Business This Week

USINESS HIS EEK - B T W India Strategies for your Success 22nd February 2010

Closing Absolute %  Stock Markets: In a volatile week, the Indian Stock market managed to end in the Index 19 Feb’10 Change Change positive territory on Budget expectations and global cues. The BSE Sensex ended at 16,192 against last weekend’s level of 16,153, registering a marginal gain of 39 points or BSE Sensex 16,192 39 0.2% 0.24%. The NSE also ended higher at 4,845 against last weekend’s level of NSE Nifty 4,845 18 0.4% 4,827, registering a gain of 18 points or 0.37% Dow Jones 10,402 303 3.0%  Biggest loser and Gainer: S&P 500 1,109 34 3.1% . Hindalco was the top gainer for the week with a gain of 8.3% NASDAQ 2,244 60 2.8% . While Reliance Infra was the top loser for the week with a loss of 5.7% FTSE 100 5,358 216 4.2%  Foreign Exchange Reserves: India's foreign exchange reserves rose by $485M for the Nikkei 10,124 31 0.3% week ended 12 Feb’10 to $279.2B against $278.7B in the previous week Hang Seng 19,894 (375) (1.8%)  Inflation: Wholesale price-based inflation rose to 8.56% in Jan’10 from 7.31% in Dec’09, more than the past RBI’s forecast of 8.5% for this fiscal BSE Sensex P/E  Crude oil: Crude oil for Mar’10 delivery finished higher last week, erasing earlier 20.21 20.01 20.09 19.91 losses, as energy traders played off the Federal Reserve's surprise move to raise its 19.80 discount rate. Oil futures closed the week at $79.81 per barrel  Gold: Gold for Apr’10 delivery on 19 Feb’10gained $3.40 to end at $1,122.10 an ounce, off its intraday low of $1,099.30 an ounce on the New York Mercantile Exchange. The metal ended the week 3.1% ahead of the prior week's finish 15 Feb 16 Feb 17 Feb 18 Feb 19 Feb

BSE Sensex Dow Jones Hang Seng

16,429 20,534 16,328 10,393 10,402 16,227 10,309 20,269 10,269 16,153 20,422 16,192 10,099 19,894 16,038

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© 2010 ARC Financial Services Private Limited, All rights reserved. Nishant Rustagi: [email protected] I www.arc-fs.com 1 USINESS HIS EEK - B T W India Strategies for your Success 22nd February 2010 Mergers, Acquisitions and Joint Ventures

Telecom, Media & Technology: Telecom, Media & Technology:  Reliance Capital Partners, a group firm of Reliance ADA  Telenor Asia Pte Ltd, a Norway-headquartered telecom group, hiked its holding in Fame India to 11% major, hiked its stake in Uninor, a JV company with . On 17 Feb’10, the company acquired 1M shares at a price Unitech Wireless, with a fresh investment of around INR of INR 75.6 a share to hike its stake from 8.13% to 11% 20.2B . On 5 Feb 2010, the company acquired 0.48M shares , or . Post this transaction, Telenor stake has increased to 1.37% stake in Fame 67.25% in Uninor, from 60.1% earlier . Overall the company has spent ~INR 240M to buy 11% . With this fresh round of funding, Telenor’s total investment stake at an average cost of acquisition of INR 64.4/share in Uninor stands at INR 61.4B  PVR Ltd, India’s leading cinema chain, terminated its . Currently, Telenor has an option to increase to increase its agreement to buy the cinema exhibition business of DT stake to 74% in the company Cinemas Ltd, a DLF group company  Blue Coat Systems, Inc, a California-based technology . Earlier PVR had announced a cash-and-stock deal to buy provider in application delivery networking, acquired out DT Cinemas by issuing 2.5M shares to DT Cinemas majority stake in S7 Software Solutions Pvt Ltd., for an (representing 10% of PVR’s fully diluted paid-up capital) $5.25M in cash and also pay a cash component of INR 200.2M, putting the . The company further intends to acquire the remaining total deal value at roughly INR 50 0M stake in S7 after getting regulatory approval from the  SinglePoint, a US-based mobile interactivity and SMS Indian government advertising services company, acquired M2Junction, a  Bharti Airtel offered up to $10.7B for the African assets leading mobile advertising startup , for an undisclosed of Kuwaiti telecom group Zain amount . Bharti Airtel has entered into talks with Zain for acquisition . M2Junction provides SMS marketing solutions in of its African operations voice, data, and video category to advertisers via mobile platform . Currently, Bharti Airtel is working on raising $6-7B in debt to finance an all cash acquisition of Zain Telecom's African operations . The deal will involve a total payout of $9B on account of net debt of $1.7B

