Hindustanis.Org

For private equity (PE) players, mid-sized, family-owned companies in India still retain their charm. Leading PE firms are learnt to have evinced interest in a major fund-raising programme by Trichy-based Cethar Vessels, a Rs 1,100-crore boiler manufacturer, which has lined up an ambitious expansion programme to meet the growing demand for power generation.

Private equity players such as Chryscapital, CVC and UTI Ventures are some of the names that the closely-held Cethar is learnt to be talking to for offloading part of the promoter stake. The funds infusion could be in the range of $50-100 million, according to people close to the development.

The funds would be used up for Cethar’s expansion programme. The boiler maker had earlier said it would need about Rs 900 crore to build facilities for boiler auxiliaries and pressure parts. It also plans to raise Rs 500 crore from private equity funds and tie up with banks and institutions for the remaining amount.

When contacted, K Subburaj, chairman, Cethar Vessels, told ET: “We have mandated SSKI to find a private equity investor. We are meeting with Chryscapital. But it is one of the many meetings that SSKI is arranging for us. It will be at least a month before an investor is finalised.” Cethar is also likely to soon appoint an audit firm to do financial auditing and get another investment bank to help arrive at a valuation.

The company has been talking to a number of audit firms, including KPMG, for the purpose.Sources said Cethar intends to raise private equity money before March 2008 as it will help the company chip in with additional promoter’s equity for raising funds from banks and FIs. The company, which reported a revenue of Rs 1,100 crore last fiscal and has set its sights on about Rs 1,750 crore in the current year, has plans to go public before 2009.

Source - Economic Times 

The chill is on. Back in June, dealmakers gushed about the hot market after notching a record $2.7 trillion of mergers and acquisitions worldwide in the first half of 2007. With the number of deals down 49% in the credit crunch, sentiments have cooled: Nine percent of dealmakers are calling the M&A environment “excellent,” vs. 49% in midyear, according to exclusive research from the Association for Corporate Growth and Thomson Financial (TOC).

The groups’ biannual survey, which polled 813 private equity executives, investment bankers, lenders, entrepreneurs, and other players in M&A, found that the once-unbridled optimism has been replaced by more realistic expectations. Although the dreams of $100 billion buyouts are gone, most pros expect strong M&A activity. After all, private equity firms are sitting on huge piles of cash after collecting billions from investors in recent years. In the latest quarter they raised $30 billion, down from a record $60 billion in the fourth quarter of 2006.

Don’t expect the same type of deals, though. For one thing, it’s no longer a sellers’ market. Now that stock prices have dropped, 39% of dealmakers figure buyers have the upper hand, up from 13% six months ago.

Some 75% of the 212 private equity firms surveyed, a subset of the group, predict that the number of buyouts will shrink, while 93% figure distressed deals will be in vogue. Deals also may have a more international flavor. Some 43% of all participants think cross-border deals are increasingly important. Yet 46% of the private equity types say the U.S. is still the best place for their deals. Next best: China.

Despite the new mood, buyout firms don’t expect their day-to-day work will change much. Some 80% say they won’t change gears and modify their investment strategy. Of course, they may have to battle strategic corporate buyers over targets more than in the era of easy money. “The pendulum has shifted away from private equity,” says Robert Kaiser, vice-president at Thomson Financial. “In the future, private equity will be lucky to be 25% of U.S. M&A.”

Source - Businessweek