Four-S Private Equity Track

Issue: 16th January 22nd January, 2 012

Your Eye to Indian Private Equity

281.2
16 14 12 10

PE activity for the week

During the week ended 22 January, 2012, there were 10 PE/VC deals worth $281.2mn compared to 5 deals worth $135.2mn in the previous week. Out of the total, there were 3 deals at growth stage, 3 deals at early stage and one deal each at late, project and PIPE stage. The largest transaction during the week was by Temasek Holdings picking up 4.9% in Godrej Consumer Products Ltd. for $135mn.
nd

280.0 240.0 200.0 160.0 120.0 80.0 40.0 0.0

135.2

10

8 6 4 2 0

5
15th January'12
PE Investments

22nd January'12
No. of Deals

Private Equity: Investment Summary during the week

Investor (s) Temasek Holdings Olympus Capital IL&FS PE Sequoia Capital Acumen Fund Songs Investments New Silk Route Songs Investments Nalanda Capital Seedfund Target Godrej Consumer Products DM Healthcare Indiabulls Infraestate Knowlarity Communications GUARDIAN SV Agro Processing Varsity Education Be Well Hospitals Ratnamani Metals Handspick.com Stake (%) 4.9 NA 9.4 NA NA NA NA NA NA NA Value ($mn) 135.0 100.0 38.5 6.6 1.1 NA NA NA NA NA Sector Manufacturing Services Construction Services Services Services Services Services Manufacturing Services Industry Personal Product Health Services Real Estates Telecom BFSI Misc. Services Education Health Services Metals Retail Segment FMCG Health Services Real Estates Telecommunication Services Microfinance Agri SCM Education services Health Services Ferrous Metal Online Retail Stage Late Growth Project Early Early Growth Growth Growth PIPE Early

Source: Four-S PE Database

Temasek Holdings Consumers

buys

4.9%

into

Godrej

Singapores sovereign wealth fund Temasek Holding is buying 4.9% stake in consumer products firm Godrej Consumer Products Ltd for Rs 6.85bn ($135mn). The fresh

capital infusion would help Godrej Consumer finance its aggressive inorganic strategy, wherein it has acquired 7 companies across the world since 2010 and consolidated its holding in 2 JVs. Four-S Comment: For Temasek, the transaction is significant considering it is first after the leadership change at
Indian Private Equity Weekly Update 16th January 22nd January, 2 012

Temasek. Manish Kejriwal, who was heading India office since 2004, left in late 2011 to start his own PE firm, making way to Rohit Sipahimalani, who joined from Morgan Stanley. Also, the deal is Temaseks first big investment since 2010, when it invested $200mn in GMR Energy Ltd. The PE fund spent 2011 in picking up small equity stakes in public listed companies e.g. Max India and Jain Irrigation through open market transactions. Temaseks other portfolio companies in India include ICICI Bank, Tata Sky, Bharti Airtel and its tower arm Bharti Infratel.

Four-S Comment: With the capital infusion, the company will be able to kick start its development on land parcels it bought from National Textile Corp. Ltd, a governmentcontrolled firm owning large tracts of land across India comprising defunct textile mills. The company also acquired another tract of land close to Bharat Textile Mills, which belonged to Poddar Mills. The firm is now planning to develop the 2 pieces of land as a gated residential project including IT office space.

Olympus Asia invest $100mn in DM Healthcare

Olympus Capital Asia Investments Ltd has invested $100mn in Kochi based healthcare chain DM Healthcare Ltd for a significant minority stake. The transaction is a combination of Olympus Capitals primary investment into DM Healthcare for the growth and expansion of the company in India and secondary purchase of a portion of India Value Funds shareholding in the company. India Value Fund had originally invested around $50mn in DM Healthcare four years ago for a 22% stake. With the fund raised, DM Hospital will set up greenfield projects and partner with smaller hospitals across other tier 2 and tier 3 cities in India. It targets to have close to 3,000 beds by 2015 from 900 at present. Four-S Comment: The transaction happens to be a single largest independent deal in Indian healthcare sector (in rupees terms). Although Apax Partners had invested around a similar amount in Apollo Hospitals 5 years ago, but then the Indian currency was much stronger against the US dollar. The Apax-Apollo deal was for $104mn or around Rs 4.25bn back then. The latest deal value is around Rs 5.1bn.

Sequoia Capital invests $6.6mn in Knowlarity Communications Ltd.

