Information  X 
Enter a valid email address

Dhir India Inv. plc (DHIR)

  Print      Mail a friend

Thursday 12 July, 2007

Dhir India Inv. plc

Dealings Commence

Dhir India Investments plc
12 July 2007


Not for release in or into the United States of America, Canada, Australia, the
                       Republic of South Africa or Japan


12 July 2007

                           Dhir India Investments plc
                        ("Dhir India" or the "Company")


                   Admission to AIM and First Day of Dealings


        First Indian distressed assets investment company floats on AIM


Dhir India Investments plc, the first UK quoted company established to invest in
the circa $50 billion* Indian non performing assets sector, announces that
dealings will commence on AIM this morning under the symbol 'DHIR'. Evolution
Securities is nominated adviser and broker to the Company.

The flotation follows a successful Placing during which the Company raised £25
million, before expenses from a number of highly regarded institutions. The key
statistics for the Flotation are as follows:

Placing Price                                                              150p

Number of Placing Shares being placed on behalf of the Company      16,666,665

Number of Ordinary shares in issue immediately following the
Placing                                                             16,666,667

Market Capitalisation of the Company at the Placing Price on
Admission                                                          £25,000,000

Number of Warrants in issue following the Placing                    3,333,333

Dhir India, which is an Isle of Man registered, newly incorporated company,
intends to provide shareholders with both income and capital growth and will be
the first UK quoted vehicle to provide western fund managers with the
opportunity to invest in the Indian non performing assets market.


The Company has no fixed life and is targeting an annualised return of 25-30 per
cent. (gross of management fees), once the net proceeds of the Placing are fully
invested. The Company expects to be fully invested within 12 months of
Admission, having made about six investments, of which investments relating to
any single company will not be in excess of £5 million.


The current stock of non performing assets (NPAs) in India was built up
primarily as result of the transformation of the Indian economy in the 1990s
from a centrally regulated to a more free market economy. During this time,
commercial lending rates were as high as 18-20 per cent. per annum, whilst the
industrial growth rate remained sluggish at 2-3 per cent. per annum and Indian
industries could not cope with the competition from international companies,
which did not have such a high cost of capital. This has created an opportunity
to invest in NPAs, which are typically over-leveraged capital structures with
insufficient liquidity and in default of their obligations to creditors. Often
these companies have significant assets and/or solid underlying business
fundamentals, which are not being fully utilised in spite of the fact that the
rate of growth in the industrial sector has caught up with that of the rest of
the economy, being an estimated 9-10 per cent. per annum since 2004-2005. In
such circumstances, the Company believes that the resolution of the existing
debts, and in some cases a turnaround of the underlying business, can lead to
substantial profits on exit from the investments being generated in the short
and medium term.

(*Source: The Wharton School, February 2007)

PriceWaterhouseCoopers has estimated that over $1 billion will be spent buying
NPAs from Indian banks in 2007. Most of the NPAs sold by India's banks to date
have been bought by a handful of Indian financial institutions and a select few
international investment banks and funds (e.g. JP Morgan, Citigroup, Deutsche
Bank, Standard Chartered Bank, WL Ross, Spinnaker, Eight Capital, Clearwater
Capital, and Kotak Mahindra Bank, etc.). These investors are generally targeting
transactions with a value of over US$20 million or the acquisition of large
portfolios.


On the other hand, Dhir India will focus on small and medium size transactions
of about $5-10 million, an area which the larger players in the market have
avoided due to regulatory, logistical and operational requirements, including
the heavy dependence on a large and sophisticated network of local contacts
required for executing deals and specialist knowledge of distressed asset
regulation in India, which make it difficult for most investors to access these
opportunities.


The Company has an experienced board of five non-executive Directors, all of
whom are independent of the Manager, except for Alok Dhir. The Board is chaired
by Charlie Hambro.


The Asset Manager
Shiva Consultants Limited ("Shiva" or "the Manager") will act as asset manager
and investment advisor to the Company and will be responsible for sourcing,
appraising and managing potential investment opportunities.


Shiva is controlled by Alok Dhir, the managing partner of Dhir & Dhir Associates
("DDA") and a leading legal practitioner with over 20 years experience in
corporate and industrial insolvency law in India. Mr Dhir also controls the Dhir
Group of companies which, in addition to DDA also comprises Dhir & Dhir Asset
Reconstruction & Securitisation Company Limited and Turnaround Consultants
Private Limited, all of which specialise in various aspects of asset
reconstruction and turnaround.


