1. Top Headlines
 The Indian Public School buys US South Hills Academy for
$10M
 IvyCap Ventures’ debut fund makes first close at $19M;
investing $4.5M in two companies
 Microqual to raise $100M from IFC
 CHD Developers buys Empire Realtech for $18M
 Shareaholic raises $3M Series A funding led by Kepha
Partners.
 RIM hit with $147.2 million verdict in wireless patent
lawsuit
Weekly Economic Review
Earnings season kicked off this week, and India’s top IT firms, TCS and
Infosys gave a contrasting picture of the IT sector. Infosys shocked
investors with a steeper-than-expected cut in its guidance. Its growth
forecast was slashed to just 5% for the current fiscal. Its estimate in
April was 8-10%. The company’s performance in the three months to
June also remained flat when compared to the previous quarter. Net
profit dropped 1.2% to Rs. 2,289 crore, while revenue rose 8.6%
quarter-on-quarter to Rs. 9,616 crore. Infosys did not provide a
guidance for September because of the volatile conditions. Infosys CEO
S.D. Shibulal told Mint the company was falling behind in the short-term
because of discretionary spending. He added that Infosys’ long-term
strategies would pay off and take it ahead of rivals.
Speaking of rivals, Tata Consultancy Services has raced past Infosys for
a thirteenth quarter in a row. Consolidated net profit for the first
quarter rose 14.6% quarter-on-quarter to Rs. 3,318 crore. And revenue
climbed 12.1% to Rs. 14,869 crore. TCS says it saw growth across
business segments, even from clients in the financial industry. And
while TCS doesn’t provide guidance, it says it will continue to beat the
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2. Nasscom forecast of 11-14%. Still, analysts have warned that the IT
industry as a whole faces problems of declines in pricing power and
currency volatility.
Switching to telecom, Norwegian firm Telenor is on the lookout for a
new joint venture partner in India. Two people familiar with the
development have told Mint that the company has hired Citi Global
Markets India to find a new partner. Telenor wants to control the new
venture by holding a 74% stake in it. Its existing partner, Unitech, has
been resisting its attempts to end the joint venture. The dispute is now
with the Company Law Board and the Delhi high court. In February, a
Supreme Court decision cancelled more than a hundred telecom
licenses including 22 used by Uninor.
Moving to the economy, new factory output data shows little cause to
cheer. The index of industrial production for May climbed 2.4%
compared to the same period, a year-ago. The revised figure for the
previous month shows a contraction of 0.9%. In addition, any potential
revival in growth could be neutralized by this year’s poor monsoon.
Loss-making carrier Jet Airways is taking several measures to cut costs.
Executives from the airline have told Mint it could sell and lease-back up
to five planes this quarter. The arrangement could yield at least $50
million. Jet also plans to phase out a hundred out of its 200 expat pilots.
Ratan Tata, the chairman Tata Sons, has revealed his post-retirement
plans. Tata said he would work on child nutrition and rural
development. He said helping children this way would change India’s
mental and physical health in the coming years. Tata is will step down
as chairman on his 75th birthday this December.
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3. Inside The Story
The Indian Public School buys US South Hills Academy for
$10M
Tamil Nadu-based The Indian Public School (TIPS) has acquired South
Hills Academy, a Los Angeles-based school for $10 million (Rs 54.3
crore). This acquisition will help TIPS to expand its presence globally.
This is the first overseas acquisition in the education space by an Indian
firm in more than three years. A little over half a dozen outbound M&A
deals were struck during 2006-09. However, education has been one of
the hot sectors for private equity investors in India. Over the past 12
months, as many as 24 deals worth $147 million were struck in India
IvyCap Ventures’ debut fund makes first close at $19M;
investing $4.5M in two companies
IvyCap Ventures Advisors, started by former Ajay Piramal Group
executive Vikram Gupta, has made a first close for its debut fund IvyCap
Ventures Trust Fund - I, at Rs 105 crore ($19 million) and is set to invest
Rs 25 crore ($4.54 million) in two target companies.One of these
companies provides agri-related information to rural focused business
and farmers and has been on a high growth path in the past four years.
This target company recorded a topline of Rs 12 crore in CY 11 and aims
to reach Rs 22 crore for CY 12. The company has already covered more
than a million farmers across 35,000 villages in 13 states.
Microqual to raise $100M from IFC
Foreign ownership in telecom tower company Microqual will climb to
nearly 65% after World Bank arm, International Finance Corporation
(IFC), and a clutch of overseas PE investors pump in investments of
$100 million into the company. It already has a $25-million funding
commitment from IFC and is in advanced talks with a clutch of overseas
PE firms to raise another $75 million. Existing investors include Jafco
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4. Asia, BTS Advisors, Headland Capital Partners and Indo-US Venture
Partners.
CHD Developers buys Empire Realtech for $18M
New Delhi-based real estate developer CHD Developers Ltd has
acquired Empire Realtech Pvt. Ltd for Rs 100 crore ($18 million). CHD
will convert the 12.34 acres of land it gets from the acquisition into a
residential project in Gurgaon, a company statement said.While the
company plans to develop a residential project on the land it got from a
clutch of individual land owners in Gurgaon, Saund claims that
residential development is going to be the focus area of the company for
next five years. The land that company acquired is in Sector 106 in
Dwarka Expressway, Gurgaon has got all clearances and approvals.The
acquisition will be funded through internal accruals and fresh money
from sales will take care of the Rs 200 crore ($36 million) of
investments that the company will make to develop the property.
Shareaholic raises $3M Series A funding led by Kepha
Partners
Boston and New Delhi-based Shareaholic, Inc., which runs the content
sharing site Shareaholic Inc., has raised $3 million in Series A funding
led by Kepha Partners. All existing investors including General Catalyst
Partners, NextView Ventures, 500Startups, Boston Seed Capital, and
angels also participated in the round.The company had earlier raised $2
million from General Catalyst Partners, NextView Ventures, Dave
McClure of 500 Startups, Nicole Stata of Boston Seed, Edward Roberts of
MIT, Dharmesh Shah of HubSpot and others. Prior to this, the company
has raised $355,000 as angel funding in 2009, when it crossed the 100-
million user mark. The new investment takes Shareaholic’s total funding
to $5.35 million.
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5. RIM hit with $147.2 million verdict in wireless patent
lawsuit
A northern California jury directed Research in Motion Ltd to pay
$147.2 million in patent litigation over a remote management system
for wireless devices, according to an attorney for the plaintiff,
Mformation Technologies Inc.The verdict on Friday in a San Francisco
federal court comes at a bad time for RIM, whose stock has fallen more
than 70 percent in the past year as customers abandon the BlackBerry
in favor of Apple's and a slew of devices using Google Inc's Android
software.Amar Thakur, an attorney for Mformation, said the jury
directed RIM to pay an $8 royalty for every BlackBerry device
connected to RIM's enterprise server software, which brings the total
award to $147.2 million. The verdict only covers U.S. sales through trial,
Thakur said, and not future or foreign damages.
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