Come January 1 2009 and two leading public sector lenders Punjab National Bank and Bank of Baroda will reduce their prime lending rate by 50 and 75 basis points.
The BPLR of PNB would stand reduced to 12 per cent, from the existing 12.50 per cent, effective from January 1.PNB also announced a reduction in its peak deposit rate by 100 basis points to 8.5 per cent for deposits of one year to less than three years beginning new year.Earlier this month, the bank had reduced its peak deposit rate to 9.50 per cent from 10.5 per cent.
In a separate regulatory filing to the BSE, Bank of Baroda said "The bank has decided to reduce its Benchmark Prime Lending Rate (BPLR) by 75 basis points from existing 13.25 per cent to 12.50 per cent with effect from January 1, 2009."
Monday, December 29, 2008
Friday, December 26, 2008
LIC raises stake in HDFC Bank to over 5 per cent
Country's largest insurer Life Insurance corporation of India has increased its stake in HDFC Bank to over five per cent following acquisition of shares from the open market.LIC purchased 1.6 lakh shares from the open market hiking its stake in
the company to 5.01 per cent.The equity holding of the insurer increased by 0.04 per cent from 4.97 per cent earlier.
As on June 2008, LIC holding in the bank stood at 2.15 per cent which went up to 4.7 per cent in September this year.Yesterday, LIC hiked its stake in Vijaya Bank to 9.53per cent by acquiring shares worth nearly Rs 30 crore from the open market.
Domestic institutional investor acquired over 94.29 lakh shares representing 2.18 per cent stake in the state-run lender.Before the acquisition, LIC held over 3.18 crore shares representing 7.38 per cent stake in the bank which subsequently increased to 9.53 per cent after the purchase.
Swiss Finance Corp raises its stake in Amtek Auto to 8%
Mauritius-based Swiss Finance Corporation (SFC) has bought an additional 4% stake in Amtek Auto through open market purchases.The foreign investor acquired a total of 57.2 lakh shares for about Rs 31 crore on December 12 ‘08. Post-acquisitions, SFC’s
stake in the company has gone up to 8.2% of the equity, according to disclosures filed with the Bombay Stock Exchange.
The Amtek Auto stock has risen sharply by 52% in the past one month. Warburg Pincus, Citigroup, Credit Suisee Singapore, CLSA Mauritius and Sansar Capital Mauritius are among other major foreign institutional investors holding a substantial stake in the company.
Amtek Auto is part of Amtek Group, one of major players in automotive components industry with production facilities located across North America, Europe and Asia.
stake in the company has gone up to 8.2% of the equity, according to disclosures filed with the Bombay Stock Exchange.
The Amtek Auto stock has risen sharply by 52% in the past one month. Warburg Pincus, Citigroup, Credit Suisee Singapore, CLSA Mauritius and Sansar Capital Mauritius are among other major foreign institutional investors holding a substantial stake in the company.
Amtek Auto is part of Amtek Group, one of major players in automotive components industry with production facilities located across North America, Europe and Asia.
Petrol begins to flow from RPL's refinery
Reliance Petroleum (RPL), a subsidiary of Reliance Industries, commissioned its 27-million tonne export refinery in Jamnagar on Thursday, putting to rest market speculation of a possible delay following a global demand slump for petroleum products.
The RPL refinery, which will be capable of processing 5,80,000 barrels of oil per day (bopd), has been developed in partnership with Chevron of US, which holds a 5% stake in the refinery. This is the second refinery from the Reliance stable in Jamnagar, which along with the existing 33-million metric tonne per annum (mmtpa) RIL refinery, is now the world’s largest refinery complex, with an aggregate refining capacity of 1.24 million bopd at a single location.
RIL and RPL, which would be exporting most of their products except LPG — which they sell to government-owned refineries — would be keenly watched by its rivals and analysts, as they seek to sell their products in the western markets.
Fortis Healthcare to raise Rs 1,000 crore through rights issue
Fortis Healthcare CEO & MD Shivinder Singh on Christmas day announced plans to raise Rs 1,000 crore through a rights issue.
The money would be used to fund the company’s greenfield projects and restructure the balance sheet, besides being utilised for other investment opportunities.The share ratio and issue price of the rights issue would be finalised by February-end.
The company is setting up a medicity in Gurgaon and three new hospitals in Mumbai, West Delhi and Gurgaon. Fortis’.Last year, Fortis Healthcare raised Rs 496 crore through its maiden public issue and the promoters currently own 74.4% in the company. At present, Fortis Healthcare has 23 hospitals and plans to increase it to 40 hospitals by 2011.
Read more in
Cholamandalam DBS to raise Rs 300 cr via preference shares
Cholamandalam DBS said its founders including EID Parry, Coromandel Fertiliser Ltd and DBS Bank would subscribe to 10 million convertible shares, to raise Rs 300 crore.
The preference shares will be issued at Rs 100 each at a premium of Rs 200 and shall be convertible into equity within 18 months, the financial services firm said in a statement to the stock exchange.
The firm had said on Oct 24 it will raise an additional Rs 50 lakh.
The preference shares will be issued at Rs 100 each at a premium of Rs 200 and shall be convertible into equity within 18 months, the financial services firm said in a statement to the stock exchange.
The firm had said on Oct 24 it will raise an additional Rs 50 lakh.
Wednesday, December 10, 2008
LIC's investment in MF's rises 3 folds
After banks, it’s the country’s largest insurer Life Insurance Corporation of India (LIC) that has come to the aid of cash-strapped mutual funds (MFs), which are reeling under redemption pressure on liquid and fixed maturity plans (FMPs).The public-sector insurer has pumped in over Rs 14,000 crore into liquid funds of various fund houses. This is more than three times its investment of around Rs 4,500 crore in such instruments last year.
It could not be ascertained as to how much the corporation has invested in its own mutual fund arm, LIC Mutual Fund.
According to Irda norms, LIC can invest 50 per cent in government securities, 15 per cent in the infrastructure sector, and the remaining 35 per cent in other channels, including equity, mutual funds, fixed deposits, non-convertible debentures, certificate of deposits, and commercial papers.
Liquid or money market funds earn returns in the range of 10-12 per cent. LIC parks money in short- term liquid funds and FMPs, where the average tenure varies from two weeks to a month.
FT picks up major stake in African Bourse
The Financial Technologies India (FTIL) group has inked a deal to acquire 60 per cent stake in Botswana-based Bourse Africa. The latter has been licensed by the Botswana government to set-up a spot and/or derivative multi-asset exchange for trading in commodities, currencies, bonds and diamonds.The remaining equity in Bourse Africa will be held by other African financial institutions, banks, global multi-lateral developmental ventures, exchanges and other strategic investors.
The exchange will have a pan-African presence through the hub-and-spoke model that will connect all major countries in Africa. Operating out of Botswana, Bourse Africa is accredited to the Botswana International Financial Services Centre (IFSC).Other financial services ecosystems that are planned to be set up include a Clearing Corporation, Warehouse Receipt Corporation and Depository services.
Read more in The Business Standard article.
Blackstone’s NCC stake-hike plan blocked
The government has blocked private equity firm Blackstone’s plans to hike stake in Nagarjuna Construction Company (NCC) on the grounds that the construction firm has been operating as a ‘foreign-owned Indian holding company’ without prior permission from the Foreign Investment Promotion Board (FIPB).NCC has been asked to first pay a penalty to RBI and then seek a fresh permission from the FIPB to offload an additional 3.5% stake to US-based Blackstone.
The construction company had sought government permission to issue 91 lakh convertible share warrants to Blackstone at a conversion price of Rs 225 each, a deal size of Rs 205 crore. This was the second tranche of investment planned by the private equity firm in the company. In August 2007, Blackstone struck a deal to invest about Rs 616 crore to pick up a 12% stake. This was a two-tiered transaction in which it was to get convertible warrants in the second leg.
Blackstone, however, stands to benefit from the government’s decision to reject the proposed investment. NCC’s stock price has crashed and on Monday closed at Rs 68.55 on the BSE. The private equity firm would not like to pay more than a two-fold premium on the existing stock price while subscribing to the convertible warrants.