Gurgaon-based Cloud telephony start-up Knowlarity Communications Ltd. has received Rs 340mn ($6.6mn) from Sequoia Capital. Knowlarity plans to use the funding to strengthen its R&D activities and expand marketing operations. After establishing its presence in India and Indonesia, Knowlarity is now planning to extend its solutions and services to other international markets. Four-S Comment: Cloud telephony-based services in India are at an early stage and poised for healthy growth given the demand amidst telecom players looking for pan-India presence. At present, cloud telephony services market is growing 25% CAGR and is expected to grow at the same pace over the next 3-4 years. Besides, the company is growing fast to keep pace with the growing demand. Today, its catering to larger enterprises, through its hosted IVR solutions integrated with its existing IT systems. Knowlarity has also serviced social projects such as m-Governance for the Mid-Day Meal scheme.

Acumen Fund invests $1mn in GUARDIAN

Social VC investor Acumen Fund has invested $1mn (Rs 52mn) in GUARDIAN (Gramalaya Urban and Rural Development Initiatives and Network), a Tamil Nadu-based microfinance institution focusing on lending to communities who lack access to water and sanitation facilities. The fund raised would be used by GUARDIAN to build its portfolio and transition from a partially grant-funded NGO to a fully self-sustaining microfinance institution (MFI). In addition, the capital raised would be utilized to scale up potentially

IL&FS takes 9.4% in Indiabulls real estate project

The real estate fund of IL&FS Private Equity has invested Rs 2bn (~$38.5mn) to buy 9.36% stake in Indiabulls Infraestate Ltd, a 100% SPV floated by Indiabulls Real Estate Ltd to develop a realty project on a 8.39 acre parcel of land in Lower Parel Mumbai, earlier occupied by Bharat Textile Mills. Further details of the projects were not known.

Indian Private Equity Weekly Update 16th January 22nd January, 2 012

path-breaking models for expanding water and sanitation facilities across poor communities. Four-S Comment: Acumen Fund is a VC firm specializing in growth investments in water, healthcare, energy, agro, cleantech and housing segments, and prefers to invest in India, Pakistan, South Africa, East Africa (focus on Kenya) and West Africa. The firm typically invests between $0.32mn with exit period ranging from 5-7 years. Its India its portfolio include Kochi-based ayurvedic chain Ayur Vaid Hospitals, Hyderabad-based LifeSpring Hospitals, Mumbaibased ambulance start-up service Dial 1298 For Ambulance and Drishtee, a rural communications company.

Varsity Education offers varied education services including curriculum development, teacher recruitment & training and facilities management, and has a 10,000 employee base. The company claims to have served over 300,000 students across Karnataka, Andhra Pradesh, Maharashtra and Tamil Nadu. Four-S Comment: In recent times, education has been one of the top priority sectors for New Silk Route. Prior to this deal, New Silk Route invested in Beaconhouse School System, one of the worlds largest K-12 chains catering to over 200,000 students. In January 2011, it had also invested up to $25mn in Hyderabad-based Sri Chaitanya Educational Group.

Song Investments backs 2 portfolio firms

PE firm Song Investment Advisors Ltd. has invested in 2 new companies: secondary care hospital chain Be Well Hospitals and potato supply chain management company SV Agro Processing. Both companies would utilize the capital infusion for growth purposes. Be Well Hospitals is a chain of secondary care medical facilities targeted at tier II and tier III cities, as well as metro suburbs. SV Agro Processing is an end-to-end potato supply chain management company handling everything from input selling, contract farming to infrastructure facilitation and logistics to ensure product delivery to processors and retail clients. Four-S Comment: Songs Investment Advisors Ltd. is an early and growth stage investment firm based out of Hyderabad managing $17mn of capital. The fund is backed by search giant Google Inc., Soros Economic Development Fund and Omidyar Network. It typically invests between Rs 5-200mn in a firm over the life of the investment. So far, it has invested in K12 Techno Services Ltd, which manages over 60 schools run by 15 different trusts under the Gowtham Model School.

Nalanda Capital raises stake in Ratnamani Metals

Nalanda Capital, a Singapore-based PE firm focused on secondary market transactions has increased its holding in Ratnamani Metals and Tubes Ltd to 10.47%. The firm manufactures high frequency welded & submerged arc welded (SAW) carbon steel pipes, seamless tubes & pipes, welded tubes & pipes and electric fusion welded stainless steel pipes. The company has manufacturing plants at Mehsana (Gandhinagar) and Kutch district of Gujarat. Four-S Comment: Nalanda Capital, which has $875mn under management across 2 funds, appears to be looking to bring down the average cost of share acquisition in its portfolio firms as stock market valuations have tanked to near 2 year low. The company originally picked up stake in Ratnamani Metals in early 2010 and has been slowly increasing its exposure in the firm ever since. Last week it picked up additional stake in another portfolio company, Great Eastern Shipping Company.

