₦airaland Forum

Nigeria: HoneyWell to Invest U.S.$1 Billion On Power Project

HoneyWell Group is to spend over $1 billion in the development of power generation and transmission projects in Bayelsa, Ogun and Lagos and States.

Its Chief Executive Officer, Chris Bale, made the disclosure in an interview with THISDAY in Lagos.

According to him, the first phase of the projects is the 150 megawatts power, Akute Oshun project in Ogun State, which was aimed to meet the electricity needs of Lagos, Ogun and other parts of the South-west who he said consume about 45 per cent the electricity generated.

Bale, said the Nigerian Electricity Regulatory Commission (NERC) had already granted the company a licence for the building of the Ogun power project and assured them that the project would be completed before the end of 2014.

He said: "Right now the group is approaching the next stage of development which is getting the necessary inputs together. We are discussing with Gas Aggregator Company of Nigeria. We have also gotten a Gas Purchase Order (GPO ), very soon negotiation would commence with the gas suppliers. Also, we are holding discussions with Transmission Company of Nigeria for a transmission line to evacuate the power that is going to be accruing from the Akute plant."

The CEO also disclosed that discussions with the Bulk Trading company was at advanced stage and would be formalise as soon as possible.

He said, Honeywell has the expertise as well as the financial muscle to operate the power companies if it succeeds in the bid process.

Bale, who noted however that as an integrated energy company, Honeywell is not wholly dependent on distribution aspect of the power sector, said: "Our strategy is not to depend on disco, clearly we would like to succeed in the bid process, but if we are not successful we still have these power generation projects to deal with. We see the potential for the housing Project in Ogun state to be 500 megawatts, we are looking at 100mw megawatts in Bayelsa State, we are looking at another 500mw plant closer home and this would be quiet the size of an investment portfolio."

Throwing more lights on the company's financial strength, Bale said the firm's track record was evidenced in various projects it has in Nigeria and other countries.

He added: " If you look at the HoneyWell group, the flour Mill's financial position is a matter of public record, and there are additional companies in the HoneyWell group that give you a sense of an established Nigerian company that has the financial capability to do new projects".

He said: "The company has a long standing involvement in the Nigerian power sector and also has good relationship with investors, and for the growth of the power sector, so we see this as an opportunity to deploy Honeywell group's resources and bring the much needed investment in the sector from outside the country".

The company was among the 54 firms that met the July 31 deadline for submission of bids for electricity distribution companies. Specifically, the company bided for Ikeja and Eko Distribution companies (Discos).

Shedding more lights on the company's interest in distribution networks, he said, apart from the projects in Ogun, Bayela and Lagos, there are other potential projects in other states of the federation.

Corroborating the CEO's statement , the project director power for the Seun Faluyi said the group was looking at the full value chain from generation to distribution, adding that participating in the bid process for the privatization exercise was just one of the recent steps that the group has taken. "We also have interest in generation that is Independent power projects. A lot of them are at developmental stages.

The project will compliment the Federal Government efforts at providing stable power supply top the country and thereby enhance economic activities that would stimulate employment," he said.

Nigeria: HoneyWell to Invest U.S.$1 Billion On Power Project

HoneyWell Group is to spend over $1 billion in the development of power generation and transmission projects in Bayelsa, Ogun and Lagos and States.

Its Chief Executive Officer, Chris Bale, made the disclosure in an interview with THISDAY in Lagos.

According to him, the first phase of the projects is the 150 megawatts power, Akute Oshun project in Ogun State, which was aimed to meet the electricity needs of Lagos, Ogun and other parts of the South-west who he said consume about 45 per cent the electricity generated.

Bale, said the Nigerian Electricity Regulatory Commission (NERC) had already granted the company a licence for the building of the Ogun power project and assured them that the project would be completed before the end of 2014.

He said: "Right now the group is approaching the next stage of development which is getting the necessary inputs together. We are discussing with Gas Aggregator Company of Nigeria. We have also gotten a Gas Purchase Order (GPO ), very soon negotiation would commence with the gas suppliers. Also, we are holding discussions with Transmission Company of Nigeria for a transmission line to evacuate the power that is going to be accruing from the Akute plant."

The CEO also disclosed that discussions with the Bulk Trading company was at advanced stage and would be formalise as soon as possible.

He said, Honeywell has the expertise as well as the financial muscle to operate the power companies if it succeeds in the bid process.

Bale, who noted however that as an integrated energy company, Honeywell is not wholly dependent on distribution aspect of the power sector, said: "Our strategy is not to depend on disco, clearly we would like to succeed in the bid process, but if we are not successful we still have these power generation projects to deal with. We see the potential for the housing Project in Ogun state to be 500 megawatts, we are looking at 100mw megawatts in Bayelsa State, we are looking at another 500mw plant closer home and this would be quiet the size of an investment portfolio."

Throwing more lights on the company's financial strength, Bale said the firm's track record was evidenced in various projects it has in Nigeria and other countries.

He added: " If you look at the HoneyWell group, the flour Mill's financial position is a matter of public record, and there are additional companies in the HoneyWell group that give you a sense of an established Nigerian company that has the financial capability to do new projects".

He said: "The company has a long standing involvement in the Nigerian power sector and also has good relationship with investors, and for the growth of the power sector, so we see this as an opportunity to deploy Honeywell group's resources and bring the much needed investment in the sector from outside the country".

The company was among the 54 firms that met the July 31 deadline for submission of bids for electricity distribution companies. Specifically, the company bided for Ikeja and Eko Distribution companies (Discos).

Shedding more lights on the company's interest in distribution networks, he said, apart from the projects in Ogun, Bayela and Lagos, there are other potential projects in other states of the federation.

Corroborating the CEO's statement , the project director power for the Seun Faluyi said the group was looking at the full value chain from generation to distribution, adding that participating in the bid process for the privatization exercise was just one of the recent steps that the group has taken. "We also have interest in generation that is Independent power projects. A lot of them are at developmental stages.

The project will compliment the Federal Government efforts at providing stable power supply top the country and thereby enhance economic activities that would stimulate employment," he said.

Rating agency upgrades Nigerian banks

August 10, 2012 by Agency Reporter Leave a Comment
Nigeria’s main rating agency, Agusto & Company, upgraded the banking sector on Thursday by one notch to Bbb from Bb, with a stable outlook, citing improved earnings and capital ratios.

In a ratings report on Nigerian banks, the agency said credit growth was gradually returning and risk aversion waning as banks recovered from the shock of a $4bn bail-out in 2009.

It said the upgrade was based on the banks’ financial condition and their capacity to meet their obligations, assuming the political environment did not get any riskier.

Nigerian banks have staged a sharp recovery in earnings during the first half of 2012, with mid-tier lender Diamond Bank posting a fourfold profit rise, while First Bank and UBA doubled profits during the period.

Banking sector capital ratio was 25 per cent in 2008.

“In view of marked improvements in the banking landscape during 2011, Agusto & Co. has upgraded the industry rating to Bbb, from Bb,” the agency said, adding that the sector was adequately capitalised.

