Sunday, September 28, 2008

Morgan Stanley deal values Biotor ahead of Roshini

Alternate Energy space is sizzling hot amidst falling markets world over. In one of the recent deals, Morgan Stanley has reportedly picked up close to 30% stake in a Mumbai based cleantech firm. The company, Biotor Industries received INR2.4bn (US$53m) from the private equity arm of Morgan Stanley. The investment is in the form of equity and compulsorily convertible preference shares amounting to 30.4% of the post issue paid up capital of the firm.

Biotor makes castor oil based products and has fully owned subsidiaries in US and Germany for marketing and distribution. It also has a contract manufacturing subsidiary and plans to set up a manufacturing unit in Gujarat.

Total valuation of the firm after the deal is pegged at INR7.9bn (US$175m), ahead of Hyderabad based Roshini Biotech which was valued at INR6.8bn based on a second round investment from Goldman Sachs. While Roshini has long term plans of going public in 2011, AE biofuel’s Indian subsidiary Universal biofuels is in talks with private equity players to raise around INR2bn (US$44.3m) in a pre IPO deal. The company owns a 50 million gallon per year biodiesel facility on the east coast of India, and is planning a 75 million gallon per year biodiesel facility in Argentina.

Thursday, September 25, 2008

Capital flight: Banks clamouring for liquidity

US fed has more work to finish after the recent investment bank meltdown. A lot has already been said and written about what should have been done and what not, but as humans, financial institutions are prone to mistakes. So, the big daddy bails out AIG and other blue-chips banks going for a song is a ritual performed every 15-20 years or so. Though the price is a little too much this time, but that’s ok given the regulator’s high level of tolerance.
Anyway, the latest to add in the list is the amount of liquidity required in the system. After the mayhem, banks are being inundated with lines of credit requests. These are the agreements the banks entered into when the grass was green and the meadows were lush. Again, no wonder the banks went on a spree and committed US$1.4 trillion in such arrangements. These are the short term loans for working capital, but the sheer size of the amount required is enough to make your eyes go round.

The rush for short term credit is another drag on the balance sheets of the banks, which are already stretched after the recent crisis after swallowing US$521bn of write downs and losses. Citigroup is leading the pack with US$471bn in such agreements, while Bank of America and JPMorgan each have short term line of credit commitments amounting to US$388bn and US$255bn respectively.

And the companies are flocking to improve their liquidity positions. General Motors plans to make use of the remaining US$3.5bn revolving line of credit to cover its restructuring costs. International Lease Finance Corporation has also tapped Citigroup and other banks for its US$2.5bn syndicated credit loan.