India October 17 Weekly Newsletter 2011 This document covers news related to India with a special focus on areas like mergers & acquisitions, private equity & venture capital. Volume 106, October 17th, 2011 For the period October 10, 2011 to October 16, 2011 October 17, 2011 [INDIA WEEKLY NEWSLETTER] Highlights Life Healthcare To Acquire 26% In Max Healthcare For Rs516 cr…(3) Suzlon Completes Hansen Stake Sale For Rs 890 cr…(4) Content Pages Fabindia Acquires Majority Stake In Mergers & Acquisitions News 3-4 Womenwear Retailer – EAST…(5) Mergers & Acquisitions Deals 5-8 Trivitron Healthcare Acquires Minority Stake In Kiran Medical…(6) Private Equity News 8-10 Religare Enterprises Acquires Shreyas Stocks Pvt Ltd…(7) Private Equity Deals 10-12 International Paper Buys 75% In Andhra Venture Capital News 12-12 Paper For $388 mn…(8) Venture Capital Deals 12-13 IFC May Invest $25 mn In MicroQual Techno…(8) Letsbuy.com Close To Raising Over $40 mn…(9) One97 Communication Raises $10 mn From SAP Ventures…(9) Eye-Q Hospitals Raises Funding From Helion, Nexus Venture Partners…(10) Sahara Group Invests $100 mn In Force India…(11) Sequoia Capital Invests $5 mn In Fast Food Chain - Faaso's…(12) Singapore-Based Media Firm Cinemacraft Raises SG$1 mn…(13) Confidential LKP Securities Limited 2 October 17, 2011 [INDIA WEEKLY NEWSLETTER] Mergers & Acquisitions News Parkway Holdings May Acquire Actis Backed Sterling Hospitals Parkway Holdings may buyout Actis' 80% stake in Ahmadabad based Sterling Hospitals for around Rs700 cr. Actis had announced it's plans to exit the hospital chain in July. Parkway Holdings, Manipal Group, AMRI Hospitals, DM Healthcare and Fortis Hospitals were interested in acquiring the controlling stake in the company. In September-end, Kolkata-based AMRI, which was among three short-listed bidders, quit the race when the asking price exceeded Rs 640 crore, leaving the field open to Parkway and Manipal. Parkway is expected to complete the transaction with Actis by the end of this month. Established in 2001, hospital chain Sterling Hospitals has three multi-specialty tertiary care hospitals, one each at Ahmedabad (310-bed), Vadodara (160-bed), Rajkot (190-bed) and Bhavnagar (183–bed) with high-end secondary care setup at Mundra SEZ (114-bed) and at Adipur (70-bed). It also has a satellite center at Mehsana. Life Healthcare To Acquire 26% In Max Healthcare For Rs516 cr South Africa based hospital chain - Life Healthcare is acquiring 26% stake in Max Healthcare for Rs516.5 cr, valuing the company at around Rs2000 cr in all cash transaction. Life Healthcare seems to be paying a huge premium, considering the previous transaction in Max Healthcare which valued the company at Rs855 cr. In June this year, Warburg Pincus sold it's 16.37% stake in Max Healthcare Institute Limited to Max India Limited for Rs.140 cr. This being a fresh equity infusion will bring down Max India's holding in Max Healthcare to around 70% from 91.84%. International Finance Corporation owns 3.1% stake in Max Healthcare, while balance 6% is owned by overseas corporate bodies. The funds will be used for expansion and part repayment of it's Rs900Cr debt. Max India will also cancel it's plans of a rights issue. The $1.1- billion Life Healthcare, which operates 63 facilities with 8,322 beds in South Africa and Botswana, will have two nominees on the board of Max Healthcare. It will provide strategic inputs to the Indian venture, but will not actively participate in the management of the company. New Delhi-based Max Healthcare offers healthcare services ranging from consultation to diagnosis and from surgery to pharmacy. It operates 8 hospitals in Delhi and Punjab. The company is planning for an IPO by 2012-13. Reliance Set To Strike Deal With Disney’s UTV Mukesh Ambani is set to sign a deal with Walt Disney’s Indian subsidiary that will provide his Reliance Industries with the content for its next generation of mobile telecoms. The deal, expected to be sealed in the coming weeks, is between Reliance and UTV, one of Bollywood’s largest entertainment groups, which Disney controls with a 50.44% stake and is in the process Confidential LKP Securities Limited 3 October 17, 2011 [INDIA WEEKLY NEWSLETTER] of buying fully. It is the first concrete move by the billionaire’s group since it acquired Infotel, the only company to have won a national allocation of fourth-generation spectrum in an auction. It will be the latest in a series of joint ventures signed by India’s largest private sector group. Reliance, which has a cash pile of about $9 bn, has formed a partnership with BP that saw the UK group acquire a 30% stake in Reliance’s off-shore oil and gas interests east of India for $7.2 bn. Reliance also entered the financial services sector by signing a joint venture with DE Shaw, the US hedge fund, and acquiring Bharti’s 