Deals – May 2008

DIC looks to the east * Darby invests in Coffee Day * Propel books 2.5x cash from exit * HSBC to acquire apparel maker * Goldman, Whitesun team up again * Henderson backs agrochemical company * Q1 investments hit $3.3bn in India * Aureos backs Chinese wind energy firm * 2.3x cash from Indonesian mining deal * IDFC backs carbon credit advisory firm

DIC looks to the east
Dubai International Capital (DIC) has bought a “significant minority stake” in the True Group, a wellness service provider.

Singapore-based True Group started operations as a fitness, yoga and wellness group. In addition to Singapore, the group has operations in Malaysia, Taiwan and Thailand. It operates 17 wellness centres in these four countries, making it one of the largest yoga and wellness groups in the region.

Patrick Wee, founder and chief executive of the True Group told PEI Asia that “by partnering with DIC, we are targeting to have 100 centres within five years.”

DIC’s investment will “provide a launch pad True to enter into new markets, in particular the largely untapped markets in the Middle East and Indian subcontinent, heralding True’s move from an Asian brand to a global brand,”Wee said.

The financial terms of the purchase were not disclosed.

The investment in True is in line with DIC’s aim to grow and diversify its emerging markets portfolio. Sameer Al Ansari, executive chairman of DIC, said in a statement that this investment is a demonstration of “our increasing focus on Asia as a key driver of growth for 2008 and beyond.”

Darby invests in Coffee Day
Darby Overseas Investments, the private equity arm of Franklin Templeton Investments, has invested $25 million (€16 million) to take a minority stake in Bangalore-based Amalgamated Bean Coffee Trading Company, an integrated coffee business. Amalgamated Bean Coffee Trading Company, more popularly known as Coffee Day, engages in coffee procurement, processing and retailing. The company manages Café Coffee Day, India’s largest retail café chain.

Deepa Sankaran, principal at Darby Asia Investments, told PEI Asia that Darby made the investment since Coffee Day is in the “right industry” and is an integrated coffee firm with “operations across the value chain.” The investment will help expand Coffee Day’s operations in India and Europe.

The investment was made from Darby Asia Mezzanine Fund II and is the fund’s third in India. Previous deals in the country were Bhoruka Power Corporation, a company engaged in the construction of wind power and small hydroelectric projects, and Escorts Construction Equipment, a manufacturer of heavy construction and material handling equipment.

Propel books 2.5x cash from exit
Propel Investments, a Sydney-based private equity manager, has made a 2.5 times cash return from the sale of a 40 percent stake in MediHerb, an Australian herbal health products provider. The stake was acquired by Thompson Group, a distributor of health supplements.

MediHerb produces herbal products and supplies them to customers in Australia, Canada, New Zealand, South Africa and the US.

Propel Investments told PEI Asia that it realised A$20 million ($18.3 million; €11.5 million) from the sale of its stake, which it had acquired in 1999.

The firm is currently raising its third fund with a target of A$275 million. This is the first fund the firm has raised since spinning out of Deutsche Bank’s Australian private equity division last year.

HSBC to acquire apparel maker
HSBC Private Equity Asia is set to acquire Singapore Exchange-listed apparel maker Sing Lun Holdings.

Sing Lun makes and trades textiles and supplies apparel to international brands such as Eddie Bauer, GAP, Banana Republic, FILA and Polo Ralph Lauren. It operates six manufacturing plants in Singapore, Sri Lanka and Malaysia.

HSBC is offering S$120 million ($86.5 million) to acquire the company at S$0.46 a share, an 18 percent premium over the last transacted share price before the offer document was released on 30 March.

The company’s founding shareholders have agreed to sell their shares amounting to a 53.48 percent stake. The investment will be made from HSBC Private Equity Fund 6.


Goldman, Whitesun team up again
Goldman Sachs and China-focussed Whitesun Equity Partners have invested $30 million (€19 million) in C. Straits Food Chain, a Western food and coffee shop chain based in China.

Zhou Zhiyang, a managing director at Goldman Sachs, said in a statement that “food and beverage chains have huge growth potential in China, where personal incomes are rising.”

