The India Investment Post

In exits, the Patni exit came after a 10 year wait for a paltry $1.5 bln valuation ( $1.2 bln at Year end exchange rates) The BPO giant Intelenet also found it difficult to close the deal, finally settling for $600 mln for Blackstone's exit by selling tio Serco. Serco has thence not ramped operations in India too much either.

Warburg Pincus made some good profits in its sale of 4% of Kotak mahindra for a good price on the exchanges with $245 mln in its kitty. it still holds another 6% but has exited most of its other investments like Vaibhav Gems and even Max India

As the Indian Telecom story merged int ot he global mainstream saga of despair and degrowth, ChrysCap was able to get out of Idea Cellular, its 2.7 percent stake fetching $170 mln

Last in the list, Siemens had to bide its time for its venture to exit BIAL selling 14% of the airport to ROFR holder GVK after a wait of 3 years for Rs 6.14 bln or $120mln.

Siemens Project Ventures, which typically puts in $130 million-$1.3 billion in a project, has invested in 14 international power plant projects, with an overall capacity of more than 8,000 MW, as well as in three telecommunications projects, two medical centres and an airport, with a cumulative project volume of $10 billion.

The year's top 5 deals include the Hero Honda sale of Honda stake when GIC and Bain, funded Hero thru an acquisition of 26% in Hero Investments Pvt Limited set up to ensure the promoters could go through with the sale without affecting their prospects forthe future without their erstwhile technical collaborator/ JV partner

They could have paid market prices for their $848 mln investment but for the growth prospects of the company. Meanwhile while Patni PE and promotyers waited 10 years to sell out, iGate promoter Phaneesh Murthy was able to get a buy in from Apax Partners for $480 mln to fund his $921 mln acquisition of Patni

India's infrastructure story continues to offer a lot of midcap players every year, an anachronism in terms of the size of projects required and other challenges, but PE firms and in this case JP Morgan signed on to a stake in SKIL Infra for $400 mln. The IPO instead would have been $225 mln and infra stocks have fallen nearly 50% in a year when the Indian markets dived 24% from their nnear top start in Jan 2011 

SKIL gets JP Morgan stakes in a shipbuilder in Pipavav and Everonn Education

Apollo Global signed up for $350 mln in Welspun, a majority in the groups Pipe manufacturing company and the rest in Welspun maxsteel, for rolling supplies to Welspun Corp. The Pipe companies supplies to OIl and Gas projects but also to any other sector using Iron/Steel pipelines.

Renewable Energy also got a headstart in 2011 deals after the big thrust in Power and 4g in 2010 with Goldman Sachs AM buying $200 mln worth majority ownership in ReNew windpower that plans to build a 1GW Wind farm footprint by 2015

2011 was as much about making business happen as any other year despite deal business going down by 30% to $460 mln in the year in India and as usual we had a consultant reporting on growth from the India corneer of the world in Investment Banking as global focus shifts to fee adviisory business. India's share is a less than 8% of the Asia pie which itself yields a  $1 mln lower than each corresponding deal in the US on average. US leads in investment banking deals this season as well. PSE divestments that comprise large volume of business tyupically entail a  negative revenue entropya s expenses are not reimbursed and banks bid low for the goodwill

The largest component of the deal business in India continued to be Private Equity with VCC listing the Top 5 deals and the Top 5 exits in the big ticket deals that went down. 

Earning nearly $500 mln from fees may be still much lower for investment bankers to satisfy staffing for growth 5 years out esp as the region's deal yields depend on Pe which is currently fighting funding and legal wars in their global franchises as regulations circles around to make it tougher for them to ensure profitability on deals following numerous failures in high fashion and early / blocked exits in existing deals. 

It was especially happy for the bankers and the PE teams for getting through these deals in 2011

In Dollar terms the Indian markets have fallen 33% this year ( more than that at 1700 points from 4700) 

The FTalphaville team, writes on the general success of bankers to play with derivatives a s a derivate of our literacy bound skills learnt by the coming generations. With 2 in 3 people in India qualifying as educated, this is just where our brain matter has been applied too. and what Sid Mallya possesses to run Kingfisher after his Father's true legacy

In summary what the Flynn score trends over the last few editions show, is that people have been getting better at abstract problem solving, more likely to prefer arcane problems with fuzzy results than disruptive rights or wrongs with every choice

 

The Flynn effect has always been tinged with mystery. First popularized by the political scientist James Flynn, the effect refers to thewidespread increase in IQ scores over time. … What’s most peculiar is how scores have increased:

1) Scores have increased the most on the problem-solving portion of intelligence tests.

2) Verbal intelligence has remained relatively flat, while non-verbal scores continue to rise.

3) Performance gains have occurred across all age groups.

4) The rise in scores exists primarily on those tests with content that does not appear to be easily learned.

What’s puzzling about this increase in general intelligence is that it appears where we’d least expect it. While one might assume that IQ scores could increase over time in terms of crystallized intelligence — the part of the test that measures particular kinds of knowledge, such as being able to count or vocabulary words — it’s actually increased on measures of fluid intelligence, which is the ability to solve abstract problems.

This could even reflect on how the Anna movement lost steam soon after the math in the Lower house and the Upper House was revealed in News analysis. Also on show was a movement commentator who was seemingly hoping to learn about the content of the movement from the Parliamentary debatee and his fellow commentators

Air India sat pretty while everyone cried foul on the aviation industry, airlines' stopped pying the gas billa t the airport and while vendors have been paid and /. or prioritised, banks continue to suffer, printing credit lines, much like the Eruopeans without any collateral, reusing old paper and where loans are dead certain to be lost to fantasies, issue preference shares to themselves. They should have been adminstering the airlines in bankruptcy court buit as of now, no leasing arrangement for athe aircraft, no stoppage to airlines expansion and no money to pay salaries, contagion spreading to banks instead of cutting losses. 

