Exclusive: Ajay Relan, the former Managing Director of Citigroup Venture Capital International (CVCI) in India, is believed to have roped in Morgan Creek Capital as an anchor investor in his soon-to-be floated private equity fund. The US-based investment firm is said to be investing $100 million in Relan’s fund, independent sources told VC Circle.Sources also said Relan has roped in Amit Bhatiani, a senior New York based hedge fund manager as a partner in his fund. Relan, in an interview to VC Circle, confirmed the appointment of a senior partner, however, refused to name him nor the anchor investor in the fund. Bhatiani has been a Partner at Duma Capital, a New York based hedge fund, while prior to that he was a portfolio manager at Clinton Group.
Relan told VC Circle: “We are getting a partner from New York who has experience in investing in public markets. I have known him for the last 10 years. It’s important to have fresh blood in the company.” Relan recently quit CVCI after about 13 years of service to start his own fund. He is joined by another CVCI hand Jayanta Basu who will also be a partner. Relan said there will be three partners, one principal and two analysts.
Relan also said that he is looking at a fund size of $750 million to $1 billion, and the fund raising will be complete in four to six months. “There is a very strong interest from limited partners,” he said. He also informed that he has got commitments worth $100-200 million already.
Fifty four year old Relan is also looking forward to investing in companies personally along with the fund. He is believed to have netted about $30-40 million in carry from CVCI. The other new thing Relan will do is to launch a subsidiary company which will help the portfolio companies of the fund in managing the growth and adding operational excellence. More in the Q&A below. Excerpts:
What led you to floating a private equity fund of your own?
It’s primarily driven by entrepreneur spirit. I believe that one can create a sustainable private equity business. It’s also possibly inspired by the success one has in building a business, managing a team and building the team. I am joined by Jayanta Basu from CVCI as a partner. We will also have some fresh blood. PE business has some degree of interface with public markets either through PIPE deals or the portfolio companies that will be listed.
We are getting one partner from New York who has experience in handling markets. He will move from New York to India. He is a partner in a hedge fund management company. I have known him for past ten years. There will be three Partners.
What is the basic character of the fund?
We will be identifying great management team, in both private and public markets. We will be sector agnostic. We think these companies can grow at 40 per cent year on year and offer high returns or return on capital employed.
What will you do differently?
At Citi, I was primarily engaged in growth capital with strong minority protection rights and Board representation. Here, we will manage the private / public interface better and manage returns. We will identify companies with potential, add operating excellence and value to the companies. We will also form a separate company who will work with portfolio companies and add value to them - on the lines of Blackstone /KKR (Capstone) model. Their rewards are going to come from what they can do to the company. The companies in India are growing rapidly, they will ensure operating margins aligned with growth. We will use our experience to truly identify the sectors where we can get high ROC businesses.
When did you decide to go on your own?
It took six months to start on my entrepreneurial journey. People have always been asking me about it but the idea had to take roots. There is a heightened sense of responsibility which comes from experience and you feel confident about managing the money because the buck stops here. In this business, learnings are very important. One has to go through various cycles.
What is the size of the fund that you are looking at?
We are looking at $750 million which can go up to $1 billion. We expect to raise it in another 4-6 months. We have started getting calls already, there is a very strong interest from LPs. We have got commitments of $100-200 million already. In India, reputation matters.
How many offices will you have? How is the economics structured for the fund?
We are going to have two offices – Delhi and Mumbai. We will do the standard structuring here also. I will also invest personally along with the fund in the companies (Relan has made a huge carry from Citi). We will have a team of three partners - one principal and two analysts.
On the other hand, the fund management business at Citi was run extremely well. There was a high level of empowerment. Citi runs its very entrepreneurially.
Are you launching the fund for economic reasons? You get a higher share of profits if it’s your own fund.
Overall the economics does not matter. Economics is only a secondary issue. For us, its primarily entrepreneurship. I would probably be better off at Citi if it’s about money. Economics is not a driver, and it has never been a driver. Its about being able to look back and say we did some of the best deals. I don’t want to buy a private jet.
Do you have plans to list the fund any time?
It’s too early, you must have a sustainable business, you have a responsibility to the shareholders.
As a first time fund, do you find it difficult raising a fund?