Mr Dhir along with his associates has successfully invested approximately
$14 million of their own money in distressed companies and will be the lead
investment advisor to the Company. He has undertaken to co-invest in each of the
investments made by the Group an amount equal to 5% of such investment, with a
committed maximum aggregate amount of £1.25 million. He along with his
associates may however co-invest up to 25% into such investments at his sole
discretion.


Additionally, Mr Dhir will co invest, with Dhir India, into a subsidiary non
banking financial company (NBFC), which will be established or acquired after
Admission, and is intended to be utilised for providing financing to investee
companies. Mr Dhir will invest 50% of the non-banking finance company, which is
to be capitalized to the extent of $0.5 million, with the balance provided by
Dhir India.


With his investment into transactions and his investment into Dhir NBFC, Mr
Dhir's committed co-investment will be £1.5 million.


Together, Shiva's senior management have over 60 years' of experience in the
Indian distressed assets market, whether from a legal, financing or banking
perspective. They have experience in structuring and resolving distressed assets
transactions on a professional basis and undertaking the turnaround of
distressed assets. The Manager is well connected with the business and financial
community in the regions in which it operates. Furthermore, proximity to and an
in situ local capability will allow the Company to be flexible when choosing
which investments to pursue and will allow it to react rapidly to potential
investment opportunities.


Investments
The Company will consider primarily four types of investment opportunity:

•     Turnaround of companies

•     Re-sale of assets or companies

•     Break-up and sale of assets

•     Bridge financing

The Directors believe that through the Manager's and the Dhir & Dhir Group's
network of contacts, the Group will have access to a strong pipeline of
potential investments. The Manager is currently appraising a number of potential
investment opportunities


Commenting, Alok Dhir of Dhir India, said: "Our experience of dealing with
underperforming assets in India convinced us that this is a market where there
are numerous opportunities to create value and the fact that we have raised £25
million from such a select group of shareholders underpins that belief. We are
now looking forward to putting the funds to use in investments where we can
deliver shareholder value by identifying opportunities where there are strong
assets and/or an underlying business with solid fundamentals."


Contact details

Dhir India Investments      Evolution Securities      Tavistock Communications
Alok Dhir                   Tom Price                 Richard Sunderland
Shivi Agarwal               Jeremy Ellis              Rachel Drysdale
                            Chris Clarke
Tel: +91 11 424 10000       Tel: +44 (0)20 7071 4300  Tel: +44 (0) 207 920 3150



NOTES TO EDITORS

1. Investment Strategy

The investments will be structured primarily in the following four types of
transaction:


Turnaround of companies
In these transactions, the objective is to acquire an interest in a target
company through its secured debt (and a minority equity interest where
appropriate). The aim will be, in conjunction with the Manager (who will
beneficially or with others hold the majority of the equity) to benefit from the
control taken of the target company, its operations and its assets and, if
appropriate, to change or motivate existing management and implement a new
strategy to turn around the business.


Target companies will typically be under-performing due to financial,
operational or management constraints and an overhang of debt, but with the
potential for achieving a turnaround through restructuring. In such
transactions, the Manager may arrange to provide the target company with a range
of technical, legal, management and financial inputs, as required. It may also
rely on third party business valuations and in-house turnaround business
planning expertise.


The Directors believe that exits from such an investment will be achieved
principally through selling the controlling interest in the target company to a
third party or to the target's existing management or via public offering. The
Company intends to work to a time frame of 24-36 months from acquisition to exit
in such transactions.


Re-sale of assets or companies
The objective in these transactions is, in conjunction with the Manager, to
obtain benefit from a change in control of the target company or its assets
through the secured debt. The Group will consider acquiring a minority equity
interest in target companies and/or assets, where the balance is obtained by the
Manager or the Manager and a third party, but the Company would not acquire a
majority of the equity interest.


The value in such transactions lies in being able to acquire or settle the debts
of the target company at a discount to the market value of the underlying assets
of the business as a whole and then to restructure the debts so as to achieve
the desired return upon a sale of the target company or its assets.


An exit is achieved through the sale of its assets to a third party purchaser
and/or the equity when sold with those held by the Manager. The Manager will
seek to identify such transactions in sectors where there is demand for
consolidation and capacity addition.


The Company intends to work to a time frame of 9-12 months from acquisition to
exit in such transactions.


Break-up and sale of assets
The objective of these transactions is, in conjunction with the Manager to
obtain benefit from a change in control of the target company or its assets by
taking a secured debt position with a view to realising latent value through the
sale of individual assets or parts of the business to different buyers. The
Group will consider acquiring a minority equity interest in target companies and
/ or assets, where the balance is obtained by the Manager or the Manager and a
third party, but the Company would not acquire a majority of the equity
interest. This process will entail the negotiation and restructuring of debts
with creditors and lenders, the consolidation of security and the sale of assets
to third party buyers.