Nigeria’s 19 lenders have swung back to profit, thanks to a state-owned “bad bank” AMCON absorbing their non-performing loans in exchange for government backed bonds.

“With sale of troubled loans worth over N1.5tn ($9.5bn) to AMCON during the year, banks were able to free up their balance sheets and focus more on creating risk assets.”

It said non-performing loans declined to N328bn, representing 4.8 per cent of loans in 2011, compared with an impaired loan ratio of 16 per cent in 2010.

Global ratings agency Fitch two weeks ago said that Nigerian banks continued to face challenges despite AMCON’s support and that credit had grown rapidly by 30-66 per cent in 2011. It said lenders had thin levels of “core capital”.

Agusto said Nigeria’s top five lenders – First Bank , Zenith Bank, UBA, Guaranty Trust Bank and Access Bank – accounted for much of the growth in total assets last year.

It said total banking assets grew by 20 per cent to N21.6tn ($135 bn) in 2011.

It downgraded the sector to Bb in 2008 for high levels of non-performing loans caused by reckless lending, which culminated in the 2009 financial crisis and the central bank bail-out of nine banks.

Diamond Bank gets $70m convertible loan
August 9, 2012 by Ademola Alawiye Leave a Comment
The International Finance Corporation, a private sector arm of the World Bank, has granted Diamond Bank Plc a $70m loan .

Shares in the bank rose by 1.4 per cent to an 11-week high, bucking the trend on a weak bourse, to value the bank at around N41bn ($254m).

The World Bank unit said the funding would help finance lending to small and medium-sized businesses in the country’s economy.

A statement by the bank said, “The bank considers the dollar denominated investment appropriate firm its medium and long term funding strategies given the high interest rates regime, dearth of such long- term financing in the Nigerian financial markets and the depressed domestic equities market which would have made local borrowing and equity issuance a lot more expensive.

“Moreover, the bank’s current capital structure is optimised with the issue of debt capital rather than equity. Injecting tier 2 capital into the balance sheet will help the bank to achieve a lower weighted average cost of capital and boost the bank’s capital adequacy ratio, while providing a veritable source of funding for customers’ business and the bank’s expansion plans.”

The statement said the facility was also convertible, which gave the IFC entities the option to convert the debts into equity at pre-agreed price share within agreed timelines in the future.

“This is another stamp of authority on the bank and its management as the IFC truly believes in the growth potential of the bank to seek to become a core shareholder in it. This speaks to the existence of excellent corporate governance culture in Diamond Bank,” it added.

Shares in Diamond Bank, which has over 200 branches in Nigeria, have gained almost 46 per cent this year, compared with an overall rise in the sector of about 30 per cent.

IFC lends $1bn to Nigeria’s financial, real sectors

August 9, 2012 by Martin Ayankola Leave a Comment
The International Finance Corporation, an arm of the World Bank, has so far given a total of $1bn in loans to Nigerian companies in the financial and real sectors.

Disclosing this on Wednesday in Lagos, IFC’s Country Manager, Nigeria, Mr. Solomon Adegbie-Quaynor, said 70 per cent of the money was given to firms in the financial sector while the rest went to the real sector.

Quaynor, who was speaking at the signing of an agreement with Diamond Bank for a $70m loan, said the facility was given to the bank because of IFC’s confidence in its management.

According to him, the loan given to Diamond Bank is a long-term debt convertible to equity.

Meanwhile, IFC, on its website, said it invested $12.2bn in 518 projects in 2011, of which $4.9bn went to the poorest countries eligible to borrow from the World Bank’s International Development Association.

“We also mobilised an additional $6.5bn to support the private sector in developing countries,” it added.

The agency said it was still developing new financial products that would enable companies to manage risk and broaden their access to foreign and domestic capital markets.

“Our broad suite of investment services can ease poverty and spur long-term growth by promoting sustainable enterprises, encouraging entrepreneurship, and mobilising resources that wouldn’t otherwise be available,” it added.

Linde of Germany to Buy Lincare for $3.8 Billion

Linde of Germany said Sunday that it had agreed to buy Lincare Holdings, a Florida-based provider of respiratory therapy equipment for homes, for around $3.8 billion to expand its product offerings.

Linde, one of the biggest providers of industrial air and gas products in the world, will pay $41.50 a share in cash. That represents a 22 percent premium over Lincare’s closing price on Friday. It is also a 64 percent premium to Lincare’s closing price on June 26, the day before The Financial Times’s Alphaville blog reported that the company might sell itself to Linde.

Including $800 million of debt, the deal is valued at about $4.6 billion.

Sunday’s deal is the latest effort by Linde to broaden out its health care portfolio, which so far has focused on products for use in hospitals. Earlier this year, the company bought the European home care unit of Air Products and Chemicals for $751 million.

Linde has not been shy about turning to mergers to bolster its offerings. It has struck about 27 takeovers since 2007, according to data from Standard & Poor’s Capital IQ.

Buying Lincare would expand Linde’s presence in the sector in the United States. The 40-year-old company sells home oxygen equipment, as well as equipment that turns medicines into aerosols and delivers treatments via tubes.

Last year, Lincare reported $177.3 million in net income, on $1.8 billion in revenue. Based in Clearwater, Fla., the company has 10,841 employees.

Its shares have risen 13.8 percent in the last year.

Linde plans to finance the deal through cash on hand and a $4.5 billion loan. Having drawn $1.5 billion in net income and $17.5 billion in revenue last year, the company is expected to easily digest its latest acquisition.

The deal is expected to close in the third quarter and is subject to regulatory approval.

PRIVATIZATION PLAN COULD STUMBLE BEFORE LEAVING THE GATE

By Kim Iskyan

In early June, Russia's largest bank, Sberbank, agreed to buy DenizBank of Turkey from French-Belgian lender Dexia, for $3.5 billion. The deal marked Sberbank's second-largest transaction in recent years outside the former Soviet Union.

In late May, newly reelected president Vladimir Putin approved the modestly-reformist cabinet of his prime minister (and former president) Dmitry Medvedev. The most senior figure after the prime minister is Igor Shuvalov, who is viewed as a market-friendly, reform-focused figure. Putin's Kremlin staff will likely have more clout than the cabinet. The new cabinet appears focused mostly on continuing the status quo, rather than bringing about a sharp policy shift.

In early June the Russian government approved a new privatization plan that aims to raise about $10 billion through the sale of government stakes by the end of 2012. The plan is similar to one advanced by Medvedev in 2011, which met with heavy resistance from conservatives in government. Poor market conditions are also likely to significantly postpone the latest privatization plan iteration.

Gas giant Gazprom said it would substantially rethink its plans for the massive Shtokman gas project in Arctic waters, possibly abandoning current partners Statoil and France's Total. Gazprom has been unable to make much headway with the project.

Marubeni of Japan to Buy Gavilon for $3.6 Billion

TOKYO — Marubeni, the Japanese trading house, said on Tuesday that it would buy the American grain merchant Gavilon Group for $3.6 billion, as it looks to ship American agricultural products to fast-growing Asian markets.

