BackDeals Buzz: WeWork IPO postponed, $2.75-bn India unit deal faces delays
In other news, JM Financial Private Equity has closed its second India-focused fund with commitments of more than ₹600 crore from Quilvest Group and Small Industries Development Bank of India (Sidbi) among others.
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WeWork IPO postponed, $2.75-billion India unit deal faces delays
We Co.’s decision to postpone its much-awaited initial public offering (IPO) will also likely delay a plan to acquire majority control of its Indian affiliate to next year, Mint reported citing two people familiar with the development. Earlier this year, We Co. offered to buy a 70% stake in WeWork India in a cash and stock deal valued at $2.75 billion, three years after it entered the country through a brand franchise agreement. Embassy Buildcon Llp, the holding company of WeWork India that is owned by Embassy Group chairman Jitu Virwani, would hold the remaining 30% stake once the deal goes through. Since its first regulatory filing in mid-August, the New York-based office rental company has faced questions from investors over its business model, corporate governance, valuation and how its founder Adam Neumann runs the company. A Reuters report last week said We Co. might seek a valuation between $10 billion and $12 billion for its IPO, far lower than the $47 billion valuation it achieved in January when SoftBank invested $2 billion in it.
Sidbi, Quilvest invest in JM Financial arm’s ₹600-crore India fund
JM Financial Private Equity has closed its second India-focused fund with commitments of more than ₹600 crore from Quilvest Group and Small Industries Development Bank of India (Sidbi) among others, Mint reported citing two people aware of the matter. The PE arm of Nimesh Kampani-led JM Financial Group had achieved the first close of its second fund at ₹300 crore in April 2018. A first close allows a fund manager to start investing the capital that was raised, while allowing it to continue to raise more funds from investors. Luxembourg-based global wealth manager and PE firm Quilvest invested more than ₹100 crore in the second fund, along with Indian development financier Sidbi that put in another ₹122 crore. Among the other limited partners were Federal Bank Ltd and National Bank for Agriculture and Rural Development (Nabard), and some family offices and independent investors.
Tata Power arm sells stake in S African JV Cennergi for $106 million
Tata Power Co. Ltd will exit a South African wind power joint venture by selling its entire stake to a local partner for $106 million, Mint reported citing company statement. The deal is likely to be completed in the third quarter of this financial year. Cennergi (Pty) Ltd, which owns two wind power farms totalling nearly 230MW, is an equal joint venture between Exxaro Resources Ltd, a leading South African coal producer, and Khopoli Investments Ltd, a subsidiary of Tata Power. After the transaction, Exxaro will own 100% of Cennergi. The decision to sell the South African asset forms part of Tata Power’s strategy to deleverage the balance sheet by divesting sub-optimal size international assets. The share purchase agreement with Exxaro Resources was executed for ZAR1, 550 million ($106 million), subject to normal working capital and other adjustments. The proceeds from such sale would be re-invested in emerging areas such as renewable power, power distribution and service-led businesses in India which will bring in greater value and help the firm align with the emerging consumer needs.
Oyo to raise $200 million for luxury push in US
Oyo Hotels and Homes, the operator of India’s largest network of hotels, is in talks with financial institutions to borrow $200 million to buy premium and luxury hotels in the US, Mint reported citing two people familiar with the matter. The company, which bought Hooters Casino Hotel in Las Vegas last month, has identified the premium hotels segment as its area of focus outside India. Oyo’s overseas push into the premium and luxury segment is a departure from its strategy in India, where 25-year-old founder Ritesh Agarwal has signed up thousands of small hotels onto his online platform and helped them upgrade and standardize their rooms to cater to budget travellers. Agarwal is now spending a major part of his time in the US to expand Oyo’s presence in the world’s largest economy. Oyo is going to create a separate entity in the US to help it acquire and run four and five star hotel assets in US. It is in talks with several financial institutions to raise debt to fund these transactions. Oyo is likely to own a minority stake in the US entity being created for owning the hotel assets.
Chiratae Ventures out with a fresh seed fund of $35 million for new bets
Chiratae Ventures is launching a separate $35 million seed fund, as the fight for seed and early-stage investments across top venture funds intensifies, The Economic Times reported citing people familiar with the matter. The intent is to focus on cheque sizes of between $500,000 and $1 million, and get exposure to high-growth emerging sectors early.With the seed-stage market getting more competitive, funds have to continually think of programmes and initiatives to add value to companies, another person briefed on the matter added. Formerly known as IDG Ventures India, Chiratae will continue to do Series A to late-stage investments across the technology sector through its fund. Most venture funds in India are aggressively launching programmes to tap founders early in a hyper-competitive deal making market. For instance, Accel Partners started an accelerator called “#ReBound" for second time founders; Silicon Valley investment firm Sequoia Capital launched its $200 million Surge, while Orios Venture Partners re-launched its accelerator programme Misfits.
No chance of recovery, Sintex lenders in talks with three players to sell firm
Lenders are talking to three potential bidders for the debt laden textile and yarn company, Sintex Industries in a last ditch effort to recover their dues totalling ₹6,500 crore after efforts at other recoveries were fruitless, The Economic Times reported citing three people familiar with the matter. The Balkrishan Goenka-controlled Welspun India, Rajinder Gupta-owned Trident Group and Paul Oswal-controlled Vardhman Group have been approached by the bankers to buy the debt-laden company. State-owned Punjab National Bank is the lead lender to Sintex Industries and PNB Investment Services, the merchant banking arm of the bank, is helping the lenders find a buyer for the company. However, initial bids for the company have been short of lenders’ expectations.The Sintex Group as a whole owes banks a total of ₹10,000 crore. Sintex Plastics Technology, the company which is ubiquitous for plastic water tanks in India, is also part of the group. However, the majority of the debt is owed by Sintex Industries and it is already classified as an NPA by banks. Banks also signed an inter creditor agreement (ICA) for the account last month. Besides PNB, the other lenders to Sintex include Bank of India, Bank of Baroda and Union Bank of India (UBI).
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