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BIGGEST PE DEALS
Golden handshakes
Get savvy about the biggest private equity deals over the last year, the biggest dealmakers and what Venture Capitalists look for when zeroing in on potential start-ups! Also in this package, meet the stalwarts at Saif Partners and Bessemer Venture Partners to get a grip on their India strategy. Plus, columns by entrepreneurs who made it big with timely PE investments...
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 Investee: HDFC
Investor: Carlyle Group
Investment Value: $650 mn
Says Tejinder Singh, Analyst, Arihant Capital Markets, “The rationale for the deal is primarily the Indian growth story, which HDFC has successfully reflected. Carlyle Group has shown much interest in the housing finance domain, a niche area; thanks to the surge in disposable income of Indians. Its interest in this domain is also highlighted by the fact that it has picked up a significant stake in Repco Home Finance for a cool $27.7 million. For the purpose of growing, expanding and even maintaining its position in the market, a lot of capital will be needed and thus the association will be a long term one. Though they have no clear categorisation, it is the overall industry opportunity that guides their investment in India. Be it Repco or HDFC, it goes on to prove that investments being made by Carlyle in this segment are long term in nature. Besides capital, PE firms also bring with them international expertise in terms of technology and management, besides closely monitoring management developments.”
The deal between Indian mortgage major Housing Development and Finance Corporation (HDFC) and the New York headquartered PE giant Carlyle Group set a new record for PE transactions in India. Following the foot steps of ICICI Bank, HDFC struck a deal valued at Rs.26.38 billion (Rs.1,730 per share), which gave Carlyle Group a 5.6% stake in HDFC. The deal was a part of the larger vision of HDFC to raise Rs.31.14 billion by selling 18 million shares. The investment for its first Indian deal was made from Carlyle’s large cap fund (Asia Partners II). HDFC has plans to use a part of the proceeds to maintain its 23% stake in its subsidiary HDFC Bank. A part of the proceeds will be further used to fund growth in HDFC’s insurance (which needs over Rs.6 billion every year) and mortgage businesses.
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 Investee: RCOM Ltd.’s arm
Investor: Fortress Capital, HSBC, et al
Investment Value: $337.5 mn
According to Anil Dhirubhai Ambani, Chairman, RCOM, “We are excited about the tremendous growth potential in the Indian telecom infrastructure business. Our strategy to create a separate company for infrastructure businesses has resulted in tremendous unlocking of value for over two million RCOM shareholders. RTIL, as an independent telecom infrastructure provider, has significant growth potential and is on track to become the leading player in India. RTIL will be listed in the future and provide investors another attractive opportunity to participate in India’s incredible telecom growth.” RTIL has already filed the draft Red Herring prospectus with SEBI and would hit the capital market soon to raise an expected Rs.6,000 crores from the public.
Reliance Telecom Infrastructure Limited (RTIL), the hived-off tower business subsidiary of Reliance Communication (RCOM), shelled out 5% of its stake to seven investors – Fortress Capital, George Soros, Galleon, GLG Capital, HSBC, DA Capital and Newsilk – for Rs.14 billion in July last year. The deal put the valuation of its tower business at about Rs.270 billion. The Anil Ambani owned RCOM is one of the first telecom companies in India to separate its tower business. RTIL builds, owns and operates communications towers and related assets under long term contracts. The company intends to invest Rs.46.23 billion in setting up 16,000 towers by 2009.
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