bloggingbuyouts

In India, the growth of the information technology (IT) industry has been stunning. For the most part, the strategy has been to focus on internal growth. However, this may be changing, and we can expect to see more M&A.

In fact, this week Infosys Technologies Ltd. (NASDAQ: INFY) has agreed to pay $753.1 million for UK rival, Axon Group PLC.

In a way, the Indian IT service providers are victims of their own success. For example, wages are skyrocketing and it's getting tougher to find quality consultants.

With the Axon deal, Infosys will add about 2,000 consultants who specialize in the complex work of SAP (NYSE: SAP) implementations -- projects that can certainly generate juicy fees. Infosys will also get a stronger platform in Europe. Last year, Axon generated $378.3 million in revenues, with $37.4 million in profits.

According to Murray Beach, managing Managing Director of TM Capital:

"This transaction is an impressive step for Infosys. Many of the leading offshore services firms have talked about climbing up the value chain of services offerings and improving on-site customer presence, but none have completed a deal of such magnitude to back up their rhetoric. We expect the acquisition of Axon to mark the first of many acquisitions by the leading Indian offshore players of traditional on-site strategic and technology consulting companies in the US and Europe."

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

For financial markets, August is always a slow time as Wall Streeters head for their vacations. But this year, there was more than just seasonality. Simply put, it was a very tough month for M&A operators.

In fact, according to Reuters, August was the worst month since 1992.

It's been about a year since the credit crunch started, and it looks like things aren't getting better. If anything, it's a good bet we'll continue to see volatility and layoffs in the financial services space.

In August, the M&A volume in the U.S. came to about $28.5 billion, which is 53% off from the same period a year ago.

Ironically, while private equity funds have a huge amount of capital to put to work, there is not much bank financing. As a result, most of the private equity deals have been fairly small (below $2 billion or so).

Also, some of the recent mega deals – such as InBev's $45 billion acquisition for Anheuser-Busch Cos. (NASDAQ: BUD) – are crowding out the financing market.

In other words, investment bankers may need to wait until next year for things to warm up again.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Private equity powerhouse, The Carlyle Group, has more than 500 investment professionals across 21 countries. Of course, some of them are corporate luminaries like Louis Gerstner.

Well, after being the chairman of Carlyle since 2003, he is now departing -- his last day will be September 30th. Although, he will remain as a Senior Advisor to the firm.

Gerstner has had a stellar career. In 1993, he took the challenge of becoming IBM's (NYSE: IBM) chairman. At the time, the company was crumbling.

Despite not having much tech experience, Gerstner set forth an ambitious strategy that not only saved IBM but returned the company to greatness. He even wrote a book about his experience in a book called Who Says Elephants Can't Dance?: Leading a Great Enterprise through Dramatic Change, which is definitely worth reading.

Before his tenure at IBM, Gerstner was the CEO of RJR Nabisco, where he had to deal with the debt-load from a mega leveraged buyout (from KKR). He was also the president of American Express (NYSE: AXP) and a director of management at McKinsey & Co., Inc.

While at Carlyle, Gerstner made a big impact. He helped globalize the firm as well as diversify the investment base. As of now, Carlyle manages about $75 billion in assets across 57 funds and controls a portfolio that has aggregate revenues of $87 billion.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

As seen recently with the quarterly reports of the Blackstone Group LLP (NYSE: BX) and Fortress Investment Group (NYSE: FIG), the private equity world is having a hard time exiting investments. As a result, its returns are fairly muted.

That's why the recent announcement from the Carlyle Group is important. That is, the firm has sold John Maneely Co. to Novolipetsk Steel, Russia's #4 steel maker, for $3.53 billion.

Essentially, Novolipetsk sees this deal as a way to bolster its presence in the US market, especially in the pipe and tube markets. In fact, such things are fairly profitable because of recent shortages, largely due to energy costs.

As for Carlyle, the deal is a nice score. After all, the firm invested $550 million in 2006 for several companies which ultimately turned into John Maneely. This transaction will also be lucrative for a group of investment banks -- like Merrill Lynch (NYSE: MER), Deutsche Bank and Societe Generale -- that will provide the necessary debt financing.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

With surging energy prices, investors have been pouring huge sums into alternative energy and cleantech deals. For example, according to a recent survey from Ernst & Young/Dow Jones VentureSource, venture capital investments in the category have surged 83% to $961.7 million in Q2.

Well, private equity shops also want some of the action, especially since buyouts continue to remain fairly quiet. That is, the Blackstone Group LP (NYSE: BX) has established its Cleantech Energy Group.

The chief of this division will be James D. Kiggen, who certainly brings some nice credentials. He was the senior vice president at AllianceBernstein L.P, where he analyzed emerging technologies. He also structured investments in a variety of cleantech companies, like A123Systems and Powerspan.

