Way to Go Timbor Home

Those who were skeptical about India’s quality consciousness need to look at Timbor, the largest manufacturer-retailer of modular kitchens. It is an ISO 9001 and ISO 14001 certified company and rated SE 1B by Credit Rating Information Services of India (CRISIL). The ratings are result of the company’s wide geographical reach and the in-house production facilities. The ratings also reflect the well-defined organisational structure and a robust business model,” believes Anant Maloo, MD & CEO, Timbor Home Pvt Ltd.

Timbor has 72 exclusive kitchen, furniture and door showrooms across India and plans to take this to 300 stores in next two years at an estimated cost of Rs 40 crore. It makes furniture in solid wood and veneer. As a step towards backwardation, it has undertaken a pilot project of fast growing hard wood species of 10000 saplings in an area of 25 acres. It plans to grow this size to 2000 acres over the next two years.

Bennett Coleman & Co. Ltd, the owners of The Times of India, along with Writers and Publishers Ltd. of Dainik Bhaskar Group (DB Corps) have invested in the equity of the company. Timbor, part of the Rs.1200 crore industry and started in 2006, is growing at an annual growth of 30 per cent.

Zee's 9X plans: Way out for PEs?

The General Entertainment Channel 9X may change hands soon, if media reports are to be believed. Zee Entertainment Enterprises Limited (ZEEL), the country’s largest media company, may buy out the loss-making channel from INX Media Pvt Ltd. As and when this transpires, private equity investors Temasek Holdings, New Silk Route, New Vernon Private Equity Fund and Kotak Private Equity may wash their hands off gleefully.

INX Media, launched in 2007-08 by ex STAR bossman Peter Mukherjee with PE help to the tune of $170 million through a private equity fund, could not make it big in the stiff competitive market. In 2009, Peter and his wife Indrani stepped down from the management after handing over charge to Pradeep Guha, an ex Times of India and Zee veteran, with the blessings of PE investors. Guha also has a small equity stake in INX Media.

The channel owes around Rs.130 crore to creditors. Once the 9X-Zee deal goes through, creditors may have to take a sharp cut in their dues. Zee may have to shell out Rs.65 crore. Why Zee is buying another channel is a mystery. 9X does not offer anything significant in terms of content or viewership profile. Observers claim may be the price tag is attractive particularly at a time when government is getting stingy with fresh TV licence approval.

For this deal to go through, INX has to spin off 9X, followed by court approval for Zee takeover arrangement. INX promoters sold their INX News to Nai Dunia of Indore recently. Once the 9X deal is through, INX will be left with just the music channel 9XM.

Africa Shining: Continent of PE Hope?

Once upon a time, Africa meant South Africa and nothing beyond for money managers. No longer, it seems. Africa, once dubbed as the dark continent, is on a roll – economically speaking. A latest KPMG survey claims that South African private equity firms are increasingly looking at the rest of the continent, spurred by the success of local telecoms and retail companies in Africa's frontier markets. South Africa accounted for more than 70 percent of the sub-Saharan region's $2.9 billion of private equity deals in 2008. Warren Watkins, head of private equity at KPMG's South African unit, observes that this share is falling.

The survey was conducted among 100 plus South African industry players recently. Forty six per cent PE bosses see "Africa excluding South Africa" as the "next meaningful opportunity". Just 42 percent think differently that South Africa is the future. Watkins is quoted as saying five years ago, this ratio would have been 90 per cent for South Africa and the rest of Africa. Close to two-thirds surveyed maintained that they planned to invest in Africa outside South Africa in the next year. More or less the same ratio claimed they would raise money locally and overseas to invest in frontier Africa, which is loosely defined as anywhere from Senegal in the west to Kenya in the east and the border of South Africa, a relatively developed emerging market, in the south.

Nigeria, the region’s most populous nation and biggest oil producer, is where most PE bosses would like to park their funds. Of late Uganda, Rwanda, Ghana and Zambia are attracting foreign capital following five per cent plus growth in the recent past and foreign-investor friendly policies being rolled out. It is estimated the African continent can boast of 2 billion population by 2050. What is drawing PEs to the continent is the recent success of Shoprite and MTN across the Continent from their earlier base in South Africa in the retail and telecom space.

Retail and healthcare, manufacturing, banking and telecommunications are major attractions. South African private equity firms had $4 billion of 'dry powder' waiting to be invested at the end of 2008 and were likely to be sitting on a similar pile of cash now because of a dismal 2009.