Consumer Goods & Retail: Hospitality:  Ruchi Soya acquires Palm Tech India Ltd (PTIL), an  MakeMyTrip (MMT), India's largest online travel Andhra-based company with a palm mill, for an company, plans to buy Ticketvala.com, a Mumbai- undisclosed amount based provider of online bus ticket reservation services . As per the deal, Palm Tech India will be merged with Mac . The deal will help the MMT to strengthen its reach in bus Oil, a holding company of Ruchi Soya servicing in North and Central India . Earlier in Jan’10, the company acquired Gemini Edibles . Earlier in 2007, Ticketvala.com had raised venture capital and Fats India Pvt Ltd. funding of $2M from Footprint Ventures  Capital Foods Ltd, a leading maker of ready-to-eat foods, acquired all brands of celebrity chef, Sanjeev Healthcare & Life sciences: Kapoor  Abbott Labs made an open offer to acquire 20% stake . The deal will enable Capital Foods to add a new line of in Solvay Pharma India for INR 3.05B products in its ready-to-eat segment, frozen . The offer has been made at a price of INR 3,054.73 a foods, jams, pickles and papads share . The deal seems to be an all stock deal with Kapoor . Promoters’ holding in Solvay Pharma was at 68.85% as of getting 10% in Capital Foods post transaction Dec’09 end and an open offer, if it’s fully successful, will give Abbott over 88% holding Education: – Post that Abbott may consider to delist the firm  Career Launcher India Ltd (CL),invested $1M in 361  Parenteral Drugs India Ltd (PDIL), a Mumbai-based Degree Minds Consulting Pvt Ltd (361 DM), a Chennai- drug manufacturing company, acquired majority stake based start-up in the training space in Mascareignes Pharmaceutical Manufacturing Co. Ltd in Mauritius . 361 DM offers training to company officials and college students . PDIL is acquiring over 35M million shares of Mascareignes, following which the latter would become a . The company could raise another $1-2M in a second wholly owned subsidiary of the company round in a few months

Banking, Financial Services & Insurance: Industrials:  Aditya Birla Financial Services Pvt Ltd, the non-  Tube Investments of India (TII), a Murugappa group banking financial services arm of diversified Aditya company, acquired controlling stake in France-based Birla Group, plans to acquire 75% stake in Aditya Birla Sedis Group for €6.8B Money Ltd . TII acquired 77% equity of Sedis Group’s Holding . The company plans to acquire around 41.5M equity Company, Financiere C10 shares of Aditya Birla Money from Aditya Birla Nuvo Ltd . This acquisition is expected to help TII to create its base in through an off market transaction European market . The move is part of company’s plan to consolidate all the – It will also give TII access to superior technology of group financial services companies under one umbrella Sedis for manufacturing Special and Engineering brand to get easier access to funds class chains . The company is expecting to complete the transaction on . Sedis has a strong presence in 100 countries and a very 23 Feb’10 strong Brand equity  PNB bought a controlling stake in the small Kazakh lender Danabank . The joint bank plans to focus on financing small and medium-sized businesses in Kazakhstan, particularly in the agricultural sector  Dhanalakshmi Bank plans to buy ~70% stake in a mutual fund firm . The bank is also looking at 30-40% loan growth in the current financial year by lending to low-risk large corporates

Consumer Goods & Retail: Education:  Sequoia Capital India, a venture and growth capital  Nadathur Group, the family office of Infosys co-founder fund, plans to invest INR 500M in Bangalore-based N S Raghavan, invested ~$10M in test preparation firm kitchen appliances company Stovekraft Pvt Ltd. Career Point Infosystems Ltd. . Sequoia could be investing up to INR 500M ($10.7M) in . Career Point Infosystems Ltd. provides coaching for Stovekraft for around 25% stake entrance examinations for engineering institutions such as . Stovekraft had earlier raised INR 220M from SIDBI VC in IITs and medical colleges 2007 and will use the second funding round to fuel its expansion plans Healthcare & Life sciences:  Karuturi Overseas Ltd., a subsidiary of world's largest  Milestone Religare Investment Advisors plans to invest rose exporter Karuturi Global, plans to raise $100M from ~$10M in Bangalore-based specialty hospital HealthCare PE funds Global Enterprises Ltd (HCG) . The company plans to utilize the funds to fuel its expansion . The deal would be the second investment in a healthcare plans in Africa firm in the last three months Standard Chartered Bank's Africa PE arm and a unit of . . The HCG has previously raised INR 1.5B from IDFC Reliance Capital are in talks to invest in the Dubai-based PE, Evolvence and PremjiInvest Karuturi Overseas  FIL Capital Advisors (India) Pvt. Ltd., the Indian PE arm  Vishal Retail received a proposal from buyout giant TPG of Fidelity International, plans to pick up a minority stake to acquire the stake for INR 2.5B in Ahmedabad-based mid-sized biopharma player Intas . If TPG is indeed going to pick shares worth INR 2.5B at the Biopharmaceuticals for a $20M existing share price, it would be subscribing to 36M fresh shares giving it a 62% stake post equity dilution . Intas has previously raised $10M from Kotak Private Equity . Promoters currently hold 60% that would decline to 20% on the diluted basis