Buoyed by a strong yen, Japanese companies have been spending billions of dollars in recent years to secure access to resources like minerals and natural gas, activity that has helped fuel a global commodities boom.

The Gavilon acquisition would allow Marubeni to become a top global player in grains, handling over 55 million tons annually, according to a statement from the Japanese company. The deal for Gavilon would also give Tokyo-based Marubeni far greater control of supply and distribution in the United States, the world’s largest agricultural exporter.

"As part of a larger trading organization, Gavilon will be well-positioned to more efficiently connect supply with growing global demand,” Greg Heckman, president and chief executive of Gavilon, said in a statement.

Gavilon, based in Omaha, Neb., is the third-biggest grain distributor and trader in the United States, behind Archer Daniels Midland and Cargill. The company has been expanding its global presence, acquiring the DeBruce Companies in 2011 to bolster assets in the United States and Mexico. In a separate statement, Orascom Construction Industries of Egypt said it was selling its 16.8 percent stake in Gavilon to Marubeni for $605 million.

With Gavilon, Marubeni gains critical exposure to American agriculture market, securing supplies for its home market.

Japan is the largest grain importer in the world, relying on imports for 60 percent of its food in terms of calories.

Marubeni also hopes to position itself to supply growing demand in Asia, especially in China. As it continues to industrialize, China also faces shrinking farmland and other production constraints.

“We expect world grain trade volume to continue to grow on the back of robust demand in China and other emerging countries,” Marubeni said in a statement.

Felda Raises $3.1 Billion in Asia’s Biggest I.P.O.

HONG KONG — Felda Global Ventures Holdings successfully raised $3.1 billion on Thursday by selling shares in Malaysia in the world’s second-largest initial public offering this year, after Facebook’s botched Nasdaq listing last month.

Felda, a palm oil producer, successfully priced Asia’s biggest deal this year at 4.55 ringgit per share, or $1.43, near the high end of its indicated price range of 4 ringgit to 4.65 ringgit, a person with direct knowledge of the matter said. The shares are scheduled to start trading in Kuala Lumpur on June 28.

The high-profile deal came after a recent series of I.P.O.’s in Asia and elsewhere were withdrawn or postponed because of slumping markets. Those included a planned $3 billion offering by Formula One in Singapore and a $1 billion Hong Kong share sale by Britain’s Graff Diamonds.

Felda, which is being privatized by the Malaysian government, was selling 1.92 billion shares to institutional investors at the offer price and 273 million shares to retail investors at a 2 percent discount, according to its prospectus.

Of the total I.P.O. proceeds of 9.93 billion ringgit, or $3.12 billion, about 55 percent will go to the government, which sold off a 33 percent stake, and about 45 percent will go to the company, mainly for the purchase of new plantations. Felda already has about 356,000 hectares, or 880,000 acres, of palm plantations in Malaysia.

The Felda offering is the brightest spot in a gloomy market for new listings in Asia this year. Prior to the deal, total money raised by I.P.O.’s in Asia, excluding Japan, had declined 68 percent, to $13.9 billion, this year from the period a year earlier, the weakest year-to-date performance since 2009, according to data from Dealogic.

Felda’s success was bolstered by cornerstone investors who bought nearly 20 percent of the I.P.O., the person with knowledge of the deal said. Those included the Qatar investment authority; AIA; Fidelity; Value Partners, a Hong Kong-based funds management firm; and several Malaysian state-affiliated pension funds.

A stake of about 11 percent will go to state governments in Malaysia, while about 13 percent will be offered to foreign and domestic institutional investors. The remaining 19 percent stake is being offered to domestic investors, employees and affiliates of the company, the person said.

CIMB, Maybank and Morgan Stanley are the joint bookrunners for the Felda I.P.O., while the same three plus Deutsche Bank and JPMorgan Chase are the underwriters for the retail offering.

Cabot to Buy Norit for $1.1 Billion

The Cabot Corporation agreed on Thursday to buy Norit, a Dutch manufacturer of activated carbon that is used in chemical reactions, for $1.1 billion.

The deal for Norit is the latest example of companies looking to complete bolt-on acquisitions that will help support their existing business operations.

Cabot, a chemicals company based in Boston, said the transaction would bolster its presence in high-margin businesses, like the food and beverage industries, and would add up to 25 cents a share to the company’s earnings by 2013.

Cabot is acquiring Norit from the British private equity firm Doughty Hanson & Company and the Dutch investment company Euroland Investments, which bought Norit in 2007 for an undisclosed amount.

“This acquisition supports the ongoing transformation of our portfolio to a higher margin, less cyclical specialty chemicals focused company,” Cabot’s chief executive, Patrick Prevost, said in a statement.

Norit specializes in the manufacturing of activated carbon, which is used in a number of industries, like environmental protection, air and water purification and pharmaceuticals. The Dutch company operates 10 manufacturing plants across the Americas and Europe.

Norit generated $360 million of sales and reported a pretax profit of $92 million in 2011, according to a company statement. Last year, the Dutch company sold one of its divisions, Clean Process Technologies, to the water services company Pentair for 503 million euros, or $636 million.

Cabot said it expected to generate one-off cost savings of around $50 million after the deal closes by early September.

The company will finance the acquisition through a combination of $200 million in cash reserves, as well as $300 million in existing credit facilities and a further $600 million in new loans.

JPMorgan Chase and the law firm Wachtell, Lipton, Rosen & Katz advised Cabot on the deal.

Unit of PPG to Merge With Georgia Gulf in $2 Billion Deal

The specialty chemicals company PPG Industries will spin off a commodities unit and merge it with Georgia Gulf in a deal valued at about $2 billion, the companies announced on Thursday.

PPG is expected to receive $900 million in cash and $1 billion worth of Georgia Gulf shares. It will also assume $95 million in debt. Owners of PPG stock will get a little more than half of the shares of the newly formed entity. The deal is expected to conclude late this year or early next year.

The new company is expected to have annual revenue of about $5 billion, and will be one of the largest North American producers of chlor-alkali and vinyl chloride — chemicals used in soaps, PVC piping and other products.

“This transaction creates a global industry leader with substantial opportunities for long-term growth and enhanced shareholder value,” Paul Carrico, president and chief executive officer of Georgia Gulf, said in a statement.

Charles E. Bunch, PPG’s chairman and chief executive, said in the statement: “We are pleased to have reached this agreement as this transaction is another major step in our strategic transformation into a more focused coatings and specialty products company. This is a unique opportunity to create significant value for PPG shareholders and to share in synergies that would not be available to PPG’s commodity chemicals business on its own.”

Shareholders of London Metal Exchange Back $2.1 Billion Takeover

LONDON – Shareholders of the London Metal Exchange agreed on Wednesday to a £1.38 billion ($2.1 billion) takeover deal from Hong Kong Exchanges and Clearing.

The deal will allow the Asian company to control the world’s largest futures trading exchange for metals like aluminum, copper and zinc, as emerging market demand for commodities remains strong.