It looks like Kiggen will have a wide mandate. Some of the investment themes include wind power, solar, ethanol, renewables and so on.

In fact, Blackstone has already made some cleantech investments. One example is an investment with Windland Energieerzeugungs GmbH to complete Meerwind, a massive wind farm project in the North Sea. There was also an $870 million deal for a Bujagali hydroelectric power station late last year.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Dany Levy, who got her start as a journalist, is the mastermind behind the highly successful email newsletter platform, the Daily Candy, established in 2000. She even got investment capital from top players, such as Bob Pittman, the founder of MTV.

Well, this week Comcast (NASDAQ: CMCSA) agreed to shell out $125 million for the Daily Candy.

Basically, the Daily Candy is a purveyor of hip and fashionable content geared to women. True, there are only 2.5 million email subscribers. However, they are highly desirable for advertisers. The Daily Candy's user base has a median age of 31; has $75,000 in income; and 96% read the email every day. Oh, and 66% of them have purchased something they read about from the Daily Candy.

Currently, there are local editions in 12 cities. Although, with the heft from Comcast, I'm sure this number will expand. There should also be some nice synergy with the advertiser base as well as cable assets like the E! Entertainment channel.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

With its plans to become a public company in Q4, the folks at KKR have a lot on their plate. Even so, the company realizes it needs to keep building the firm.

In light of the credit crunch and slowing economy, this is a tough thing. After all, much of KKR's business comes from its buyout business, which has been mostly frozen for the past year.

But KKR understands that private equity is a long-term proposition, and there are certainly some great investment opportunities right now. One attractive area is infrastructure, and in May KKR announced plans to raise a $10 billion infrastructure fund and retained a top Lazard (NYSE: LAZ) executive, George Bilicic, to manage things.

This week there was more activity on this initiative. KKR retained John Bryson as a Senior Advisor. No doubt, he's a maestro of infrastructure. He was formerly the CEO of Edison International (he joined the firm in 1984) where he had to deal with complex regulations as well as find ways to grow operations. Before this, he was a partner at the law firm, Morrison & Foerster and even served as the president of the California Public Utilities Commission.

Of course, KKR is facing lots of competition in the infrastructure category, such as from other tier-1 private equity operators and even sovereign wealth funds. Take a look at TPG, which has recently made a preliminary $6.5 billion bid for Australia's Asciano, a port and rails firm.

But infrastructure is a massive space with room for many players. More importantly, private equity firms are bulging with cash and need to find places to put it.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

With bulging coffers, U.S. private equity firms have been aggressively expanding into foreign markets. One of the big players is The Blackstone Group LP (NYSE: BX).

According to a piece in the Financial Times, it looks like Blackstone is taking a look at Informa Plc, a UK publisher.

Actually, it looks like other major private equity firms, such as Providence Equity Partners Ltd. and Carlyle Group, are swarming over the company.

Informa was formed, in 1998, as the result of a merger of the IBC Group plc and LLP Group plc, but if you take a look at the various businesses, the roots go back to 1734 with the first maritime publication.

As of now, Informa has operations in 40 countries and about 10,000 employees. Moreover, the firm organizes more than 10,000 events and conferences a year. There are also 2,500 subscription based information services.

In other words, Informa has a fairly steady business, with strong recurring revenues.

Interestingly enough, last month Providence Equity made a preliminary overture for Informa for about $4.29 billion. But getting debt financing won't be easy.

Then again, in the case of Blackstone, it might not have to worry about such things since it looks like the firm is teaming up with the cash-flush Dubai World Trade Center sovereign wealth fund.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Lately, there's been lots of dire talk about the private equity world. Returns are likely to be much lower and perhaps there will be many firms that shut down.

Indeed, such things may turn out to be true.

However, whenever there is extreme turbulence and a pervasive credit crunch, there are also big opportunities to make money. Just look at Apollo Management and Cerberus Capital. Both firms made a killing during the difficult early 1990s.

Fast forward to today, and we may be seeing something similar with one of the top beneficiaries possibly being Lone Star Funds. Yes, this week the fund purchased a collateralized debt portfolio from Merrill Lynch & Co. (NYSE: MER) at 22 cents on the dollar [subscription required]. The face value on it? About $30.6 billion.

This is not a one-off deal as it looks like Lone Star is hungry for high-risk debt. For example, the firm recently purchased the mortgage division of CIT Group Inc. (NYSE: CIT) and acquired Bear Stearn's mortgage segment. There was also the purchase of Accredited Home Lenders Holding Co. for $295 million.

Back in the mid 1970s, three smart investment bankers from Bear Stearns started a new firm, KKR. They helped create a new way of buying companies called an LBO -- a leveraged buyout. Since then, KKR has been an innovator in that and other financial structures.