According to Press Note 9 guidelines, laid down by the Department of Industrial Policy and Promotion (DIPP), a foreign-owned Indian holding company is a domestic firm in which foreign investment is 51% or more. In NCC’s case, though, the total foreign stake is 30.83% as of August 2008. Of this, Blackstone holds 8.85% as a foreign institutional investor (FII). NCC has RBI’s permission to take FII investments up to 74%.
Read more in
The construction company had sought government permission to issue 91 lakh convertible share warrants to Blackstone at a conversion price of Rs 225 each, a deal size of Rs 205 crore. This was the second tranche of investment planned by the private equity firm in the company. In August 2007, Blackstone struck a deal to invest about Rs 616 crore to pick up a 12% stake. This was a two-tiered transaction in which it was to get convertible warrants in the second leg.
Blackstone, however, stands to benefit from the government’s decision to reject the proposed investment. NCC’s stock price has crashed and on Monday closed at Rs 68.55 on the BSE. The private equity firm would not like to pay more than a two-fold premium on the existing stock price while subscribing to the convertible warrants.
According to Press Note 9 guidelines, laid down by the Department of Industrial Policy and Promotion (DIPP), a foreign-owned Indian holding company is a domestic firm in which foreign investment is 51% or more. In NCC’s case, though, the total foreign stake is 30.83% as of August 2008. Of this, Blackstone holds 8.85% as a foreign institutional investor (FII). NCC has RBI’s permission to take FII investments up to 74%.
Read more in
Wockhardt in talks to raise $100 mn
Mumbai-based drugmaker Wockhardt, country’s sixth-largest drug maker by revenue is in discussions with ICICI Venture, ChrysCapital and other private equity firms to divest a 15% stake to pay off investors in its $110-million foreign currency convertible bonds (FCCB) issue, which comes up for redemption next year.According to sources Wockhardt is looking to raise $100 million (around Rs 500 crore) from PE funds at nearly triple the premium over its current market price of Rs 96.45 per share.
The firm is looking to sell 15% stake, but is unlikely to get the kind of premium it is looking for. PE firms are looking for a more realistic valuation of the company. Under India’s takeover code, if a single investor buys 15% equity in a company, it has to make an open offer for buying an additional 20%. But if a clutch of investors together buy 15%, the open offer option does not get triggered.Wockhardt’s FCCB issue is due for redemption in October 2009 at a conversion price of Rs 486 per share.
Another option available to Wockhardt is to raise debt, including ECBs, for taking care of the liabilities arising out of FCCB conversion. But the company’s debt obligations are already in the region of Rs 2,800 crore, and with a debt-equity ratio of 2.3:1, its capacity to raise loans could be constrained.
Read more in The Economic Times article.
The firm is looking to sell 15% stake, but is unlikely to get the kind of premium it is looking for. PE firms are looking for a more realistic valuation of the company. Under India’s takeover code, if a single investor buys 15% equity in a company, it has to make an open offer for buying an additional 20%. But if a clutch of investors together buy 15%, the open offer option does not get triggered.Wockhardt’s FCCB issue is due for redemption in October 2009 at a conversion price of Rs 486 per share.
Another option available to Wockhardt is to raise debt, including ECBs, for taking care of the liabilities arising out of FCCB conversion. But the company’s debt obligations are already in the region of Rs 2,800 crore, and with a debt-equity ratio of 2.3:1, its capacity to raise loans could be constrained.
Read more in The Economic Times article.
Railway hikes freight rates by 8% on cement, coal
Indian Railways on Monday hiked the freight rates for cement, coal and coke by up to 8% per tonne. The Railways move would increase the input cost of housing, power and steel sectors that have been identified for special focus by the government. The hike came into effect immediately after the government announced a package to boost the economy.
According to a Railways notification, the classification of cement, coal and coke has moved upwards from class 140 to 150 for train load movement. This translates into higher freight depending on the distance travelled. Coal industry analysts suggest that the increase in freight will hit power generators hard, while for steel producers the increase will be offset by a global decline in coking coal prices. The coking coal is converted into coke for use in the blast furnace for generating liquid steel.
“Cost of thermal coal is less than the transportation cost for state power generators in the northern region, where coal may be transported from about 1,000 to 1,500 kms. Railways freight on coal, typically, costs about Re 1 per tonne per km, which can result up to Rs 1,500, whereas cost of coal is between Rs 500 and 750 (Grade F) thermal coal,” Puneet Goel of KPMG advisory services told ET.For cement industry, the move could lead to an average around Re 1 per bag increase in transportation cost of the construction material, thinning the relief to cement consumers that could result from 4% excise duty cut.
Tuesday, December 9, 2008
OVL to go ahead with the acquisition Imperial Energy
The union cabinet has accorded its approval to ONGC Videsh Ltd, the overseas investment arm of ONGC, India's largest oil explorer, to go ahead with the acquisition of UK-listed Imperial Energy.
The cabinet committee on economic affirs met Tuesday morning to approve the deal. There is no official word on the government's decision as yet. People who are in the know of the deal said that the cabinet clearance was taken so that OVL could meet the Tuesday midnight deadline set by UK authorities.
This would pave the way for OVL to make the open offer to the UK listed shareholders. The $2.1 billion deal will be one of the bigger deals by ONGC in recent times Imperial Energy has oilfields in Russia. OVL had sought to delay making the open offer but the request was rejected by the Takeover panel on Monday.
Analysts say the deal works out to around $2 to $2.5 a barrel for OVL given Imperial's declared reserves of 900 million barrels and will help improve India's energy security. India meets almost 70% of its oil demand through imports.ONGC is being advised by Deutsche Bank. Merrill Lynch is advising Imperial.
Related story:
OVL may make ‘firm’ offer to Imperial soon
Imperial Energy has choosen OVL over Sinopec
Infrastructure India acquires 49% in Oriental Tollways
Infrastructure India, a London-listed investment fund, is close to acquiring a 49% stake in Oriental Tollways for Rs 450 crore ($90 million).Oriental is part of New Delhi-based privately-owned Bakshi Enterprise.Dabur India vice-chairman Amit Burman is a shareholder in OSE in a personal capacity.
The specialist India-focussed fund will invest in Oriental Tollways through a Mauritius-based subsidiary.Infrastructure India’s mandate is to invest in Indian energy and transport infrastructure projects and comes out of its belief that the present time is appropriate to focus on infrastructure in India given the fast pace of change in its economy.The fund has already invested in Shree Maheswar Hydel Power Corporation, a 400-MW hydroelectric power project located in Madhya Pradesh, among others, in India.
Its investment, which will value Oriental Tollways at Rs 918 crore, comes against a gloomy backdrop for the Indian infrastructure sector, which has, in the past, been hobbled by bureaucratic delays and is now a victim of tight funding conditions amid a global credit crunch, on the whole.
Read more in The Economic Times article.
The specialist India-focussed fund will invest in Oriental Tollways through a Mauritius-based subsidiary.Infrastructure India’s mandate is to invest in Indian energy and transport infrastructure projects and comes out of its belief that the present time is appropriate to focus on infrastructure in India given the fast pace of change in its economy.The fund has already invested in Shree Maheswar Hydel Power Corporation, a 400-MW hydroelectric power project located in Madhya Pradesh, among others, in India.
Its investment, which will value Oriental Tollways at Rs 918 crore, comes against a gloomy backdrop for the Indian infrastructure sector, which has, in the past, been hobbled by bureaucratic delays and is now a victim of tight funding conditions amid a global credit crunch, on the whole.
Read more in The Economic Times article.
Merrill Lynch sells stake in Religare
Merrill Lynch has sold its nearly 5% stake in financial services company Religare Enterprises,promoted by Malvinder and Shivinder Singh for an undisclosed sum.Last November Merrill Lynh had bought a 5.56% stake in Religare as part of a pre-initial public offering (IPO) placement.
