Indian Economy Weekly Review

1. TOP HEADLINES
 IDFC Project Equity Buys ICICI Venture’s Stake in Sahyadri
Hospitals.
 PE-backed Shree Ganesh Jewellery Buys 55% In Two Solar
Power Firms.
 Fares rise due to Kingfisher cancellations.
 SBI decides on Rs 1,650-crore relief package for Kingfisher.
 BSE to launch green index today.
 JP Morgan Raising $500M India-focused Offshore Realty
Fund.
 Future Group's Big Bazaar brings new recipe to boost sales.
 PE-backed Agre Developers Sells 20% In Gupta
Infrastructure For $6M.
 Azure Capital Set To Raise Two New Realty Funds Of $60M
Each.
 Citigroup to Exit India’s HDFC With $2.1B Sale.
 Kingfisher Airlines gets offer from 2 desi investors for Rs
800 cr: Vijay Mallya
 Raymond’s Auto Components Arm Acquires Trinity India
For $11M
 MCX IPO subscribed 54 times; gets bids worth Rs36,000
crore
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2. Weekly Economic Review
End of the week markets are upbeat following a slew of positive data from
United States. The S&P 500 ended near a 10-month high, at 1363.46, up 0.4%,
the Dow closed at a 52 week high, up 0.4% and the Nasdaq Composite gained
0.8%, reports Wall Street Journal.Asian markets were trading marginally higher
on Friday morning following positive cues from the United States.Japan’s Nikkei
Stock Average was up 0.2%, China’s Shanghai was trading flat and Hong Kong’s
Hang Seng gained 0.3%, reports
Housing Development Finance Corp. Ltd (HDFC) will be in the focus as
Citigroup divests entire 9.85% stake in HDFC to raise $2.07 billion. Citigroup is
selling its entire stake to reinforce its capital base in preparation for new
international standards that will come into force in January 2013, reports Mint.
Citigroup will sell 145.2 million shares at Rs. 630-703.55 each on Friday.
Kingfisher Airlines has told the Director General of Civil Aviation (DGCA) that it
will make 16 more aircraft operational next week, taking its total fleet size to
44, reports. Currently Kingfisher Airlines has only 28 aircrafts which can fly 170
flights a day and new aircraft could provide the beleaguered airline an
opportunity to increase its daily service. Kingfisher Airlines has received
recapitalization offers from two large Indian investors for Rs 800 crore, airline
chairman Vijay Mallya said. The investor would pick up 24% stake if the deal
was clinched, he added.
The MCX IPO, which closed on Friday, was oversubscribed 54 times; with the
retail portion oversubscribed by a record 24 times till 6 pm. Bankers to the
issue had to seek extra time from exchanges for uploading investor
applications. The bids from institutions and high net worth investors and
corporate were oversubscribed 49.12 times and 150.35 times, respectively.
MCX is the first Indian bourse to be listed.
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3. Inside The Story
IDFC Project Equity Buys ICICI Venture’s Stake In Sahyadri
Hospitals
IDFC Project Equity, which manages the India Infrastructure Fund, has
acquired a significant minority stake in Sahyadri Hospitals Ltd (SHL) for
around Rs 190 crore. The deal includes buyout of the stake held by ICICI
Venture Fund Management Company Ltd in the Pune-based specialty
hospital chain. The deal will be IDFC Project Equity’s first investment in
the healthcare space, helping it diversify further from power utility and
transportation segments.
PE-backed Shree Ganesh Jewellery Buys 55% In Two Solar
Power Firms
Credit Suisse PE Asia-backed Shree Ganesh Jewellery House Ltd has
forayed into solar power generation business by buying controlling
stakes in two companies – Alex Astral Power and Alex Spectrum
Radiation – for an undisclosed sum, the company has said. The Kolkata-
Based company has acquired 55 per cent stake in each firm. Although the
company did not disclose the amount invested, according to a media
report, Shree Ganesh Jewellery paid Rs 100 crore ($20 million) to buy the
stakes in the two power firms. Alex Spectrum is reportedly close to
Commissioning a 5 MW solar project in Rajasthan while Alex Astral
Power has already commissioned a 25 MW solar power plant in Gujarat.