The Directors consider that this type of transaction is particularly attractive
where there are high value assets in the target company, and the Company expects
that the debt can be settled at a discount to market value. The Company intends
to work to a time frame of 12-15 months from acquisition to exit in such
transactions.


Bridge financing
In these transactions the objective is to provide short term bridge financing to
target companies that are in need of immediate funds to complete one time
settlements with secured creditors and which have cash flows to support the
repayment of the financing (together with the Company's desired return) to the
Group over a period of 6-9 months.


2.   Investment Restrictions

The Company will only invest in Indian companies and assets. The Company will
not have a predetermined preference of allocation in the type of transactions
outlined above, but will aim to build a diversified portfolio by:


   • investing no more than £5 Million in one single entity;
   • investing no more than 50 per cent. of the Net Asset Value of its
    portfolio in one single transaction type; and
   • not investing in transactions where the intrinsic value of the assets is
    believed to be less than the amount of the investment required.

These investment restrictions will apply at the time of the initial investment
in a particular opportunity and subsequent transactions which affect these
ratios will not lead to a requirement to divest any investment to rebalance the
portfolio. There are no obligations on the Company or the Manager to make any
investments or to return monies to Shareholders within a minimum period of time.


3.   Dhir India directors

Charlie Hambro, aged 47 - Non-executive Chairman
Mr Hambro led a distinguished career as a merchant banker working in London and
New York for Hambros Bank, managing an international debt portfolio that
included advisory roles in major debt restructuring and rescheduling projects as
well as tax based structured finance. He was also Chairman of Hambros Offshore
Private Banks involved in Private Wealth Management. After the sale of Hambros
Bank to Societe Generale in 1997, Mr Hambro became the Managing Director of
Nordea Securities in London before leaving to found Firecrest Hambro, a boutique
Advisory and Trust firm that provides independent financial advice and services
to substantial clients, their families and family companies.


John Bourbon, aged 51 - Non-executive Director
Mr Bourbon runs his own compliance and regulatory consultancy business based in
the Isle of Man. He provides services to both regulated entities in the Isle of
Man and to international regulatory bodies. In addition he acts as a director
for a number of international collective investment funds and he is the Chairman
of the AIM quoted, Value Catalyst Fund Limited. He is the author of a handbook
for directors of collective investment vehicles focusing on corporate
governance, risk assessment modeling and compliance monitoring, and is the
Chairman of the Compliance Institute. Mr Bourbon previously held the position of
Managing Director of the Cayman Islands Monetary Authority. Prior to his arrival
in the Cayman Islands, John was Head of Supervision at the Isle of Man Financial
Supervision Commission. Before this he worked for nearly 24 years within the
financial services arm of the Barclays Bank Group, including Barclays Unicorn
(the bank's unit trust group) before becoming Compliance Officer for Barclays
Bank Trust Company Limited. John is licensed by the Isle of Man Financial
Supervision Commission as a Corporate Service Provider (Category 2) and a Trust
Service Provider (Category 2).


Alok Dhir, aged 46 - Non-executive Director
Mr Dhir qualified as a Chartered Accountant in 1983, qualified as a lawyer in
1985 and has practised insolvency law since 1987. He established Dhir & Dhir
Associates in 1993. In addition, Mr Dhir is founding Director of DDARC. Over 20
years of experience in the sector has enabled Mr Dhir to build up an extensive
network of relationships as well as an in-depth understanding of both lenders'
risk sensitivities and borrowers' requirements. Mr Dhir is also a successful
private investor in Indian distressed assets.


Dr Mohmmad Yousuf Khan, aged 62- Non-executive Director
Dr Khan was formerly Chairman of J&K Bank, which he helped transform from a
marginal state bank into a large national private bank in India. Prior to this,
Dr Khan led a distinguished industrial and commercial career. He is currently
Chairman of the Banking and Advisory Council of Yes Bank Ltd in India. He is
also on the board of Steel Authority of India Ltd, Bharat Hotels Ltd and Zee
Entertainment Enterprises Ltd, which are all leading businesses in India in
their respective sectors.


