iD Fresh - supplies everyday batter for the Indian palate

Sarjena Foods - the company behind Baker Street

Prem Watsa and his India innings

Canada-based Prem Watsa's India (which also happens to be his home turf) innings started in 2010, when he acquired a small 10% stake in India Infoline Limited (now IIFL Holdings Limited) spending a little less than INR 300 crore. Today, the man in question has made an open offer to buy an additional 26% stake in IIFL Holdings for INR 1,621 crore.

In fact going by the spate of announcements so far this year, Mr Watsa and his team have truly been keeping busy targeting inorganic growth opportunities.

Few days back, two of his group companies in India announced two separate acquisitions. In August 2015, Mr Watsa took a majority ownership in National Collateral Management Services Limited (NCMSL), a leading private-sector agriculture storage company in India, for INR 800 crore. During the same month, Mr Watsa (through Thomas Cook India Limited) also took over the India and Hong Kong businesses of Kuoni for INR 535 crore.

Its worthwhile to take note of the manner in which Mr Watsa has transformed Thomas Cook India, which he acquired in 2012. Mr Watsa acquired 87% in Thomas Cook India for INR 963 crore in 2012. The very next year, Thomas Cook India signed an agreement to buy 74% stake in IKYA Human Capital Solutions Private Limited (now Quess Corp Limited) for INR 256 crore, making a foray into staffing services. At the time of acquisition IKYA was amongst the top three temporary staffing companies in India. In the following years, IKYA went on to acquire a host of companies including Hofincons Infotech and Industrial Services Private Limited (an industrial asset management firm), Aramark India Private Limited (a facility management company) and a few others outside India, including Brainhunter Systems Canada, Transfield Services Qatar and Randstand Lanka. Mr Watsa also entered into time share vacations after acquiring Sterling Holiday Resorts India Limited in 2014, and then merging it with Thomas Cook India. The deal valued Sterling Holiday at about INR 870 crore. The inorganic growth account of Sterling Holiday was opened this month after the company signed an agreement to acquire Nature Trails Resorts Private Limited, marking a foray into adventure tourism.

Taking a cue from the manner in which Mr Watsa has transformed Thomas Cook India, it may be easy to assume that he may have chosen similar growth paths for IIFL Holdings and NCMSL.

McNROE Consumer - wild stone deodorant... it happens

Gangar Eyenation - enhancing the vision of India

Girnar - a regional tea champion

Baggit - making affordable and trendy handbags

SAJ Food Products - the company behind Bisk Farm

India loses ten foreign AMC’s since 2010

With today’s announcement, Goldman Sachs has joined the growing brigade of foreign asset management companies (AMC's) which chose to completely exit their mutual fund businesses in India. Since 2010, a total of ten foreign AMC's including those of Shinsei, AIG, Fidelity, Daiwa, Morgan Stanley, ING Group, PineBridge, Deutsche Bank, KBC, and Goldman Sachs, have logged out of India.

Year	Foreign AMC
2010	Shinsei Asset Management
2010	AIG Global Asset Management
2012	Fidelity Fund Management
2013	Daiwa Asset Management India
2013	Morgan Stanley Investment Management
2014	ING Investment Management
2014	PineBridge Investments Asset Management
2015	Deutsche Asset Management
2015	KBC Asset Management (exits JV with Union Bank of India)
2015	Goldman Sachs Asset Management

Various articles seem to suggest that the stringent norms from SEBI (Securities and Exchange Board of India) in the form of higher net worth, investing of seed capital in open-ended schemes, quarterly disclosures on voting pattern in portfolio company resolutions, ban on entry loads, and rationalization of commissions to mutual fund distributors, have been the culprits. Nonetheless, the decision for the above rests with SEBI along with AMFI (Association of Mutual Funds in India), through which the mutual fund houses usually voice their opinion. After all, the exits of renowned foreign asset management companies' certainly do reflect poorly on the state of affairs in the Indian mutual fund business.

Focusing back to the deal between Goldman Sachs and Reliance Capital; as per the terms, Goldman Sachs Asset Management India would be receiving INR 243 crore in cash from Reliance Capital Asset Management for parting with its 100% stake in the business. The amount is approximately INR 100 crore more than what Goldman Sachs had paid to acquire the business from the original promoters of Benchmark Asset Management Company in 2011. Considering the cumulative losses of an equivalent amount reported by Goldman Sachs Asset Management India over the last four years, it seems the parent Goldman Sachs Group, Inc. was happy to exit at par.

Zephyr - combining education and entertainment in toys

Ramdev Food Products - tadke ki dibiya...

Desai Brothers - the company behind Mother's Recipe

Pelican Farm - All that's Good Mex Nachos

Moshe's - he brought us the taste of the Mediterranean

Bagrrys - our homegrown oats and muesli company

Enrich - runs a large chain of unisex salons in India

Deutsche AMC India was probably valued at over 1,000 crores

With more than a decade of existence in the Indian mutual fund industry and INR 25,000 crore in assets under management (AUM), the Deutsche AMC India easily found a match in the form of DHFL Pramerica Asset Managers to take over its mutual fund business. Though no formal communication of this deal seems to be available anywhere, various media reports have indicated that an agreement was signed sometime early August 2015 for a purchase consideration of INR 400 crore.

