Deals – June 2006

India‘s ICICI Venture gets into healthcare
India’s ICICI Venture has made a minority investment in Indian diagnostic centre chain Metropolis Health Services India, an acquisitive firm looking to expand overseas.

ICICI invested 350 million Indian rupees ($8 million) in the chain, which is seeking to expand in the Middle East, South and Southeast Asia, as well as Africa. Founded in 1981, Metropolis currently has 17 laboratories and 200 franchisees across India.

ICICI’s director of investment Aluri Srinivasa said in a statement: “Our investment in Metropolis is an opportunity to leverage the rapid growth in the healthcare sector.”

Healthcare is a rising sector for private equity investors in India. In March, Carlyle Group placed its first bet on an Asian drug maker by investing $20 million to fund the expansion of Claris Lifesciences, an Indian pharmaceutical company.

GSJBW fund fully invested
Australia’s Goldman Sachs JBWere (GSJBW) Private Equity has invested NZ$20 million ($12.8 million) for a 28.5 percent stake in retirement home operator Vision Senior Living of New Zealand. The deal comes on the heels of a joint investment with Australia’s Quadrant Private Equity in Kathmandu Group, an outdoor and travel clothing and equipment company.

The investment, made from Hauraki Private Equity Fund 2, also marks the end of the investment period for the NZ$76 million fund raised in 2004, Paul Chrystall, head of private equity at GSJBW, told PEI Asia.

GSJBW Private Equity is now planning to raise a new fund, but has not yet announced when it will be launched or what will be its target size. Hauraki funds I and II, which totalled NZ$98 million, are managed out of Auckland.

Goldman, CDH win Chinese meat auction
Goldman Sachs and partner Beijingbased CDH China have won an auction for China’s biggest meat processing company, Shanghui Group, with a bid of about 2 billion yuan ($250 million).

Owned by the local authorities in Henan province, Shanghui owns 36 percent of Shanghai-listed Chinese meat processor, Henan Shanghui Investment & Development.

The auction, which began in March, saw Goldman Sachs and CDH compete with Hong Kong-headquartered CCMP Capital Asia, which has been courting Shanghui for more than a year, according to the Wall Street Journal.

LF Asia acquires menswear brands
LF Asia Investments, the private equity arm of Hong Kong’s Li & Fung, a consumer trading group founded in 1906 in Guangzhou, has acquired a group of companies that sell menswear labels – including Cerruti 1881, Gieves & Hawkes and D’Urban – for an undisclosed sum.

The group of companies comprises: Trinity Textiles, D’Urban Distribution (HK), Jadestar Investments and the apparel companies of CEGO. They form part of a holding company named LiFung Trinity, which is separate from Li & Fung, LF managing director William Fung was quoted as saying in South China Morning Post.

The deal comes on the heels of Li & Fung acquiring Oxford Womenswear Group, a US producer of budget-priced women’s apparel, for a total cash consideration of $37 million, according to a company statement.

The Oxford Womenswear deal fits with Li & Fung’s strategy of growth opportunities that complement the group’s core sourcing business, including development and marketing opportunities in the US.

IDFC lines up Indian stockbroker
India’s Infrastructure Development Finance Company (IDFC) has approved the acquisition of a 33 percent stake in a Mumbai-based private securities firm for an undisclosed amount.

The board of India’s IDFC, incorporated in Chennai in 1997, approved on April 29 the acquisition of a 33.33 percent stake in a privately held Mumbaibased domestic corporate finance and institutional securities company, SSKI, according to a statement by IDFC.

IDFC will work with SSKI to pool relationships and expertise to provide investment banking and capital markets solutions.

The decision coincides with India’s stock market boom, and follows the $32.5 million acquisition of a stake in online brokerage Sharekhan by US private equity group General Atlantic. General Atlantic didn’t disclose the level of stake it will hold in Sharekhan posttransaction, but it is understood to be more than 16 percent.

Morgan Stanley to acquire Korean trader
Morgan Stanley’s Asia Pacific private equity group, headquartered in Hong Kong, has agreed to acquire 75 percent of Korea trading company Ssangyong Corp from its creditors. A memorandum of understanding on the deal was reached in September last year, after Morgan Stanley closed its first Asia-dedicated private equity fund on $515 million.

The firm will invest 67.8 billion Korean won ($72 million) of equity in addition to assuming $120 million of Ssangyong’s debt, making the total transaction worth some $192.4 million, according to a Morgan Stanley spokesman.

Ssangyong ran into difficulties in the late 1990s but has been recovering since 2002, thanks to help from financial institutions and the completion of a restructuring programme.

Oak revisits India strategy
US venture capital firm Oak Investment Partners is considering a change in strategy in India to include investing in publicly traded companies as the latter better represents the size of investment Oak normally targets.

“Our average deal size is much higher than the appetite for privately-held Indian companies,” Ranjan Chak, who set up Oak’s local office in 2003, said in an interview with Dow Jones Newswires.

Oak’s deal sizes typically range between $50 million and $70 million. “We had to cut down on our deal size to $20 million for the Indian market,” Chak added.

Oak recently invested $30 million to buy an undisclosed minority stake in USbased Global Consultants Inc, which has a software development centre in the southern Indian city of Bangalore.