I am not really a first time fund raiser. I have been investing and also raising funds for Citi for the past 15 years. It is only that I am starting up now. I don’t think that matters.
What are the deals that you are proud of at Citi?
My real joy has been in creating a team of absolutely first grade professionals. Creating a team, building them together is a great thing. It’s not the deal. That can happen out of serendipity. So that even after I leave it, I am proud of what I have built. The key is to spend a lot of time with the management, and guide them. They are mostly family businesses, so you need to provide them with new management ideas and other support.
What is the key thing for investment success?
You need to back the right team in the right sector and at right time, then you are done. You can’t lose if you get these things right. Some of the sectors we have backed at Citi in the past include infrastructure (IVRCL), renewable energy (Suzlon Energy) and financial services (UTI Bank, Yes Bank and Centurion Bank).
Bangalore-based early stage technology focused venture capital firm Ojas Venture Partners has made a venture capital investment in city based Mango Technologies. The company provides application framework and user interface solutions to ultra-low cost phones (below Rs 2,000). Mango has developed a thinnest modular application & UI framework, which considerably reduces engineering effort and time spent on development and integration. “Mango Technologies is hardcore product technology company,” said Rajesh Srivastha, Managing Partner, Ojas Venture Partners, confirming the development to VC Circle. The terms of the investment and the size of the transaction remain undisclosed.
Who Are They?
Mango was founded in 2006 by Sunil Maheshwari and Lekh Joshi, who have worked with various platform providers such as Motorola, Reliance Infocomm and Quasar Innovations. The company has a rapidly expanding 24 people team based out of Bangalore. Mango was incubated at the NSR Entrepreneurship cell at IIM, Bangalore and won the NASSCOM innovation award earlier this year. Now it is working closely with a mobile proprietary platform and a phone using Mango platform can be expected in the market in next six months, said Srivastha.
What They Do?
When mobile proprietary platforms develop a low cost phone, they take the existing operating system and application framework and dumb it down for low cost phone. Now to reduce costs they use hardware that is a cheaper substitute, but the amount of processing power is still higher. This is where Mango Technologies steps in providing the application software so that the cheaper handsets have better UI and are not as sluggish. “This would allow mobile platforms to develop ultra-low cost phones that looks and feels like a higher cost phone,” said Srivastha.
Also the technology developed by Mango opens up big opportunity for VAS (value added services) applications in the low cost phones. “From our due diligence of Mango, we found that what they had is one-fifth of what is available in the world market,” added Srivastha. “As compared to the international players in the market we beleive that Mango has two distinct advantages. First is the amount of memory that they use and second is the amount of processing power this technology takes,” explained Srivastha.
Ojas Upbeat On Mobile Segment
“Currently we are seeing a lot of opportunity in the mobile segment,” said Srivastha. Mango Technologies is the third investment of Ojas Venture Partners, which is backed by Raghavan S Nadathur, the co-founder and former JMD of Infosys. Earlier this year Ojas had invested in in mobile payment/banking company Tyfone Inc. Before that it invested in Ziva Software which is engaged in the area of products and services in the mobile search domain. Ojas, which is investing out of a $35 million fund, is primarily focusing on technology pan-India and also looks at some consumer services.
“We are also seeing a few opportunities in semiconductor segment. We have also seen a lot of opportunities in the SAS, ERP and CRM space, but we haven’t found anything that I think is scalabe enough, and we are also looking at a couple of opportunities in the cleantech space,” added Srivastha.
Private equity firm New Silk Route Advisors has bought the UK investment group Dawnay Day’s stake in its Indian business, Dawnay Day AV India for about Rs 200 crore, reports Mint. The sale includes Dawnaday International’s 50 percent stake in the Indian venture and the employee trust’s 25 percent holding as well. The deal includes only the stock brokerage and third party distribution business. It does not include its financial research arm, Dawnay Day AV Analytics Pvt. Ltd and Dawnay Day Hotels India Pvt. Ltd, a fully owned subsidiary of Dawnay Day International.Dawnay Day AV India is a joint venture between Alok Vajpeyi, ex-DSP Merrill Lynch official, and Dawnay Day International, the financial services arm of the UK-based Dawnay Day Group. Alok Vajpeyi, Vice Chairman and Managing Director of Dawnay Day AV Financial Services has also sold his 25 percent stake to the foreign private equity investor.