Hong Kong Exchanges, part owned by the local Hong Kong government, had announced its all-cash offer last month, outbidding several American rivals for control of the 135-year-old London exchange.

An overwhelming majority of London Metal Exchange’s shareholders approved the deal on Wednesday. The takeover required the backing of at least 50 percent of its shareholders; those shareholders must also represent more than 75 percent of the firm’s stock.

“I am delighted that our shareholders have overwhelmingly supported the board’s recommendation,” Martin Abbott, the London Metal Exchange’s chief executive, said in a statement.

The acquisition will provide a windfall for JPMorgan Chase and Goldman Sachs, which own a combined 20.4 percent of the metal exchange. The two banks are likely to earn more than a combined $430 million from the transaction.

Despite concerns that the Chinese economy may be slowing down, China and other emerging economies in the region are now the largest buyers of a number of commodities, including iron ore and coal.

The acquisition, whose price tag was higher than analysts’ estimates, will help the Hong Kong exchange take advantage of this demand.

“All the world’s leading exchanges have been fighting in this area,” Charles Li, chief executive of Hong Kong Exchanges, said in an interview last month. “This is about growth and conquering new markets.”

Total trading on the London Metal Exchange increased 22 percent last year from 2010, while the value of all traded contracts rose 33 percent, to $15.4 trillion.

In an interview last month, Romnesh Lamba, head of market development for Hong Kong Exchanges, said that after securing approval for the takeover, the strategy will center on increasing the number of Chinese participants on the London exchange.

Currently, less than a quarter of the London Metal Exchange’s customers hail from China, and Mr. Lamba said there were plans to create contracts denominated in renminbi, the Chinese currency, and to allow for clearing of trades in Asia to help increase the number of regional users. The changes would take place over the next three years, he added.

Hong Kong Exchanges also wants to gain Chinese government approval to use local warehouses to provide commodities for domestic customers. Chinese regulations currently do not allow foreign exchanges to operate mainland warehouses.

By securing control of the L.M.E., Hong Kong Exchanges has ended a battle that spanned more than nine months and pitted many of the world’s largest financial exchanges against each other.

NYSE Euronext and the CME Group made initial bids, but dropped out earlier this year, according to a person with direct knowledge of the matter.

InterContinental Exchange, based in Atlanta, also had proposed buying the London Metal Exchange, but was eventually outbid by Hong Kong Exchanges.

The takeover is expected to close by the end of the year.

Goldman’s Buyout Arm to Buy Interline Brands for $1.1 Billion

Interline Brands, a distributor of repair products for professional contractors, agreed on Tuesday to sell itself to the private equity arm of Goldman Sachs and P2 Capital Partners for about $1.1 billion, including debt.

Under the terms of the deal, the buyout firms will pay $25.50 a share in cash, a huge 42 percent premium to Interline’s closing price on Friday and a 31 percent premium to the company’s 30-day average closing price.

This agreement provides excellent value to shareholders,” Michael J. Grebe, Interline’s chairman and chief executive, said in a statement. “This is also an exciting new chapter for Interline, one that we believe will bring broad benefits to all of our stakeholders.”

Shares in Interline rose nearly 40 percent on Tuesday, though at $25.09, they remained below the offer price.

Interline, founded in 1978, is a direct marketer and distributor of products like janitorial equipment and air conditioner parts. The company reported $37.7 million in net income last year, its third straight annual increase, on revenue of $1.2 billion.

The deal is structured as a management buyout, with members of Interline’s executive team expected to invest alongside GS Capital Partners and P2 Capital Partners. The buyout firms have received committed debt financing from Goldman and Bank of America.

The deal allows Interline to look for higher bids until June 28, in what is known as a go-shop period. If no bids materialize, the transaction is expected to close by the end of September.

Interline was advised by Barclays and the law firm Paul, Weiss, Rifkind, Wharton & Garrison. GS Capital Partners was advised by Goldman and the law firm Fried, Frank, Harris, Shriver & Jacobson. P2 was counseled by Debevoise & Plimpton

National Oilwell Varco to Buy Robbins & Myers for $2.5 Billion

National Oilwell Varco agreed on Thursday to buy Robbins & Myers, a maker of oil well drilling equipment, for about $2.5 billion, as deal-making in the energy sector continues unabated.

Under the terms of the deal, National Oilwell will pay $60 a share in cash, a 28 percent premium to Robbins & Myers’ closing price on Wednesday.

It is the latest deal in the oil patch, as a slew of companies seek to take advantage of a boom in drilling for oil and natural gas, especially in hardened rock formations untapped by previous generations.

National Oilwell has been among the more active buyers. Since 2010, the company has made 13 deals, according to data from Standard & Poor’s Capital IQ.

Based in Dayton, Ohio, Robbins & Myers specializes in making critical industrial parts like valve controls and grinders.

“Robbins & Myers has many complementary products with those National Oilwell Varco currently offers the industry,” Pete Miller, National Oilwell’s chairman and chief executive, said in a statement. “We feel that our combined manufacturing infrastructure and portfolios of technology will further advance our presence in the oil and gas markets we serve.”

Robbins & Myers’ biggest shareholder, M.H.M. & Company, which owns a 10 percent stake, has agreed to the deal. About two-thirds of the company’s shareholders must also sign on. The deal is expected to close in the fourth quarter.

National Oilwell was counseled by the law firm Fulbright & Jaworski, while Robbins & Myers was advised by Citigroup and the law firm Thompson Hine.

Fashola seeks improved exploration activities in onshore, offshore basins .

THE Lagos State Governor, Babatunde Raji Fashola, has implored the Ministry of Petroleum Resources through the Department of Petroleum Resources, to intensify exploration activity within the onshore and offshore Dahomey basin, to enable Nigeria boost its oil and gas reserves for collective benefit.

Fashola, stated this at the opening ceremony of the 36th Society of Petroleum Engineers’ Nigeria yearly international conference and exhibition, in Lagos on Monday.

He agreed that the country is blessed with huge oil and gas resources, which are currently estimated at about 35 billion barrels reserves for oil and 187 trillion cubic feet for gas, but noted that for various reasons, these valuable assets have not been fully exploited and Nigeria’s deep offshore oil and gas resources remains untapped.

According to him, “Lagos State has all it takes to partner with and support the Federal Government in achieving this goal.

“The state falls within the Benin sedimentary basin and also among the Nigerian littoral states. Available information suggests that our offshore territorial areas are endowed with abundant hydrocarbon resources.

“This hydrocarbon belt is known to cover areas spreading towards the western flange of West Africa and up to Ghana, placing that country amongst the oil players of the world.

The governor pointed out that the conference theme, “Future of oil and gas: balance with the environment and sustainable stakeholders participation” is as interesting as it is timely.

“The conference is coming at a most auspicious time, a time when Nigeria is poised to implement radical reforms in the oil and gas industry that will, when implemented, certainly be an engine for growth and have a positive impact on our environment.

