Thursday, July 17, 2008

SpiceJet gets US$80m from Wilbur Ross

Indian low cost carrier (LCC) SpiceJet has secured INR3.45bn (US$80m) in investments from PE firm Wilbur Ross & Co. The company is India’s second largest budget carrier with a fleet of 17 Boeing B737 planes and 10% market share. Financial details of the deal were not disclosed but the stake is likely to be limited at 15% as any transaction involving more than 15% will trigger an open offer.

The airline was in talks with Vijay Mallya’s Kingfisher Airlines which closed the negotiations citing steep valuation for the budget airline. But industry experts report that management control may be the actual reason behind the failure. Vijay Mallya has already secured the leading position in low cost model after taking control of Deccan Aviation and reasonably enough, wasn’t ready to shell out extra cash for another ‘strategic investment’. SpiceJet owners, Kansagra family and Dubai based Istithmar, on the other side were not prepared to lose management control.
Apparently, cutting a deal with Wilbur Ross was the preferred move for SpiceJet. With Wilbur Ross on board, the company must be more cautious though. Ross has made a reputation as a turnaround king for distressed industries. In the process he is often ruthless with the purchased entities and their management.

About Wilbur Ross: Ross entered the steel industry in 2002
and sewed up five deals within three years, investing US$2.2bn in the ailing steel plants of LTV and Bethlehem among others. In less than three years, Wilbur Ross sold his steel portfolio to LN Mittal pocketing US$4.5bn. Since then, he has turned focus on automotive components industry. In the recent times, the vulture (As New York Post calls him) has acquired a clutch of auto parts firms including Collins & Aikman, Oxford etc and formed a JV with interior specialist Lear Corporation.

Thursday, July 3, 2008

Amtek Auto: ChrysCap picks up 7%

Private Equity (PE) firm ChrysCapital has acquired 7% stake in India’s leading auto ancillary company Amtek Auto. The investment is in the form of P-Note holding. ChrysCapital has mopped up over 9.3m shares through six bulk deals transacted at different prices on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

Apart from ChrysCapital, Amtek Auto has many other foreign investors on the board including Warburg Pincus, Citigroup, Swiss Finance Corporation and Oppenheimer Funds.

Amtek Auto is on a global investment drive, both organic and inorganic. The Gurgaon based company recently acquired UK-based gear company, Triplex Ketlon. Now, Amtek is leading the race for a controlling stake in German castings company KSM Castings for around EUR250m (around INR17bn). If the deal is successful, it will be one of the largest acquisitions by an Indian company in the automotive forging category. The proposed acquisition will consolidate its business in the mature western European market, where Amtek already enjoys 40% market share.

Wednesday, July 2, 2008

Private Equity: Goldman Sachs to invest in Roshini Biotech

Goldman Sachs is reportedly picking up a minority stake in Hyderabad based bio-diesel company Roshini Biotech. It is learnt that Goldman Sachs is picking up a 25% stake in the company for INR1.7bn. The price being paid pegs the valuation of the plantation company at INR6.8bn.

The company says that the investment will be used to expand its overseas operations. It is planning to expand its overseas operations and enter countries such as Uganda, Sri Lanka and Indonesia amongst others. Roshini Biotech has already won 25,000 acres of land from the Ugandan government to cultivate pongamia seeds.

Roshini Biotech is a bio-fuel company engaged in the bio-energy value chain. It has the world’s largest plantation of non-edible feedstock with more than 40 million trees and seedlings. Pongamia Pinnata, in which the company deals, is a non-edible and drought resistant tree with high yields of crude oil that recaptures rapidly -growing greenhouse gas emissions and generates income to poor farmers and rural communities.

This is the second round of PE funding for the company. Last year an investment and strategic advisory company focused on Chinese and Indian markets, Origo Sino-India Plc picked up 20% equity stake in Roshni Biotech. The company plans to go public in 2011.