Private Equity Track

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1 9 T H T H J U L Y Private Equity Track R e s e a r c h 4 I n d i a W e e k l y u p d a t e o n t h e I n d i a n P E S e c t o r PE Activity for the week During the week ended 15th July, 2012, there were 5 PE/VC deals worth $66.5mn compared to 8 deals worth $4.1mn (size of 6 deals were not disclosed), in the previous week Out of the total, 2 were growth stage deals, 2 were PIPE deals and one was early stage deal. In the largest deal during the week, Carlyle bought a 9.96% stake in the Hyderabad-based IT firm Infotech Enterprises in the open market for a total of Rs 2.1bn ($38mn) th July' th July' PE Investments No. of Deals PE Deals During The week Investor (s) Target Stake (%) Value ($mn) Stage Sector Industry Segment Carlyle Infotech Enterprises PIPE Services IT/ITeS Software & services Fidelity Growth Partners, Qualcomm Ventures, NVP, Catamaran Big Shoe Bazaar NA 18.0 Growth Services Retail Internet Retail SAIF Partners Blue Star PIPE Manufacturing FMCG AC Jungle Ventures, others Mobikon Asia Pte Ltd NA 1.7 Early Services Media & Entertain ment Digital marketing Evolvence India Life Sciences Fund Dr. Agarwal's Healthcare NA NA Growth Services Health Services Hospitals Source: Four-S PE Database Research4India is the research services arm of Four-S Services Pvt Ltd. Here we provide regular research reports on key sectors of the Indian economy, and large unlisted companies in these sectors. For subscription / custom queries, please contact Seema Shukla at seema@four-s.com.

2 Carlyle buys 10% stake in Infotech Enterprises US-based private equity firm Carlyle on Wednesday bought a 9.96% stake in the Hyderabad-based IT firm Infotech Enterprises in the open market at a price of Rs 190 a share, spending a total of Rs 2.1bn ($38mn). Three institutional investors - Kotak India Fund, American Funds Insurance and Small Cap World Funds - were the key sellers of the holding acquired by Carlyle. Infotech Enterprises is a global engineering services company which provides engineering solutions, including product development and life-cycle support, process, network and content engineering to major organizations worldwide and is headquartered in Hyderabad. Other major stakeholders in the company holding more than 10% include Carrier International Mauritius and GA Global Investments. Four-S Comment: Private investment in public equity (PIPE) is emerging as a hot spot for PE investors. For PE investors, PIPEs tend to become increasingly attractive in markets where control investments are harder to execute. And India has always been one such market characterized by growth investments of smaller size for minority stakes. It is more advantageous for a PE fund in India to have a relatively liquid minority position in listed companies than in unlisted companies. Moreover, investors are finding listed companies at increasingly attractive valuations relative to unlisted firms. In addition, such investments provide greater liquidity and easier exit options, which attract investors interest, especially in a market where traditional options of exit, especially IPO market, has almost dried up. In India, PIPE investments more than doubled in 2011 to $1.5 billion in 55 deals compared to $631 million in 30 deals a year earlier (Four-S Research). Big Shoe Bazaar raises $18mn in Series C funding Online wholesale cash and carry company Big Shoe Bazaar India Pvt. Ltd, the brand owner of Yebhi.com, has raised Rs 1bn ($18mn) in Series C funding, led by Fidelity Growth Partners India and Qualcomm Ventures. Existing investors Nexus Venture Partners and Catamaran also participated in the round. Yebhi.com is an e- com site offering products across categories like home, lifestyle & fashion and electronics. In 2010, the company had received Rs 100mn in Series A funding from Nexus Venture Partners. This was followed by a second round of funding of Rs 400mn last year, led by Catamaran Ventures. Four-S Comment: Big Shoe Bazaar is planning a huge push into the mobile commerce space and is set to create some unique M-commerce platforms over the next 6 months. Online shopping is set to receive further boost with the rapid rise of smartphones, tablets and social media networks will greatly influence the way people engage in online shopping. India's current mobile subscriber base stands at 700mn subscribers and has been on a rapid growth. SAIF Partners buys additional stake in Blue Star SAIF Partners has bought 25 lakh shares of Blue Star Limited at a price of Rs 190 per share representing an investment of Rs 475mn ($8.8mn) in the company and raising its stake from 1.39% to 4.17%, an additional 2.78% stake purchase. A major seller in the stock was HDFC Standard Life Insurance Company. The PE firm had invested Rs 170mn in Blue Star earlier in June this year. Blue Star is a central air-conditioning company with an annual turnover of Rs 27bn, a network of 29 offices, 7 modern manufacturing facilities, over 1,600 dealers and around 2,800 employees. The company was planning last year to add one more unit to its existing 5 manufacturing units, with an investment of Rs mn by this year. Mobikon raises $1.7mn from Jungle Ventures, others Mobikon Asia Pte Ltd, a digital marketing startup located in India and Singapore, has raised $1.7mn in a Series A round led by Research4India 2