The one-year lock-in period expired last month, and Merrill Lynch has since sold its post-IPO stake of 4.97%. The buyers of the stake or the price at which it changed hands were not immediately known, although a Religare official said the sale happened last week.
Based on Religare’s average stock price of Rs 299 last week, Merrill Lynch could have cashed out for Rs 113.6 crore, generating a return of 87.5% in one year. Merrill had acquired 5.56% stake in Religare for Rs 60.6 crore last October through its wholly-owned subsidiary Indopark Holdings.
Despite the stock market crash, the scrip is trading much above its IPO issue price of Rs 185. The stock had shot up after listing to touch Rs 729 on the NSE. Promoters currently hold 54% stake in the company.
Stimulus effect: Auto makers slash prices
With government announcing a 4% cut in CENVAT across the board, the Auto industry today announced price cuts across various models and segments. The cut has been in the range of Rs.2000 to Rs.50,000. Rate cut comes as a blessing for the auto industry which has been hit hard by the global recession and a slowdown in the India economy.
Pune-based Bajaj Auto today announced cut in prices of its vehicles by up to Rs 4,400 on account of four per cent reduction in CENVAT.The prices of two-wheelers have been reduced by up to Rs 2,100, while that of three-wheelers have been cut by up to Rs 4,400, Bajaj Auto Ltd (BAL).
Maruti Suzuki said in a statement that the price of its top-end SX4 sedan will go down by Rs.23,000 to Rs.760,542, while the small car Maruti-800 will be cheaper by Rs.6,500 at Rs.193,561. Hyundai Motor, the second largest car maker in the country, has cut the prices of its flagship model Santro (GL) by Rs.8,834 (non AC), while the top-end luxury car Sonata will see a drop of Rs.44,792.The company's new sensation i10 will be cheaper by Rs.11,247 and Rs.18,381 depending on its models.
Toyota Kirloskar said the price of its popular multi-purpose vehicle would be reduced by up to Rs.32,780, while high-end models like Corolla would be cheaper by Rs.40,750.
Sunday, December 7, 2008
After Rbi's rate cut, banks announce cut in deposit rates
After Saturdays announcement by RBI of cutting the repo and reverse repo by a 100 basis point, some private sector banks have announced cuts in the deposit rates offered by them.HDFC Bank, the second-largest private bank, has slashed interest rates on deposits.on some of its flagship products, with the reduction being steep for short maturities. The rates for deposits with a maturity of six months and 15 days have been reduced from 10.5% to 8.25%. For nine months and 15 days, the rates are from 10.5% to 9% while for one year and 15 days, they are now 10% from 10.5% earlier. The bank has also slashed the rates for two years and 15 days from 10.5% to 9.5%, making it the first private bank to cut deposit rates after some of the PSU banks cut rates a couple of weeks before. HDFC Bank has also slashed rates on its bulk deposits.
ICICI Bank is yet to take a final decision on rate cuts. Axis Bank is carrying out a review and may take a decision soon.IndusInd Bank’s will review its decision to cut deposit rates next week. For the past few weeks, it has been offering 11% for 200 days, 400 days and 1,000 days.Yes Bank on Saturday said that it has reduced its prime lending rate by 0.50 per cent with effect from December 8.The bank's PLR accordingly stands reduced to 16.5 per cent from the earlier 17 per cent.
The State Bank of India on Friday said it will consider rate cut after the Reserve Bank of India announces reduction in benchmark rates.SBI has already reduced benchmark lending rate by 75 basis points to 13 per cent, beginning last month. Most PSU banks have slashed deposit rates from December 1. They have done away with the special offer of 10.5% on deposits. The country’s largest bank, State Bank of India, offers 10% for 1,000 days. Corporation Bank has decided to offer a maximum rate of 9.5% for 1-3 years, Union Bank will offer a maximum rate of 10.05% for seven years and 9.5% for one-seven years.
Govt announces the much awaited fiscal stimulus package
Indian government today announced the much awaited fiscal stimulus package for the economy.
The following are the highlights of the fiscal stimulus package unveiled by the government Sunday to contain the impact of global
financial crisis on the Indian economy:
- Plan, non-plan expenditure of Rs.300,000 crore (Rs.3,000 billion/$60 billion) in four months
- Parliament nod to be sought for Rs.20,000 crore more toward plan expenditure
- Across-the-board cut of four percent in the ad valorem central value-added tax
- Interest subvention of two percent on export credit for labour intensive sectors
- Additional allocations for export incentive schemes
- Full refund of service tax paid by exporters to foreign agents
- Incentives for loans on housing for up to Rs.500,000, and up to Rs.2 million
- Limits under the credit guarantee scheme for small enterprises doubled
- Lock-in period for loans to small firms under credit guarantee scheme reduced
- India Infrastructure Finance Co allowed to raise Rs.100 billion through tax-free bonds
- Norms for government departments to replace vehicles relaxed
- Import duty on naphtha for use by the power sector is being reduced to zero
- Export duty on iron ore fines eliminated
- Export duty on lumps for steel industry reduced to five percent
The following are the highlights of the fiscal stimulus package unveiled by the government Sunday to contain the impact of global
financial crisis on the Indian economy:
- Plan, non-plan expenditure of Rs.300,000 crore (Rs.3,000 billion/$60 billion) in four months
- Parliament nod to be sought for Rs.20,000 crore more toward plan expenditure
- Across-the-board cut of four percent in the ad valorem central value-added tax
- Interest subvention of two percent on export credit for labour intensive sectors
- Additional allocations for export incentive schemes
- Full refund of service tax paid by exporters to foreign agents
- Incentives for loans on housing for up to Rs.500,000, and up to Rs.2 million
- Limits under the credit guarantee scheme for small enterprises doubled
- Lock-in period for loans to small firms under credit guarantee scheme reduced
- India Infrastructure Finance Co allowed to raise Rs.100 billion through tax-free bonds
- Norms for government departments to replace vehicles relaxed
- Import duty on naphtha for use by the power sector is being reduced to zero
- Export duty on iron ore fines eliminated
- Export duty on lumps for steel industry reduced to five percent
RBI cuts Repo and Reverse Repo
RBI on saturday cut its repo and reverse repo rate by 100 bps to 5% and 6.5%, signaling banks to cut their lending rates.
Following are some of the key take aways from the RBI's announcement on Saturday
Ø RBI cuts reverse repo and repo rates by 100 bps
Ø SIDBI and NHB are being given liquidity support to the extent of Rs.7000 crore and Rs.4000 crore to provide liquidity support both SME segment as well as Housing Finance companies
Ø FCCBs are now being allowed to be bought back by Indian corporates, basically issuers out of their own dollar resources raised through ECB or FCCB
Ø Loans granted to HFCs to fund less than Rs 20 lakhs of housing dwelling units, would be classified under the priority sector lending
ØDecided to extend exceptional/ concessional treatment to the commercial real estate exposures which are restructured up to June 30, 2009
Ø Second restructuring done by banks of exposures (other than exposures to commercial real estate, capital market exposures and personal/ consumer loans) up to June 30, 2009, will also be eligible for exceptional regulatory treatment.
Wednesday, December 3, 2008
Sources:GE India to acquire Indo Tech transformers
Indo Tech Transformers, part of the Rs 240 crore Indo Tech group, is soon t be acquired by General Electric India for an undisclosed sum. The buy will help GE, known to acquire to grow in its important markets, strengthen its manufacturing presence in the power sector.
Indo-Tech has a good profit track record. In the first half of this year, it clocked a 43% rise in net profit at Rs 24.63 crore against Rs 17.14 crore in the same period last year. Net sales increased to Rs 119.38 crore ( Rs 90.75 crore). During 2007-08, it reported a net profit of Rs 39 crore on net sales of Rs 189.86 crore.As on March 31, 2008, it has reserves and surplus of Rs 112 crore on a thin equity of Rs 10.62 crore in which the promoters hold 54.34%, institutions 18% and public the rest.
In the last one month, the company's share price soared by 34.69% from Rs 184.95 on November 1st to the current price of Rs 249.10. According to the company's stock archive on the BSE, the total number of trades for the months from July to October 2008 was over 15,000. But in the month of November alone, the stock was traded 15,000times.