Well, this week, we got news of another one: KKR is going public through a complicated exchange of securities. KKR will merge into KKR Private Equity Investors, which is listed on the Euronext Amsterdam. This firm essentially is a co-investor in KKR deals; it raised $5 billion in May 2006 soon after it was formed. Ultimately, KKR will own about 79% of the entity.

From there, KKR will then list on the New York Stock Exchange, likely in Q4.

Something else: KKR will not get cash in the transaction, nor will the partners or employees. The insider shares will be locked up for six to eight years.

So why go public?

The smart money continues to pour into social networking deals. The latest comes from a tier-one VC: Kleiner Perkins Caufield & Byers.

Today, the firm announced a $29 million round for Zynga Game Network. Essentially, the company combines two hot categories – social networking and casual games.

No doubt, this deal is a big validator. After all, Kleiner only cares about companies that have the potential of being game-changers.

So, what makes Zynga different? Well, for the most part, the company has devised innovative techniques to create highly addictive games (some say the process is scientific). Plus, there are opportunities to expand onto mobile platforms and to even create virtual worlds.

Keep in mind that Kleiner has invested in a variety of break-out gaming companies in the past, such as Electronic Arts Inc. (NASDAQ: ERTS). In fact, a Kleiner partner, William "Bing" Gordon – the former CEO of EA – will come on the board of Zynga.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

When UK mortgage lender HBOS Plc went to market to raise capital, the outcome was a bust. The company sold only about 8% of the securities. In the end, HBOS's underwriters -- Morgan Stanley (NYSE: MS) and Dresdner Kleinwort Ltd. -- were stuck with $7.6 billion in unwanted paper.

In light of this, it's going to be tough for UK financial institutions to bolster their balance sheets. But there is an alternative: private equity.

In fact, it looks like The Blackstone Group LP (NYSE: BX) is taking a look at Paragon, a UK mortgage lender. It appears that Paragon is opening up its books to engage in some initial due diligence.

Of course, this is still nascent, and deals can easily fall apart, especially in tough markets. However, investors are certainly excited. In London trading, Paragon's shares spiked 23%.

Even so, the value of Paragon is still down 87% over the past year, so it should be no surprise that the private equity folks sense opportunity.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Cleveland-Cliffs Inc (NYSE: CLF), founded 160 years ago, is a global mining operator. It's the biggest producer of iron ore pellets in North America and is a major supplier of metallurgical coal. Over the past year, Cleveland's stock price has gone from $28.20 to a high of $121.95. No doubt, the company has benefited handsomely from the surge in the steel market.

Today, Cleveland has offered to pay $128 per share – a cool $10 billion – for Alpha Natural Resources, Inc. (NYSE: ANR), a high-quality Appalachian coal supplier. The expected pro forma enterprise value of the merged companies, which will be called Cliffs Natural Resources, is expected to be about $22 billion.

The metrics on the deal look enticing. By 2009, Cliffs should have revenues of $10 billion and EBITDA of $4.7 billion. Moreover, by 2010, there are expected to be at least $200 million in annual synergies.

All in all, the deal will increase scale, which is becoming essential as the steel industry consolidates. For example, Cliffs will have reserves of about one billion tons of iron ore and one billion tons of metallurgical and thermal coal.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Wilbur Ross has made billions by finding opportunities in distressed industries such as steel and mortgages.

So, what's his next target? Well, he has invested $80.4 million in SpiceJet Ltd., a discount carrier in India. The investment dollars come from Ross's fund, WL Ross & Co.

As should be no surprise, SpiceJet is losing money as it deals with high oil prices and heavy competition. Plus, in order to continue growing, the company has a voracious need for capital to take on new planes.

For Ross, this deal is definitely small. But, at the same time, it does reveal some of his thinking.

Of course, he sees lots of growth opportunities in emerging markets – and the recent sell-off in equities is making valuations alluring.

What's more, Ross thinks oil prices will eventually fall (he thinks they could drop back to $100 per barrel within a year).

Even so, it's gutsy. But that's what has made Ross huge amounts of money over the years.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Venture capital-backed IPOs are nonexistent lately (there were zero in Q2). The M&A market has been soft for VC-backed deals. And the economy is slowing.

All in all, this is the recipe for big-time problems in the VC space. Yet, according to a recent survey from Thomson Reuters and the National Venture Capital Association, VCs were actually able to raise 3% more in funds in Q2, to $9.1 billion.

True, the typical kind of investor in VC fund include long-term players, such as endowments, insurance companies, pensions and other types of institutions. And, if history is any guide, VC returns can be lucrative.

But, if you look deeper into the figures, you'll see that there is a flight to quality. That is, the tier-1 VCs are grabbing most of the investment dollars. For example, Kleiner Perkins raised a $700 million fund and Foundation Capital scooped up $750 million.

Despite all this, there could be tough times for the VC industry. Some of the less-noteworthy firms may disappear. More important, if returns continue to lag, it seems inevitable that even the larger firms will eventually feel the pain.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.