Established in 2003, Deutsche AMC India has a reasonably strong track record and deep relationships with institutional clients and distribution partners. On the other hand, DHFL Pramerica, which initiated its mutual fund innings in India sometime 2008 with the real estate major DLF, has not been able to scale up in the manner it had wished to. At the end of September 2015, DHFL Pramerica had an AUM of just INR 2,366 crore or ~0.2% of the total industry AUM. DHFL (the new JV partner) had swapped places with DLF at Pramerica India’s mutual fund arm last year.

Given its chequered history in India, Pramerica couldn’t let go off this one golden opportunity to bag Deutsche AMC’s India business and muscle its AUM size by 10x. DHFL’s business links with Deutsche seems to have worked in favor of the deal.

Coming to the probable valuations, it would be prudent to compare Deutsche-DHFL Pramerica deal with likes of those where the AUM under consideration was above INR 5,000 crore and the acquisition was for a complete 100% stake. Two deals – Standard Chartered and IDFC; and Fidelity and L&T perfectly fit the bill:

• In 2008, Standard Chartered Mutual Fund was scooped up by IDFC for INR 820 crore, valuing the latter at 5.8% of its total AUM of INR 14,000 crore. Standard Chartered AMC had nearly 80% of its AUM in debt.
•  In 2012, Fidelity sold its Indian mutual fund business to L&T Finance for an estimated INR 550 crore, valuing the latter at 6.2% of its total AUM of INR 8,800 crore. Fidelity AMC had 30% of its AUM in debt.

Considering the above and the fact that a debt heavy portfolio generally fetches a lower valuation, Deutsche AMC India could’ve probably asked for a minimum INR 1,000 crore, approximately 4.5% value of its average AUM of INR 22,800 crore (normalized for four quarters).

Steelbird - among the largest helmet makers in India

Hygiene Research Institute - coloring the greys

Shangri-La learns to live with project delays in India

In September 2015, Hong Kong based luxury hotel chain Shangri-La Hotel and Resorts announced the opening of its first hotel in Bengaluru, the second Shangri-La hotel in India. Built by Adarsh Developers for INR 780 crore, the 19 story Shangri-La Bengaluru on the Palace Road has 397 guest rooms and suites – the largest inventory of accommodation in Bengaluru; eight food and beverage venues; a Health Club; salon; spa; a 739 sq m ballroom with six function rooms; and a business centre.

Unfortunately, just like the Mumbai project, the completion of the Bengaluru hotel project faced enormous delays. Yet, Shangri-La Hotel and Resorts held its patience. In 2013, Shangri-La Hotel and Resorts had moved out of a similar sized hotel project in Mumbai (established at a cost of over INR 1100 crores by a large real estate company based in Mumbai), citing delays in project completion. Though, it seems it was largely due to differences with the property owners.

Nonetheless, I just hope that Shangri-La Bengaluru does not face a similar fate as the Mumbai project and instead does a roaring business like Shangri-La’s – Eros Hotel in New Delhi.

Shangri-La Hotel and Resorts happily runs the Shangri-La’s – Eros Hotel, which opened doors in September 2005. The Shangri-La’s – Eros Hotel was purchased by the Eros Group (Jagdish Rai Sood) from India Tourism Development Corporation (ITDC) for INR 96 crores in 2002. Eros spent an additional INR 200 crores on refurbishing the hotel. 

Wildcraft - our home grown outdoor gear brand

Spacewood - dressing up Indian homes and offices

Prataap Snacks - the company behind Yellow Diamond

Prime Retail - the dada of luxury watches in Kolkata

Vedant Fashions - pioneer in branded ethnic wear for men

Did Carnival Group just buy a gem from L&T Realty?

Carnival Group, promoted by Shrikant Bhasi, has scooped up the ELANTE PROJECT in Chandigarh for INR 1,785 crore. With a rental income of INR 170 crore in FY 2014-15, ELANTE already presents a lucrative gross yield of 9.5% to Carnival Group. However, L&T Realty ((an L&T subsidiary), the selling entity, just about made meager gains on its eight year old investment.

ELANTE, a mixed use development project occupying a 20 acre (81,340 sq m) plot area in Chandigarh, hosts one of the most successful malls - ELANTE MALL - in Northern India. As per an ICRA report, ELANTE MALL enjoys an astonishing 100% occupancy.

Promoted by CSJ Infrastructure (an L&T subsidiary), ELANTE MALL has a retail space of 1.15 million sq ft and houses an 8-screen Multiplex of PVR Cinemas, which opened in June 2013. ELANTE PROJECT also includes office premises with a central courtyard, and an upcoming 5-star hotel. The office complex covers 400,000 sq ft of space (a large part of which has been sold), while the hotel occupies 250,000 sq ft area.

Background: In 2007, CSJ Infrastructure acquired a 20-acre plot from Pfizer for INR 278 crore. In addition, it incurred a land use conversion charge of INR 185 crore since the company wished to build a commercial project on an industrial land. CSJ Infrastructure planned for a mixed use development project over the land for an estimated project cost of INR 1,127 crore. It commenced construction of ELANTE PROJECT in Dec 2009. The ELANTE MALL (which includes the Multiplex) and office complex were completed in March 2013. The 213-room Hyatt Hotel is expected to open in December 2015. 

Nobel Hygiene - care for toddlers as well as adults