Investments Pour Into Bangalore

The Karnataka government today cleared 55 new investment proposals involving an investment of Rs 39,583 crore with an employment potential of 115,000.


Major investments cleared today includes

• Expansion project of Toyota Kirloskar Auto Parts Pvt Ltd at investment of Rs 500 crore in Bidadi near Bangalore
• Tyco Electronics Corporation India Pvt Ltd, which has proposed to invest Rs 595 crore to manufacture connector cables and other electrical components in Devanahalli industrial area.
• Target Corporation India Pvt Ltd, a subsidiary of the US-based Target, plans to set up a software and business service centre in Devanahalli industrial area for an investment of Rs 300 crore
• Schneider Electric India Pvt Ltd plans to expand its electronic power gadget capacity in Attibele industrial area in Anekal taluk at a cost of Rs 53 crore.
• Wipro, the third largest software exporter, has proposed to set up a unit in aerospace SEZ near the Bangalore international airport at an investment of Rs 52 crore.
• Pepsico India Holdings is expanding its unit to manufacture non-alcoholic beverages and other food products at its existing facility in Nelamangala at Rs 55 crore

The state high level clearance committee (SHLCC) headed by chief minister B S Yeddyurappa cleared these proposals at its 24th meeting here today. Briefing reporters, Murugesh R Nirani, minister for large and medium industries, said, “Most of the new proposals cleared today are expansion projects of many existing industries in the state. The state government will organise the second edition of the Global Investors Meet on June 3 and June 4, 2012, to attract more investments.

Bangalore boy Phaneesh Murthy scripted a mega deal in IT on Monday when his much smaller company,iGate Corporation,acquired the much larger Patni Computers for $1.22 billion (Rs 5,500 crore)

Bangalore: Bangalore boy Phaneesh Murthy scripted a mega deal in IT on Monday when his much smaller company,iGate Corporation,acquired the much larger Patni Computers for $1.22 billion (Rs 5,500 crore).
The acquisition gives Murthy the heft to barge into the Big Boys club and play with the likes of TCS,Infosys and Wipro as the combined entity will boast a billion-dollar topline.
The acquisition was finalised after several weeks of backroom negotiations and media speculation.The deal is expected to be closed,along with regulatory approvals,in the first half of this year.Speculation is rife that the new entity will be called iGate Global.The deal has been done at Rs 503.5 per share,valuing Patni at around $1.45 billion.TOI first reported that iGate and Apaxs winning bid was priced between Rs 500-505 per share almost ten days ago.The three Patni brothers,who together held a 45.6% stake,are selling their stake along with private equity investor General Atlantic,which held a 17.4% stake in Patni.
iGate will make an open offer for a further 20.6% stake in Patni as a result of which it will get anywhere between 63% and 83% stake in the company depending on the outcome of the open offer.The deal size is perhaps bested only by Oracle Corps acquisition of a majority stake in i-flex solutions for more than $1.5 billion in 2005.
iGate will have to raise around $700 million through debt from Royal Bank of Canada and Jeffries & Company.A further sum of $100 million will be raised from iGates cash reserves.Private equity partner Apax Partners will invest anywhere between $270-$ 480 million (depending on the response to the open offer) for a 20%-34 % stake in iGate.
The deal values mid-size Patni at around eight times EBITDA (earnings before interest tax depreciation and amortisation) and at around 1.8 times revenue.Compare the valuation with that of the biggies: Infosys,Cognizant and TCS quote over 20 times EBITDA and between 5-8 times revenue.
Two bankers who worked on the deal said Patnis valuation was good,factoring in its growth profile in recent years.While Patni registered revenues of $518.7 million in the 9 months ended September 2010,the corresponding figure for iGate is less than half,at $199.5 million.

BILLION-DOLLAR BABY

FIGURING THE DEAL

The transaction is valued at $1.22 billion,including the mandatory 20% open offer to the public shareholders of Patni

iGate

to buy 45.6% shares of the three Patni founders Narendra Patni,Gajendra Patni and Ashok Patni along with 17.4% stake of PE firm,General Atlantic

iGate

will pay $921 million for buying 63% stake at Rs 503.50 apiece.It will also make an open offer for a further 20.6% stake in Patni,taking its stake to between 63% and 83%

WHEN WILL IT BE SEALED

By first half of 2011,after acquiring all regulatory approvals

THE HEADCOUNT

By Sept 30,2010,the combined headcount will be 24,834