74% stake in an insurance venture with France’s Axa. Suzlon Completes Hansen Stake Sale For Rs 890 cr Wind turbine manufacturer Suzlon Energy Ltd has completed the sale of its remaining 26.06% stake in Belgium-based Hansen Transmissions International NV to German engineering firm ZF Friedrichshafen AG for Rs 890 crore or GBP 115.25 million. Hansen is a London Stock Exchange-listed wind turbine gearbox and industrial gearbox designer, manufacturer and supplier, which was acquired by Suzlon in 2006. While Suzlon has now completely exited Hansen, the company is also in the final stages of acquiring 100 per cent stake in the wind power firm REpower Systems SE. Last month, REpower’s board passed a resolution to ‘squeeze out’ its minority shareholders who hold the remaining 5 per cent in the German firm for €63 million or Rs 428 crore. Suzlon had acquired stakes in Hansen and REpower during 2006- 2008 but had to start a debt recast programme as its borrowings increased to $2.5 billion during mid-2009. Since then, the firm has been cutting its stake in Hansen while increasing its holding in REpower, in order to take the latter private. Reliance Infrastructure To Acquire Rs2000 cr Road Projects Anil Ambani's Reliance Infrastructure Limited may acquire Rs2000 cr worth road projects in Tamil Nadu and Karnataka. Reliance Infrastructure has set aside more than Rs2500 cr to buy distressed assets in highways and road assets. Hyderabad based IVRCL Assets and Holdings and other companies may sell road projects awarded to them by the National Highways Authority of India. IVRCL may sell majority stake in its operational projects, Kumarpalayam- Cheng palli and Salem-Kumarpalayam in Tamil Nadu. Hindustan Construction Company is also looking to acquire stakes in distressed infrastructure projects. Off late, there have aggressive bidding for NHAI projects raising concerns over the profitability of these new projects. The government has received as much as Rs15,729 cr in premiums from the winning bidders of at least 16 big-ticket highway contracts that it has invited bids for since April. That's in contrast with the Rs660 cr the government estimated it would have to pay in order to plug gaps in the commercial viability of the projects, via the so-called viability gap financing. Reliance Infrastructure's road portfolio include 11 projects totaling to about 1000 km. Confidential LKP Securities Limited 4 October 17, 2011 [INDIA WEEKLY NEWSLETTER] Mergers & Acquisitions Deals Fabindia Acquires Majority Stake In Womenwear Retailer – EAST Fabindia has acquired majority stake in UK based womenwear retailer - EAST, with an option to buyout the remaining stake within a year. Fabindia had acquired 25% stake in EAST, for an undisclosed amount in early 2009 with the option of acquiring the rest in the next three years. With this deal, Fabindia's ownership in EAST will go up to 62.5%. EAST, originally called Anokhi was started by Clive Pettigrew, Penny Oliver, and Jonathan Keating in 1986. The stores were rebranded EAST in 1994. The retailer with an annual revenue of more than $62Mn sells women wear through exclusive outlets and high end department store - John Lewis in the UK. Besides garments, EAST offers jewellery as well as accessories sourced from India, China and the South-East Asian countries. It recently introduced two sub brands - EAST Artisan and EAST Boutique. Founded in 1960 by a young American, John Bissell, to market the diverse craft traditions of India, Fabindia started as a company exporting home furnishings. Retail was a small part of Fabindia's business until the mid-to late 1990s, when William Bissell took over the company from his father John Bissell. William later transformed the company from an export house into a national retail brand. William Bissell and family own 50% stake in Fabindia, Wolfensohn holds 8% while employees own the balance 42% stake. Early this year, Fabindia empowered its nearly 700 employees by giving them stake in the company. Fabindia has also invited bids for a Rs200 cr raise & buyout of Wolfensohn Capital Partner’s 8% held since 2007. Wolfensohn entered in 2007 with Rs50 cr for 8% investment. Flipkart Acquires Digital Content Platform – MIME360 Flipkart has acquired Mumbai based Mime360. Mime360 (Manoramic International Media Exchange) is a digital content platform founded by Sameer Nigam and Rahul Chari. The company ties up with content owners to host their digitized content, and then offers APIs to publishers and content aggregators for integrating with their business. The company works on a pure revenue-share basis with content owners, and licenses out the encryption technology to web publishers and cloud service providers. It has tied up with Saregama, Universal Music and Inreco for content and delivers content to publishers like Gaana.com (Indiatimes), Mymusic and iMusti.