“I am certainly optimistic that when those reforms are in place, Nigeria will have no place in the index of nations with the paradox of having an abundance of natural resources and yet comparatively marginal economic and development,” he said.

He lauded the Minister of Petroleum Resources, for her courage in pursuing the reforms necessary to bring the oil and gas industry back from the brink, and in particular for working assiduously towards the quick passage of the PIB.

“All hands must be on deck to ensure that once the bill is passed into law, its implementation stimulates the transparency, efficiency, fairness and equity that we all desire.

‘A law is only as good as its effect and its effect depends on its implementation, just as the success of its implementation depends on its desire of all stakeholders to make it work.

“In Lagos State, we are eagerly awaiting its commencement, as we have already started our own energy reforms for the benefits of all Lagosians.

“ For instance, recognizing that energy is one of the most critical factors that affect our socio-economic growth, we created a new ministry at the start of this term, to be responsible for development and exploitation of energy and mineral resources in the state,” the governor added.

BP sells UK LPG business
08 Aug 2012 09:04 GMT

London, 8 August (Argus) — BP has agreed to sell its LPG distribution business in the UK to Irish firm DCC for $63mn.

The business supplies around 87,000 t/yr of LPG to industrial, commercial and domestic customers in the UK.

BP plans to sell $38bn of its assets by the end of 2013 to help meet costs associated with the 2010 Macondo oil spill in the US Gulf of Mexico. The firm has agreed around $24bn of asset sales since the start of 2010.

BP said in February that it plans to sell its LPG bottling and tank filling business, as well as some of its wholesale LPG activities, in the UK, Portugal, Austria, Poland, the Netherlands, Belgium, Turkey, China and South Africa.

Nigeria's First Bank given go-ahead to restructure
Friday, 03 Aug 2012

Nigeria's First Bank said on Thursday it had won regulatory approval to transfer its subsidiaries into a newly-formed holding company, in line with regulatory requirements to separate core lending from other businesses.

The central bank two years ago scrapped the universal banking model and directed lenders in Africa's second-biggest economy to sell their stakes in non-banking subsidiaries or adopt a holding company structure.

Onche Ugbabe, chief strategy officer, said the lender had received a nod from the Securities and Exchange Commission to proceed with the new structure and was waiting for approval from the central bank and shareholders.

"We expect to conclude the implementation by the third quarter," Ugbabe told a conference call with analysts.

Rivals UBA and Stanbic IBTC Bank, the local unit of South Africa's Standard Bank, said recently they would form holding companies to retain their subsidiaries, including asset management operations.

First Bank, one of Nigeria's top tier lenders, said it had no need to boost the capital bases of its offshore units, following new rules from the central bank on how lenders use local funds abroad and as other African countries tighten requirements for foreign lenders.

The lender said its offshore units in the United Kingdom and Democratic Republic of Congo were adequately capitalized and that it had no concerns about the new central bank rule.

The central bank has issued a directive to lenders restricting them from recapitalizing offshore units from funds sourced at home, in order to avoid capital flight and save a weak naira which has lost 3 percent since April.

"In the unlikely event that we need to raise capital for subsidiaries there are many options we can explore ... we can also reduce dividend payments," Chief Executive Bisi Onasanya said, also on the conference call.

sked on the call how the central bank's directive would affect First Bank's expansion, Onasanya said the bank was not bullish on an African expansion strategy because it still wanted to strengthen its position at home.

Analysts say the new capital rules may hinder Nigerian banks' expansion plans across the continent.

Nigeria's central bank has said it wants to enforce better supervision of banks and their subsidiaries in order to avoid a repeat of the events that led to a $4 billion bailout of nine undercapitalised lenders in 2009.

Private equity eyes Africa, lured by middle class

By Marietta Cauchi
-- Carlyle to raise $500 million for new fund focused on Africa

-- Demand for consumer-faced businesses far outstrips supply

-- Returns on investments can be 40% or more

LONDON (MarketWatch) -- Private equity is set to ramp up investment in Sub-Saharan Africa, as demand from a growing middle class for iPads, Nike sneakers and fast food adds to the region's traditional attraction as a continent of rich natural resources.

Africa has 10% of the world's oil, as much as 90% of its platinum group metals and 60% of the world's uncultivated arable land, but an emerging middle class with growing disposable income has grabbed the attention of a range of investors from global buyout giants such as Carlyle Group to rock star and humanitarian Bob Geldof.

Carlyle aims to raise $500 million for its first fund focused on the region, and Friday received a commitment of $50 million from the African Development Bank. Carlyle is the first large global private equity firm to raise a fund dedicated to the area and joins specialists such as Emerging Capital Partners and Helios, which have been investing across Africa for several years.

Carlyle is unlikely to invest in the extracting or primary manufacturing industries because of the long investment periods they involve. Instead, it will buy stakes in African companies that provide products and services to consumers--either nationally or across the continent--and which it will be able to sell after the three to five years that private equity firms typically need to turn a profit.

"There is a tremendous opportunity to invest in consumer-facing business because of the fast growing middle class," said Bryce Fort, a partner at Emerging Capital Partners, which has been investing exclusively in Africa for 12 years.

"The demand started with mobile phones and has now spread to other businesses such as retail, consumer-focused insurance and the like--and the demand far outstrips supply, which remains constrained," he added.

Investors in private equity funds now put African frontier markets such as Nigeria or Kenya ahead of frontier Asian and Latin American markets as offering the best opportunities, based on the tremendous growth prospects.

Funds with a dedicated focus on Sub-Saharan Africa remain small in number and size compared with those dedicated to other regions. For example, 10 funds raised an aggregated $2.3 billion for Sub-Sahara Africa in 2011, compared with the 29 funds that raised $14.2 billion for Latin America, or the $26.9 billion raised by 110 funds for Asia, according to data from research firm Preqin.

But compared with previous years--in 2010 just $600 million was raised for the region--interest in Sub-Sahara Africa has rocketed and is set to increase as consumers' disposable income rises.

"Ghana, for example, is likely to be the world's fastest-growing economy overall in 2011, expanding at an estimated 16.3%," Abu Dhabi-based asset manager Invest AD said in a recent study.

"As a result, all institutional investors expect to have some exposure to Africa by 2016, with one-third expecting to shift at least 5% of their fund value there," it added. At the moment 45% have less than 1%, if any, exposure to the continent.

Challenges remain, but these are the obstacles a dealmaker would face anywhere and are no longer dominated by concerns such as corruption and political uncertainty.

"It is very much business and commercial issues that are part of business anywhere and not the issues that people normally associate with Africa such as political instability and corruption etc.," said Fort. Experts cite market volatility, illiquidity and finding the right management to run the business among these issues.

Meanwhile, returns from investing in Africa can be as much as 40% or more, according to Henry Obi, who is chairman of the Emerging Markets Private Equity Association and chief operating officer of Helios, another Africa-focused private equity firm. Even on average, private equity returns are around 19% for the period since 2000--this compares with just 11% for the Morgan Stanley Composite Index, MSCI, he added.

