects, Mint reported on 18 October citing a public notification released late on Wednesday night. This despite the fact that the third round, which has a base price of ₹4,995 crore, is yet to close. In fact, the NHAI has deferred the deadline to submit bids twice—from mid-September to 31 October—following investors’ requests for more time. NHAI, which is the nodal agency of the ministry of road transport and highways, has set an initial estimated concession value of ₹4,170 crore for the bundle. Bidding is expected to close by January 2020. Under the TOT model, long-term concessions for collecting toll revenues are auctioned to the highest bidder. The fourth bundle has seven stretches totaling around 401 km spread across five states. In terms of revenue (toll collection) concentration, a single stretch (Pimpalgaon-Nashik-Gonde also referred as PNG) accounts for around 35% of total collections, while the top two of the seven stretches account for around 55%.