Read more in The Economic Times article.
Indo-Tech has a good profit track record. In the first half of this year, it clocked a 43% rise in net profit at Rs 24.63 crore against Rs 17.14 crore in the same period last year. Net sales increased to Rs 119.38 crore ( Rs 90.75 crore). During 2007-08, it reported a net profit of Rs 39 crore on net sales of Rs 189.86 crore.As on March 31, 2008, it has reserves and surplus of Rs 112 crore on a thin equity of Rs 10.62 crore in which the promoters hold 54.34%, institutions 18% and public the rest.
In the last one month, the company's share price soared by 34.69% from Rs 184.95 on November 1st to the current price of Rs 249.10. According to the company's stock archive on the BSE, the total number of trades for the months from July to October 2008 was over 15,000. But in the month of November alone, the stock was traded 15,000times.
Read more in The Economic Times article.
Germany's MAN to be 50:50 partner in Force Motors JV
Force Motors Ltd today announced that it would sell up to 14.50 per cent stake in its auto components joint venture with German truckmaker MAN for about 3 bn rupees, sending the former's shares up.MAN would acquire additional equity in the joint venture to increase its stake to 50 percent, via a rights issue for up to 2.5 bn rupees.
Force Motors currently holds 70 percent stake in the JV, MAN Force Trucks Pvt Ltd, while the German firm holds the rest.The joint venture would start designing and make trucks and bus chassis over the next few months to widen its footprint in the Indian market.
Force Motors will reduce its stake in the heavy commercial vehicle joint venture with MAN Nutzfahrzeuge to 50% from the current 70%.Force will sell 14.2% stake to MAN for Rs 300 crore. Later, MAN will infuse Euro 40 million (around Rs 250 crore) in the JV through subscription of a rights issue. Force will refrain from subscribing to the issue. As a result, MAN’s stake will go up to 50% from the current 30%.
The transaction, which is to be completed over the next few weeks, will peg the enterprise value of the JV at Rs 2,000 crore. Both the parties have signed the deal on Tuesday in Munich.
Tuesday, December 2, 2008
Hedge funds lose $170 billion in third quarter
The hede fund industry lost nearly a tenth of its size as it was caught between biggest outflows since 2005 and worst performance in 10 years. Global hedge fund assets shrunk 8.8% to $1.63 trillion on September 30, 2008, from $1.8 trillion on June 30. The size of the industry is further expected to shrink to $1 trillion.
Tough times for the hedge fund industry began with the unravelling of the short financials and long commodities trade, where in the hedge funds sold US financial stocks and bought commodities.Changes in margin requirements and other trading rules by US regulators triggered the unwinding of this trade which saw crude prices drop from $ 148 levels to below $100 in a flash causing serious dent in assets of many hedge funds.
The industry had received inflows in the first two quarters of the year, though the inflows have been falling gradually over the previous four quarters.In the quarter ending June, $4.03 billion came into hedge funds.However the reversal in the third quarter has taken the overall flows for the year into negative for the first time in three years. At nearly $12 billion, the outflows in 2008 is already threefold larger than the last negative reading in December 2005, with three months to spare.
Tough times for the hedge fund industry began with the unravelling of the short financials and long commodities trade, where in the hedge funds sold US financial stocks and bought commodities.Changes in margin requirements and other trading rules by US regulators triggered the unwinding of this trade which saw crude prices drop from $ 148 levels to below $100 in a flash causing serious dent in assets of many hedge funds.
The industry had received inflows in the first two quarters of the year, though the inflows have been falling gradually over the previous four quarters.In the quarter ending June, $4.03 billion came into hedge funds.However the reversal in the third quarter has taken the overall flows for the year into negative for the first time in three years. At nearly $12 billion, the outflows in 2008 is already threefold larger than the last negative reading in December 2005, with three months to spare.
RBI eases lending norms for urban co-op banks
The Reserve Bank of India (RBI) has relaxed lending norms for tier-II urban co-operative banks (UCBs), making it easier for them to lend to commercial real estate and non-banking finance firms (NBFCs).The central bank has rationalised and reduced the standard asset provisioning requirements for tier-II UCBs from 1 to 2 per cent earlier to 0.40 per cent across sectors. It has also slashed risk weights on lending to various sectors.
The provisioning norm in case of direct advances to agriculture and SME sectors, however, is kept unchanged at 0.25 per cent.
According to a central bank circular today, loans and advances to commercial real estate will now attract a risk weight of 100 per cent as against the earlier 150 per cent.
The banking sector regulator has allowed UCBs to fund only asset-financing NBFCs and the risk weight on exposure to such companies remains unchanged at 100 per cent.For tier-I UCBs, the general provision norms on all their standard assets have been kept unchanged at 0.25 per cent.
On November 15, RBI had reduced the standard asset provisioning requirements of banks lending to NBFCs to 0.40 per cent from 2 per cent, except in the case of direct advances to agriculture and SME sectors, where the provisioning requirement remains at 0.25 per cent.Similarly, the central bank had also reduced banks’ risk provisioning for commercial real estate loans to 100 per cent from 150 per cent.
Monday, December 1, 2008
Actis to pump in $1 bn in India in 3-4 yrs
Despite the terror attacks in Mumbai on 26th November 2008, Actis is going ahead with its plan of investing Rs.5000 crore in the next 3-4 years. The firm continues to be positive on the India's growth potential.
A pioneer in management buyouts, Actis has been a consistent private equity investor in India for over 10 years.Over this period Actis has worked in partnership with a number of promoters and management teams to create tremendous value for their businesses.Actis has successfully closed its 2.9 billion dollar PE fund - Actis Emerging Markets 3 (AEM3)- which exceeded the target of 2.5 billion dollar. AEM3 included commitments from a diversified group of 100 investors from across the globe, including a number of first time investors in emerging markets.
Read more in The Economic Times article.
A pioneer in management buyouts, Actis has been a consistent private equity investor in India for over 10 years.Over this period Actis has worked in partnership with a number of promoters and management teams to create tremendous value for their businesses.Actis has successfully closed its 2.9 billion dollar PE fund - Actis Emerging Markets 3 (AEM3)- which exceeded the target of 2.5 billion dollar. AEM3 included commitments from a diversified group of 100 investors from across the globe, including a number of first time investors in emerging markets.
Read more in The Economic Times article.
Auto sales for November down
Economic slowdown seems to have taken a toll on the Auto sector as well. Auto companies today reported their monthly sales figure, with all the top auto makers reporting disappointing set of figures.
India's leading car maker Maruti Suzuki sales declined 24.3 per cent in November this year compared to sales in the same month last year.The company sold 52,711 vehicles in November this year as compared to 69,699 in the like period a year ago.
Company's volumes in the domestic sedan segment, called the A3 segment, which comprises SX4, Esteem and Swift D'zire models, grew by 40.3 per cent from 4,260 cars in November last year to 5,975 this year.
The sales in the high-end small car segment, called the A2 segment, comprising Alto, Wagon-R, Zen, Swift, and A-Star models declined 26.6 percent from 47,641 in 2007 to 34,976 this year.
Tractor major Mahindra and Mahindra too announced that it will it could cut down productions and temporarily shut plants due to slowdown in sales in domestic as well as overseas markets.
The economic turmoil has cast its spell on country's oldest automobile company Hindustan Motors too, with sales of Ambassador cars dipping by more than 33 per cent in the past few months.A company official told reporters that Amby sales which were in the region of 900 cars per month have come down to 600 units now.
India's leading car maker Maruti Suzuki sales declined 24.3 per cent in November this year compared to sales in the same month last year.The company sold 52,711 vehicles in November this year as compared to 69,699 in the like period a year ago.
Company's volumes in the domestic sedan segment, called the A3 segment, which comprises SX4, Esteem and Swift D'zire models, grew by 40.3 per cent from 4,260 cars in November last year to 5,975 this year.