Helios invests across all sectors and at every stage in a company's life--sometimes going in when the business is no more than a blank sheet of paper, at other times putting in growth capital or staging a full management buyout.

"The investment period tends to be longer than usual--between four and seven years instead of three to five years," Obi said. "All the operational initiatives take longer."

For example, the founders of Helios established Helios Towers Nigeria in January 2005 to capitalize on the extremely strong growth in mobile telephony in Nigeria and using the successful tower-leasing business model pioneered by U.S.-based companies such as Crown Castle International /quotes/zigman/230852/quotes/nls/cci CCI -0.21% . The investment was incorporated in the Helios fund the following year.

Helios' other investments include Continental Outdoor Media, which has operations in 13 Sub-Saharan Africa countries in addition to South Africa; Nairobi's Equity Bank , which provides banking services to a previously un-banked population; and Kenya-based Flamingo Holdings, which grows, processes, packages and distributes cut flowers and fresh vegetables.

The heightened interest in Sub-Saharan Africa as a money-making opportunity was further highlighted last week when rock star Geldof sought to galvanize the private equity industry into investing in the continent.

"Aid has stabilized the community and, given a stabilized community, you have an economy that private equity can capitalize on," he told a global private equity conference in Berlin.

Geldof himself has just closed his first private equity fund, which raised $200 million. The 8 Miles Fund, named after the shortest distance between Europe and Africa, will invest across the continent in projects and assets in a wide range of sectors.

"Our fund will make a lot of money but what we want to leave behind is firms, farms and factories," he said.

Ever the altruist, Geldof said he wasn't interested in the money--the buyout boys would probably beg to differ.

5 biggest private equity deals in Africa

Private equity deals in Africa have remained steady if not particularly fast and furious. The robust growth in the region reflects the universally agreed opportunity of the continent, whilst the modest deal flow is indicative of an emerging market where investors are still cautious and waiting for more adventurous parties to pave the way. And pave the way they are, in 2011 over $3bn worth of deals were closed – E&Y list 5 of the largest in their Private equity roundup – Africa report:


Company Deal value (US$m) Country Firm

Tracker Network Ltd. 434 South Africa Actis Capital LLP, RMB Ventures Ltd.

Eaton Towers 150 Ghana Capital International, Inc

Universal Industries Corporation 184 South Africa Ethos Private Equity Ltd.

InterSwitch Ltd. 110 Nigeria Helios Investment Partners LLP, Adlevo Capital Managers LLC

Rift Valley Railways 110 Kenya Citadel Capital, African Agriculture Fund, IFC


Unsurprisingly the list is dominated by Southern and Western Africa countries. Kenya flying the baton for East Africa is not much of a surprise either. But is this really worth getting out of bed for? Carlyle Group certainly think so, setting up their Sub-Saharan Africa fund last year was a marker in the Sub-Saharan sand for the cautious larger investors. The question maybe we should be asking ourselves is not if, but rather when, should we all jump onto the back of the emerging market’s roaring lion?!

How to grow private equity investment in Africa

Growing private equity investment for Africa really comes down to two major factors: one, the ability to nurture the emerging middle class and two, presenting a convincing case for LPs to invest.

On the first point growing the emerging middle class to create a burgeoning private sector is hardly a new idea. Look at any of the BRICs and you’ll see a similar stage in their early development. Investment into the SME sector now allows for more investable companies later. This is true for Africa as it is for every emerging economy. East Africa presents a great case study for this, here’s a great little article that maps it out.

So now it’s down to convincing the GPs. Many are interested, but it really has only been the DFIs that have led the way, still where they lead others will follow. Jurgen Rigterink, CIO of FMO (who invest over €305m into Africa PE) outlined his fund manger selection process at this year’s Private Equity World Africa event:

■Thorough process of relationship assessment
■Team composition, indiv. & combined track record
■Reputational check (via local network)
■Attractiveness of market and fund proposition
■Competitive analysis

Middle East sovereign wealth funds to increase allocations to alternatives

Sovereign wealth funds in the Middle East are set to increase their allocations to hedge funds and other alternative investments. So says an article published recently on efinancialnews.com, following a roundtable held last month in the Gulf.

Bhisham Manraj from Bank of America Merrill Lynch suggests that regional SWFs’ “need for diversification, increased yield in the current low interest rate environment, increasing sophistication – and the fact that they are uniquely placed to deploy long term capital – makes them well placed to continue and increase their investment programs in infrastructure, private equity, hedge funds and real estate”.

Other roundtable participants supported Manraj’s views; Uwe Eberle, head of Van Eck Global in Switzerland, said: “Recent discussions in the Gulf region have confirmed that [investors in] the region [are] looking for more diversification. If you can deliver [outperformance] or absolute return with strong risk management, investors now express significantly higher interest than in the past. I believe the alternative investment industry has a significant upside in the region.”

When Mark Mobius was in town recently for the Hedge Funds World Middle East conference, we quizzed him for his views on the outlook for Middle East investor allocations to alternatives.

How to compare private equity strategies with hedge funds?

This question of comparing private equity strategy with hedge funds seems to have appeared a lot in many different forums and social networks but hasn’t yet generated a clear response that answers the question. In an attempt to remedy this, I have reached out to some industry experts and here are their responses so far:

Jon Unger Private Equity has more to do with taking an undervalued company, cleaning it up, and turning it around to sell it at a profit. One would put more weight to ownership in a PE strategy rather than a Hedge Fund. PE could also be Venture Capital in that they bring privately owned companies to Market with an IPO in the effort that the public would value the company at more than what the company can get on its earnings.
A Hedge Fund is basically the grown up version of an investment club where only accredited investors (think high net worth) can invest in the company. There can be up to 200 investors. A hedge fund is not always so concerned about the management or ownership of the company. In fact a hedge fund could be just a large portfolio of short positions on a commodity hedging against a bull market.

Daniel Cross at the Financial Advisory suggests that hedge funds are private investment companies that are structured as Limited Partnerships. The general partner is the Hedge Fund manager while the limited partners would be investors. In order to invest in a Hedge Fund, the potential partner must qualify as a high net worth individual – someone that has earned over $200,000 over the past 2 years with a reasonable assumption that it will continue or a net worth of at least $750,000.00. The manager pools together everyone’s money and trades various products ranging from stocks to bonds to derivatives. It is currently a lightly regulated industry that allows the Hedge Fund manager a lot of freedom but comes with the price of not being allowed to advertise or market the Fund to anyone other than the aforementioned qualified investors.
Private Equity companies invest primarily in companies that are not publicly traded. They profit based on a
companies underlying company and are known for restructuring and streamlining them for maximum efficiency. They are open to any investors as they do not have the type of restrictions Hedge Funds have, although if they begin to trade stocks, they must reorganize as such.

10 biggest private equity firms focused on Southern Africa Agri

Is there even such a thing as a “big” private equity firm focusing on Southern African Agri? Er… well here’s a top 10 for all you sceptics!