Blackstone to acquire stake in Monnet Ispat

The Blackstone Group is likely to acquire a 12% stake in Monnet Ispat’s greenfield power plant to be set up in Orissa with an investment of Rs.275 crore. The 1,050 MW power project will be commissioned by the parent company’s subsidiary, Monnet Power at an estimated cost of Rs.5,092 crore. Media reports have it that it would be funded through a mix of equity capital and debt. Blackstone is evaluating the proposal to participate in the equity component.

Of the debt component of Rs 3,819 crore, Rs.400 crore may come from the 21-bank consortium led by IDFC. Other banks that are part of the consortium are Punjab National Bank, Oriental Bank of Commerce, Central Bank of India, Bank of Baroda, State Bank of Hyderabad, State Bank of Mysore and State Bank of Patiala.

Monnet is the second largest coal-based Sponge Iron manufacturer with thriving facilities in Raipur and Raigarh in the State of Chattisgarh. It has a combined capacity of 860,000 TPA of Sponge Iron, 300,000 TPA of Steel, 60,000 TPA of Ferro Alloys and Power generation facility of 150MW besides running the largest underground coal mine in the country, according to the company website.

Blackstone, one of the world’s leading buyout giants, was founded by Stephen A. Schwarzman and Peter G. Peterson in 1985. They began with a balance sheet of $400,000 and a clear vision of an independent, conflict-free, client-focused firm whose interests would be closely aligned with those of its clients and investors, says the company website. In less than a quarter century, it has become a leading global alternative investment manager and financial advisor and an established global financial brand. Blackstone completes its IPO, listing on the NYSE. China Investment Company (CIC) has also invested in this IPO, considered to be the largest IPO of a U.S. based issuer in 2002.

Times Private Treaties kicks off 2010 with Investment in Birla Life Sciences

Times Private Treaties kicked off 2010 with investment in Birla Life Sciences, a Yash Birla Group Company. The deal is the first in 2010 for Times Private Treaties adding to its portfolio in the healthcare sector; which comprises of clients such as HCG Oncology, Thyrocare, Apollo Clinic, Richfeel and more.

Birla Lifesciences Pvt Ltd. is a newly incorporated entity under Birla Wellness. Birla Lifesciences aims to re-ignite faith in the ancient science of natural products, by combining modern technology with time tested wisdom to get highly efficacious and safe products. Birla Life Sciences is in the business of Ayurvedic medicines "Birlaveda", Natural Cosmetic Products "Chant", Health Foods "Nutrinext" and Wellness Services "Rebirth stores."

According to a latest report in the Express Pharma, the total market size of the Indian ayurvedic market is Rs 8000 crore and it is growing substantially between 10-15 percent, with the same growth rate targeted for the next 10 years.

Currently, more than 30,000 branded and 1,500 traditional ayurvedic products are available in the market. At present, India manufactures ayurvedic drugs worth Rs 6,000 crore per year, of which Rs 1,500 crore are exported. About 60 percent of this are crude herbs to be manufactured into products outside India, about 30 percent are finished product shipped abroad for direct sales to consumers, and the remaining 10 percent partially prepared products to be finished in foreign countries.

The Times Private Treaties innovative model is based on providing brand building and advertising opportunities to help companies create their brand and unlock value. This model enables companies to advertise in BCCL vehicles. This also helps the company to bring in many first time advertisers to BCCL’s advertiser base.

Birla to Boost its Retail Wing

Aditya Birla Retail (ABR), running the retail chain more currently, is open to the idea of offloading between 10 and 15 per cent stake in its company to private equity players to boost its retail operations.

The Rs 1,450-crore outfit is funded by debt and plans to raise funds through Private Equity. It is not averse to tying up with a strategic partner. The business is still not making money. ABR is in in discussions to figure out whether structured deals could be forged along the lines of what Wal-Mart and Tesco have already done, according to media reports. At present, Indian regulations restrict foreign investment in multi-brand retailers that sell directly to consumers, but there is no such restriction on wholesale retailing.

To make a mark and thrive over a period of time, ABR is examining new formats like deep discount and home stores. However, officials do not plan to ignore supermarket and hypermarket models. The company plans to launch a dozen hypermarkets every year because the model is an easier one to crack due to the supply chain efficiencies and is easy to manage. Taking advantage of the drop in real estate properties, ABR has not lost an opportunity to get into revenue-sharing deals with real estate owners.

Private labels in almost 30 to 40 categories are also expected to give the retailer better margins. Special products for More outlets is also on the cards. Coca Cola will be making customised packs for the More outlets soon.

PE firms Get Into Ops Mode

The PE world has changed dramatically and quickly is the general feeling of domain experts. With global economy, barring emerging ones, on a slow pace and secondary markets in a sort of limbo giving limited exit IPO options, the prospects of buyout firms holding onto their portfolio companies much longer than they originally imagined looms large.