The sales in the high-end small car segment, called the A2 segment, comprising Alto, Wagon-R, Zen, Swift, and A-Star models declined 26.6 percent from 47,641 in 2007 to 34,976 this year.
Tractor major Mahindra and Mahindra too announced that it will it could cut down productions and temporarily shut plants due to slowdown in sales in domestic as well as overseas markets.
The economic turmoil has cast its spell on country's oldest automobile company Hindustan Motors too, with sales of Ambassador cars dipping by more than 33 per cent in the past few months.A company official told reporters that Amby sales which were in the region of 900 cars per month have come down to 600 units now.
74 cos in BSE 500 have FCCBs outstanding of $10.9 bn
The Economic Times quoted a recent Edelweiss report which highlights that at the end of Sep 30, 2008, 74 companies in the BSE 500 Index had FCCBs outstanding aggregating
$10.9 billion.
The brokerage house estimates that for 61 companies (including Ashok Leyland and India Cements) the probability of FCCBs being converted into equity is low, given the gap between current stock prices and effective conversion price.
Edelweiss also pointed out that currently, most companies do not charge redemption premium to the Profit & Loss account on the assumption that bonds will finally be converted into equity shares. Hence, in the event of non conversion, a significant cost is kept off the P&L and profits are overstated to that extent.
$10.9 billion.
The brokerage house estimates that for 61 companies (including Ashok Leyland and India Cements) the probability of FCCBs being converted into equity is low, given the gap between current stock prices and effective conversion price.
Edelweiss also pointed out that currently, most companies do not charge redemption premium to the Profit & Loss account on the assumption that bonds will finally be converted into equity shares. Hence, in the event of non conversion, a significant cost is kept off the P&L and profits are overstated to that extent.
Wednesday, November 19, 2008
HDFC plans to raise yen loan
HDFC, the country’s largest housing finance company (HFCs), has said that it is keen to raise funds overseas and is awaiting further details of the Reserve Bank
of India’s (RBI) guidelines.On Saturday, RBI had said that it would allow HFCs to raise short-term borrowings overseas as a temporary measure.
Although RBI has reduced the CRR and brought down the repo rate, thereby bringing down the cost of funds for banks, none of these measures have brought down the cost of funds for HDFC. The corporation continues to pay double-digit interest rates to banks. With interest rates ruling high, fixed deposits, which offer returns up to 10.9%, have once again become the mainstay of HDFC’s borrowings, accounting for over 20% of funds.
In the past, HDFC had raised overseas funds in various currencies, including yen. According to bankers, since the funds are anyway converted into rupees and hedged, the currency does not matter. What is crucial for HDFC will be RBI guidelines on the tenure and cost. Since all its liabilities are long-term with an average loan tenure of seven years, HDFC will require long-term funds.
Even from the cost perspective, a foreign currency borrowing has to have a tenure of at least three years to justify the fixed cost of fund raising, including fees paid to bankers. The guidelines on foreign borrowings are expected to be out within the next couple of days.
Along with guidelines on foreign currency borrowings, HFCs are awaiting an easing of capital requirements in line with the relaxations allowed for banks. National Housing Bank — NHB usually follows the prudential norms on home loans prescribed by RBI.
of India’s (RBI) guidelines.On Saturday, RBI had said that it would allow HFCs to raise short-term borrowings overseas as a temporary measure.
Although RBI has reduced the CRR and brought down the repo rate, thereby bringing down the cost of funds for banks, none of these measures have brought down the cost of funds for HDFC. The corporation continues to pay double-digit interest rates to banks. With interest rates ruling high, fixed deposits, which offer returns up to 10.9%, have once again become the mainstay of HDFC’s borrowings, accounting for over 20% of funds.
In the past, HDFC had raised overseas funds in various currencies, including yen. According to bankers, since the funds are anyway converted into rupees and hedged, the currency does not matter. What is crucial for HDFC will be RBI guidelines on the tenure and cost. Since all its liabilities are long-term with an average loan tenure of seven years, HDFC will require long-term funds.
Even from the cost perspective, a foreign currency borrowing has to have a tenure of at least three years to justify the fixed cost of fund raising, including fees paid to bankers. The guidelines on foreign borrowings are expected to be out within the next couple of days.
Along with guidelines on foreign currency borrowings, HFCs are awaiting an easing of capital requirements in line with the relaxations allowed for banks. National Housing Bank — NHB usually follows the prudential norms on home loans prescribed by RBI.
Lloyds shareholders approve HBOS takeover
Shareholders of British bank Lloyds TSB on Wednesday backed the takeover of troubled rival HBOS and a recapitalisation that will hand the British government a key stake. Lloyds TSB investors, holding an extraordinary general meeting in Glasgow, Scotland, voted almost 96 percent in favour of the HBOS takeover.
They also voted by a similar majority to approve plans to raise 5.5 bn pounds (6.5 bn euros, 8.3 bn dollars) of new capital. Under the recapitalisation plan, Lloyds will issue 1.0 bn pounds of preference shares to the British government and 4.5 bn pounds in new ordinary shares.
At the same time, HBOS also plans to raise 11.5 bn pounds of fresh capital with support from the state.Lloyds TSB Chairman Sir Victor Blank said the vote was an "important milestone" in the history of the group.
Lloyds TSB agreed in September to buy HBOS in a deal worth 9.8 billion pounds after its target was left facing collapse due to massive exposure to the US subprime mortgage crisis. Competition rules have been waived to allow the takeover to go ahead. HBOS shareholders will vote on the deal in December.
They also voted by a similar majority to approve plans to raise 5.5 bn pounds (6.5 bn euros, 8.3 bn dollars) of new capital. Under the recapitalisation plan, Lloyds will issue 1.0 bn pounds of preference shares to the British government and 4.5 bn pounds in new ordinary shares.
At the same time, HBOS also plans to raise 11.5 bn pounds of fresh capital with support from the state.Lloyds TSB Chairman Sir Victor Blank said the vote was an "important milestone" in the history of the group.
Lloyds TSB agreed in September to buy HBOS in a deal worth 9.8 billion pounds after its target was left facing collapse due to massive exposure to the US subprime mortgage crisis. Competition rules have been waived to allow the takeover to go ahead. HBOS shareholders will vote on the deal in December.
Monday, November 17, 2008
Kingfisher plans 25% stake sale
Vijay Mallya's Kingfisher Airlines is believed to be discussing stake sale with three foreign airlines — British Airways, Singapore Airlines and Virgin — as a strategic investment is expected to fetch better valuation compared to the numbers indicated by PE investors.
The airline is holding exploratory talks with international carriers for diluting up to 25% stake. The move comes as the Centre is reportedly planning a policy change to allow foreign airlines to invest in domestic carriers with a cap of just below 26%.
The civil aviation ministry had met the airlines on October 30 to discuss key policy changes including allowing foreign airlines to pick up stake in domestic carriers. This meeting has triggered expectation that the government may allow the foreign carriers to buy equity in Indian companies. It must be mentioned that while foreign airlines are not allowed to pick up equity in aviation companies, other institutions and foreign investors are free to hold up to 49% stake.
Read more in The Economic Times article.
PE's pick up 80% stake in GEAR
Two private equity firms — US-based Berggruen Holdings and UK-based Cycladic Capital — have picked up close to 80% stake in construction equipment service provider Gemini Equipment and Rentals (GEAR) for around $15 million (nearly Rs 74 crore).
“This is part of the first round capital-raising programme. The proceeds will be utilised for expansion,” said GEAR managing director Rajiv Sethi. The construction equipment industry is growing at the rate of 35% and is likely to expand fivefold by 2015. The critical role of the industry in the infrastructure development has opened huge opportunity for entrepreneurs to enter the construction equipment rental business.
Currently, GEAR has an asset fleet of 200. The company has presence in Ahmedabad, Bhopal, Bhubaneshwar, Lucknow, New Delhi, Bangalore, Kolkata and Secunderabad. It aims to have 500 equipment assets by the end of this fiscal and additional 250 in the year 2009-10.
