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| UB's Vijay Mallya: brewing a heady concoction |
Investors
and analysts usually react carefully to announcements by the flamboyant
chairman of the UB Group, Vijay Mallya. Several have amounted to
little. But the latest announcement that Scottish and Newcastle
(S&N) would invest Rs 425 crore into the beer business of the
UB Group should bring good cheer. For some time now, Mallya has
been looking at bringing in a foreign brewing major in a bid to
improve the financial health of the beer business.
There are two parts to the deal. In the first,
UB will receive Rs 200 crore in the form of redeemable optionally
convertible preference shares and Rs 50 crore in the form of loan
stock (which can be later converted into equity). If the entire
investment of Rs 250 crore is converted into equity, S&N would
get a maximum shareholding of 26 per cent in the beer business.
The cleverness of the deal is that it is not based on current valuations.
Within the next five years, when S&N decides to convert its
investment into equity, a valuer will be appointed and the price
of the shares decided. If UB and S&N cannot agree, UB can just
repay the investment with a 5 per cent interest per annum.
The second part of the deal involves the setting
up of a Special Purpose Vehicle. This will be formed with a share
capital of Rs 1 crore: 40 per cent of the company will be held by
UB, 40 per cent by S&N and the rest by an independent managing
team lead by Ravi Jain and Associates. For its share, S&N will
invest Rs 175 crore. UB on its part will transfer the assets and
liabilities of Millennium Alcobev and those of Inertia Industries.
The SPV will be the main vehicle for new acquisitions and will eventually
be merged into the brewing company.
Ravi Nedungadi, President and CFO of the UB
Group and the main architect of the deal, says it meets three 'objectives.'
The beer business now gets a better valuation, even as it provides
Mallya with much-needed cash. A significant portion of the group's
debt burden (which stood at Rs 360 crore in the first half of the
current year) can be wiped out, improving the profitability of the
company. ''Third, it provides us an array of international brands
from S&N's stable like Kronenbourg, John Smiths and New Castle
Brown. Also we can leverage S&N's network to push our Kingfisher
brand beyond the London curry houses. This will help us grow internationally
as S&N's brands are the market leaders in UK, France, and Belgium,''
adds Nedungadi. Now that's no small beer, right?
-Venkatesha Babu
EXECUTIVE
TRACKING
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| M.S. Banga: bidding adieu? |
It
is all in hushed tones at the moment. But the buzz in the placement
circles is that there is big action afoot at HLL. There is buzz
of chairman Banga moving out-sooner than planned-and vice-chairman
M.K. Sharma taking over. Sharma, HLL's legal eagle was promoted
to vice-chairman some time ago. There is also talk of another restructuring
where the company's activities get aligned into two divisions: Food
and non-food, with each sporting a new CEO. A HLL spokesperson,
when contacted, denied that any of this is taking place, but the
buzz continues.
Heard of Premji Foundation? That's where Dilip
Ranjekar, the head of hr at Wipro is headed.
Meanwhile, Prateek Kumar currently head of
human resource at Wipro Technologies will be handling group HR.
REFCO-SIFY SECURITIES
Online Option
Refco-Sify is providing India with its first
online derivatives trading platform. Are investors ready to bite?
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| Vineet Bhatnagar: persuading the investor
to do it online |
Vineet
Bhatnagar is a man with two very challenging missions. Not only
has he taken it upon himself to persuade the Indian small investor
to shift to trading in derivative instruments, he's also attempting
to get the retail Joe to trade in options and futures online. Bhatnagar
is Managing Director of Refco-Sify Securities India-a 60-40 JV with
an authorised capital base of $10 million-which is India's only
foreign brokerage targeted at the retail investor, and more significantly,
the country's only company that facilitates online trading in derivatives,
via portal smartjones.com.
''In an overbrokered market like India, we
realised that price couldn't be a strategy; instead positioning
ourselves as an MNC broker targeting the retail segment made much
more sense,'' explains Bhatnagar, an IIM-A PGDBM, who has also done
stints with Prime Broking and Hong Kong Bank. Bhatnagar's broking
experience coupled with Refco's expertise in derivative products-the
group is the world's largest non-bank futures commission merchant-explains
why Refco-Sify is the only provider of online derivates trading
in India till date.
According to Bhatnagar, online trading will
only take off if the transaction-oriented portals are able to get
the investor to trust the technology and security of networks. Once
that happens small investors will logically gravitate towards the
net as it is convenient, fast, in real-time and roughly 20 per cent
cheaper than offline trading. As for trading in derivatives, daily
volumes at Rs 1,100 crore are already 40 per cent of the cash market
volumes, and Bhatnagar predicts that in 12 months the two will be
equal.
Meantime, Refco-Sify is busy developing the
market by holding seminars all over the country, right from Mangalore
to Bhavnagar to Indore, and demystifying jargon like Call Spreads,
Straddles, and Strangles. Are you up to it?
-Brian Carvalho
BHARTI TELEVENTURES
Return Of The IPOs
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| Sunil Mittal: IPO-catalyst |
It has several
firsts to its credit: one of the first book-building IPOs after
a gap of 12 months (the last one being Mid-Day Multimedia in February
2001); one of the first 100 per cent book-building IPOs. And by
the time you read this, it will all be over. The it in question
is Bharti Televentures' IPO, and at the time this issue went to
press, on January 29, bids had been received for 10.94 crore shares
of the 18.53 crore shares on offer. The bids ranged from Rs 45 (the
floor price) to Rs 50 per share. At the minimum price of Rs 45,
bids were received for 3.07 crore shares, while there weren't too
many bids over Rs 50. We won't quibble about the price here as that
will be irrelevant by the time this issue hits the stands, but fact
is, if an IPO can complete 60 per cent of its offer on Day 1, the
good times may well be back on the Street.
-Roshni Jayakar
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