1. Top Headlines
 HKEx to buy London Metal Exchange, NRI family Bagris to
get $205M.
 Jyothy Labs to merge Henkel to consolidate biz
 Air Works India invests $22M in Dubai’s Empire Aviation
group
 Sharma to launch $500M London hedge fund
 Sweden's IKEA to invest $756M in India
 Vinod Khosla’s SunBorne Energy raises $5M VC funding.
 DJB fined Rs 5,000 for imposing undue penalty on
consumer
Weekly Executive Summary
Stocks and commodities plunged as fears over the outlook for global
growth mounted following weak manufacturing data from Germany and
China. Moody’s Investors Service downgraded the ratings of several
global banks citing risks and volatility in the capital markets. Brent
crude fell to a 18 month low of $89.64 per barrel after China’s
manufacturing sector contracted for an eighth consecutive month to
48.1 in June due to a fall in exports. Manufacturing activity in Germany
was also weakest in three years.
In other news, it’s not been a good day for India’s cement industry
either. A clutch of top companies in the industry face a steep fine for
allegedly colluding to raise prices. The Competition Commission of India
has fined 11 cement companies a total of $1.1 billion. It says they kept
production artificially low to create shortages. The companies being
fined include the Aditya Birla Group’s UltraTech Cement, ACC, Ambuja
Cement and the Indian arm of French company Lafarge. News of the
CCI’s decision came after markets closed for the day. But industry
watchers had been anticipating the penalty for some time now.
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2. RIL has decided to sell its textiles business, including its iconic brand
Only Vimal. RIL has hired NM Rothschild to manage the sale of the
business. The Only Vimal brand is being sold to make the textiles unit
more attractive for potential buyers.
The Competition Commission of India verdict is out. CCI has severely
censured cartelization in the cement industry by imposing a penalty of
at least Rs. 6,300 crore on the top 11 makers of the material. Among
these, the worst-hit are ACC Ltd, Ambuja Cements Ltd, UltraTech
Cement Ltd and Jaiprakash Associates Ltd, which have been fined in
excess of Rs. 1,000 crore each. All the 11 firms were fined 50% of their
average profit for fiscal years 2010 and 2011.
The coal ministry will push for significant dilution of the provisions of
Coal India’s current fuel supply pacts with power companies during the
meeting at the Prime Minister’s Office today.The ministry will propose
lowering CIL’s supply commitment under new FSAs to 65% of the
contracted quantity for the first 3 years, 72% for the fourth year and
80% for the fifth year and will increase the penalty level for reduced
commitment.
Pipavav Defence and Offshore Engineering will be on the radar after
DCNS, the French defence major said that it is likely to buy little less
than 10% stake in Pipavav Defence for around Rs. 800 crore, The deal
values the shares of Pipavav Defence at a substantial premium of more
than 32% to its last closing price.
Lastly, there is competition for WalMart as LanMark is gaining
popularity in retailing in south India. LanMark, which has brought
together 160 small dealers of white goods in Kerala under a common
brand, has quietly made its debut in Tamil Nadu with 12 stores under its
fold. That aremeans it has more stories under its umbrella, than Croma
and Reliance Digital do.
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3. Inside The Story
HKEx to buy London Metal Exchange, NRI family Bagris to
get $205M
Hong Kong stock exchange has sealed a deal to acquire LME Holdings
Limited, the parent company of the world’s largest non ferrous metal
trading bourse London Metal Exchange, in a deal worth £1.38 billion
($2.18 billion). This would be one of the most high profile acquisitions
of a financial services company in the developed world by an emerging
markets company. As per the deal, HK Investment (UK) Limited (HKEx
Investment) and Hong Kong Exchanges and Clearing Limited (HKEx)
have entered into an agreement to buyout LME Holdings. The deal
involves purchase of £107.60 per LME ordinary share in cash.