“This is part of the first round capital-raising programme. The proceeds will be utilised for expansion,” said GEAR managing director Rajiv Sethi. The construction equipment industry is growing at the rate of 35% and is likely to expand fivefold by 2015. The critical role of the industry in the infrastructure development has opened huge opportunity for entrepreneurs to enter the construction equipment rental business.
Currently, GEAR has an asset fleet of 200. The company has presence in Ahmedabad, Bhopal, Bhubaneshwar, Lucknow, New Delhi, Bangalore, Kolkata and Secunderabad. It aims to have 500 equipment assets by the end of this fiscal and additional 250 in the year 2009-10.
Religare ties-up with Karur Vysya for equity trading services
Financial services provider, Religare, and Karur Vysya Bank,announced their tie-up offering Religare's equity trading services to the bank's customers.The new alliance is in line with Religare's strategy of increasing its reach and penetration across the country.The arrangement with Religare will provide the three in one facility of demat account, bank account and trading account to Karur Vysya's customers.
The equity trading service would be part of value -added offering for the bank's savings account customers. Religare would map its own branch network with the network of the bank to service the bank's clients.Pre-trading account opening activity would be done at the bank branch and post-trading account opening of the clients would be served by Religare-designated branches.The partnership is a step forward to further strengthen the bancinvest channel created by Religare, which already includes tie-ups with IndusInd Bank, Tamilnad Mercantile Bank, Corporation Bank and Bank of Rajasthan, among others.
HM mulling components business.
Hindustan Motors is moving ahead to become more of an automobile component manufacturer than developer of new models."The key to our revival will be our components business comprising forgings, castings and stampings produced at our Uttarpara factory near Kolkata," company Chairman C.K. Birla said.
As long as the Ambassador remained the car of choice for all Indian government purchases, whether at the federal or the state level, the company managed to stay in the green even as other manufacturers aggressively attacked the rapidly growing Indian automobiles market.
Hindustan Motors refused to move away from the Ambassador. But when government orders began drying up in 2004, the company, once India's largest carmaker, was hit hard; it has been ailing ever since.
Read more in The Economic Times article.
CII for removal of interest rate cap on NRE deposits
Pressing for removal of interest rate cap on non-resident (NR) deposits to deal with the problem of forex liquidity in the system,industry chamber CII said RBI decision to relax external sector norm will give right signals to the industry.
"The problem is of sentiments overtaking events and therefore the RBI's response to the emerging market needs of industry sends out the right signals," CII President K V Kamath said in a statement.He added, "CII had suggested that the interest rate cap on FCNR (B) and NRE deposits be removed and the banks be allowed to decide these rates...we feel that the removal of the cap is what is called at this juncture."
CII said the central bank's move to allow housing finance companies to avail of foreign currency borrowings and buy-back and pre-payment of foreign currency convertible bonds would be very useful for the real estate sector.The Reserve Bank yesterday announced a slew of measures, including permission to housing finance firms to raise funds from overseas markets and raising the interest rate ceiling on foreign currency deposits.
"The problem is of sentiments overtaking events and therefore the RBI's response to the emerging market needs of industry sends out the right signals," CII President K V Kamath said in a statement.He added, "CII had suggested that the interest rate cap on FCNR (B) and NRE deposits be removed and the banks be allowed to decide these rates...we feel that the removal of the cap is what is called at this juncture."
CII said the central bank's move to allow housing finance companies to avail of foreign currency borrowings and buy-back and pre-payment of foreign currency convertible bonds would be very useful for the real estate sector.The Reserve Bank yesterday announced a slew of measures, including permission to housing finance firms to raise funds from overseas markets and raising the interest rate ceiling on foreign currency deposits.
Wednesday, November 12, 2008
Cement companies keen on JV with NTPC
The country’s largest power generation company, National Thermal Power Corporation’s (NTPC), move to foray into cement making in a joint venture has aroused interest among the domestic cement players.NTPC last week said that it has invited expressions of interest (EoI) from companies to partner the state-owned company in setting up four plants to manufacture cement using fly ash generated from its power stations.North-based Shree Cements, which has plans to set up a grinding unit in a joint venture with NTPC, has already submitted an EoI.
“The location of our grinding unit, which will have a capacity of around 1 million tonnes per annum, could be in Haryana, Uttar Pradesh or Rajasthan, close to Delhi’s Badarpur unit of NTPC,” said Bangur, who is also the president of Cement Manufacturers’ Association. “We will supply clinker and NTPC will provide fly ash,” he added.
Read more in The Business Standard article.
Zydus Cadila buys Dutch firm Etna Biotech
Ahmedabad-based pharma major Zydus Cadila on Tuesday said it has acquired Etna Biotech, a subsidiary of the Dutch biopharma company,Crucell. This is the sixth foreign acquisition by Zydus in the last five years. The company has not divulged the details of the deal.
In an official statement issued by the Zydus Cadila CMD Pankaj Patel said: “This acquisition will help us to be in the forefront in the innovation for vaccine research and development. The deal marks company’s first acquisition in the research space and offers the group a highly evolved research platform for developing new vaccines and technology.”
Zydus, the Rs 2,300-crore company is striving for a strong foot-hold in the lucrative vaccines market. The global vaccine industry is expected to grow by 18% by 2010, which is roughly three times the growth of the global pharmaceutical industry. The company would look at scaling up its vaccine products, as the newly-acquired research oriented company will provide cost advantage, sources said.
Last month, the group received WHO accreditation for rabies vaccine. So far Zydus had only a few products in vaccines segment through collaborations which were more for marketing other vaccines. The only vaccine that the company owned is the rabies vaccine - Lyssavac N.
In an official statement issued by the Zydus Cadila CMD Pankaj Patel said: “This acquisition will help us to be in the forefront in the innovation for vaccine research and development. The deal marks company’s first acquisition in the research space and offers the group a highly evolved research platform for developing new vaccines and technology.”
Zydus, the Rs 2,300-crore company is striving for a strong foot-hold in the lucrative vaccines market. The global vaccine industry is expected to grow by 18% by 2010, which is roughly three times the growth of the global pharmaceutical industry. The company would look at scaling up its vaccine products, as the newly-acquired research oriented company will provide cost advantage, sources said.
Last month, the group received WHO accreditation for rabies vaccine. So far Zydus had only a few products in vaccines segment through collaborations which were more for marketing other vaccines. The only vaccine that the company owned is the rabies vaccine - Lyssavac N.
OVL may make ‘firm’ offer to Imperial soon
ONGC Videsh (OVL) — the foreign arm of government-owned Oil & Natural Gas Corporation (ONGC) — is set to make a ‘firm’ offer to shareholders of the UK-based Imperial Energy within 28 days.On Monday, the Russian Federal Anti-Monopoly Service (FAS) gave OVL a clean chit on anti-monopoly regulations, the other mandatory pre-condition for making a formal offer paving way for the $2.5 bn acquisition.
Imperial, incorporated in 2004, has oil and gas assets principally in the Tomsk region of western Siberia and the Kostanai region in north central Kazakhstan.It has about 920 mn barrels of oil equivalent (boe) independently estimated proven and probable hydrocarbon reserves (2P) and around 3.4 bn boe of independently estimated proven plus probable plus possible hydrocarbon reserves (3P). The company plans to produce 25,000 barrels of oil per day (bopd) by December this year and 35,000 bopd by the end of 2009.
Read more in The Economic Times article.
IDBI in talks to buy 25% stake in GE arm
Industrial Development Bank of India (IDBI) is learnt to be in talks with GE Commercial Finance (GE), the financial arm of GE, to pick up around 25% stake in the latter’s construction equipment finance business in India. Infrastructure Development Finance Company (IDFC) will also hold around 35% stake in it.
Sources close to the development confirmed the move and said GE is all set to hive off its construction equipment finance business into a separate Rs 650-800 crore joint venture company and is in talks with IDFC and IDBI for the same.“Talks were initiated in the beginning of this year but global market slowdown and the current turmoil in the financial services sector led to the delay in the agreement. It may take some time for the final deal to come through,” said a source.