Dawnay Day mulling a stake sale to private equity investors has been on the cards for quite some time now , what really comes as the piece of news is Vajpeyi selling his stake to the investors. VC Circle could not independently confirm the news, however the Mint report pegs the valuation at Rs 200 crore, where the two businesses being sold are valued at 40 crores and the remaining 160 crore is the value of Dawnay Day AV’s office spread across Mumbai and Pune.
Of the Rs 200 crore, Rs 80 crore will be used to retire a Dawnay Day AV loan from HSBC Holdings Plc; and another Rs 80 crore will go towards repaying the preferential capital issued by Dawnay Day International, adds the report.
Vajpeyi has made his fortune anyways. It was only three years back that he put in Rs 2-5 crore and will take out 21 crore now.
Dawnay Day, the U.K. based investment company is mulling sale of many of its assets as it needs to raise cash for its stricken empire quickly. The failed company’s portfolio assets has evinced enough interest from people as the company puts its portfolio up for sale. Before the collapse, the company had $4bn (£2.15bn) in assets and $6bn under management for clients. ]]>
Bangalore-based online DVD rental company Seventymm Services Pvt Ltd has received $12.5 million (Rs 50 crore) from NEA Indo US Ventures. This will be the third round of funding for Seventymm, which now has a total capital of around $22 million. While DFJ with ePlanet Ventures had invested $2 million in 2005, the rest was raised from Matrix Partners in 2006. NEA Indo-US Ventures’ MD Ms Vani Kola will be joining the Seventymm board, according to this report. Last year Seventymm had acquired Delhi-based online DVD rental firm Madhouse, which had received angel investment of $228,000.There is a lot competition in the DVD rental segment in India with entry Reliance ADAG’s Big Flix and Nimbus Communication’s Showtime. ADAG was also reported to be in talks to buyout Seventymm after it made its entry into the DVD rental segment. Nimbus communications also made an entry into this segment in May this year with their entertainment rental and sale business called Showtime. Then there is also Moser Baer, who has released DVD and VCD movies at a price of Rs 34.
Unlike Big Flix, Seventymm does not plan to go into retailing side of the business. This round of funding will be used for expanding the reach of the business and home delivery services. Seventymm currently operates in six cities of Bangalore, Chennai, Hyderabad, Mumbai, Delhi and Chandigarh with a team of 400 people. It also claims to have a consumer base of 70,000 people and is adding 7,000 consumers a month, has an ARPU of Rs 250. Seventymm currently offers more than 18,000 titles covering Hindi, English, 11 regional languages and plans to take these upto 25,000 titles, adding both new releases and old ones.
This investment is NEA Indo US Ventures fifth investment announcement in the last three weeks. Only yesterday it had announced a $2 million investment in Chennai-based Basiz Fund Services. Late last month it had invested $2.25 million in Banglore-based Idenizen Smartware Pvt ltd, a technology solutions provider for the education vertical. Then it invested $4 million in India and US-based e-publishing firm Pre-Media Global USA Inc. It also co-invested along with DFJ in Delhi-based e-waste management company Attero Recycling Pvt. Ltd. ]]>
Kirloskar Acquires Two Companies In Germany: Kirloskar Electric Co. has picked up
stakes in two German firms. It will buy about 95 per cent in German manufacturing firm Lloyd Dynamowerke GmbH & Co and 100 per cent in Lloyd Beteiligungs GmbH from CMP Fonds I GmbH. The acquisitions will be done through its wholly owned subsidiary in the Netherlands, it said in a statement.
Arcelor Mittal Buys London Mining Brasil : ArcelorMittal, the world’s biggest steel producer, has agreed to buy iron ore miner London Mining Brasil for up to $810 million to help improve its self-sufficiency in raw materials.
Axill Europe Acquires Reuters London’s High End Data Centre : Axill Europe, a wholly-owned subsidiary of Hyderabad-based technology, e-commerce and online advertisement solutions provider Northgate Technologies, has acquired Reuter’s London-based high-end data centre infrastructure with over 8,000 sft area for an undisclosed sum.
