The Newsletter Service Is Back

June 22, 2007 | by Sahad P V

Update II: The newsletter service is back. So we will be sending out the daily email updates. More importantly, now please go ahead and sign up for the Daily Email Update on the right if you are a new user. It helps you track the important developments in the deal world without much efforts - the stuff comes straight to your inbox.

If you are facing any technical difficulty, please email me on

Update I: The service seems to be up, although there are still some technical glitches. If you are not able to register for Daily Email Update, please come back and check again.

(June 21, 2007): The newsletter management company Feedblitz’s servers are down. The servers are being fixed. So you will not be able to register for the daily update if you are a new user. We will also not be able to send the newsletter till the servers are fixed.

Apologies for the inconvenience. Hopefully it should be up soon, after which you can sign up for the update as well as continue receiving the newsletters. Thank you.

More Suitors For Brics Securities: Fortis, Nikko Cordial, Fortress, Lehman

June 22, 2007 | by Sahad P V

There are more suitors for the Mumbai-based institutional broking house Brics Securities. Belgian-Dutch financial group Fortis, Japanese brokerage Nikko Cordial Securities and a leading alternative asset management company Fortress Investment Group are the potential buyers for Brics, according to a report in The Economic Times. An official at Brics Securities has admitted that the brokerage has received offers from global firms.

Earlier reports suggested that Lehman Brothers was in talks with Brics for acquiring the institutional equity business of Brics.

Brics has annual sales of Rs 85 crore, of which the institutional broking business constitutes Rs 50 crore. The company is not apparently keen on selling the institutional business alone since that may end up destroying the value of the company as a whole.

Brics offers services such as equity, debt and commodity broking, portfolio management, distribution of third-party products and depository facilities. It also has an Non Banking Financial Companies (NBFC) licence.

Brics is a part of the JV Gokal Group —an international conglomerate with over 50 years of experience in tea and commodities trading. It came into being in October 2003 following the acquisition and rechristening of Birla Sun Life Securities—a joint venture between the Aditya Birla Group and the Sunlife Group of Canada.

The firm has a network of 13 offices in 8 cities across India.

Prudential Built A

June 21, 2007 | by Sahad P V

UK financial giant Prudential has made a killing out of India - at least in terms of valuation of the businesses it’s in. ICICI Bank’s follow-on public issue documents have some details about the valuation of the assets owned by Prudential in India. The Telegraph of UK reports that they are as much as $3 billion or

Srini Vudayagiri Leaves Thomas Weisel; Anand Sunderji To Take His Place

June 21, 2007 | by Sahad P V

Exclusive: Sreenivasulu “Srini” Vudayagiri, a top executive of private equity funds of funds Thomas Weisel International (TWI) has left the organisation, VC Circle has learnt. Vudayagiri was a Director and Head of Asset Management at TWI, a wholly owned subsidiary of Thomas Weisel Partners. He was leading TWI’s India-focused fund of funds.

According to sources in the know, the parting was not on amicable terms. The exact reasons could not be ascertained. Both TWI and Vudayagiri could not be contacted for comments.

Industry sources say that Vudayagiri may be probably headed to Lightspeed Venture Partners, although this could not be confirmed. In December 2006, Lightspeed debuted in India with $7 million investment in Lightspeed does not have an India office yet, though.

Prior to joining TWI in February 2006, Vudayagiri spent close to six years as associate director (South Asia) of Intel Capital based out of Bangalore. Before Intel, he was part of founding team of CDC Capital Partners (now called Actis) in India for four years. Vudayagiri is an alumnus of IIM Ahmedabad.

Update: VC Circle learns that Anand Sunderji (right), who was a VP with Swiss-based $3.3-billion fund of funds Adveq Management, is moving to Thomas Weisel in the place of Srini Vudayagiri. He will be joining in July as Director of Asset Management, and will be heading up the fund of funds.