Globally, GE Commercial Finance has assets of over $335 bn. It caters to industries including healthcare, manufacturing, construction, infrastructure and equipment, among others.The company’s real estate portfolio spans across all market segments — from industrial, commercial and office space to residential and recreational developments.
Sources close to the development confirmed the move and said GE is all set to hive off its construction equipment finance business into a separate Rs 650-800 crore joint venture company and is in talks with IDFC and IDBI for the same.“Talks were initiated in the beginning of this year but global market slowdown and the current turmoil in the financial services sector led to the delay in the agreement. It may take some time for the final deal to come through,” said a source.
Globally, GE Commercial Finance has assets of over $335 bn. It caters to industries including healthcare, manufacturing, construction, infrastructure and equipment, among others.The company’s real estate portfolio spans across all market segments — from industrial, commercial and office space to residential and recreational developments.
DoCoMo to buy 26% of Tata Tele for $2.7 bn
Japanese business daily the Nikkei Wi-fi wireless networks today reported that DoCoMo will buy a stake of about 26 per cent in Tata Teleservices Ltd for 260 billion yen ($2.7 billion). This would be the latest of a series of overseas acquisitions by DoCoMo and follows $350 million investment in Bangladesh's No.3 cellphone carrier.In September DoCoMo was in talks to buy a stake in Tata, part of the Tata Group conglomerate and parent of Tata Teleservices (Maharashtra) Ltd.
The deal would add to a record value of overseas acquisitions by Japanese firms this year as companies increasingly snap up competitors abroad, taking advantage of tumbling global stock markets and the yen's recent surge.
DoCoMo spent nearly 1.9 trillion yen in the late 1990s and early 2000s to buy small stakes in operators around the world to promote use of its i-mode mobile Internet technology and ensure the adoption of 3G networks on the same W-CDMA standard that it uses.But it saw its investments sour, and pulled out of AT&T Wireless Services Inc, Dutch operator KPN Mobile N.V. and Hutchison 3G UK Holdings after incurring heavy losses.
Tuesday, November 11, 2008
SKS Microfinance mops up Rs 366 cr
SKS Microfinance on Monday announced that it has raised $75 million (Rs 366 crore) from a host of investors including Sandstone Capital, SKS investors, Kismet Capital and SVB India Capital Partners (an affiliate of Silicon Valley Bank).This was the fourth round of fund raising by the Hyderabad-based micro-finance firm. Edelweiss Capital was the advisor to SKS.
SKS has provided micro-loans of Rs 4,729 crore to 3.3 million poor households across 18 states in 50,000 villages and urban slums of India. Its members have maintained a 99% repayment rate. The new equity investment will help SKS expand its reach to 8 million members over the next two years.
Vikram Akula, founder and CEO of SKS Microfinance, said: “The fact that this investment has come during the global economic meltdown is proof of the confidence that investors have in SKS.” In February, it had raised Rs 124 crore from UNITUS, Vinod Khosla, Infocom Ventures, SKS Capital, Sidbi, Tejas Ventures, Sequoia Capital, Yatish Trading, SVB India and Columbia Pacific.Prior to that, it had collected Rs 53 crore in March 2007 and Rs 14 crore in March 2006. Last month, Swadhaar, a Mumbai-based micro-finance institution has raised $3 million from Michael and Susan Dell Foundation, Accion and Unit Equity Fund.
Circuit City files for bankruptcy
Circuit city Stores, the No 2 US consumer electronics retailer, filed for bankruptcy protection on Monday, falling victim to tighter credit terms from vendors and a loss of market share to Best Buy, Wal-Mart Stores and other rivals.The retailer and 17 affiliates filed for Chapter 11 protection from creditors with the US bankruptcy court in Richmond, Virginia.
Circuit City filed a week after saying it would close 155 stores, or more than one-fifth of its retail base, and eliminate 17% of its US workforce. It also said it was considering all options to restructure. The company had lost money in five of the last six quarters.
In recent weeks, suppliers pinched by the global credit crunch have tightened terms, sometimes requiring up-front payments before shipping goods. Best Buy has said it might take over stores that distressed rivals close. According to the filing, Circuit City had $3.4 bn of assets and $2.32 bn of debts as of August 31, and more than 100,000 creditors.Among the company’s largest unsecured creditors are HP, Samsung and Sony, the filing shows. The largest shareholders include HBK Master Fund and First Pacific Advisors.
Circuit City filed a week after saying it would close 155 stores, or more than one-fifth of its retail base, and eliminate 17% of its US workforce. It also said it was considering all options to restructure. The company had lost money in five of the last six quarters.
In recent weeks, suppliers pinched by the global credit crunch have tightened terms, sometimes requiring up-front payments before shipping goods. Best Buy has said it might take over stores that distressed rivals close. According to the filing, Circuit City had $3.4 bn of assets and $2.32 bn of debts as of August 31, and more than 100,000 creditors.Among the company’s largest unsecured creditors are HP, Samsung and Sony, the filing shows. The largest shareholders include HBK Master Fund and First Pacific Advisors.
Wells Fargo set to buy Wachovia
US bank Wells Fargo said Monday it had raised 12.6 billion dollars in a stock offering in preparation for its acquisition of rival bank Wachovia.
The bank offered 407.5 million shares and sold an additional 61 million shares due to demand.Wells Fargo, which needs financing to buy Wachovia, fixed the share offering at 27 dollars in early November, a modest discount to its share price at the time of 28.77 dollars.
"The enthusiastic response to this offering in a very difficult market demonstrates broad investor confidence in Wells Fargo's long-term growth potential and our time-tested vision and diversified business model," said Wells Fargo's chief financial officer Howard Atkins.
Wells Fargo also has received 25 billion dollars from the US Treasury as part of the Treasury's 700 billion dollar bailout of the troubled financial sector.
The bank offered 407.5 million shares and sold an additional 61 million shares due to demand.Wells Fargo, which needs financing to buy Wachovia, fixed the share offering at 27 dollars in early November, a modest discount to its share price at the time of 28.77 dollars.
"The enthusiastic response to this offering in a very difficult market demonstrates broad investor confidence in Wells Fargo's long-term growth potential and our time-tested vision and diversified business model," said Wells Fargo's chief financial officer Howard Atkins.
Wells Fargo also has received 25 billion dollars from the US Treasury as part of the Treasury's 700 billion dollar bailout of the troubled financial sector.
After hefty payout, BSE shareholders to get 12:1 bonus
After pocketing a hefty 3000% dividend in 2007-08, shareholders of the Bombay Stock Exchange (BSE) are being treated to some more largesse — this time in the form of a bonus issue. According to reliable sources, the BSE board at its meeting on Saturday has decided to offer 12 bonus shares for very share held by shareholders.
Though the bonus issue is in line with brokers’ expectations, the move is seen as the first step towards eventual listing of the exchange’s shares. BSE is required to enhance its capital base significantly from the current level for listing purpose.
Post-bonus, the exchange’s equity capital would increase from the current Rs 78 lakh to Rs 10 crore, which is the limit applicable to companies seeking listing on the National Stock Exchange (NSE). The minimum paid-up capital requirement for BSE listing is Rs 3 crore.
Though the bonus issue is in line with brokers’ expectations, the move is seen as the first step towards eventual listing of the exchange’s shares. BSE is required to enhance its capital base significantly from the current level for listing purpose.
Post-bonus, the exchange’s equity capital would increase from the current Rs 78 lakh to Rs 10 crore, which is the limit applicable to companies seeking listing on the National Stock Exchange (NSE). The minimum paid-up capital requirement for BSE listing is Rs 3 crore.
Fannie Mae posts $29 bn in losses
US mortgage finance giant Fannie Mae posted a record $29 billion in losses in the third quarter. The company's net worth fell to $9.4 billion at the end of September from $44.1 billion at the end of last year.Fannie Mae said it might have to tap the government's $100-billion funding as early as next year.
Fannie Mae and Freddie Mac, which own or guarantee around half of US home loans, were seized by federal regulators in early September.The US government was to inject up to $100 billion in each company in exchange for ownership stakes of almost 80 percent.
