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.

Acquisitions News: 22/1/10

PROGRESS SOFT ACQUIRES SAVVION INC
Chennai/Hyderabad
Business Standard

Application infrastructure software provider Progress Software Corporation, which has its India operations based out of Hyderabad, has acquired Savvion Inc, a California-based business enterprise software developer, for $49 million (approximately Rs 225 crore).

“Our acquisition of Savvion enhances our goal to provide unprecedented business visibility, responsiveness and business process improvement, coupled with highest degree of data integrity and integration,” Rick Reidy, president and chief executive of Progress Software, stated in a press release on Tuesday.

Progress Software, which employs 1,800 globally, has a workforce of 250 in Hyderabad. It has invested $10 million (around Rs 46 crore) in its Hyderabad facility over the last five years.

The company has revised its business outlook, reflecting the anticipated impact from the acquisition of Savvion. It expects its GAAP (generally accepted accounting principles) revenues to be in the range of $538 million (Rs 2,474crore) to $548 million (Rs 2,520 crore) for the fiscal ending November 30, 2010.

Progress Software expects to issue aggregate of approximately 110,000 equity shares to six Savvion employees, who have joined Progress as part of the acquisition.

 

BHARTI-LIMELIGHT LINK UP TO DELIVER MULTIMEDIA SERVICES
Leslie D'Monte, Mumbai
Financial Chronicle  The Telegraph    

India’s largest private telecom company, Bharti Airtel, wants to help international players deliver multimedia content to Indian players, while simultaneously helping local companies to deliver content to foreign ones. It has tied up with Limelight Networks to launch content delivery network (CDN) services in the country. Limelight is the second-largest CDN player globally in terms of revenues.

The combine will set up servers in Chennai and Mumbai, that complement Airtel’s existing network infrastructure that enables it access to undersea cables via international cable landing stations at these two cities, according to Ajay Chitkara, CEO, Global Data Business, Bharti Airtel.

A CDN, according to Frost & Sullivan analysts, basically comprises technology and services that enable the rapid and uninterrupted flow of content from the origin server to the end user. There are over 20 CDN vendors, including big names like Akamai, Internap, Limelight Networks, SyncCast, BitGravity, Velocix and even Amazon. The market for CDN services in Asia is estimated to be $350 milion by 2014, while the CDN market in India is expected to be $100 million (Rs 455 crore).

Limelight Networks and Bharti Airtel will offer their customers “the ability to create a high-quality experience for their end-users — whether they’re watching an HD movie, making an online purchase, listening to music, playing a video game, or downloading a software package”.

“Over the last few years, internet usage has completely changed from using simple text to more of multimedia options (video, games, etc). Today, users expect online video, music, images, and software to behave just like content accessed by turning on a TV, playing a CD or DVD, or loading an application from a hard drive,” reasons Chitkara.

Limelight Networks would get access to one of the fastest growing emerging markets, says George Fraser, its Vice-President (EMEA & Asia).

The company’s architecture includes a dedicated optical network that connects thousands of servers around the world with over 900 last-mile access networks and 25 delivery centres. It has “eight years of experience in successfully delivering some of the largest live and on-demand events in the history of the internet, including the 2008 Beijing Games and the 2009 inauguration speech of US President Obama,” said Fraser.