Bain Capital gets CCI nod for stake buy in Genpact

Competition Commission has approved American private equity firm Bain Capital’s proposal to acquire 30 percent stake in Indian IT firm Genpact.

Giving the green signal, the fair trade regulator said the acquisition would not have adverse impact on the domestic IT-BPO sector. Bain Capital, co-founded by US Presidential candidate Mitt Romney, would acquire nearly 68 million shares, representing 30 percent stake, of Genpact for about $1 billion.

 

The shares would be purchased from the domestic firm’s two stakeholders—General Atlantic and Oak Hill Capital. “The Commission is of the opinion that the proposed combination is not likely to have an appreciable adverse effect on competition in India and, therefore, the Commission hereby approves the proposed combination,” the Commission said in an order dated October 11.

Bain Capital is to execute the Genpact deal through Glory Investments A Ltd (GI A). According to the Commission, the entities involved in the proposed deal are not engaged in identical or substitutable businesses.

 

“Also, the activities of GI A and Genpact are not related to each other at different stages or levels of the production chain in different markets in respect of production, supply, distribution, storage, sale or trade in goods or provisions of services in which another party to the proposed combination is engaged,” the order said.

 

Genpact is engaged in providing business process and technology management services, whereas Bain Capital has no presence in the IT-BPO sector in India. The notice seeking approval was submitted to the fair trade regulator on August 30.

 

Prior to that, South Asia Private Investment (now known as Glory Investments) had entered into share purchase pacts with shareholders of Genpact as well as the company. As per the agreements, Glory Investments have the right to assign the share purchases to “permitted transferee”. In this case, they are South Asia Integral Mauritius (now known as Glory Investments B Ltd) and Bain Capital India Investors III (now known as Glory Investment IV Ltd).

 

The notice was jointly submitted by GI A, GI B and GI IV. Genpact began operations in 1997 as an India-based unit of General Electric, assisting the American conglomerate’s finance division.

See growth in India biz despite policy issues: Glaxo CEO

The GlaxoSmithKline   global board is meeting in India for the very first time and Andrew Witty, CEO of the company continues to be positive about India. He expects Glaxo to rake in a turnover of a billion pounds this year and added that he brough along his board to this country to witness its potential.

Despite the regulatory headwinds faced by the Indian pharma industry, Witty is hopeful of good business despite the challenges.

 

Here is the edited transcript of the interview on CNBC-TV18.

 

Q: Why did you decide to bring the global board down to India at a time when the Indian economy has clearly slowed down? There is a lot of pessimism with regards to the India story, why now?

 

A: At its core I am a huge bull on India. I have been coming to India for many years. In a previous role India was in my geographic responsibilities directly.

 

I have a very strong sense of optimism about the future potential of this country. We have two great businesses here, consumer healthcare company as well as the pharmaceutical business. They have performed fantastically over the last few years. I think there is a lot more potential for those businesses as they evolve in India. I want my board to see it. Not everybody on my board had been to India. It was important for me that they saw first hand what we see as the opportunity here in this country.

 

Q: Do they go back believers in the India story? Have they gone back feeling reassured about the strength of the Indian economy and your Indian presence?

 

A: I think more or less they do. As always when you look at a big complicated country like India with two big businesses that we have, it would be naïve to say everything is perfect.

 

It never is all perfect. But I think they certainly leave with a high degree of confidence around the momentum of the economy here. Even though it has slowed a little bit, it is still very substantial growth compared to many other parts of the world, the fundamental drivers, demographic drivers, for example, the rise in spending power of rural India is a good example. They understood all those things much more clearly now, which is key.

 

Of course, there is still uncertainty. There continues to be policy uncertainties in certain areas of government decision-making, particularly in our field, but if you look at the balances you have to come away feeling positive about India.

 

Q: What is your opinion on policy uncertainties and the patent issue that is being dealt with the courts in India? How do you view this debate on patent is equal to pricing?

 

A: First of all, I want to keep out of the specifics because other companies are involved in this. Last year when I gave a speech to the industry in India, I made it very clear; my personal view and my company’s view

 

Intellectual property protection is an important aspect of ensuring that innovation is rewarded. We want to do that as we want to incentivise people to do more high-risk research. We believe strongly in the role of intellectual property protection. We think it gives the discoverer a fair reward for the risk they took, whether that is an academic scientist or a bio-tech company or a big pharmaceutical company.

 

For me pricing is completely a separate discussion. The fact that you have a period of exclusivity in a country shouldn’t determine what price you charge. Your fluffiness about price should be driven by the value it creates in the system. So, is this a good value for money proposition in the system and the affordability of the people who you are asking to pay for it?

 

For me, there is an intellectual property argument around how do you secure confidence in the research environment. Is their risk worth it and a completely separate conversation about pricing.

 

I believe what you have seen at GSK is that we will continuously strive to defend intellectual property. But more importantly defend tier pricing to make sure that we have appropriate pricing for the affordability of the country. That’s why in my view, our business in India has been successful for so long because we have allowed it to be an Indian business.

 

GlaxoSmithKline Pharmaceuticals India is not some American or European operation transplanted into India.

Kingfisher

The Directorate General of Civil Aviation (DGCA) has suspended Kingfisher Airlines  license till it does not come up with a revival plan.

Kingfisher Airlines had failed to reply to any of the questions posed in the Directorate General of Civil Aviation’s (DGCA) show cause notice.
Instead, the airline has asked for time to reply in person to the notice.
In a statement, the debt-ridden airline announced that that it has extended it’s ongoing lockout to October 23.

Meanwhile, Kingfisher itself remains hopeful of being able to resume operations by November. In a statement issued, it said, “Kingfisher Airlines Ltd has extended the partial lockout until October 23, 2012. We had a positive meeting with employee representatives on October 17 and are hopeful of reaching common ground when we meet again next week. Currently, we anticipate resuming operations on November 6, subject to our resumption plan being reviewed and approved by the DGCA.”
The stock fell 4.58 percent to close at Rs 11.45 on Friday, which tanked nearly 18 percent in last 15 days.