INDIA BUSINESS WORLD - FEBRUARY 16st - FEBRUARY 29th - 2008
ICICI ARM, JAYPEE END $800M DEAL
What could have been one of the largest private equity (PE) deals in India has come unstuck, joining the list of similar high-profile pacts that were casualties to costly valuations and adverse market conditions, among other factors.
ICICI Venture and Jaypee Infratech have terminated talks for the PE player buying around 10-15% stake for $800 million in the infrastructure company, which is developing a project worth Rs 1 lakh crore. The deal could have given Jaypee Infratech a valuation of over Rs 30,000 crore. “ICICI Venture is not investing in Jaypee Infratech. We were looking at getting a strategic investor in the firm, but have put our plan on hold for now,” Jaiprakash Associates (JAL) executive chairman Manoj Gaur said.
Jaypee Infratech is a wholly owned subsidiary of JAL; the original plan envisaged investors acquiring 44% stake in the company through allotment of new shares. But now Jaiprakash Associates plans to invest up to Rs 440 crore to acquire 44 crore equity shares of Rs 10 each at par in one or more tranches in Jaypee Infratech. The additional shares Jaiprakash Associates is subscribing to was originally meant for strategic investors, Mr Gaur said, adding that “since the strategic investment has been put on hold, JAL has initiated action to subscribe to these shares”.
It couldn’t be ascertained as to why the deal didn’t work out. But sources said valuation and board representation, among other things, may have played a part.
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