Jyothy Labs to merge Henkel to consolidate biz
Consumer goods company Jyothy Laboratories Ltd is merging Henkel
India Ltd with itself to consolidate its personal care products business
under a single umbrella, completing the final leg of its strategic
acquisition of the Indian arm of German giant Henkel.Jyothy Labs, which
currently owns 83.66 per cent stake in Henkel India, will issue 1 share
for every eight shares owned in Henkel India. If the same is converted
Into shares or treasury stock of Jyothy Labs, it would be worth Rs 288
crore as per current stock market price. But the company has decided to
cancel them, which would lead to minimal equity dilution for Jyothy
Labs. Other shareholders of Henkel India would get cumulatively just
around 2.87 per cent stake worth Rs 55 crore.
Air Works India invests $22M in Dubai’s Empire Aviation
group
Air Works India Engineering Pvt Ltd has acquired a strategic stake in
Dubai-based Empire Aviation Group for $22 million (Rs 120.9
crore).Through this investment, Air Works India plans to expand its
aircraft business in Middle East and provide its services to customers in
India.Founded in 2007, Empire Aviation, an aircraft asset management
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4. company, provides private aviation services such as aircraft sales,
aircraft management, charter and finance and insurance. The company
focuses on a distinctive asset management approach to private
aviation.“The transaction will be financed by taking senior secured debt
from a consortium of four private equity firms led by KKR & Co. LP,”
said Vivek Gour, managing director of Air Works.
Sharma to launch $500M London hedge fund
Sutesh Sharma, the former head of proprietary trading at Citigroup is to
launch his new London-based hedge fund, Portman Square Capital, with
around $500m this autumn.The fund manager will be one of the largest
hedge fund start-ups of 2012, and among the most high-profile of those
that have spun out of banks’ internal trading operations in response to
tough new US legislation.Mr Sharma’s new venture has been widely
anticipated by many in the industry since it was conceived last year.The
former Citigroup trading star was also the former head of proprietary
trading at Morgan Stanley and is a close acquaintance of Citigroup chief
executive Vikram Pandit, with whom he founded Old Lane Partners, one
of the biggest hedge fund launches, in 2005. Old Lane was acquired by
Citi in 2008 – a deal which propelled Mr Pandit to the top of the bank.
Sweden's IKEA to invest $756M in India
Sweden's IKEA, the world's largest furniture maker, will invest 600
million euros in the Indian retail market, a trade ministry official said on
Friday.IKEA Chief Executive Mikael Ohlsson met Indian Trade Minister
Anand Sharma in St. Petersburg, Russia, to discuss the investment. The
official said the company had filed an application to start operations in
India.India currently allows 100 per cent foreign direct investment in
single-brand retail, but bars foreign investment in supermarket chains.
Vinod Khosla’s SunBorne Energy raises $5M VC funding
Vinod Khosla-backed Sun Borne Energy Holdings LLC has raised $5
million (Rs 28.4 crore) in VC funding as part of its plan to raise $20
million (Rs 113.5 crore) equity funding, according to information from
the US Securities and Exchange Commission’s Notice of Exempt Offering
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5. of Securities. The identity of the investors has not been
disclosed.Massachusetts-based SunBorne Energy, which was
incorporated in 2008, operates in the solar energy spectrum. In India,
the company’s business model is based on utility scale projects.
SunBorne has successfully bid for several solar projects awarded by
Gujarat (15 MW), Rajasthan (Phalodi), Andhra Pradesh and Karnataka
(10 MW). It has drawn up massive expansion plans in the solar energy
segment and aims to build over 1 GW of power in 5-7 years, underlining
the enormous potential of the nascent solar power sector in India.
SunBorne plans to commission more than 200 MW of capacity by 2014.
DJB fined Rs 5,000 for imposing undue penalty on
consumer
A consumer forum here has imposed a penalty of Rs 5,000 on Delhi Jal
Board (DJB) for wrongly penalising a consumer for "negligence" of its
officials, who had sent her cheque for water bill to a wrong bank. The
woman had issued a cheque drawn on the State Bank of India, but the
DJB sent it to the Punjab National Bank, which returned it with the
reason that it was 'wrongly delivered /not drawn on us'. The civic body,
Subsequently, imposed a fine of Rs 400 on the consumer for not paying
the water bill.
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