something to smile about? - Euromoney Institutional Investor PLC

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MARKETFOCUSIndian government pavesway for privatisation» Biggest off-loading ofshares undertaken» Privatisation toregenerate state-ownedindustry» ONGC 10% stake saleMarch 2004 is gearing up tobe a busy month in theIndian equity markets. Somuch so that investors havealready nicknamed itprivatization month.Privatization month willsee the biggest off-loading ofshares ever undertaken bythe Indian government (orany government worldwide)– it will divest more than $3billion of state-owned stock.If the part-privatization isIn brief»Nokia plans to buy outPsion’s share in Symbian,in a move to consolidate itsinfluence on the operatingsystem used in mostEuropean smart phones.The £135.7 million dealwould increase Nokia’sstake from 32.2% to 63.3%,but it is facing strongopposition from Psion’slargest shareholder whosays an IPO of Symbianshould be consideredinstead.»Juniper Networks is toacquire network-securitysoftware maker NetScreenTechnologies for $3.6billion in stock. Juniper hasbeen buoyed by a recoveryin the telecoms sector. Itfully subscribed it willbecome the largest equityplacement in India’s capitalmarket history.The equity sale formspart of a governmentinitiative designed toregenerate a percentage ofthe country’s hithertotraditionally state-ownedand controlled industries.By selling a proportion oftheir share holdings,expanding the capitalmarket base and increasingliquidity, the IndianGovernment hopes toattract foreign investmentand intellectual expertise.“The government islooking to establishreported fourth quarter netincome of $14.7 million upfrom $8.5 million.»Singapore-based STAssembly Test Servicesmade a $1.6 billion bid forSilicon Valley’s ChiPAC. Thedeal will create the thirdlargestcompany in the chipassembly and test services“back-end” service providermarket behind Amkortechnologies and AdvancedSemiconductor Engineering.»Diners Club Malaysiaannounced the first assetbackedsecuritization for itscharge card receivables inMalaysia with the issuanceof Domayne AssetCorporation Bhd’s (DACB)RM132 million ($34.7million) Medium TermNotes of 3.5 years tenure.widespread ownership, andeventually, a totaldivestment in companiesthat it perceives as being innon-core areas, i.e. sectorsthat are not classified asaffecting national security,”says Ravi Menon, director ofinvestment banking atHSBC in Mumbai.“This is all part of agovernment initiative thatreally kicked off in June2003, when the IPO fromMaruti began to open up thedomestic equity markets toforeign institutionalinvestors,” says YogeshShetty, group director ofcommercial foreignexchange at Travelex.Diners Club Malaysia willsell its charge cardreceivables on a revolvingbasis to DACB which will, inturn, raise the financing bydeclaring a trust over thesereceivables and issuingMTNs. This is the firstsecuritization deal of itskind in Malaysia.»Russia’s sixth-largest oilcompany, OAO Tatneft,won approval from theTurkish government to buya majority of oil refinerTupras for $1.3 billion.Tupras controls 87% ofTurkey’s refining market.»Enersur, the Peruvianbasedsubsidiary of Belgianenergy company Tractebel,won a 30-year concessionfrom the Peruviangovernment for the 130MWThe government’s jewelin the crown, and ahighlight of privatisationmonth, will be the publicoffering of a 10% stake inthe Oil and Natural GasCorporation (ONGC) India’slargest domestic companyby market capitalisation,worth an estimated $2.5billion. The governmentowns 84% of ONGC atpresent and will retain amajority stake in thecompany, along witheffective control after thesale is completed.Other state-ownedheavyweights hitting themarkets in March includeGail, the largest gasdistributor, the Bank ofMaharashtra, IBP, the oilretailer, and the DredgingCorporation.The Government hastried and failed in the pastto partly privatise some ofIndia’s largest state-ownedYuncan hydroelectricproject. Enersur bid $53million. Norway’s statepower company Statkraftand the US-based PSEGdeclined to take part in thebid.»Financing for the largestpipeline project in history –the $3.65 billion Baku-Tbilisi-Cayhan – wascompleted in February. Thefinancing for the projectwhich spans threejurisdictions and over 1700km, needed 17,000signatures to be finalised.The project is beingdeveloped to provide aprimary export route for oilproduced off-shoreAzerbaijan.»Suez-Tractebel ofBelgium and Mimag of11 cf March 2004 corporatefinancemag.com