Seedfund invests in online e-commerce portal HandsPick.com

Seedfund, an early-stage VC fund has invested an undisclosed sum to acquire a significant minority stake in HandsPick.com, a fashion apparel and accessories ecommerce brand owned by Delhi-based start-up Intuitent Online Venture Ltd. The capital raised would be used for

New Silk Route invests in Varsity Education

New Silk Route Partners, an Asia-focused private equity and growth capital firm, has acquired a significant minority stake in Hyderabad-based education support services provider Varsity Education Management Ltd for an undisclosed sum.

Indian Private Equity Weekly Update 16th January 22nd January, 2 012

design, manufacturing, sourcing, brand creation, logistics and customer satisfaction assurance. HandsPick, at present, has over 60 brands online, including Lee, Puma, Spykar and Wrangler, among others. Members can also place orders over the phone and opt for trials before the actual purchase. HandsPick has a 30-day return policy and backs a mandatory cash-on-delivery payment mode.

India Equity Partners raising $500mn for second fund

Mid-market focused PE firm, India Equity Partners (IEP) is planning to raise its second private equity fund targeted at $500mn and has already received commitments for around $130mn from a group of more than 50 investors. At present, IEP is investing out of its first fund worth $350mn. It has been chasing investments in sectors like consumer products, food services, healthcare, education and consumer finance, as well as logistics and utility services. For the second fund, IEP is expected to focus on its existing strategy.

Fund Raising & Liquidity Events

Magnetar to raise $100mn Cleantech Fund Red Fort raises $500mn for its second realty fund
Delhi based real estate focused PE firm Red Fort Capital has raised $500mn from overseas investors for its second real estate fund focused on residential properties. With the fund closure, Red Fort Capital has around $900mn under management, making it one of the largest independent private equity real estate investment specialists in India. Of the $500mn corpus, around $400mn had been raised by the fund and another $100mn has been raised via coinvestment pools. What may have also attracted investors to Red Fort is its track record. In March 2011, Red Fort said that it had returned over $100mn to investors since 2009 as its fund I portfolio reached the harvesting stage. SEBI registered Magnetar Venture Ltd plans to launch a $100mn fund focused on clean technologies by March 2012 to funnel growth capital into budding enterprises. To start the proceedings, it will raise $20mn in its first phase. As an investment strategy, Magnetar will look to invest in staterun firms working in the field or their units.

Private Equity and M&A News New Silk Route to invest $300mn in India
Asia-focused PE firm New Silk Route (NSR), is looking to invest as much as $300mn (~Rs 15.51bn) this year, primarily in medical devices firms and restaurant chains. Besides, NSR is looking to raise capital for Ascend Telecom Infrastructure Ltd, a telecom infrastructure company controlled by it. Ascend recently merged its telecom tower business with that of India Telecom Infra Ltd. The merged entity has nearly 3,700 towers and needs funds to scale up operations.

StanChart IL&FS Infra fund partially exit IL&FS Transportation

Standard Chartered IL&FS Asia Infrastructure Growth Fund has made a partial exit from IL&FS Transportation Networks Ltd by selling 1.25% stake for a little over Rs 400mn. The stake sale has been done at a profit of 25% or 1.25x. The fund still holds over 3% stake in IL&FS Transportation. Standard Chartered IL&FS Asia Infrastructure Growth Fund acquired the stake in March 2008 at Rs 133 per share while the stake sale has been done at Rs 166 a unit.

Prestige Construction may raise Rs 18bn through a stake sale in Bangalore SEZ
A slew of global PE players have envinced interest in buying out Cessna Business Park, a 4.5mn sq ft SEZ being developed by Bangalore based Prestige Construction Ltd. for a Rs 18bn. The project is one of Prestiges landmark commercial space developments in the city, strategically

Indian Private Equity Weekly Update 16th January 22nd January, 2 012

located on Sarjapur-Marathalli outer ring road and already house marquee technology majors like Cisco as its clients. If Prestige decides to go ahead with the sale, it will be the second major such deal after global private major Blackstone picked up a significant stake in another tech park developed by the Embassy Group for $200mn in 2011.

NMCE in talks with PE players to raise Rs 300350mn

National Multi-Commodity Exchange of India (NMCE), 4th largest exchange domestically, is in talks with 5 private equity investors and banks to raise Rs. 300-350mn to comply with minimum capital rule. Forward Markets Commission, the commodity futures regulator, has asked commodity exchanges with 5 years of operations to have a minimum equity capital of Rs. 1bn by 31 March this year.