ONGC Videsh’s Bid For Imperial Energy Corporation: An empowered committee of secretaries has approved a plan by ONGC Videsh Ltd (OVL), the wholly-owned subsidiary of government-owned Oil & Natural Gas Corporation Ltd (ONGC) Ltd, for a $3-billion bid for Imperial Energy Corporation, a London Stock Exchange-listed oil exploration and production company.
Gratto Scouts For Another Retail Partner As Its JV With Raymond Troubles:The equal joint venture between apparel retailer Raymond and Italian fashion house Grotto SpA is learnt to be in trouble less than two years after it was formed. The JV was formed to retail Grotto’s high-street brand GAS in India. Grotto is learnt to be exploring the options of exiting the JV and is tying up with another potential partner for India operation.
GMR Hyderabad Airport and Malaysian Airlines Join Hands For MRO Firm:
GHIAL signs an agreement with Malaysian Airlines for a MRO facility. German Carrier Lufthansa pulls out of its agreement with GMR Hyderabad International Airport for MRO facility at Hyderabad.
Private Equity
Ansal Properties Looks For PE Money For Its IT Projects : Ansal Properties and Infrastructure Ltd (Ansal API), the Delhi-based realty major, is looking at raising Rs 700 crore for the four information technology (IT) special economic zones (SEZs) and two IT parks it has planned across India.
Berggruen Holdings To Invest Rs 1,000 crore In Indian Hotels : Berggruen Holdings, a New York-based private investment company, which is setting up a series of three- and four-star hotels under its arm Berggruen Hotels, will invest
over Rs 1,000 crore in India till 2012.
Goldman Sachs, Fidelity International To Cut Stakes In Indian Commodity Exchanges:
Goldman Sachs, Fidelity International and Inter Continental Exchange (ICE) have got time till June next year to pare their stakes in Indian commodity exchanges to 5 per cent.
Modern India Talks To PE Investors For Rs 1,000 Crore For SEZ Projects :Property developer Modern India is in talks with two-three private equity (PE) firms to raise Rs 100 crore for its proposed Rs 675 crore IT SEZ at Khapoli in Mumbai. The proposed SEZ, to come up on 43 acres of land, has received nod from the Board of Approval but is awaiting notification.
Investment Banking
IndusInd Acquires Rs 100 crore Microfinance Assets From SKS: IndusInd Bank has acquired the microfinance portfolio worth Rs 100 crore from SKS Mircofinance through the allotment of agriculture advances. The private sector bank is expected to take the balance Rs 50 crore micro-finance portfolio on its books in February 2009.
Citigroup Global Increases Its Stake From 5% to 8% In Educomp Solutions
Foreign fund house Citigroup Global Mkts (Mauritius) has consolidated its stake in e-learning solutions provider Educomp Solutions to 5.10 per cent at about Rs 8.56 crore.
Matrix Partners India has made a Series-A investment of $7 million (Rs.30 crores) in pre-school educator Tree House Education and Accessories Pvt. Ltd. Mumbai-based Tree House claims to be the largest non-franchised, branded pre-school educator in the country and currently operates more than 45 pre-schools in Mumbai. With the current round of funding, Tree House plans to expand and open centers all over the country.“The pre-school education market is upward of a billion dollar size in India. It is largely fragmented and there is huge scope to scale the company. Also, there is a great need for standardised quality education in the pre-school segment at an affordable price, with a clear focus on early childhood care,” said Rajesh Bhatia, MD, Tree House Education.
There are several other big players in this segment, however none of them has got PE funding yet. Delhi-based Mothers Pride, which is spread across Delhi and NCR, and Shemrock Schools with 90 branches are some of them. Then there is also Kidzee, which is backed by Zee’s Subhash Chandra, and Eurokids International which claims to have 180 pre-schools spread across 70 towns.
Matrix Partners India has around $450 million under management. It invests upto $50 million in companies, making venture and growth capital investments. Some of the portfolio companies of Matrix Prtners India is Brand Marketing India , Itzcash Card, Seventymm, Tree House and Yo! China. Avnish Bajaj, who previously founded Bazee.com, is the Managing Director of Matrix India. ]]>
Ambit Holdings Pvt. Ltd., Ashok Wadhwa’s financial services arm, has appointed Nikhil Puri as he Managing Director for Ambit Corporate Finance. Ambit Corporate Finance is a mergers and acquisitions advisory firm. Puri was previously working as Managing Director in the Global Industries Group. There his work involved accomplishing client and coverage related responsibilities across the healthcare, specialty chemicals and FMCG sectors. Puri has spent the last 12 years working with leading global investment banks such as Lehman Brothers and BearStearns.