Banking, Financial Services & Insurance : Industrials:  Qinvest, Qatar's largest investment bank, picked up 25%  Samara Capital Partners increased its stake in Asian stake in Mumbai-based Ambit group for INR 2.5B Oilfield Services Ltd. to 35.9% from 13.3% . QInvest also plans to come in as an anchor investor in a . Samara Capital has picked up an additional 4.05M shares hedge fund and Shariah compliant fund to be raised by through a preferential allotment Ambit . Samara has announced the open offer at INR 61.2 a . QInvest plans to put $25M in Ambit Frontier Fund, a Long- share, the same price at which it is subscribing to the pref short India dedicated equity fund based out of Mauritius allotment – It will also help Ambit to raise another $150M Shariah- . Samara had picked up stake in Asian Oilfield for INR 285M compliant fund at INR 190 each in Dec’07  IFC, the investment arm of the World Bank, plans to take  Aditya Birla PE Fund, part of diversified Aditya Birla 20% stake in a new company, being set up by Dewan Group, invested INR 500M in Anupam Industries Ltd, a Housing Finance Corporation Ltd (DHFL) Gujarat-based manufacturer of material handling . DHFL is planning to set up a housing finance firm targeting equipments the low-cost home segment . The company plans to utilise the proceeds for its expansion . The total cost of the new project is expected to be $20M plans  NetAmbit InfoSource & e-Services Pvt. Ltd., a financial  Templeton Strategic Emerging Markets Fund III, LDC, a products distribution company, raised INR 500M from fund managed by US-based Franklin Templeton Asset Helion Venture Partners Management, invested $19.95M (~iNR 934M) in Shiv-Vani Oil & Gas Exploration Services Ltd. . Bessemer Venture Partners, which invested in the company in 2007, has also participated in this round by . Templeton is acquiring 2.45M shares of Shiv-Vani at INR investing INR 100M 380 a share . NetAmbit plans to utilize the finds to expand into newer . Post this transaction, Templeton will hold a 5.6% stake in markets through diversified distribution channels Shiv-Vani

Real Estate & Infrastructure: Rights Issue:  ICICI Prudential, India Opportunities Real Estate Fund  Kingfisher Airlines plans to mop up INR 4B through 1:1 will take 49% stake in Shriram's Bangalore project right issue . Shriram Group has raised INR 400M from ICICI Prudential . The company proposes to retire mounting debt AMC Ltd. and India Opportunities Real Estate Fund (Mauritius) for their 16-acre residential project in  Jayshree Chemicals plans to float rights issue in the ratio Yelhanka, the northern suburb of Bangalore 9:2  Temasek Holdings acquired 4% stake in Shoba . The company proposes to raise funds to part finance the Developers company's expansion project . Promoter of Sobha Developers Ltd. sold a 4% stake via a block deal to Aranda Investments, a unit of Singapore's Temasek Holdings at INR 251 per share . Post-sale, Chairman P.N.C. Menon holds 12.7% stake while the total founders' stake stands at 60.5%

Outsourcing:  Actis, an emerging markets-focussed PE firm, invested $50M in Integreon, a Mumbai-based back office outsourcing firm backed by Ayala Corporation of Philippines, for a substantial minority stake . Integreon will use the funds to invest in new services, technologies and acquisitions . Integreon offers services to corporations, law firms, and investment banks and has around 100 clients in its portfolio

Telecom, Media & Technology: Telecom, Media & Technology:  Elephant Capital sold 1.9M shares in NIIT  ChrysCapital and Morgan Stanley to make part exit from . The PE firm sold 1.9M shares in NIIT achieving an IRR in Hathway Cable and Datacom Ltd. excess of 25% . At the IPO price band of INR 240 per share, ChrysCap will . Its residual holding in NIIT is 0.66M shares, representing a be pocketing returns of 48% - 63% on its investment made shareholding of 0.4% in the company, is worth INR 45M or in May’07, while Morgan Stanley will generate return of around $1M 13% to 25% on its investment made in Jun’08 . Earlier the PE firm had picked up around 1.5% stake in NIIT . The average cost of acquisition of shares stands at INR for around INR 155M through secondary market purchases 162 a share for ChrysCap while it is INR 213 a share for between Mar’08 and Nov’08 Morgan Stanley  Siva Ventures Ltd, the flagship company of C . Post the IPO, ChrysCap and Morgan Stanley stake in the Sivasankaran's Sterling Infotech Group, sold ~10% stake company will drop to 6.4% and 2.9% respectively in Sahara One Media and Entertainment in an off market transaction for INR 391M Real Estate & Infrastructure: . Siva Ventures stake in Sahara One dropped to 4.95%  India Globalization Capital (IGC) reduced stake in Sricon . Siva Ventures, which was earlier known as Aircel from 63% to 22% Televentures Ltd, had picked up a 14.98% stake in Sahara One in May’06 for INR 1.2B (INR 372 per share) . The company is also looking to exit the company in the future while concentrating on its other firm Techni Bharathi  Nalanda Capital sold ~2% stake in Sun TV for INR 2.9B Ltd (TBL) where also it owns a majority stake . The funds sold 7.7M, which accounts for nearly 2% stake . Earlier in Mar’08, IGC bought 63% stake in Sricon for $30M for a price of INR 370 per share . Earlier in Dec’08, Nalanda picked up a 2.22% stake in Sun TV with a total investment of between INR 1.2B – 1.3B . The PE firm has made returns of 2.5x on its part exit