Clearwater makes open offer for 20% stake in Kamat Hotels

PE firm Clearwater Capital Partners is all set to make an open offer to acquire another 20% in hospitality chain Kamat Hotels Ltd, after it exercised a right to convert 5,966 foreign currency convertible bonds into equity. It was allocated 1.95mn shares in Kamat Hotels (India) Ltd at Rs. 135 apiece. Post allotment, Clearwater and its associates hold 32.23% of the total shareholding of Kamat Hotels. Kamat Hotels issued FCCBs worth $18mn to Clearwater last year. The PE firm exercised some of those bonds the same year at Rs. 135 apiece to hold a 24.5% share in Kamat Hotels.

Australia firm forms JV with PE firm

Australia-based Water Resources Group Ltd (WRG) has entered into a JV with Mandala Water Ltd, a 100% subsidiary of global PE fund Mandala Capital AG Fund Ltd. The JV will use Water Resources Groups products and technologies in India, Pakistan, Sri Lanka and Bangladesh. Water Resources Group will own 49% in the JV, which will allow it to tap the growing South Asia desalination market for both industrial and municipal applications. The JV will also look to develop new markets in seed & food preservation and food logistics.

TVS Logistics in talks for PE funds

Chennai-based TVS Logistics Services Ltd is in talks with PE firms including global PE giants KKR and Temasek for a second round of funding roughly estimated at $50mn. The firm plans to use the funds to achieve scale which would enable the firm raise capital from the primary markets. Besides, the company is looking to expand its footprint in the domestic market and globally which might inlclude expansion in Southeast Asia, Turkey and South Africa.

BCCL eyes majority stake in Neo Sports, Neo Cricket

Bennett, Coleman and Co Ltd (BCCL), part of the Times Group, has joined the race to pick up a majority stake in the 2 sports channels of Nimbus Communications namely, Neo Cricket and Neo Sports. Both the channels are housed under Neo Sports Broadcast Ltd, a subsidiary of Nimbus. Times Group has also shown preliminary interest in buying out the Hyderabad-based Associated Broadcasting Company.

M&A Activities
During the week ended 22nd January, 2012, there were 8 M&A deals worth $336mn (size of 6 deals were not known). In the largest transaction during the week, Japan based life insurance major, Nippon Life Insurance announced picking up 26.0% in Reliance Capital Assets Management for $290mn.

Indian Private Equity Weekly Update 16th January 22nd January, 2 012

M&A Activity: Summary during the week

Acquirer Nippon Life Insurance Dalmia Cement (Bharat) Ltd. Nomura Research Automatic Data Processing eYantra Industries Ltd Dishman Pharma Sundar Garments Malabar Trading Co Target Reliance Capital Asset Management Calcom Cement India Anshin Software Randstad Holding NV Privilege Corner Creapharm Parenterals George Street London Protect Nature Target business Assets Management Cement Manufacturing Software Development HR BPO Services Corporate Rewards Bulk Drug Maker Apparel Brand Agriculture & Food Products Stake (%) 26.0 NA NA NA 100.0 NA NA 50.0+ Deal value ($ mn) 290.0 46.0 NA NA NA NA NA NA

Source: Four-S Database, Acquisition price is in $mn

Market Update Key Domestic Indices

Index BSE Sensex S&P CNX Nifty CNX Nifty Junior Nifty Mid Cap 50 CNX IT Bank Nifty CNX Infrastructure CNX Realty
Source: BSE, NSE

Indian Market Movements 52 Week 13-Jan-12 20-Jan-12 Change (%) High Low 16,154.62 16,739.01 3.49% 19,811.10 15,135.90 4,866.00 5,048.60 3.62% 5,944.45 4,531.15 9,101.50 9,414.35 3.32% 11,758.15 8,224.15 1,965.50 2,022.30 2.81% 2,657.10 1,722.45 5,872.60 5,897.95 0.43% 7,344.90 5,011.10 8,975.05 9,516.85 5.69% 11,978.05 7,766.35 2,343.15 2,466.90 5.02% 3,217.50 2,045.70 213.75 231.70 7.75% 344.05 179.85

Key Global Indices

Index NASDAQ DJIA S&P 500 NIKKEI 225 Hang Seng Straits Times Index FTSE 100
Source: Yahoo Finance

Global Market Movements 52 Week 13-Jan-12 20-Jan-12 Change (%) High Low 2,710.67 2,786.70 2.73% 2,887.75 2,298.89 12,422.06 12,720.48 2.35% 12,876.00 10,404.50 1,289.09 1,315.38 2.00% 1,370.58 1,074.77 8,500.02 8,766.36 3.04% 10,891.60 8,227.63 19,204.42 20,110.37 4.50% 24,468.60 16,170.30 2,791.54 2,849.38 2.03% 3,236.93 2,521.95 5,636.60 5,728.50 1.60% 6,105.80 4,791.00

Indian Private Equity Weekly Update 16th January 22nd January, 2 012

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Indian Private Equity Weekly Update 16th January 22nd January, 2 012