Ambit Corporate Finance was the advisor to Balaji Telefilms on its recent agreement with Star Group. It has also advised on various other deals such as Patni stake sale, DHL’s acquisition of Blue Dart, Bharti Televentures acquisition of Hexacom, among others.
Ambit Holdings Pvt Ltd. also runs a $100 million private equity fund called Ambit Pragma Ventures Pvt. Ltd, which is focused across five sectors - entertainment and leisure, health care and wellness, logistics, infrastructure services and branded food. ]]>
Chennai-based Basiz Fund Services Pvt Ltd, a KPO offering investment accounting services for mutual, hedge and private equity funds, has recieved $2 million (Rs 8.5 crore) in funding from NEA-IndoUS Ventures. Basiz has offices in Chennai, Mumbai and Dubai and is a subsidiary of recently listed Vishal Information Technologies Ltd. Vishal is in turn a subsidiary of Tutis Technologies Limited. The funds will be used for capacity augmentation, infrastructure expansion and for opening new international offices to support the company’s existing and new clients.Basiz provides services in areas such as investment accounting, partnership accounting, portfolio accounting, consulting support, investment account for insurance portfolio and managed accounts. The funds business is headed by A.V. Seshadrinathan, chartered accountant by profession. He has previously worked with Fortis Fund Services and US-based BPO InterPro Global.
This investment is NEA Indo US Ventures fourth investment announcement in the last three weeks. Late last month it had invested $2.25 million in Banglore-based Idenizen Smartware Pvt ltd, a technology solutions provider for the education vertical. Then it invested $4 million in India and US-based e-publishing firm Pre-Media Global USA Inc. It also co-invested along with DFJ in Delhi-based e-waste management company Attero Recycling Pvt. Ltd. ]]>
Also Balaji has agreed to purchase Star’s 26 per cent stake at a price of Rs 190 per share, which amount to a total of Rs 322 crore, the company said informing the Bombay Stock Exchange. This should be done within the next 240 days, failing which Star would be free to sell it to any others except a competitor.
Both the companies have also agreed to pull out of their joint venture signed by them to to launch regional south Indian channels. It has also been reported that Star is signing a joint venture with Kerala-based broadcaster Asianet to launch regional channels. The content agreement between Star and Balaji will not be affected by this agreement. While BMR Advisors were the advisers to Star for this agreement, Balaji was advised by Ambit Corporate Finance.
At noon today the shares of Balaji were trading at Rs 164, with market capitalisation of Rs 1069 crore. Balaji Telefilms has Rs 221 crore cash on the balance sheet as on June 30, 2008. According to a report many parties have showed an interest to pick up a stake in Balaji. Private equity funds including Singapore’s Temasek Holdings, European firm Permira and US-based Quadrangle Capital Partners are interested in picking up a stake. Also Reliance Anil Dhirubhai Ambani Group, Astro Malaysia, and Eros International were also believed to be eyeing a stake. ]]>
Cap On Single Holding In Exchanges Go To 15% - Market regulator SEBI is examining a proposal to raise the equity holding limit in stock exchanges from 5 per cent to 15 per cent. The revised cap would be applicable for single investors, both local and foreign, reports Economic Times. The proposal is being examined by both SEBi and government to foster competition among bourses to prevent a monopoly.
TRAI Drops Carrier Access Code - The telecom regulator has decided against implementing the carrier access code (CAC), reports Financial Express. The official announcement is expected today stating that as long-distance (STD and ISD) tariffs are already quite low, there’s no need for CAC.
Private Equity
General Atlantic To Buy 20% In Wockhardt - General Atlantic, US-based private equity giant, is close to picking up 20 per cent stake in Wockhardt Hospitals for $140-150 million. The Economic Times reports that though there are differences over the valuation and structure of the investment, the deal may still go through. Earlier this year, Wockhardt was planning to raise around Rs 688-762 crore by diluting 24 per cent stake through an IPO which failed to get enough subscribers.