C.Straits has 400 directly owned or franchise outlets throughout China and the investment from Goldman and Whitesun will be used expand the retail chain to over 1,000 outlets.

Henderson backs agrochemical company
Henderson Equity Partners has taken a minority stake in Mumbai-based Sharda Worldwide Exports. The $21.5 million investment has been made from the firm’s second Asia-focussed fund, marketing of which is ongoing.

Sharda registers and markets off-patent agrochemicals in over 50 countries and enjoys a presence in the US, Latin America, the European Union, Africa and Russia.

Vishal Marwaha, a partner at Henderson Equity Partners, told PEI Asia that Sharda’s is a “very different business model” in that it does not manufacture agrochemicals – rather, it procures them from producers and sells them in countries in which it owns product registrations for those products. He added that the company has a big opportunity to acquire more product registrations, especially in the European Union.

Henderson Asia Pacific Equity Partners II is expected to close soon, and is targeting $300 million.

Q1 investments hit $3.3bn in India
The first quarter of 2008 saw private equity firms invest $3.3 billion in 97 deals in India, growth of 22 percent over the $2.7 billion invested in the corresponding period last year, according to Venture Intelligence, an Indian research service.

Arun Natarajan, chief executive officer of Venture Intelligence, told PEI Asia that despite unfavourable market conditions, “we don’t expect a substantial dip in private equity investments”.

This is because a lot of fundraising has taken place in the last two years and many private equity firms have capital that still needs to be invested. He also said that investments in venture capital, growth strategies and infrastructure “shouldn’t be affected.”

Aureos backs Chinese wind energy firm
Aureos Capital, the London-based emerging markets private equity firm, has invested $5 million (€3.2 million) to take a stake of about 30 percent in Qingdao Land of State Power Environment Engineering, a Chinese wind energy and environmental protection company. The investment was made from the $36.5 million Aureos China Fund.

Qingdao Land of State Power Environment Engineering produces wind energy turbines using proprietary technology, and it also engages in water-recycling and the removal of sulphur from power plant emissions. The investment will be used by the company to expand its operations. Steve Wu, a managing partner of the Aureos China Fund, said in a statement that “as China’s industrial output and energy usage has continued to climb the demands to improve the sustainability of both have increased” and Qingdao Land of State Power Environment Engineering is in a good position to “take advantage of this trend”.

2.3x cash from Indonesian mining deal
CIMB Standard Strategic Asset Advisors, a joint venture between Malaysian financial services group CIMB and Johannesburg-headquartered Standard Bank, has received a return of 2.3 times its investment in Indo Mines. The firm sold its 8.1 percent stake in the Australian Securities Exchange-listed company for approximately $6 million (€4 million) via a block trade of 6,550,000 shares to an undisclosed strategic buyer. CIMB Standard paid $2.6 million for the stake in March 2007. Vijay Sethu, the firm’s chief executive, said that the investment in Indo Mines was made from the Southeast Asian Strategic Assets Fund (SEASAF), a $150 million fund nearing its final close. Indo Mines is a producer of iron ore in Indonesia and is also engaged in the exploration of diamonds, precious metals and industrial metals in Australia, Indonesia and Peru.

IDFC backs carbon credit advisory firm
IDFC Private Equity has invested $10 million (€6.3 million) in Emergent Ventures India, an advisory company.

One of the programmes of the Kyoto Protocol calls for developed countries with greenhouse gas reduction commitments to invest in projects that cut carbon emissions in developing countries. The carbon reductions earn them carbon credits which they then use to meet their own emission reduction targets. Emergent Ventures advises companies on how they can obtain carbon credits.

IDFC’s investment will be used to scale up current operations and to expand Emergent Ventures’ operations in new markets.

According to Luis Miranda, president and chief executive officer at IDFC Private Equity, there is a “concerted effort globally to invest in businesses that are environment-friendly,” and the “sector is seeing some interesting times ahead.”

The investment was made from the $440 million IDFC Private Equity Fund II, which has deployed about 80 percent of its capital in 13 investments, of which five have been made in clean energy-related businesses.