Fares rise due to Kingfisher cancellations
Cashing in on Kingfisher's flight cancellations, major airlines have jacked
up their fares on many busy air routes by 10-25 per cent over the past
few days. On the busiest Delhi-Mumbai route on which the one-way
airfares average about Rs 4,500-5,000, the prevailing ticket prices of
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4. Other airlines ranged between Rs 6,555 and Rs 7,305. Similarly, on the
Delhi-Bangalore sector, one-way fare rose from an average of Rs 6,000-
7,500 to about Rs 12,000-14,000. The Delhi-Kolkata route saw a jump
from Rs 5,000 to Rs 6,500. Travel agents also confirmed the development,
saying large-scale cancellations by Kingfisher on some of the popular
sectors Bangalore-Delhi have almost doubled.
SBI decides on Rs 1,650-crore relief package for Kingfisher
The country’s largest bank, the State Bank of India (SBI), has decided to
extend a Rs 1,650-crore relief package — smelling strongly of a
bailout that the government said it had no plans to give — to liquor baron
Vijay Mallya’s bleeding Kingfisher Airlines (KFA).A source confirmed that
the bank had decided to extend a new line of credit that included Rs 700
crore as short-term working capital loans and Rs 500 crore as bank
guarantees as a cover for the airline’s payables to vendors. SBI has also
decided to extend the tenure of the existing loans of Rs 250-300 crore
that would be due for repayment next year. Besides, SBI or Punjab
National Bank (PNB) is likely to offer bank guarantees of Rs 160-200
crore to the income tax (I-T) department, the source said.
BSE to launch green index today
The Bombay Stock Exchange (BSE) will on Wednesday launch a new
index called 'BSE-GREENEX' measuring the performance of companies in
terms of carbon emissions, an official of IIM, which co-developed the
model, said. The index, developed by the BSE in collaboration with the
premier B-school Indian Institute of Management, Ahmadabad (IIM-A),
will enable investors take more informed investment decisions about
companies in the energy-intensive sectors, among others."A model has
been created in collaboration with the BSE, where BSE-100 companies
were evaluated on the basis of greenhouse emissions in the last four
financial years from 2007-08 till 2010-11," Project Coordinator at IIM-A
Amit Garg said."The companies were tested in different combinations of
carbon emission intensity, market capitalization, and turnover," he said,
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5. adding that the index will have fair representation of firms from virtually
all the sectors. The top-ranking companies from each sector like power,
steel, cement have made it to the new index called BSE-GREENEX
currently comprising less than 30 companies, Garg said.
JP Morgan Raising $500M India-focused Offshore Realty
Fund
International financial services group JP Morgan is raising a new India-
focused offshore real estate investment fund worth close to $500 million.
A person privy to the development said, “The amount being so huge, it
looks difficult that they will be able to raise that much as international
investors are taking time to warm up to Indian real estate. They might
close it at $300-350 million. The first phase of the fund is up for closing in
March this year.”Sources further added that the fund had already locked
three deals with realty developers before it set out to raise money. The
deals took place in Mumbai, Chennai and Pune, but details of the project
could not be verified
Future Group's Big Bazaar brings new recipe to boost sales
Future Group's Big Bazaar is making its biggest move into Indian
households yet. The value retail chain is not just retailing grain, but
grinding it, kneading the dough and even making chapattis for its
consumers-at no extra cost. Such services, including de-seeding
pomegranate, grating coconut as well as cutting pineapple and jackfruit
on the spot, are presently offered only at its prototype Rajaji Nagar store
in Bangalore, but will soon be rolled out in all the 12 family Big Bazaar
outlets across the country."The idea is to take care of all the pains of
cooking, to reduce the negative labour that families do not typically
reward the women for," says Ashni Biyani, director of Future Ideas, the
innovation and incubation cell of Future Group.
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6. PE-backed Agre Developers Sells 20% In Gupta
Infrastructure For $6M
Agre Developers Ltd, promoted by Kishore Biyani-led Future Group and
backed by ICICI Ventures and Kotak Private Equity, has sold its 20 per
cent stake in Gupta Infrastructure (India) Pvt Ltd, a private joint venture
with Nagpur-based Gupta Group, for Rs 29.87 crore ($6 million), the
company has disclosed in a filing to the Bombay Stock Exchange.