Arun Singh OBE, aged 50 - Non-executive Director
Mr Singh is a senior consultant on strategy and international business at
GMRLaw, focusing on international investment, AIM listings, mergers and
acquisitions, insolvencies and corporate governance in emerging and developed
markets. He was formerly a partner and Head of the International Commercial Law
Group for KPMG Legal International and Head of the India Business Group for KPMG
Europe from 1999 to 2003. Prior to KPMG he was a corporate finance partner at
Pinsent Masons where he founded their India Business Group in 1988 and advised
an extensive number of multinational corporations and SMEs investing into India
and internationally. Mr Singh was awarded an OBE in 1999 for services to
international investment. He has been special advisor to the UK's House of
Commons Trade and Industry Select Committee and a non-executive director of the
UK Government's Trade and Investment Board. Mr Singh is a regular speaker at
public seminars on international legal and management matters and was also a
founding board member of the Indo British Partnership.


In addition, the Directors are considering the appointment of a consultant to
the Board to assist with certain financial and other matters.


4. Directors of Shiva

In addition to Alok Dhir and members of his family, the directors of the Manager
are:


Bhagwan Dass Narang, aged 62 - Director
Bhagwan Dass Narang has had a distinguished career as a commercial banker and
was most recently (between 2000 and his retirement in 2005) Chairman and
Managing Director of Oriental Bank of Commerce (New Delhi), one of the largest
commercial banks of India. Prior to that, he was a General Manager of Union Bank
of India (Lucknow) between 1994 and 1996 and an Executive Director of Punjab &
Sind Bank (New Delhi) between 1996 and 2000. Mr Narang is presently Managing
Director of Shri Veni Madhav Portfolio Private Limited, a business consultancy
and investment company. He is a member of the Finance & Banking Committee of the
Associated Chambers of Commerce.


Tarun Pal, aged 42 - Director
Tarun Pal qualified as a chartered accountant in the UK in 1994. He is the Chief
Executive Officer of TCPL, a company focused on the resolution of distressed
assets in India. Prior to joining TCPL, Mr Pal held the position of Financial
Controller for a number of large companies based in London and the United Arab
Emirates and had also worked in India.


Shivi Agarwal, aged 29 - Director
Shivi Agarwal is a partner with DDA. She joined DDA in 2002 and has been
responsible for building up its corporate advisory practice, with particular
focus on transactions relating to financially distressed companies. She has
advised eminent Indian corporate houses on transactions including takeovers,
mergers and acquisitions and corporate and debt restructurings. She has advised
leading industrial companies in India on the acquisition and resolution of
distressed assets. She is also a director of TCPL.


5. The Dhir & Dhir Group

The Manager expects to draw upon the personnel and expertise of, and potential
deal flow from, the Dhir & Dhir Group, which comprises DDA, DDARC and TCPL and
which provides a range of insolvency and NPA related services in India.


Dhir & Dhir Associates ("DDA")
DDA is recognised as a leading law firm in India in insolvency law. DDA has a
leading position in, and handles a significant percentage of, the cases referred
to the statutory authority for corporate and industrial insolvency in India,
that is the BIFR and its appellate authority known as the Appellate Authority
for Industrial and Financial Reconstruction. DDA has advised many eminent Indian
institutions on the acquisition, restructuring and revival of distressed assets.


Dhir & Dhir Asset Reconstruction & Securitisation Company Limited ("DDARC")
DDARC was incorporated as an ARC in 2002 and received its COR pursuant to the
SARFAESI Act in March 2007. The RBI has granted it a COR for commencement of
business. Alok Dhir is a director of, and along with his associates, 49 per
cent. shareholder in, DDARC. DDARC is one of three ARCs in the private sector
that have been granted licences by the RBI in India, there being only six
licensed ARCs in total.ARCs are special distressed asset resolution and
reconstruction entities licensed under the SARFAESI Act and can enforce security
in accordance with the SARFAESI Act without the need to obtain court approval,
thereby enabling them to resolve NPAs.


Turnaround Consultants Private Limited ("TCPL")
Incorporated in 2005, TCPL operates as a resolution agency dealing with
distressed assets and assists banks, asset reconstruction companies and other
stakeholders in distressed assets as their asset resolution agent. This includes
assisting them in the acquisition of financial assets, enforcement of security
(including acquiring the physical assets underlying the security) and
negotiation with other creditors for aggregation or resolution of the financial
asset. Alok Dhir, along with his associates, is the beneficial owner of 100 per
cent. of TCPL.


Any services provided by members of the Dhir & Dhir Group to the Group will be
on an arm's length basis. Each of the above Dhir & Dhir Group entities will be
independent of the Group and will also have transactions with, and provide
services to, clients other than the Group. Similarly, the Group may approach
other service providers as it may deem fit. In case of any conflict of interest,
the Manager will notify the board of the Company which will take appropriate
decision on the matter. Through its relationship with the Dhir & Dhir Group, the
Company expects to benefit from referals of potential opportunities by members
of the Dhir & Dhir Group where they are permitted to do so, although DDA, DDARC
and TCPL have not undertaken (and are not able to undertake) to refer any
potential opportunities to the Company.