Before Adveq, Sunderji was the Head of the Investors community (private equity and hedge funds) at the World Economic Forum in Geneva and New York. Previously, he worked at INVESCO Asset Management in London, in capacities such as Senior European Equity and Derivative Portfolio Manager, Fund of Funds Investment Manager and Performance and Risk Analyst.

TWI has so far announced the first close ($65 million) of its targeted $250 million fund of funds. TWI has invested in three funds - IDFC Private Equity, NEA-IndoUS Ventures and iLabs - about $15 million or thereabout in each of them. The full close of the fund is expected this year.

Max India Plans Two Acquisitions In CRO Space; Healthcare IPO In 2 Years

June 21, 2007 | by Sahad P V

Max India Ltd, armed with a $325 million war chest, is looking at acquisitions in clinical research business in the US, media reports suggest. The company had recently raised $250 million via QIP and another $75 million from IFC, the private equity arm of the World Bank.

Analjit Singh-owned Max India runs an hospital chain, Max Healthcare, a life insurance business JV, Max New York Life, and a clinical research company, Neeman Medical International. The Delhi-based firm may buy two clinical research companies (CROs) either in the US or Europe to expand Neeman’s operations. The deal size could be in the range of $30-50 million, Mint newspaper and The Economic Times report, quoting B. Anantharaman, joint managing director, Max India.

Max Healthcare IPO In Two Years

The hospital chain Max Healthcare is planning an IPO in the next two years. Its rival Fortis Healthcare (owned by Max owner Analjit Singh’s nephews Malvinder and Shivinder Singh) had recently listed, and their shares are trading below the listing price.

IFC recently picked up 3.4 per cent in Max Healthcare for Rs 50 crore, valuing the company at Rs 1,470 crore ($367.5 million). The rest Rs 250 crore will be raised through a preferential issue.

Max Healthcare currently operates five hospitals primarily in the National Capital Region of Delhi. It plans to add about 452 beds to its existing 742 beds capacity - essentially about 1200 beds by 2010 to meet the growing demand for quality healthcare in the region.

The parent company Max India owns 70 per cent of Max Healthcare and private equity fund Warburg Pincus 23 per cent. Chairman and founder, Analjit Singh, along with other promoters, owns 41 per cent of Max India, while the remaining are owned by foreign institutional/other investors.


Max India Raises $250 Million From 24 Investors Via QIP

BPO Valuations Softening?

June 20, 2007 | by Sahad P V

Where are the BPO valuations heading? Downwards? The Economic Times reports, quoting industry sources, that there has been a correction in multiples BPO firms have been enjoying till recently. For instance in the case of WNS (listed in NYSE), the shares are currently trading 20 per cent below the peak price. ET report says WNS is currently valued at 44 times its earnings, down from 63 times it commanded six months ago. The Nasdaq-listed EXL Services has also seen a drop in earnings multiples from 36 to 30 times.

This will have an impact on the ongoing M&A and PE deals in Indian BPO sector. ET quotes Salil Parekh, executive chairman of Capgemini India, as saying: “Compared to the first quarter (January-March) of the year, valuations have come down. So in a relative sense they have become more attractive. This will also spur more international players to come out and look for acquisitions.” Please note that Capgemini is looking for a major BPO buyout in India.

Rajesh Jain of KPMG, which was advisor to the Intelenet management buyout of Blackstone, says that current valuations are between 2.5 - 4.5 times the sales multiple and 15-20 times the EBDITA depending on the size, margins and growth prospects. Although Intelenet, which got bought for $200 million, would have got less than 2 times multiple.

So what are the factors that have led to the softening of valuations? The appreciation of the rupee, rising attrition, and the general inability to meet the high growth expectations could be some of them.

Citigroup is looking to sell its captive BPO Citigroup Global Services. The asking price is rumoured to be in the range of $1-1.5 billion for a business that has revenues of about $300-400 million. It remains to be seen how buyers will value a captive firm which also faces the uncertainty of losing a part of the captive business once the contract lapses.