Logistics:  2i Capital sold three-fourths of its 6% stake in Pipavav Shipyard at an average of INR 55 a share . Earlier, it had sold around 2% stake between Oct’09 and mid-Jan’10, encashing around INR 700M -770M . 2i’s remaining 1.16% stake in Pipavav is valued at INR 410M

© 2010 ARC Financial Services Private Limited, All rights reserved. Nishant Rustagi: [email protected] I www.arc-fs.com 2 USINESS HIS EEK - B T W India Strategies for your Success 22nd February 2010 IPOs Listing IPOs Listed Company Issue Price (INR) Issue Size (M Shares) Listing Price (INR) Vascon Engineers 165 10.8 170 Year IPOs* Jubiliant Foodworks 145 22.7 162 2010 Till Date 9 Syncom Healthcare 75 7.5 88 2009 17 Thangamayil Jewellery Ltd 75 1.4 70 2008 37 2007 103 IPOs Closed 2006 75

Company Issue Price (INR) Price Band (INR) Issue Size Subscription 2005 39 ARSS Infrastructure Projects 450 410 – 450 INR 1.03B 47.60x Hathway Cable & Datacom Ltd. 240 240 – 265 27.7M shares 1.36x

Future Plans

Company Issue Size (INR) Shares Issue Opens Issue Closes Rating Price Band (INR) United Bank of India 3.3B – 3.6B 50M 23 Feb’10 25 Feb’10 Grade 4 60 – 66 Man Infraconstruction 1,367M – 1,418M 5.6M 18 Feb’10 22 Feb’10 Grade 3 243 - 252 Rural Electrification Corp (FPO) 34.9B 17.2M 19 Feb’10 23 Feb’10 NA 203***

DRHP Filled

Date of Filling Company Name Industry 8 Feb’10 Man Infraconstruction Real Estate & Infrastructure 19 Feb’10 United Bank of India BFSI**

*IPO’s on the basis of listing **Banking, Financial Services & Insurance ***Floor Price

© 2010 ARC Financial Services Private Limited, All rights reserved. Nishant Rustagi: [email protected] I www.arc-fs.com 3 USINESS HIS EEK - B T W India Strategies for your Success 22nd February 2010 In Focus

 M&A deal volume in Jan’10 increases 50% as compared to Jan’09 . 53 M&A transactions were struck last month, over 50% against an average of 35 deals per month in 2009 . Telecom, logistics and BFSI were the most targeted sectors and accounted for over 85% of total M&A deal value in Jan’10 – Telecom, logistics and banking, finance & insurance witnessed investment worth $2.18B, $164M and $117M respectively . In terms of deal volumes, the most active sectors were banking, finance & insurance with seven deals followed by manufacturing & IT/IT services with six deals each in Jan’10  PE deals in India witnessed a strong growth momentum in the Jan’10 and almost quadrupled to $1.24B, from its year ago period . The total value of PE transactions and qualified institutional placement (QIP) deals amounted to $1.24B in Jan’10, against $309M in the year ago period, registering an over four-fold jump . 29 PE and QIP transactions were registered, against 16 deals registered in same period in 2009  India to spend $200B on Defence by 2022 . India needs to replace its outdated Soviet-vintage inventory. . The report suggests that the forces need new combat aircrafts, ships, new guns, rocket launchers, multi-terrain vehicles, sub- marines etc.  Indian Government authorized FIPB to allow FDI up to INR 12B . FIPB authorized to approve applications up to INR 12B . All other applications over and above INR 12B will be decided by the Cabinet committee  Indian Industry grows at 16.8 % in Dec’09 . Driven by growth of Automobile, Electricity, Steel ,Cement, Export sector . Manufacturing growth at 18.5%,Consumer growth at 12%  India’s Exports grow at 11.5% in Jan’10 . Estimated revenue of INR 14.3B

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