Follow-ons by Indian Issuers 01/01/00 - 20/02/04Amt. m (US$)Iss.2000 1st Quarter 499.49 42000 2nd Quarter 108.75 12000 3rd Quarter 86.38 22000 4th Quarter 130.85 12001 1st Quarter 0.00 02001 2nd Quarter 294.69 22001 3rd Quarter 172.50 12001 4th Quarter 0.00 02002 1st Quarter 0.00 02002 2nd Quarter 0.00 02002 3rd Quarter 50.00 12003 1st Quarter 0.00 02003 2nd Quarter 0.00 02003 3rd Quarter 346.25 22003 4th Quarter 87.97 22004 1st Quarter 0.00 0companies – in February2002 it privatised VNSL(Videsh Sanchar NigamLimited), one of India’slargest ISP providers, withonly limited success. Menonbelieves the government’stiming is better this timearound.India is emerging as oneof the fastest growingeconomies in the world,propelled by risingIn briefTurkey, closed a $475million financing for theBaymina power projectnear Ankara, Turkey.»Fiat’s asset sale programwas completed in Februarywith the sale of 70% of FiatEngineering to privatelyheld Maire Holding for€80.5 million ($101.7million). In 2003 thecompany sold insurancecompany ToroAssicurazioni to publisherDe Agostini for €2.4 billionand Fiat Avio for €1.4billion to the CarlyleGroup and Finmeccanica.»Singapore saw its largestIPO of the year in February.UTAC’s offer was 32.5consumption, and therecord inflow of foreigninvestment. GDP is expectedto hit 7.5% in the fiscal yearto March. This figure is wayabove anything theEurozone or America canhope to achieve. As for thetiming of the sell-offs, itcould not be better: theequity capital markets haveexperienced anunprecedented bull run intimes oversubscribed. Thesemiconductor test andassembly company raisedS$182.6 million ($107million).»Las Vegas-based BoydGaming is to buy rival CoastCasinos for $1.3 billion incash, stock and debt.»Brazil’s two largestairlines Varig and Tamhave decided againstmerging. They spent a yearnegotiating, unsuccessfully,to deal with a complexownership structure, largedebt and legal challenges.They will instead form asmall joint venture andexpand their code-sharingarrangement.»The Mexican governmenthas approved Spanish bankSOURCE: DEALOGICIndian IPO Quarterly Breakdown 01/01/00 - 20/02/04Amt. m (US$)Iss.2000 1st Quarter 29.78 32000 2nd Quarter 66.34 32000 3rd Quarter 22.37 12000 4th Quarter 50.85 62001 1st Quarter 44.83 52001 3rd Quarter 0.96 12002 1st Quarter 205.72 22002 2nd Quarter 42.85 12002 3rd Quarter 59.19 12002 4th Quarter 92.51 22003 1st Quarter 9.91 12003 2nd Quarter 213.66 12003 3rd Quarter 63.15 42003 4th Quarter 72.38 22004 1st Quarter 150.18 3the last six months (theysaw a 60% rise in 2003). “It’sa great time for thegovernment to act. Thesefactors ensure that investorsare subscribing, and thegovernment gets a greatprice for its divested stock,”says Menon.The performance of oneof the first deals to hit themarkets certainly bodeswell. PetrochemicalBBVA’s $4.2 billion offer tobuy the remaining 40.6% ofMexico’s BBVA Bancomerthat it does not own. Thiswill take BBVA Bancomerout of the Mexico City stockmarket, where it is thelargest financial servicesstock accounting for 85% ofthe financial services index.This deal, in combinationwith the recent buyout ofMexican cement firmApasco by Swiss Holcim,will reduce the liquidity ofthe Mexican stock exchangeby 10%, according toanalysis by UBS Warburg.»PwC expects the volumeof IPOs in China to grow by70% in 2004. The firmbelieves 100 companies willgo public in Hong Kong in2004, raising approximatelyHK$100 billion ($12.9company IPCL’s shares havesoared 97.8% over the last 12months and the offeringwas healthilyoversubscribed by 10% asinvestors flocked to whatthey see as stable companieswith under-valuationmandates. “Many of thesecompanies are extremelyhealthy and are blue-chip intheir own right,” saysMenon. JEbillion) compared to HK$59billion raised in 2003. IPOsby Chinese companiescould account for 80% offunds raised in Hong Kong,with large listings expectedfrom China ConstructionBank and Minsheng Bank.»Aventis, the Franco-German pharmaceuticalcompany fending off a €46billion bid from Sanofi-Synthelabo, has gone onthe offensive. It hasannounced plans to buybackbetween €2 to3 billionof shares, and dispose ofnon-strategic products inan effort to streamline thebusiness. Aventis’schairman, Igor Landau,says that Sanofi’s €46billion offer hadfundamentallyundervalued the group.SOURCE: DEALOGICcorporatefinancemag.com March 2004 cf 12
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Page 3 and 4: CONTENTSMARCH 200422 Lead storyThe
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Page 8 and 9: €6.4 billion or 40%. S&Ppoints ou
Page 11: Global consolidationefforts set to
Page 15 and 16: Crudele strikes a chordwith Gibson
Page 17 and 18: ProxyMed recruitshealthcare veteran
Page 19 and 20: It is fair to say that France Telec
Page 21 and 22: TREASURER’SVIEWGetting to grips w
Page 23 and 24: Top 25 Japan (by market value)Compa
Page 25 and 26: Top 25 US (by market value)Company
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Page 29 and 30: MANAGING RISKFX FORECASTER OF THE Y
Page 32 and 33: What acorporateneedsThe modern corp
Page 34 and 35: Norbert Mayer, BMW: “Commercialpa
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Page 40 and 41: Glasgow School of Art: part ofGlasg
Page 42 and 43: EMEA ECM SECTORSPREADS ‘03 & ‘0
Page 44 and 45: FXFORECASTS10-year benchmark long-b

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