If one is holding onto portfolio companies, one can as well improve operational efficiency of the same so that they fetch better pricing whenever exit becomes feasible. Right thinking. Financial engineering or tinkering may work fine for a shorter duration, but operational efficiency will be a long term and positive goal to aspire for. Perhaps this shift in focus requires different kind of mindset.

KKR is cited as an example in this regard. Capstone is strengthening operation of its portfolio enterprises. Moving away from financial engineering, more PE honchos are engaged in trimming cost, boosting revenue through aggressive sales pitch in the market place are noticed of late. Experts point out that lean times also enable buyout firms to look within and examine whether they had paid the right price at the time of buyout.

Wherever PE firms lack skill sets in managing operations, they don’t hesitate to seek external assistance, claim observers. Today, a sizeable chunk of PE firms have built up operational units within their four walls. Times indeed are changing. Perhaps the new focus on operations is taking them back to 1980s when they did precisely this before switching gears.

While the renewed focus on operations is being viewed as a positive step overall, setting up an operation unit to manage portfolio companies will be an additional fixed cost. Larger the portfolio, larger the team. Experts opine the ideal format would be a mix of a small in-house team ably assisted by external consultancy firms with relevant domain expertise.

Limited-General Partner Experiments

The relationship between Limited Partners (LPs) and General Partners (GPs) is assuming greater importance. GPs depend a great deal on LPs for a major chunk of their business. However, LPs are becoming smarter day by day. Unlike the past when they used to be passive investors, today they are ruthless. They demand results, prescribed by them and not what GPs who run the show on a daily basis used to dish out earlier.

If the London-headquartered Preqin’s February survey on the LP-GP relationship were to be believed, LPs are anything but gentle. Their ties used to be long lasting in the past. But no longer. “Only around one-fifth of funds had investor bases made up of more than 90% returning LPs,” in 2009, says Preqin. The LPs are in a mood to experiment with new GPs in the post-meltdown phase. Fifty four percent of respondents declared that they were “likely to commit to vehicles managed by firms with which they had no prior relationship”. On the other hand, 37 per cent maintained that they would renew their ties with the existing firms.

Interestingly, the first time fund managers may have a challenge on their hands with no past track record or pedigree to boast of. The Preqin Investor Survey reveals that a third of respondents will consider such investments while 19 per cent said they would not mind parking their funds with a spin-out team that has a track record at another firm. But a whopping 38 per cent LPs posted a categorical “No” to any dealings with first time or spin-out funds in 2010.

The Preqin survey notes that some investors, including California Public Employees’ Retirement System (CalPERS), Oregon State Treasury and California State Employees’ Retirement System (CalSTRS), have awarded separate account mandates to investment consultants or fund of funds managers with the specific purpose of gaining exposure to emerging managers. But the mood of LPs is clear: they are in an experimental mood. It is a threat to existing GPs and, yes, an opportunity for fresh funds.

Times Private Treaties Invests in Swiss Knife India

Times Private Treaties has signed a deal with Victrinox India (Pvt) Ltd., the Indian Subsidiary of Victorinox, Switzerland, the sole manufacturer of the world renowned Swiss Army knives. Victorinox India (Pvt) Ltd offers functional and practical high quality products in the lifestyle space.

Their mission is to offer practical, functional, reasonably priced and top-quality products which gives our lives deeper meaning and makes our work even more pleasurable and satisfying. Victorinox India plans to focus more on branding and distribution in the country. At present they have presence in 5 segments, Pocket Knives, Kitchen Knives, Wrist Watches, Travel Gear and Fragrances.

Victorinox, Pocket and Kitchen knives incorporate more than a century of tradition and experience. The skill of Victorinox lies in achieving an optimum combination of function and design. The century old heritage has been extended to Swiss Army Watches, which reflect the ingenious design and outstanding durability Victorinox has come to stand for over the years.

For the perfumes from Victorinox, the fragrance designers have captured the essence of Switzerland and the uniqueness of the Swiss mountain landscape. These scents caress your senses with unique Swiss fragrance compositions and lend you a strong note of expressiveness. Victorinox's wide range of luggage, travel gear, laptop bags and trolley cases live up to its world-wide reputation for quality and ingenuity.

Victorinox is also in exploratory discussions with several organized retail outlets to set up shop-in-shops besides scaling its existing distribution set up. Victorinox products are available in over 600 multi-brand outlets and shop-in-shops.

The Times Private Treaties innovative model is based on providing brand building and advertising opportunities to help companies create their brand and unlock value. This model enables companies to advertise in BCCL vehicles. This also helps the company to bring in many first time advertisers to BCCL’s advertiser base.