Agre Properties & Services Ltd, a wholly owned subsidiary of Agre
Developers, held the stake. The deal amount would be paid in tranches
between March 3 and May 31, 2012.Gupta Group was founded by late
Mahadev Prasadjee Gupta and has interests in coal, infrastructure, power,
mining and logistics business. The JV had also developed a shopping mall-
cum-multiplex in Raipur, Chhattisgarh.
Azure Capital Set To Raise Two New Realty Funds Of $60M
Each.
Bangalore-based private equity firm Azure Capital Advisors Ltd is
planning to raise two new funds dedicated to the real estate space. One of
these will be a rental yield fund while the other will focus on Mumbai
redevelopment projects. The rental yield fund, called India Realty Fund II,
will be the second fund from Azure’s stable and the firm is planning to
raise Rs 150 crore for the same, with a greenshoe option of additional Rs
150 crore. It will be filing with the Securities and Exchange Board of India
(SEBI) within the next three weeks and may seal a first close after raising
Rs 30-40 crore. The fund will look to invest in Mumbai, Pune, Bangalore
and Chennai, and will target commercial properties close to central
business districts (CBDs).
Citigroup to Exit India’s HDFC With $2.1B Sale
Citigroup Inc. (C) plans to exit an almost seven-year-old investment in
India’s largest mortgage lender with an offer to sell its stake in Housing
Development Finance Corp. for as much as 102 billion rupees ($2.1
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7. Billion). The U.S. bank is offering 145.3 million shares at 630 rupees to
703.55 rupees apiece, or as much as a 10 percent discount on the closing
price of HDFC shares yesterday, according to a term sheet obtained by
Bloomberg News. The stake represents the New York-based lender’s
remaining 9.9 percent holding in Mumbai-based HDFC. Citigroup joins
European and U.S. banks including HSBC Holdings Plc and Goldman Sachs
Group Inc. in selling Asian assets as global rules for higher risk buffers
force lenders to boost capital. Citigroup, the third-largest U.S. lender by
Assets, also plans to raise as much as $20 billion in debt this year to make
payments on a 2008 emergency credit program.
Kingfisher Airlines gets offer from 2 desi investors for Rs
800 cr: Vijay Mallya
The beleaguered Kingfisher Airlines has received recapitalization offers
from two large Indian investors for Rs 800 crore, airline chairman Vijay
Mallya said. The investor would pick up 24% stake if the deal was
clinched, he added. Mallya's senior executives have said that there are
investors who would pump fresh equity in the hope of divesting the stake
at a gain to strategic investors after government allows foreign carriers
are allowed to invest in Indian airlines. The union cabinet is expected to
decide on allowing foreign airlines to take up to 49% in domestic carriers
sometime next month. Mallya said there was no agreement with the
lenders for a fresh loan yet, and also denied any deal with a foreign airline
as speculated in media recently. State Bank of India (SBI) led consortium
of 18 banks will meet next week to discuss whether or not to extend fresh
loans to Kingfisher, based on a new feasibility report from SBI Caps.
Raymond’s Auto Components Arm Acquires Trinity India
For $11M
Ring Plus Aqua Ltd, the auto components arm of the textile and apparel
maker Raymond Ltd, has acquired a majority stake in Pune-based Trinity
India Ltd. Although the company did not disclose the deal value in its
official communiqué to the stock exchanges, various media reports stated
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8. That Ring plus Aqua had bought 78 per cent stake in the company for Rs
54 crore ($11 million), citing a top company executive. The deal was
funded by internal accruals and facilitated by Equirus Capital.
MCX IPO subscribed 54 times; gets bids worth Rs36, 000
crore
Riding high on a record-breaking demand from retail, institutional and
high networth individual (HNI) investors, the initial public offer (IPO) of
the country’s top commodity bourse Multi Commodity Exchange (MCX)
got over-subscribed by more than 54 times on Friday and attracted bids
worth about Rs36,000 crore. Overall, the MCX IPO, which happens to be
the first for the year 2012, got subscribed by 54.09 times on the last day
of bidding—thus attracting the highest over-subscription level since the
Anil Ambani-led Reliance group’s R-Power IPO in January 2008, which
was subscribed nearly 73 times.
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