1.African Agricultural Land Fund, $3.249bn
2.Standard Bank Private Equity, $1bn
3.Futuregrowth Agri Fund, $554m
4.Carlyle Group Sub-Saharan Africa Investment Group, $500m
5.South Africa Silverlands Fund, $450m
6.Chayton Atlas Agricultural Company, $150-200m
7.African Agricultural Fund, $135m
8.Agri-Vie Agribusiness Fund, $110m
9.Actis Africa Agribusiness Fund, $93m
10.Advanced African Solutions, $250m (planned)
What do they all have in common? Backed by DFI money. What’s interesting? Silverfunds (Silverstreet Capital’s fund) is also backed by pension fund money!

Have a look at this superb report by Laurent Thomas, (Study on Private Equity in Agribusiness in Southern Africa)for details of structure, strategy, geo, and track records. A great read.

Nigeria's AMCON asks Citi to advise on bank sell-off

AMCON appoints Citi, Rencap to advise on sale of banks

* "Bad bank" runs three nationalised lenders after rescue

* Rival banks had been lined up to bid for them

By Chijioke Ohuocha

LAGOS, Aug 7 (Reuters) - Nigeria's state-backed "bad bank" AMCON has appointed Citi and Renaissance Capital to determine the value of three lenders it nationalised last year before deciding on the best way to privatise them.

AMCON Chief Executive Mustapha Chike-Obi confirmed the appointments in a message to Reuters on Tuesday but gave no further details.

Nigeria nationalised three lenders last year after they failed to find new investors before a recapitalisation deadline and changed their names to Mainstreet Bank from Afribank; Enterprise Bank from Spring Bank and Keystone Bank from Bank PHB.

The three banks were among nine involved in a $4 billion central bank bailout in 2009 when the regulators asked them to find new investors or face nationalisation.

Citi and RenCap have between three and six months to complete their evaluation.

Chike-Obi told Reuters last month AMCON may list the three nationalised lenders instead of selling them to rivals, as it seeks to determine fair value for the banks.

Previously, AMCON said that more than 20 firms - banks and private equity investors - had expressed interest in acquiring the nationalised lenders, but AMCON is keen to have them valued before starting any negotiations.

CNOOC signs $1.56 billion domestic coalbed methane deal

(Reuters) - CNOOC Ltd (0883.HK), China's largest offshore oil producer, has signed a deal to spend 9.93 billion yuan ($1.56 billion) to explore for coalbed methane (CBM) in China over the next five years as part of a 30-year agreement.

A deal on the project was signed between CNOOC Ltd and China United Coalbed Methane Corporation Ltd, which is half owned by CNOOC Ltd's parent, China National Offshore Oil Corporation (CNOOC Group), and half owned by China National Coal Group Corp, CNOOC said in a filing with the Hong Kong bourse.

The two firms aim to explore, develop and produce methane gas in China for 30 years, CNOOC said.

China is investing 100 billion yuan to double coalbed methane output by 2015. Beijing wants gas output from coal seams of up to 30 billion cubic meters (bcm) by 2020, which would account for 15 percent of China's total gas production, up from 5 percent last year.

Beijing plans to double the share of natural gas in its energy mix by 2015 and reduce the role of coal in a bid to ease pollution and slow greenhouse gas emissions. China will import more gas, but it also aims to boost output from domestic natural gas fields as well as develop unconventional sources of gas.

CNOOC Ltd said the deal with China United would give it an opportunity to develop its clean energy business and work onshore in China.

Under the agreement, exploration would cover a 10,866 sq km (4,195 sq miles) area in Shanxi, Shaanxi, Anhui, Shandong, Yunnan, Ningxia, Hebei, Hubei and Henan provinces, CNOOC said. Future coalbed methane production from the project would be shared between CNOOC Ltd and China United.

In general, CNOOC Ltd will take up to 70 percent of future development and production costs of a coalbed methane field, while China United will take up 30 percent, it said.

CNOOC Ltd, which last month agreed to buy Canadian oil producer Nexen (NXY.TO) for $15.1 billion in China's largest overseas acquisition, said the 9.93 billion yuan in budgeted expenses included 9.71 billion yuan for exploration for the first three years, with the rest for the remaining two years.

CNOOC Ltd, whose overall exploration expenditure averaged 35.8 billion yuan per year over the past five years, would fund the coalbed methane project with internal resources.

DreamWorks China JV to open $3.1 billion Shanghai theme park

(Reuters) - DreamWorks Animation SKG Inc (DWA.O) and its Chinese joint venture partners will open a theme park in Shanghai by 2016, with a total investment amount of 20 billion yuan ($3.14 billion), the companies said on Tuesday.

The creator of "Shrek," together with its joint venture partners -- China Media Capital, Shanghai Media Group and Shanghai Alliance Investment Ltd -- will also cooperate to produce "Kung Fu Panda 3" in 2016, the joint venture said in a statement.

"Without question, China has what is needed to make great animation film ... this is a perfect fit for us at DreamWorks," Jeffrey Katzenberg, CEO of DreamWorks, told a news conference.

A sharp rise in China's box office revenues, backed by a moneyed middle-class willing to pay top prices for a trip to the cinema, is luring Hollywood to one of its largest untapped markets.

Walt Disney Co (DIS.N) broke ground on its planned Shanghai Disneyland last year. Its Shanghai theme park is estimated to cost 24.5 billion yuan, with hotels and additional facilities costing another 4.5 billion yuan.

In May, News Corp (NWSA.O) agreed to buy a stake in Chinese movie distributor Bona Film Group Ltd (BONA.O).

DreamWorks' theme park, Dream Centre, will be located in the Xuhui district of Shanghai, said Li Ruigang, Chairman of China Media Capital said, adding he hoped it would become China's Broadway or West End.

DreamWorks announced in February it will create a China JV called Oriental Dreamworks that will develop and produce Chinese animated and live-action content for distribution within China and around the globe.

Advent to Buy Control of Maker of Serta and Simmons Bedding

Advent International said Sunday that it had agreed to buy a majority stake in the parent company of Serta and Simmons bedding, taking control of one of the country’s biggest makers of mattresses.

The deal for AOT Bedding Super Holdings is valued at about $3 billion, according to a person briefed on the matter. Ares Management and the Ontario Teachers’ Pension Plan, which previously controlled AOT Bedding, will maintain sizable minority stakes in the company.

Advent outbid at least two other private equity firms, Bain Capital and Berkshire Partners, for AOT Bedding, another person briefed on the sale process said.

“We are excited to be investing in Serta and Simmons, two companies with strong momentum in an industry we believe is poised for growth,” Jefferson Case, a principal at Advent International, said in a statement. “We look forward to working with our investment partners and the management teams of both companies.”
Through Sunday’s deal, Advent will control two mattress makers with a collective history of about 223 years. Based in Hoffman Estates, Ill., National Bedding makes Serta mattresses.

Simmons, which was founded in 1870, passed through a series of investors before filing for bankruptcy in 2009, burdened by the cumulative weight of its multiple takeovers.