A random quote to a ftalphacville post on Flynn scores that also segues to my next post on the general increase in abstraction and problem skills as a way of life. So you know I am not really complaining banks made the deal. Banks should.

 

We’ve become better at abstract thinking. We don’t have any trouble analysing a financial market that has no physical location, or considering credit exposures to sovereign nations through derivatives contracts. It’s just what we do.

Furthermore, as the ability to think abstractly correlates with intelligence, it becomes a self-reinforcing cycle where the people who are best at such reasoning stay longer in education, and get even better at abstract thinking, becoming even more intelligent… until one day, after many years of study, a good portion of them land in investment banks. So what do you think happens next? To what task is the abstract thinking capability employed?

 

As 2012 begins on a low note , market levels are encouraging enough for investors to make a commitment to India for more than a few million and they laso have been able to play the non FII traders in the market who continue to roll over (angel brok) short positions in short of the eternal 4500. Inflation figures were encouraging witha 6 year low on food inflation

Onions were 40% cheaper last week, 60% this week while potatoes are also down 33% as warehouses start collecting stocks and rot starts while waiting for good exports prices. 

Primary inflation came under 3% meraning good numbers for basic goods and primary articles supporting the falling nose of inflation with fuel stubbornly continuing but lower at 14.5%

There have been subtle changes in the Dollar - Euro - Commodities links ( see article ) in this month despite the year end low volumes and lack of interest which evidence a great year for equities from next week! Happy new year,e veryone and thanks for staying around! 

Japan hardly imports $30 bln annually from India and is almost entirely dependen to n Chinese imports for its local economy esp since the tsunami. However it has been developing India with annual Capital investments of INR 90 bln or $2 bln and an almost equal amount of INR 88 bln or another $ 2 bln in development aid this year. 

Japan is providing $4.5 bln in the Delhi Mumbai Industrial Corridor looking at developing more than 12 new citiies on the route amongside the larger Dedicated Freight Corridor which encompasses more of the nation across its two legs Delhi - Kolkata and Delhi Mumbai,. The Eastern corridor of the DFC itself costs $10 bln while the DMIC is envisaged to cost $90 bln. The freight corridpor speeds up our Logistics gap while the DMIC undertakes urbanisation in new zones to catch up with the China equation

 

(Reuters.in)The Japanese and Indian governments agreed Wednesday to set up a three-year, $15 billion bilateral currency swap line in an effort to buttress their economies against Europe's sovereign debt crisis.

Yamini Chao | The Image Bank | Getty Images

The new swap line--five times the previous arrangement, which expired in early summer--follows a Japan-South Korea deal in October to boost their bilateral swap pact to $70 billion from $13 billion.

The moves signal spreading doubts among Asian economic powerhouses about the ability of European leaders to fix their problems anytime soon.

 

Indian Media and Entertainment posted a string of positives though listed bullionaires like Eros and PVR continued to struggle to prove their worth on a perceived high cost base, being measured against some unreasonable expecgtations. While Ra.One was a blockbuster but fell on being second to Sallu's antics, The Don 2 and Mission Impossible concurrent successes of this month are being compared on equally tenuous marks despite $3 mln of daily business as Indian enterepreneurs in their bid to fund the global majors have set a high watermark for profitiong from the success of this entertainment. To a funny bone it might aseem its corporatisation is a s much a dud as that of Foreign banks like Stanchart to harness the Indian Capital markets, with IDRs that do not have the rights for investors to enjoy the company's performance.

Don 2 collected $15 mln in Domestic markets in Week 1 and $10 mln overseas while collections from Tamil and telugu added at least $ 3mln or 12.5% of its Week 1 collections

P&G India added A&M expenses to 37% of Sales in the period to March 2011 as it plans a new look entry into its strong product categories in the Indian market, trying to take out the resurgent consumer staples major Unilever. P&G India despite commitments to India and China has revenues below $1 bln in the Calendar 2011 as well after scoring $710 mln in March 2011 

Unilever has managed wafer thin margins on its exteneded distribution network as it keeps marketing spends below 20% while ITC has been able to build 3-4 $1 bln brands in the Indian retail lifetyle markets and Ashirvad in Consumer staples

Unilever india has posted nearly $4 bln sales in the same period and the drop in Ad spend borught back profits by almost 5% P&G's late introduction of value market brands like Tide, also led to a price and advertising war between the two, but P&G is still way behind as Modern retail almost moves to a different horse in the subcontinent with cola war like situation roping in Dabur, HUL P&G ITC and others into a different orbit in their negotiations with the Modern retail channel( supermarkets etc)

P&G will have to go much further than the $250 mln it spent in India last year and a % of revenues calculation is hardly the right parameter 

SEBI seems to have used investigations by Bloomberg UTV in cracking down on Almondz, Atherstone and PNB Invest alongwith 7 recent IPO companies like Bharatiya Global, Tijaria Polypipes, Onelife, Brooks Labs and PG Electroplast. These bankers and IPO companies are banned for 3 years from approaching the Capital Markets

These companies are charged with souping up DRHP disclosures sacrificing accuracy, misleading investors as well as using ICD routes to divert fiunds to operators for driving post IPO prices on the bourses from the issue proceeds itself. (earlier version vanilla bridge loans based on IPO value used by brokers and bankers) 

According to B-UTV's Exposed, 30 of 37 issues this year were trading below par