Key private equity deals

Author: | Published: 1 Aug 2012
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Apax Partners Pipe investment in iGATE Corp

LAW FIRMS

Khaitan & Co
Apax Partners

Kirkland & Ellis
Apax Partners

Why: Apax Partners' US$330 million Pipe investment in iGATE Corporation involved the funding of a convertible preferred instrument. This was used as equity funding for iGATE Corp's acquisition of a controlling stake in Patni Computer Systems, which was the largest M&A transaction in the Indian IT industry. Now being deployed by several PE funds for their India-related investments, the innovative 'iGATE-Apax structure' is where PE invests in a strategic player in order to fund the acquisition of a target company.

Apollo Global Management – Welspun Group

LAW FIRMS

Akin Gump Strauss Hauer & Feld
Apollo Global Management

Amarchand Mangaldas
Apollo Global Management

Covington & Burling
Welspun Group

Khaitan & Co
Welspun Group

Why: This investment by funds affiliated with Apollo Global Management of approximately US$290 million in Welspun Corp was the second largest PE deal of the year and the sixth largest investment in the country since 2009. Coming at a time when sentiment among PE investors for investing in India was relatively low, it involved the acquisition of a minority stake by Apollo in Welspun Maxsteel for US$60 million. It also involved an understanding between Apollo and Welspun Infratech to explore a further investment of up to US$150 million in Welspun Infratech.

PEP – UFO Moviez India

LAW FIRMS

AZB & Partners
UFO Moviez India

Nishith Desai Associates
Providence Equity Partners

Wadia Ghandy & Co
3i Capital

Weil Gotshal & Manges
Providence Equity Partners

Why: Private equity fund Providence Equity Partners (PEP) acquired equity in UFO Moviez India and acquired shares from some of the existing shareholders of UFO. This acquisition was innovative as the existing investors in the company had various rights linked to certain timeframes. The transaction therefore entailed several negotiations to reconcile such rights among multiple investors who had invested in UFO at different points of time. The absence of a 'promoter' group in UFO further complicated the structure.

Sequoia – Fashion & You

LAW FIRMS

Amarchand Mangaldas
Norwest Venture Partners

AZB & Partners
Intel Capital

IndusLaw
Goldsquare Sales India

Luthra & Luthra
Sequoia Capital

Why: A group of investors, including Sequoia Capital and Norwest Venture Partners, invested in Goldsquare Sales India, owner of the trade mark Fashion & You, in one of the largest investments in the e-commerce space. The deal involved complex issues relating to inter-se rights of various existing and new investors, with the deal terms and structure having to balance the investors' varied aspirations. In addition, due to changes in India's FDI Policy, certain key investor rights had to be restructured and renegotiated just when the negotiation of transaction documents was about to be completed.

Serco – Intelenet

LAW FIRMS

Khaitan & Co
Barclays Bank (H&B) Mauritius

Linklaters
Serco Group

Nishith Desai Associates
Blackstone on tax issues

Simmons & Simmons
Barclays

Simpson Thacher & Bartlett
Blackstone

Talwar Thakore & Associates
Serco Group

Wadia Ghandy & Co
Indian counsel to sellers

Why: UK-based international services firm Serco Group acquired Indian business process outsourcing company Intelenet Global Services for £385 million (Rs 2,772 crore) in an all cash deal from a consortium of Blackstone, Barclays, HDFC and management shareholders. The total acquisition cost included contingent payments of up to £50m and was fully funded from Serco's debt facilities. This was one of the first secondary sales in the private equity market in India and involved UK PE style sale transaction documents. Documentation was signed within two months of the start of due diligence.

Sithe Global Power – SKS Ispat and Power

LAW FIRMS

Khaitan & Co
SKS Ispat and Power

Trilegal
Sithe Blobal

Why: Blackstone Group-owned Sithe Global acquired a 49% equity stake in SKS Power Generation (Chhattisgarh), an SPV set up by steel conglomerate SKS Ispat and Power for the development of a 1,200 MW coal based thermal power plant in the State of Chhattisgarh. Drafting counsel had to develop a governance framework for the SPV that best utilised the expertise of Sithe Global while ensuring that its management and control remained with the promoters. Ensuring the commercial intent was accurately captured in the transaction documents was a challenge, as were certain covenants in the project documents around the Indian promoters' shareholding, the requirements of the project lenders, US tax considerations, and the parties' commercial agreement.

TPG, Shriram – Vishal Retail

LAW FIRMS

AZB & Partners
TPG Capital

Cleary Gottlieb
TPG Capital

Kochar & Co
Vishal Retail

Trilegal
Shriram Group

Zeus Law Associates
Vishal Retail

Why: TPG and Shriram Capital's acquisition of the wholesale trading, institutional sales and franchise businesses of India's debt-ridden retailer, Vishal Retail, set a precedent as India's first significant distressed-asset buyout. It saw TPG and Shriram take over the floundering discount retail chain through a JV subsidiary, TPG Wholesale, after a slump sale approved by the High Court of India. But its successful culmination required the intervention of the RBI to ensure that banks with loans to Vishal were protected through a corporate debt restructuring exercise as well as the establishment of separate agreements with Vishal's secured and unsecured creditors.

Zend Mauritius VC Investments / IFC – Magma Fincorp

LAW FIRMS

Amarchand Mangaldas
International Finance Corporation

AZB & Partners
Zend Mauritius VC Investments

Wadia Ghandy & Co
Magma Fincorp

Why: Zend Mauritius VC Investments, a part of the PE division of KKR, and International Finance Corporation made a Rs 440 crore investment in non-deposit taking non-banking finance company (NBFC) Magma Fincorp. The simultaneous investments ran in parallel, with a different set of rights afforded to each investor. The challenge for counsel was to marry the rights of each investor with the other without adversely affecting the rights of either. Other challenges included the internal restructuring of the promoter group and inter-se transfer of the promoter shareholding, which involved questions of tax structuring and structuring from the perspective of Sebi regulations, and the restructuring of certain investments by the target company.

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