Neither this announcement nor any copy of it may be taken or transmitted in or
into the United States of America or its territories or possessions (the "United
States"), or distributed, directly or indirectly, in the United States or to any
U.S. person as defined in Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act") , including without limitation U.S. resident
corporations, or other entities organised under the laws of the United States or
any state thereof or non-U.S. branches or agencies of such corporations or
entities. Neither this announcement nor any copy of it (in whole or in part) may
be taken or transmitted into or distributed in the United States of America,
Canada. Australia, Japan, South Africa, Singapore or the Republic of Ireland, or
any other jurisdiction which prohibits the same except in compliance with
applicable securities laws. Any failure to comply with these restrictions may
constitute a violation of United States or other national securities laws.


This announcement has been issued by Dhir India Investments plc ("the Company")
and is the sole responsibility of the Company and has been approved solely for
the purposes of Section 21 of the Financial Services and Markets Act 2000 by
Evolution Securities Limited of 100 Wood Street, London EC2V 7AN. Evolution
Securities Limited, which is regulated In the United Kingdom by the Financial
Services Authority, is acting for the Company and no-one else in connection with
this matter and will not be responsible to any other person for providing the
protections afforded to clients of Evolution Securities Limited or for providing
advice in relation to this matter.


The distribution of this announcement in certain jurisdictions may be restricted
by law, and persons into whose possession this announcement, or any document
referred to herein comes, should inform themselves about and observe any such
restrictions. Any failure to comply with these restrictions may constitute a
violation of the securities or other laws of any such jurisdiction.


This announcement contains forward-looking information which is based on
management's current expectations and is subject to uncertainty and changes in
circumstances. Actual results may vary materially from the expectations
contained in this announcement. Whilst the forward-looking information has been
prepared in good faith, by its very nature it relates to facts and circumstances
in the future and therefore it should not be relied upon. The Company is under
no obligation to (and expressly disclaims any such obligation to) update or
alter any forward-looking information whether as a result of new information,
future events or otherwise.


This announcement does not constitute or form part of any offer for sale or
subscription of or solicitation of any offer to buy or subscribe for any
securities nor shall it or any part of it form the basis of or be relied on in
connection with or act as an inducement to enter into any contract or commitment
whatsoever. Any decision to purchase shares in the Company in the proposed
flotation should be made solely on the basis of the information contained in the
admission document issued by the Issuer or offeror in connection with such
offering. No person is authorised by Evolution Securities Limited or any of its
affiliates to give any information or to make any representation not contained
in such documentation, and any information or representation which is not so
contained must not be relied upon as having been authorised by or on behalf of
Evolution Securities Limited or any of its affiliates. The securities to be
offered in the proposed placing must not and will not be offered to the public
in the United Kingdom (within the meaning of section 102B FSMA), save in
circumstances where it is lawful to do so without an approved prospectus (within
the meaning of section 85 FSMA) being made available to the public before the
offer is made. The securities to be offered in the proposed placing may not be
offered or sold in any other jurisdiction other than to a limited number of
persons in member states of the European Economic Area and Switzerland who are
"qualified investors" within the meaning of Article 2(1)(e) of the Prospectus
Directive (Directive 2003/71/EC).


Any securities of the Company referred to in this announcement have not been and
will not be registered under the Securities Act, any state securities laws in
the United States, or under the applicable securities laws of Australia, Canada,
the Republic of Ireland, the Republic of South Africa, or Japan and may not be
offered or sold in the United States, Australia, Canada, the Republic of
Ireland, the Republic of South Africa or Japan or to a U.S. person (as defined
in Regulation S under the Securities Act) or to any national, resident or
citizen of Australia, Canada, the Republic of Ireland, the Republic of South
Africa or Japan unless they are registered under the Securities Act or an
exemption from such registration is available in the relevant jurisdiction. The
Company does not intend to register any of its securities in the United States
or in any of the other jurisdictions listed above or to conduct a public
offering of securities in the United States or in any of the other jurisdictions
listed above. Any public offering of securities to be made in the United States
would be made by means of a prospectus that may be obtained from the Company or
the selling security holder and that will contain detailed information about the
Company and its management, as well as financial statements.



                      This information is provided by RNS
            The company news service from the London Stock Exchange

a d v e r t i s e m e n t