Lehman Brothers To Sell Money Management Division To PEs - The troubled investment bank, is considering the sale of all or part of its prized money management division to private equity firms to raise billions of dollars of capital, reports International Herald Tribune. The report adds that Lehman has sent letters to private equity firms like KKR, J. C. Flowers, the Blackstone Group, the Carlyle Group and Apollo Management to evince their interest.
Mergers & Acquisitions
Opto Circuits Acquires US Co For $70M - Medical devices major Opto Circuits has acquired US-based Criticare Systems, a non-invasive medical devices manufacturer, for $70 million. Opto borrowed $52 million to finance the overseas purchase, reports Economic Times. Opto acquired Eurocor, a German company, in 2006 and has another US subsidiary Mediaid.
Godrej Sara Lee In Talks To Buyout Tortoise - Godrej Sara Lee has initiated talks with Bombay Chemicals to acquire the Tortoise brand of mosquito repellents, reports Economic Times. The valuation of the brand could be quite low given its sluggish growth rate in recent times.
Kirloskar To Acquire German Firm For $70M - Kirloskar Electric has acquired German co Lloyd Dynamowerke & Co (LDW), which manufactures motors, machines and drive systems for around $70 million. The acquisition has been done through Kirloskar’s newly-floated subsidiary in Netherlands called Kirsons BV, reports Economic Times.
Capital Markets
PNB Close To Exiting AMC, Gilts Biz - The second largest PSU bank in the country is exiting its non-core businesses by divesting its 30 per cent stake in Principal PNB Asset Management Company and 74 per cent stake in PNB Gilts, reports Business Standard. The bank is in talks with US-based Principal Financial Services to sell stake in AMC, a deal which in likely to fetch Rs 180 crore valuing the company at Rs 600 crore. While four companies, including Edelweiss Capital and Goldman Sachs have joined the race to acquire PNB Gilts, which is valued around Rs 550-650 crore.
OIL India IPO In November - The PSU oil exploration firm plans to hit the capital markets with issue of 2.64 crore shares and plans to file a revised DRHP next month, reports Hindu Business Line. The pre IPO placement to IOC, BPCL and HPCL will also happen around the same time.
Astec LifeSciences IPO - The compnay, which is involved in manufacture and sale of active ingredients, intermediates and formulations for agrochemicals and pharmaceutical segment, has filed a DRHP with SEBI. The company plans to issue 75,00,000 equity shares of Rs 10 each and has appointed Global Securities Ltd as the lead manger for the issue, according to this report.
Doha Bank To Start AMC Operations - Doha Bank is planning an entry in to the NBFC sector by launching a asset management company next year. The activities will include brokerage to currency futures, reports Financal Express. Doha Bank had picked up 49 per cent stake in Select Securities and plans to pump $50 million in its India operations.
Corporate
Spice Corporation Restructures Businesses - The $1.5 billion group is planning to consolidate it’s businesses under four major verticals - telecom, entertainment, financial and capital market services and IT. Flush with funds agter sellinf Spice Communication to Aditya Birla, BK Modi plans to infuse Rs 1,250 crore into businesses, set aside Rs250 crore for philanthropic activities, and give his children a clearly defined and more active role in running his business empire, reports Mint.
Mallya Gets Nod To Fly Abroad - Deccan Aviation has won the approval to start overseas flights from August 26, reports Business Standard. Vijay Mallya’s airline got the rights to fly seven times a week on the Bangalore-London route. Mallya had acquired Deccan Aviation last year.
Carlson, Sarovar May Part Ways - Global hospitality chain Carlson Hospitality may part ways with Indian partner Sarovar Hotels & Resorts, as the exclusive arrangement for Park Plaza and Park Inn ends in December this year. Carlson has 38 properties in the country now and may wnat to move out of the franchisee model now, reports Times of India.
Indian venture fund Nexus India Capital Advisors has raised its second fund of $220 million. Nexus, which has fully committed its first fund of $100 million raised in 2006, will retain its policy of investing in early stage companies in the second fund too, Suvir Sujan (right), Co-founder and Managing Director of Nexus India Capital, told VC Circle in an interview. The fund was founded by Sujan, a former founder of Baazee.com (later sold to eBay India), Silicon Valley entrepreneur Naren Gupta and Sandeep Singhal of formerly e-Ventures India.The fund will invest anywhere from $1 million to $10 million in companies belonging to sectors such as business & consumer services, clean technology, technology and media. Sujan said they will invest the second fund in 25 companies over the life of the fund. Nexus already has 15 companies in its first fund portfolio of which four were bought out from the now-closed-down e-Ventures India at cost price.