Max India Raises $250 Million From 24 Investors Via QIP

June 20, 2007 | by Sahad P V

Max India, the Delhi-based company which owns a health care chain and a life insurance company, has raised Rs. 1,000 crore ($250 million) via a qualified institutional placement. The QIP issue was subscribed 2.3 times by investors from across the globe. CLSA acted as the sole book runner and global coordinator for the issue.

The QIP will raise foreign institutional holding holding in the company to 39 per cent from around 26 per cent earlier. Max India has an investment limit of 49 per cent for FIIs.

The company issued 41,666,660 new shares at a price of Rs. 240 a share (of face value Rs 2), which constituted 18.8 per cent of the fully diluted equity base of the company. About 40 per cent of the allocation went to US based investors while the remainder was split evenly between Asia and Europe based investors. The funds will be used to further grow each of its existing businesses, while a portion of the proceeds is also expected to be used for acquisitions and investments in new ventures.

As per SEBI regulations governing QIPs, the shares can be placed with only 49 investor accounts (including any sub-account). The final allocation of shares was made by Max India to a group of 24 investors represented by 42 investment accounts.

Analjit Singh-owned Max India is present in these business: healthcare (Max Healthcare), life insurance (Max New York Life Insurance), and clinical research (Neeman Medical International). Its other businesses are specialty plastic products for the packaging industry (Max Speciality Products) and healthcare staffing (Max HealthStaff).

Carlyle Invests In IT Security And Telecom Billing Software Firm Elitecore

June 20, 2007 | by Sahad P V

The Carlyle Group has made a $10.3 million investment in Elitecore Technologies Ltd, an Ahmedabad-based IT company focused on the internet security and the telecom billing solutions markets. The stake diluted is undisclosed. The funds will be used for Elitecore’s ongoing product development, R&D, working capital, new products and infrastructure build-up, a release said.

The investment will go from Carlyle Asia Growth Capital Partners, a $680 million fund that invests in high growth companies in China, India, Japan and Korea.

Elitecore’s Cyberoam product provides firewall, VPN, gateway antivirus, gateway anti-spam, intrusion detection and prevention, content filtering and bandwidth management solutions. It also offers a convergent billing solutions - sold by the name Crestel - such as billing, customer care, mediation for managing data and voice on wireline and wireless networks.

Shankar Narayanan, Managing Director and Head of Carlyle’s Growth Capital team in India, said in a statement, “Elitecore…has successfully leveraged the low cost, highly skilled Indian talent to develop a superior quality product that allows them to compete with players from the developed world.” The company was founded by Hemal Patel in 1999.

Subex Azure is a pioneer in telecom billing and security solutions. The company had revenues of Rs 340 crore ($85 million) and profits of Rs 67 crore (16.7 million) in 2006-07. Elitecore could probably go the Subex way.

Manthan Systems Gets $2 Million From DFJ ePlanet Ventures

June 20, 2007 | by Sahad P V

Manthan Systems, a Bangalore-based company dealing with business intelligence and analytical solutions for the retail and consumer packaged goods industries, has received $2 million funding from venture capital firm DFJ ePlanet Ventures. Ayaz ul Haque, Director, DFJ ePlanet, has joined Manthan’s board of directors.

Manthan had announced a $2 million investment from IDG Ventures India in March 2007. IDG Venture’s Sudhir Sethi is on the board of Manthan.

Manthan is founded by Atul Jalan, who is the CEO. The company develops and markets a suite of software products and services to retailers. The company essentially helps companies take business decisions in a data rich environment.

Founded in 1999, DFJ ePlanet Ventures is probably the first fund which followed a global model with offices in Asia, Europe and the US. The fund has made successful exits including Chinese search engine Baidu (Nasdaq listing), the VoIP company Skype ( (acquired by eBay in 2005 for $4.1 billion), Focus Media (the Chinese flat-screen delivery commercial advertiser that successfully exited on Nasdaq in 2005), among others.


IDG Ventures India Debuts With $2 Million Investment In Manthan Systems