Acquisition News: 25/1/10

INDIA EQUITY PARTNERS TO BUY 25% IN IETS FOR RS 140 CRORE
Arun Kumar, New Delhi, January 25, 2010
The Economic Times

New York-based India Equity Partners is set to acquire a 25% stake in IL&FS Education and Technology Services (IETS) for little over Rs 140 crore.

IETS is an education and cluster development initiative of Infrastructure Leasing & Financial Service (IL&FS). Two officials, involved in the deal, said on the condition of anonymity, the private equity firm would pick up nearly 20% in secondary sale by the three existing partners and 5% will be acquired through fresh issue of shares by IETS.

Orix Corporation of Japan, HDFC and Sera Fund are divesting their entire stake in favour of India Equity Partners, said a senior executive.

The current paid-up capital of IETS is Rs 32.31 crore, comprises of 3.23 crore equity shares of each. A senior executive involved in the deal said on the condition of anonymity India Equity Partners was picking up stake at Rs 175 per share resulting into a total valuation of Rs 560 crore.

Both the company is expected to make the announcement shortly, said a senior executive. The education sector is going to be very exciting in India, said head of a private equity, who has also explored the possibility of investing into the company. “Given the growth rate and huge opportunities, the sector would witness a large numbers of mid-size transactions,” he added.

Sid Khanna, chairman and managing director of India Equity Partners, refused to comment. Despite several attempt, IL&FS chairman and managing director Ravi Parthasarthy could not be reached.

 

EXCISE DUTY HIKE LIKELY FOR ALL, CENVAT MAY GO UP 2%
Surabhi, New Delhi, January 25, 2010
The Economic Times

The government is considering an across-the-board increase in excise duty in the Union budget 2010-11, as it faces pressure to withdraw fiscal stimulus measures in the wake of a 16-year high fiscal deficit of 6.8% in the current financial year.

“One option being considered is an increase in cenvat rate by 2% while leaving the service tax rate unchanged at 10%,” a finance ministry official told ET. Cenvat refers to the median excise duty, tax on manufacture of goods, levied on nearly 90% of the goods made in the country.

More services could be brought under the tax net to allow the government to keep service tax rates unchanged, the official said, requesting anonymity. A hike in service tax rate would be an immediate burden on consumers already battling high food prices. The proposal is at an early stage and may undergo significant changes by the time the budget is presented.

An alternate proposal is also under consideration, which moots an increase in excise rates in sectors that are doing well such as automobiles, instead of an across-the-board hike.

The economy is recovering from an economic downturn induced by a global recession, which forced the government to cut taxes and increase spending to boost demand. The Reserve Bank of India is keeping policy rates at record low levels to encourage economic activity.