3 Singapore-based Jungle Ventures. Angel investors including Ravi Mantha, a member of the board of trustees at The Indus Entrepreneurs (TiE), and others also took part in the round. The funds will be used for expansion in India and across South-east Asia. The company is opening new offices in Bangalore, Mumbai and Delhi, as well as in Thailand, Indonesia and Australia. Jungle Ventures is a venture capital firm in Singapore that provides early-stage investments and business-building infrastructure to startups across the Asia Pacific. The firm focuses on early-stage funding across Singapore, India and the South-east Asia. Evolvence Life Sciences invests in Dr. Agarwal's Healthcare Life Sciences-focused private equity fund EILSF (Evolvence India Life Sciences Fund) has acquired a minority stake in Chennai-based Dr. Agarwal's Healthcare, its second investment in the healthcare services segment. Dr. Agarwal's Eye Hospital is a comprehensive eye hospital, offering one stop solution for eye ailments. Fund Raising & Liquidity Events Bain raises $2.3bn for second Asia fund Bain Capital has completed fundraising for its second Asia fund, closing at $2.3bn. Bain is offering investors three options on the fees it charges to manage the money they invest from its latest global fund, and the concept was first tested on its second Asia fund. Bain offered Bain Capital Asia Fund II investors the option of either a 2% management fee and a 20% carried interest with a 7% hurdle rate, or 1% management fee and 30% carried interest with a 10% hurdle rate. Bain's first Asian fund raised $1bn but the firm has invested $4.4bn in total so far in the Asian region. SAIF Partners floats $18mn restaurant investment vehicle SAIF Partners (which invested in Mainland China in 2007 and made a killing on their investment during their IPO a month ago) has announced a Rs 1bn investment vehicle focused on investing and managing a number of quick service and casual dining restaurant chains. Quadria Capital to raise healthcare fund Quadria Capital and Investment Management is planning to raise $300mn healthcare fund. Religare Global Asset Management has committed to invest $15-20mn and become the anchor investor in the fund. The plan is to raise one third of the funds in next 5 months and the rest by end of 2013 from investors ranging from FIIs, fund of funds and HNIs. Quadria Capital Investment Management is an Asian healthcare PE fund with offices in New Delhi and Singapore. Its target investments include midsized healthcare companies with half the funds deployed in India and the rest in South and Southeast Asia. Private Equity News Karbonn Mobile to raise PE investment Karbonn Mobile is planning to raise Rs 10bn by diluting 15-20% stake to PE investors. It is planning to set up a manufacturing plant and acquiring a Korean R&D firm. Karbonn Mobiles will invest Rs 6bn in the mobile device manufacturing plant in Chennai over , for which land has been acquired. The balance of Rs 4bn will be used in acquiring the R&D centre based out of Korea, for which duediligence was going on. As of now, all of Karbonn s handsets, like for most domestic players, are imported largely from China and Taiwan while the designing is done in India. Alliance Dental to raise funds for expansion Alliance Dental Care is planning to raise Rs 300mn through PE route. The funds will be utilized for expansion of the dental-care chain. The company is in talk with two domestic PE players which are interested in healthcare space. Alliance Dental Care, a subsidiary of Alliance Medicorp, is engaged in the business of running dental clinics. Alliance Medicorp is a JV between Apollo Hospital and medical technology company-trivitron Healthcare. Currently, Apollo Hospital holds around 70% stake and Trivitron Research4India 3

4 Healthcare holds the rest. This February, Alliance Dental rebranded its dental care business to 'White Dental Care'. Omshakthy planning to raise PE funds for new projects Omshakthy Agencies (Madras) Pvt Ltd. is planning to raise Rs 1.5bn through PE investments for its proposed project at Tirumudivakkam near Chennai. The fund raised would comprise half the amount of initial investment of Rs 3bn. The company had entered into a 50:50 JV last year in Oct. with Fire Capital to develop residential projects and townships in and around Chennai named Omshakthy FIRE Realty Pvt. Ltd. The company has acquired more than 4,000 acres of land since its inception in 1991, and currently has a land bank of around 250 acre distributed across various locations. Blackstone to acquire Embassy Property's office portfolio Blackstone Group is set to acquire 36% stake in the tenanted office space portfolio of Embassy Property Developments Limited for $230mn. Embassy would be demerging the FDI complaint office buildings in which the PE firm will acquire a significant minority stake. The transaction values Embassy's new holding company for office buildings at $900mn after rolling over Blackstone's earlier investment in one of the projects. Embassy had shelved a $500mn IPO last year on account of sluggish stock market. It had entered into a Rs 56bn JV with MK Land Holding, a Malysian realty company and had set a Rs 60bn capex for new projects in next 3 years in November IPO, Other Offerings SKS Microfinance opens QIP SKS Microfinance Ltd is raising Rs 335.5mn through a preferential allotment to a fund managed by the existing investor WestBridge Capital Partners. SKS Microfinance, which is also mobilising funds through a qualified institutional placement, has sold 4.45 million shares or 5.7% stake. SKS Microfinance opened a QIP on July 12 at a share price of Rs The deal would increase the stake held by WestBridge in SKS Microfinance to approximately 12.5%, making it one of the largest shareholders in the company. Avantha Power revives plan to raise Rs 10-15bn through IPO Avantha Power and Infrastructure is planning to revive plans to hit the capital market with an initial public offer (IPO) to raise Rs 10-15bn, after having failed in its first attempt about two years ago. Avantha Power & Infrastructure has 191 MW of operational thermal power capacity, 2,460 MW of generating capacity under various stages of implementation and 1,320 MW of generating capacity under planning. Global private equity giant KKR has invested in the company. Avantha Power had filed draft IPO documents with SEBI way back in March 2010 and the regulator gave its go-ahead a few months later in August that year for the public offer. While the company had firmed up its plans to hit the market in October, adverse market conditions forced it to postpone the IPO. Fitch assigns grade 4 to Rashtriya Ispat Nigam IPO Fitch Ratings has assigned 'Fitch 4(ind)' grade to Rashtriya Ispat Nigam Ltd's proposed Initial Public Offering out of a maximum of 'Fitch 5(ind)'. The grade indicates above-average fundamentals of the issue relative to other listed equity securities in India. The grading reflects RINL's position as one of India's largest producers of long product steel, the favourable medium-to-long-term demand outlook for its products - driven by increasing infrastructure spend and a healthy balance sheet. The company was conferred 'Navratna' status by GoI in November, 2010, which provides a certain degree of operational and financial autonomy. Research4India 4