Carlyle retains Taiwan media focus
Washington DC-based Carlyle Group’s appetite for Taiwan’s media assets continues to rage. After exiting last year its investment in Taiwan Broadband Communications in an $890 million sale to Macquarie Media Group, it is now advancing toward a $1.3 billion transaction in the same space.

Carlyle is closing in on the purchase of a controlling stake in Taiwan’s Eastern Multimedia Co, according to media reports. Both Carlyle and Eastern Multimedia have declined to confirm the deal.

Carlyle wants to buy at least twothirds of Eastern Multimedia in a first stage of investment, bankers said in a Bloomberg report. The private equity firm is asking banks to bid to help finance the purchase of a 100 percent stake.

Carlyle was competing against US private equity firm Newbridge Capital and US content provider Liberty Media, which teamed up to bid, as well as Macquarie Media Group.

Taiwan’s cable television market is the third-largest in the world, and Eastern Multimedia controls almost a quarter of the island’s cable television market. The acquisition is subject to approval by Taiwan’s economics ministry’s investment commission. Taiwan has a 60 percent stake ceiling on acquisitions of cable TV operators by foreign funds.

ChrysCapital exits via secondary
India-focused private equity firm ChrysCapital has exited an investment it made in 2004 via the secondary market, its second such deal in recent months. A ChrysCapital source in New Delhi told PEI Asia the company has exited from Gammon India, an engineering, procurement and construction (EPC) firm, via the secondary market, but provided no further details.

According to The Economic Times of India, the latest sale involves the realisation of a 7 percent stake and comes after a prior partial exit last year. ChrysCapital recently exited IT services company MphasiS via a secondary.

The report pointed to a cash return of 4.75 times from Gammon, in which ChrysCapital had invested $20 million. The firm’s MphasiS investment fetched ChrysCapital a 5 times return, according to the same report.

Allco, DB Capital acquire debt collector
Australia’s Allco Equity Partners and DB Capital Partners have jointly acquired a debt collection service provider in Australia and New Zealand for A$97 million ($75 million).

Allco and DB, the private equity arm of Deutsche Asset Management in Australia, teamed up to acquire Baycorp Collection Services, a division of Baycorp Advantage Limited, a provider of business intelligence and solutions.

“We believe there are sound growth prospects given the structure of the industry and the high consumer debt levels in Australia,” Peter Yates, managing director of Allco Equity Partners, said in a statement.

Head of DB Capital Partners Peter Dowding said: “The company has clear market leadership in New Zealand, a strong position in Australia and is wellpositioned to participate in what appears to be a continuing trend by debt originators to outsource the collection function.”

Allco Equity Partners is a division of Australia-listed Allco Finance Group, a structured finance company. Allco Finance and DB Capital Partners hold majority stakes in another privately held Australian debt collection business, Portfolio Management Group.

Backing for Kiwi nursery firm
New Zealand’s AMP Pencarrow Private Equity Fund has made an investment in Wellington-based Phil & Teds Most Excellent Buggy, along with the company’s existing management. The amount invested and stake acquired were not disclosed.

The company designs, produces and sells locally and overseas a variety of nursery products. Exports to 20 countries account for 92 percent of its sales, according to a local news report.

AMP Pencarrow Private Equity Fund, co-managed by New Zealand private equity firms Pencarrow and AMP Capital, conducted its first and final close on NZ$75 million ($47 million) in June last year. The latest transaction represents the fund’s fourth deal. The fund’s investors include New Zealand Superannuation Fund, Australian fund of funds Quay Partners and AMP Life.

CHAMP consumes food firms
CHAMP Private Equity, the Sydney-headquartered buyout firm focused on Australia and New Zealand, has created a new foods group from the acquisition of four companies.

CHAMP established Manassen Foods through the acquisition of Manassen Foods Australia (MFA), an importer and distributor of brands such as Laughing Cow and Mini Babybel; Great Southern Foods, a noodles and pro-biotic drinks supplier; New Zealand importer and distributor Hutchinsons; and canned fish food distributor King Oscar.

CHAMP said Manassen Foods will have combined revenues in excess of A$250 million per annum ($181 million) and over 350 employees.The business is expected to double revenues within three years to A$500 million and will seek a listing.

CHAMP will hold a 51 percent stake in Manassen Foods, with the remainder owned by MFA owner, Roy Manassen, and management.

“Several possible add-on acquisitions have already been identified and negotiations are progressing,” CHAMP director Cameron Buchanan told sister online publication PrivateEquityOnline. Buchanan disclosed that CHAMP is looking at half a dozen more food companies, and is at varying stages of discussions with each of them.

GIC, Olympus go organic in China
Singapore’s GIC Special Investment and independent Asian private equity firm Olympus Capital Holdings Asia have acquired a majority stake in Singaporeincorporated Minzhong Organic Food Corporation.

The investment included fresh funding from CM Investment Advisers, an existing shareholder of China Minzhong, according to a company statement that did not reveal financial details of the transaction. Rabobank International was the financial adviser to China Minzhong on the deal.

China Minzhong, which produces, processes and exports vegetables from China’s Fujian and Yunnan provinces, is adding capacity.