Ares and Ontario Teachers gained control of National Bedding in 2005. The two later gained control of Simmons in 2010, buying the company out of bankruptcy. Since then, the two mattress brands have been run as separate subsidiaries and continued to compete against each other.

Founded in Boston 28 years ago, Advent has become a particularly notable investor in consumer companies in recent years. Among its investments are Party City and the athletic clothing maker Lululemon Athletica.

Advent was counseled by the law firm Weil Gotshal & Manges. AOT Bedding was advised by Barclays, Deutsche Bank, Morgan Stanley and the law firm Sullivan & Cromwell.

Heineken to Buy Stake in Asia Pacific Breweries for $4.1 Billion

LONDON — Heineken extended its reach into Asia on Friday after the Dutch brewer agreed to buy a stake in one the region’s biggest brewers for roughly $4.1 billion.

Heineken, which already owns a 42 percent holding in Asia Pacific Breweries, will acquire a further 40 percent stake in the company from Fraser & Neave, a Singapore-listed conglomerate and longstanding partner of Heineken’s in the region.

The deal underscores Heineken’s interest in fast-growing emerging markets
Listed in Singapore, Asia Pacific Breweries operates 30 breweries across Asia, including in far-flung counties like Mongolia, Papua New Guinea and the Solomon Islands. Its brand portfolio includes Tiger Beer and Bintang lager, some of the best-known beers in the regional markets where they are sold.

Heineken previously said a successful deal would give it “direct access to a number of important markets, including Cambodia, China, Indonesia, Malaysia, New Zealand, Papua New Guinea, Singapore, Thailand and Vietnam.”

Larger global brewers are looking to deal-making as growth slows in their home markets.

In June, Anheuser-Busch InBev, whose beer brands include Budweiser and Stella Artois, agreed to buy the half of the Mexican brewer Grupo Modelo that it did not already own for $20.1 billion. Rival SABMiller bought Foster’s Group, the biggest beer company in Australia, for $10.15 billion last year.

Asia Pacific Breweries has been in play for weeks. Last month, Thai Beverage, controlled by the billionaire Charoen Sirivadhanabhakdi, initially offered to buy a 22 percent stake in Fraser & Neave for $2.2 billion. Heineken countered in late July, offering to buy a 40 stake for roughly $4.1 billion. Heineken had set an Aug. 3 deadline for Fraser & Neave’s board to accept its offer.

The agreement on Friday will trigger a requirement that Heineken make a mandatory buyout offer to remaining shareholders of the Asian brewer. The purchase of the remaining shares is expected to cost $1.9 billion. The deal is expected to close at the end of the year.

In early afternoon trading on Friday, shares in the European company rose 3.6 percent.

Credit Suisse and Citigroup advised Heineken on the deal.

24 Hour Fitness Is Said to Be on the Block

The health club chain 24 Hour Fitness is for sale, people briefed on the matter said on Tuesday.

Forstmann Little, the private equity firm that owns 24 Hour Fitness, has hired Goldman Sachs to run the auction process, these people said. Goldman will soon begin soliciting interest from potential buyers, a group that includes other fitness chains and private equity firms.

The chain is expected to fetch about $2 billion in a sale, said these people, who requested anonymity because they were not authorized to discuss the deal publicly.

With about 425 locations, 24 Hour Fitness is the nation’s largest privately owned chain of fitness centers. A representative of the company did not immediately respond to a request for comment.

Forstmann Little’s eventual sale of 24 Hour Fitness was expected. Once one of the world’s largest private equity funds, Forstmann Little began winding down its operations several years ago after ill-timed telecommunications investments. Theodore J. Forstmann, the financier who led the firm, died last November at the age of 71.

The chain is one of the two major investments remaining in Forstmann Little’s portfolio. The other is IMG, the sports, fashion and media company. Forstmann Little is also expected to pursue a sale of IMG next year.

The Forstmann Little fund formally expired on June 30, meaning that it was contractually required to sell its assets and return all money to its investors by then. But the firm’s investors — called limited partners in private equity parlance — had allowed that deadline to lapse and granted the fund extra time to sell 24 Hour Fitness and IMG.

After Mr. Forstmann’s death, Forstmann Little named the hedge fund manager Julian H. Robertson its chairman. He and Mark J. MacDougall, a lawyer at Akin, Gump, Strauss, Hauer & Feld, have been overseeing the sale of the firm’s remaining assets.
Theodore J. Forstmann with Padma Lakshmi, the co-host of "Top Chef," in 2010.Hiroko Masuike for The New York TimesTheodore J. Forstmann with Padma Lakshmi, the co-host of “Top Chef,” in 2010.


Health club chains have been attractive acquisition targets for private equity firms because their membership fees generate predictable cash flows that they can use to pay off the debt taken on to pay for the company. The New York-based chain Equinox, for example, was owned by North Castle Partners and J.W. Childs before it was sold to the real estate developer Related Companies.

Other potential buyers of 24 Hour Fitness include LA Fitness, a chain of health clubs partially owned by the private equity firm Madison Dearborn, and Lifetime Fitness, a publicly traded company.

Forstmann Little acquired 24 Hour Fitness, based in San Ramon, Calif., in 2005 for $1.6 billion. The company’s financial results suffered during the recession, but have since improved. In recent years the company has expanded internationally, opening several outposts in Asia.

24 Hour Fitness was started in 1983 by Mark S. Mastrov, a former natural-foods salesman, with a single club. Today, the company is a sponsor of the United States Olympic team, and at the London Games has several athletes on its “Team 24” squad, including the beach volleyball star Kerri Walsh and the water polo team captain Tony Azevedo.

2 Private Equity Firms to Buy United Technologies Unit for $3.46 Billion

United Technologies is a step closer to paying for its takeover of the Goodrich Corporation.

Two private equity firms, the Carlyle Group and BC Partners, have agreed to buy Hamilton Sundstrand Industrial, a maker of industrial pumps and compressors, from United Technologies for $3.46 billion, the companies announced on Wednesday.

Proceeds from the transaction, which is expected to close in the fourth quarter of this year, will go toward financing United Technologies’ $16.5 billion acquisition of Goodrich, which was announced in 2011. Carlyle and BC Partners are both investing in the deal, with debt financing from a group of banks.

The agreement is the latest move by United Technologies to shed noncore assets. On Monday, the company said it agreed to sell its Rocketdyne unit to GenCorp for $550 million. In March, United Technologies said it planned to sell about $3 billion worth of assets to help pay for the Goodrich deal.

Hamilton Sundstrand Industrial comprises three businesses, which make components used in industries like energy and mining. United Technologies, which is based in Hartford, Conn., makes elevators and aircraft engines.

“We believe Hamilton Sundstrand Industrial’s strong product mix combined with secular growth trends in the energy, chemicals and industrials sectors create attractive long-term growth prospects for the company,” Vipul H. Amin, a principal of the Carlyle Group, said in a statement.

The buyers were advised by Citigroup and RBC Capital Markets, and the law firm Latham & Watkins. A host of banks — Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley, RBC Capital Markets and UBS — have committed financing.