5 M&A Activity for the Week During the week ended 15th July, 2012, there were 11 M&A deals worth $258.1mn (size of 6 deals were not known). In the largest deal during the week, Sutherland Global Services is acquiring Apollo Health Street, a health care BPO arm of Apollo Hospitals for Rs 8.75bn ($157mn). Acquiror Target Sector Source: Four-S PE Database Stake (%) Deal value ($ mn) Sutherland Global Services Apollo Health Street IT/ITeS Tube Investments of India Shanthi Gears Manufacturing NA 52.5 CHD Developers Empire Realtech Real estate NA 18.0 Providence Educational Academy Myra Mall Management Company Real estate Adcock Ingram Healthcare Cosme Farma Laboratories - some assets Healthcare NA 12.7 KPIT Sankalp Semiconductor Private IT/ITeS NA NA Parker Hannifin Corporation John Fowler (India) - filtration biz Manufacturing NA NA Solving Efeso Q-Spread IT/ITeS NA NA InMobi MMTG Labs Media & Entertainment 100 NA Genpact Triumph Engineering IT/ITeS NA NA Tamco Switchgear Henikwon Corporation Manufacturing NA NA Market Update Key Domestic Indices Indian Market Movements 52 Week Index 6-Jul Jul-12 Change (%) High Low BSE Sensex 17, , % 19, , S&P CNX Nifty 5, , % 5, , CNX Nifty Junior 10, , % 11, , Nifty Mid Cap 50 2, , % 2, , CNX IT 6, , % 6, , Bank Nifty 10, , % 11, , CNX Infrastructure 2, , % 3, , CNX Realty % Key Global Indices Global Market Movements 52 Week Index 6-Jul Jul-12 Change (%) High Low NASDAQ 2, , % 3, , Dow Jones Industrial Average 12, , % 13, , S&P 500 1, , % 1, , NIKKEI 225 8, , % 10, , Hang Seng 19, , % 22, , Straits Times Index 2, , % 3, , FTSE 100 5, , % 6, , Source: Google Finance, Yahoo finance Research4India 5

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7 About Research4India Research4India is the research services arm of Four-S Services Pvt Ltd. Here we provide regular research reports on key sectors of the Indian economy, and large unlisted companies in these sectors. These reports will be available on our upcoming site as well as from leading international research sellers like Thomson Reuters, Bloomberg, Research and Markets, CapitalIQ etc. Disclaimer The information contained herein has been obtained from sources believed to be reliable but is not necessarily complete and its accuracy cannot be guaranteed. No representation, warranty, guarantee or undertaking, express or implied, is made as to the fairness, accuracy or completeness of any information, projections or opinions contained in this document or upon which any such projections or opinions have been based. Four-S Services Pvt. Ltd. will not accept any liability whatsoever, with respect to the use of this document or its contents. This document has been distributed for information purposes only and does not constitute or form part of any offer or solicitation of any offer to buy or sell any securities. This document shall not form the basis of and should not be relied upon in connection with any contract or commitment whatsoever. This document is not to be reported or copied or made available to others. The company may from time to time solicit from, or perform consulting or other services for, any company mentioned in this document. For further details/clarifications please contact: Seema Shukla Gurgaon Office: 214, Udyog Vihar, Phase I, Gurgaon Tel: Ajay Jindal Mumbai Office: 101,Nirman Kendra, Opposite Star TV, Off Dr E Moses Road, Mahalaxmi, Mumbai Tel: Research4India 7