Sujan said the limited partners of their first fund have participated in the second fund too, besides they have added 8-10 more new LPs. The investors came from mainly the U.S and European region with representation from Asian countries like Hong Kong and Singapore too.Sujan said: “We were oversubscribed. It was very tempting to take the fund size to $350-400 million.” However, Sujan said, a moderately sized fund seemed to be ideal for early stage investing. It took only less than a month for them to raise funds.
With a bigger fund size, Nexus can acquire larger stakes in companies as opposed to what it has been doing with its first fund where it had no financial muscle to participate in follow on rounds. But Sujan ruled out any possibility of Nexus turning late stage or growth investing (like its counterparts such as Matrix Partners India or Sequoia Capital India). “We want to remain solely early stage. We are not looking at growth,” Sujan said. Nexus plans to start investing from its second fund in the next few weeeks.
Sujan also asserted that they will be sector agnostic while they will back only six-sigma entrepreneurs. Sujan’s definition of six sigma entrepreneurs is: They are “extremely passionate, who are able to inspire the team, who are able to build organisations, and those who listen to the gaps in the markets, who are malleable and who have market/domain knowledge”.
Among the fund I portfolio companies, Sujan believes NetMagic Solutions (a web-hosting and data centre firm) could be the first company heading for an IPO. He said the company is growing at 100 per cent year on year and is likely to be a candidate for listing with significant revenues in the next two years.
Its existing portfolio includes DimDim (open source free web meetings, Dlight (LED lighting solutions for rural and semi-urban markets), games2win (Online Gaming), Kirusa (Voice SMS solutions), Komli/Pubmatic (Indian online ad network), CE infoSystems (Digital maps for India), Mistral solutions (Design and Development services for embedded systems), Mobile2Win (Mobile value added services), Netmagic Solutions (Internet infrastructure and managed services provider), Suminter India Organics (Organic farming), Unicon Investment Solutions (Retail financial services intermediary). ]]>
International Finance Corporation (IFC), the private equity arm of the World Bank, has exited its investments in Dabur Pharma with 41 percent return (not factoring in dividend payout) over a three year period. This translates into a compounded annual growth rate of 12.31 percent.The exit is believed to be linked to the open offer by German pharma company Fresenius Kabi, which acquired majority control in the company from the Burmans of the Dabur Group early this year.
IFC had picked the stake through a preferential allotment in June 2005. It had picked 12.145 million shares at a price of Rs 54 per share translating into an investment of Rs 65.58 crore.
It has now sold its entire 7.75 percent stake in an off-market deal worth Rs 92.9 crore i.e. a per share value of Rs 76.5, which is the open offer price of Fresenius Kabi. Last month, another institutional investor in the firm LIC had sold its entire 1.67 percent stake at the open offer price.
Fresenius Kabi had acquired 17.58 percent in the open offer which followed the share purchase agreement with the promoters where the Burmans decided to sell out their entire stake. Fresenius Kabi now holds more than 90 percent stake in Dabur Pharma. Incidentally, 90 percent is the threshold level above which a promoter either needs to delist a listed company or dilute its holding to comply with the listing norms.
Dabur Pharma was the pharmaceutical business of the Dabur Group which is focused on the global oncology market. Its oncology product portfolio is being sold through its global footprint across more than 40 countries including the key markets of US and Europe. ]]>
Milestone Capital Advisors, the private equity fund which was till now focused on the real estate and infrastructure sector, has launched $150 million (Rs 600 crore) India Build Out Fund-I (IBF-I), which will invest in sectors such as education and media & entertainment. The fund also has a green shoe option of $50 million (Rs 200 crore).The majority of investments of the fund will be in education service providers focusing on K-12, finishing schools, test preparations, colleges, and so on. The fund will also invest in ancillary companies involved in sectors such as domestic consumption plays, physical infrastructure build-out and skills infrastructure build-out.
Milestone has hired Rajesh Singhal (pictured), who was working as associate director with Intel Capital, to spearhead IBF-I. Singhal joined Milestone in May this year as a Managing Partner and has over 13 years of knowledge in the industry. Singhal, who was with ICICI Bank before Intel Capital, has made investments such as NIIT Technologies and BPO Nipuna Systems.
