Mint August 28, 2007 page 18
Puchase of 50.1% + 20% open offer can be counted as the 10th buyout deal by PE firms in India.
The article quotes ICICI Venture Funds Management Co.'s buyout of Tata Infomedia, Actis Capital Llp's buyout of ICI India Ltd.s nitrocellulose manufacturing unit. The article mentioned that ACTis did 3 more deals. ICICI Venture went on to do first successful LBO deal, ACE Refractories Ltd. in 2005, which was sold this month for Rs.550 cr against an investment of Rs. 100 cr. Blackstone backed a management buyout of Mumbai based Intelenet Global Services Pvt. Ltd.
Banks which lend to LBO investors abroad are not yet comfortable doing the same in India.
author: Snigdha Sengupta, Mints resident expert on PE and VC. Comments and questions are welcome at venturematters@livemint.com
Showing posts with label acquisition finance. Show all posts
Showing posts with label acquisition finance. Show all posts
Tuesday, August 28, 2007
Tuesday, June 19, 2007
Seeds of a credit crunch growing a global LBO loan market
The Economic Times (ET), 20-6-2007, Page 10
Earlier banks used to finance LBOs/buyouts mainly with loans on their balance sheets. But they are now packaging and selling those loans to investors using instruments called 'collateralised loan obligations" (CLOs) that group various loans together to diversify risk.
In the old days of relationship banking, banks relied on credit quality control and huge balance sheets to ride out any problems, but CLO investors may be more short-term oriented and will dump their securities in case of underperformance and problems.
Collateralised Debt Obligations (CDOs)a broader classificationo of the structures, have been especially voracious buyers of CLOs. Total CDO sales grew to more than $300 billion, a record doubling in size in less than two years.
Anthony Schultz, a portfolio manager at Mendon Capital, says you're clsoe to the peak of the cycle and for new CDOs coming to market, the end buyers are going to say, 'Ijust took a loss on these things and you want to sell me more?'. The credit crunch will begin then.
Earlier banks used to finance LBOs/buyouts mainly with loans on their balance sheets. But they are now packaging and selling those loans to investors using instruments called 'collateralised loan obligations" (CLOs) that group various loans together to diversify risk.
In the old days of relationship banking, banks relied on credit quality control and huge balance sheets to ride out any problems, but CLO investors may be more short-term oriented and will dump their securities in case of underperformance and problems.
Collateralised Debt Obligations (CDOs)a broader classificationo of the structures, have been especially voracious buyers of CLOs. Total CDO sales grew to more than $300 billion, a record doubling in size in less than two years.
Anthony Schultz, a portfolio manager at Mendon Capital, says you're clsoe to the peak of the cycle and for new CDOs coming to market, the end buyers are going to say, 'Ijust took a loss on these things and you want to sell me more?'. The credit crunch will begin then.
Subscribe to:
Posts (Atom)