The fund will also invest in hospitality and tourism, wellness, retail, content and consultancy providers. The fund will also invest in firms involved in construction services and equipment providers, logistics, facilities management and alternate energy. IBF-I, which is a five year close ended fund, is targeting a return of 30 per cent compounded annualized IRR. The average investment size for the fund is planned to be $7.5-15 million (Rs 30-60 crore).
Milestone was started by former Pantaloon Retail Chief Operating Officer Ved Prakash Arya last year and has since then launched four other domestic funds, totalling Rs 2,400 crore. It has also launched a $400 million offshore fund registered in Mauritius. Its investments are focused in the western and southern regions of India and has invested in warehousing, green buildings, affordable housing and in Tier–II/Tier–III cities. ]]>
One of the world’s largest law firms, UK-based Clifford Chance, has recruited Rahul Guptan, a senior partner from India’s leading law firm Amarchand & Mangaldas & Suresh A Shroff & Co. Guptan was heading the firm’s capital markets practice. He also has experience in takeovers, privatisation, joint ventures, private equity investments and general corporate law. Guptan will be based in Clifford Chance’s Singapore office. He joined Amarchand & Mangaldas in 1999 and was appointed partner in April 2006.“We have a thriving practice and our clients’ demand for advice on Indian transactions grows daily. Rahul’s appointment is a natural step in our plans to enhance further our service to those clients,” said David Dunnigan, Head of Clifford Chance’s Capital Markets practice. This appointment follows the launch of firm’s launch of securities and capital markets group in Singapore at the beginning of the year.
“This is a logical development of our growing India Group, which has been advising clients on Indian matters for over fifty years, and is preparing to offer services in India as soon as regulations allow. Rahul will provide our clients with a formidable combination of international and Indian expertise and experience,” said Clifford Chance Managing Partner David Childs.
Clifford Chance is part of the Magic Circle law firms of UK, referring to the five or six top law firms (mainly solicitors) in the UK such as - Allen & Overy, Freshfields Bruckhaus Deringer, Linklaters and Slaughter & May. Though Indian regulations do not currently allow foreign law firms to practise in India, Clifford Chance’s India Group currently has over 195 members spread across over 16 offices in 12 countries. These include around 30 partners in the firm’s corporate, private equity, capital markets and infrastructure practices covering India-related work. ]]>
Call it India’s Communications Revolution V 2.0. After the government came out with norms for the launch of next generation phone services through 3G, now it is also on the verge of fully ushering in internet telephony in the country. The telecom regulator has removed restrictions on net telephony which allows internet service providers (ISPs) to terminate voice calls from the net on the phone.Put simply it makes voice calls interoperable between mobile handset (VOIP- voice internet protocol– enabled) and a personal computer (PC). To be fair, some firms have already been offering such services in India, through the illegal route. It basically stumps the illegal operators.
Consumers would be able to make calls from PCs to fixedline and mobile phones in India. They can also make a call to personal computers from their handsets.
Till date, a call from a computer could legally be made only to another computer within the country, and not to a phone. However, one could make international calls to a phone from their computer.
Implications
The foremost impact will come from drop in prices. The average cost of a call today is around Re 1 for a STD call i.e., long distance call within India as also for a local call within a city for one minute. It is expected that call charges may drop by atleast 50 percent once the ISPs start full fledged internet telephony service. Some experts believe that local calls through PCs could virtually become free while STD charges could drop to 10-40 paise per minute. The charges for international long distance telephony will also fall.
On the one hand it opens new revenue sources for ISPs, it also allows heavy communication users such as BPOs to lower costs further. However, at the same time it could create a challenge for telcos, specially in the domestic communication market and can hit revenues of operators from long distance telecom services.
Not surprisingly then the association of GSM cellular operators have already started lobbying against the opening of the net telephony sector on the grounds that it would destroy their business viability and have asked the authorities to levy a license fee from ISPs like the telcos are charged for offering their services. But the teleocm regulator has dismissed these arguments. Interestingly, most telcos double up as ISPs as well. However they have not been too active in the field.
(Picture courtesy: Indranil, Via Picasa Web Album)