Monday, November 3, 2008
Reliance Retail’s JV with UK logistics co Wincanton falls through
The high profile joint venture between Reliance Retail and the UK-based supply chain powerhouse Wincanton which was to manage RRL’s transportation, warehouses and inventory have been called off. According to The Economic Times report, the reason cited for the fall off was that RRL was unlikely to meet its initial growth projections and generate expected volumes.
RRL and Wincanton had signed an MoU and negotiations had reached advanced stages. The talks, however, were derailed after Wincanton saw a gap emerging between its expectation and what was being rolled out on the ground in terms of RRL’s expansion. In November 2006, India’s largest conglomerate Reliance Industries announced its foray into consumer retail with Rs 26,000-crore investment.
The company has also initiated a slew of measures to tide over the current crisis, perpetuated by a slowdown in Indian retail consumption and global financial turmoil. The company has recently reduced the size of its Ahmedabad hypermarket by two-thirds and initiated several cost-cutting measures. A senior source pointed out that some tough measures are on the anvil yet again.
Emami gets board's approval to hive off realty biz
FMCG major Emami Group has got its Board's approval to hive off its real estate arm into an independent entity.The Kolkata-based company, which recently acquired a controlling stake in Zandu Pharmaceuticals, is planning to focus more on its core FMCG business while letting Emami Realty chart its course as a completely separate firm.
Asked if Emami was planning to exit from the realty business after spinning off the arms, Emami Director Aditya Agarwal replied in the negative and said Emami Realty would continue working on the various projects that it has started. '
On the source of funding of the projects, he said: "It is too early to talk (about it) at the moment." Emami Realty's 10 projects comprise four IT parks, three shopping malls and three residential complexes in Kolkata, Coimbatore and Hyderabad, involving a construction area of over 50,00,000 sq ft. The projects are likely to be completed by 2010-11.
Asked if Emami was planning to exit from the realty business after spinning off the arms, Emami Director Aditya Agarwal replied in the negative and said Emami Realty would continue working on the various projects that it has started. '
On the source of funding of the projects, he said: "It is too early to talk (about it) at the moment." Emami Realty's 10 projects comprise four IT parks, three shopping malls and three residential complexes in Kolkata, Coimbatore and Hyderabad, involving a construction area of over 50,00,000 sq ft. The projects are likely to be completed by 2010-11.
Global investors pull out $480 mn from India funds in October
Global investors have pulled out a whopping over $480 million from India-focused funds last month, with as much as $120 million flowing out in the last week, amid the meltdown in the equity markets.
India-focused funds have witnessed the highest outflows among all the Asian funds in the last four weeks, followed by China funds, which saw redemptions of over $286 million, as per data compiled by global fund tracking firm EPFR.
India-focused country funds saw an outflow of $119.7 million in the last week of October, while for the past four weeks the toll has been as much as $482.2 million.
However, so far this year, the total redemptions from India-dedicated funds have been the second highest, of over two billion dollars, while China-focused funds have witnessed the highest outflows of $2.8 billion in 2008 so far.
The Indian benchmark index Sensex dropped over 3,000 points from over 13,000 to below 10,000 in October, while China's Shanghai SE Composite Index had fallen from over 2,100 to below 1,700 in the last month.
Asian equity funds excluding Japan extended their losing streak to the eighth week in a row and recorded net outflows of USD one billion in October. In the last week of October they suffered an outflow of over 386 million dollars.
India-focused funds have witnessed the highest outflows among all the Asian funds in the last four weeks, followed by China funds, which saw redemptions of over $286 million, as per data compiled by global fund tracking firm EPFR.
India-focused country funds saw an outflow of $119.7 million in the last week of October, while for the past four weeks the toll has been as much as $482.2 million.
However, so far this year, the total redemptions from India-dedicated funds have been the second highest, of over two billion dollars, while China-focused funds have witnessed the highest outflows of $2.8 billion in 2008 so far.
The Indian benchmark index Sensex dropped over 3,000 points from over 13,000 to below 10,000 in October, while China's Shanghai SE Composite Index had fallen from over 2,100 to below 1,700 in the last month.
Asian equity funds excluding Japan extended their losing streak to the eighth week in a row and recorded net outflows of USD one billion in October. In the last week of October they suffered an outflow of over 386 million dollars.
Friday, October 31, 2008
Britannia clears stock option plan
Biscuits major Britannia Industries has approved an employee stock option scheme, fixing the exercise price at Rs 1,125.30, Tuesday’s closing price.An exercise price is the price at which options can be converted into shares. The remuneration panel of the company’s board on Wednesday also approved to grant 15,000 options, convertible into an equal number of shares, to managing director Vinita Bali.
In July, shareholders had approved a proposal to issue a maximum of one lakh shares to senior management, whole-time directors and executive directors.The vesting period will be a minimum of one year from the date of grant and the exercise period will commence from the date of vesting and expire not later than three years from the date of vesting.A previous employee stock option plan okayed by the board about two years ago did not see the light of day.
In July, shareholders had approved a proposal to issue a maximum of one lakh shares to senior management, whole-time directors and executive directors.The vesting period will be a minimum of one year from the date of grant and the exercise period will commence from the date of vesting and expire not later than three years from the date of vesting.A previous employee stock option plan okayed by the board about two years ago did not see the light of day.
Anand Jain’s firm buys 10% stake in Gokaldas Exports
Anand Jain, chairman of Jai Corp and a confidante of Reliance Industries chairman Mukesh Ambani, has picked up nearly 10% equity stake in Gokaldas Exports, a leading player in the readymade garment industry.Mr Jain’s acquisition coincides with Reliance Industries’ attempt to revive ‘Only Vimal’ and other textile brands. Reliance Industries, which started as a textile company in 1979, now earns less than 1% of its revenues from the textile business.
Blackstone had acquired a 50% stake in Gokaldas from its promoters last year. The deal was pegged at Rs 275 a share, 20% higher than the ruling market rate at that time, making it the country’s largest management buyout in the textile industry. It was followed by the mandatory open offer to shareholders which increased Blackstone’s stake to 68%.
The US-based PE giant Blackstone is the largest shareholder in Gokaldas, with a 68% holding. The Hinduja family, the original promoters of the company, now holds 20%.
Blackstone had acquired a 50% stake in Gokaldas from its promoters last year. The deal was pegged at Rs 275 a share, 20% higher than the ruling market rate at that time, making it the country’s largest management buyout in the textile industry. It was followed by the mandatory open offer to shareholders which increased Blackstone’s stake to 68%.
The US-based PE giant Blackstone is the largest shareholder in Gokaldas, with a 68% holding. The Hinduja family, the original promoters of the company, now holds 20%.
NTPC to form JV with NPCIL
State-run power producer NTPC today said that it would form a joint venture with Nuclear Power Corporation of India Ltd for setting up a nuclear power project."NTPC board has approved the formation of a joint venture company with Nuclear Power Corporation of India Ltd (NPCIL) to set up a nuclear power project," company said in a statement to the Bombay Stock Exchange.NTPC would hold 49 per cent of the stake in the joint venture company and 51 per cent would be held by NPCIL.
The company plans to raise up to Rs 4,500 crore from domestic as well as international markets for meeting its expansion plans in the current financial year.NTPC posted a net profit of Rs 2,110 crore for the second quarter ended September 30, a jump of 9.60 per cent from Rs 1,925 crore in the second quarter of last fiscal.Total income rose by 18.94 per cent to Rs 10,406 crore for the quarter under review, from Rs 8,749 crore in the same period last fiscal.The company's net sales rose to Rs 19,201 crore in the first half of the current fiscal, from Rs 16,976 crore in the year-ago period.
Wednesday, October 22, 2008
Kuwait's Global Investment buys 11% in MAPE
Kuwait-based Global Investment House (Global) has picked up an 11.11% equity stake in MAPE Advisory Group, a boutique investment bank, for about $10 million (about Rs 48 crore), valuing the firm at $90 million. MAPE has offered the stake to Global by way of a fresh issue of shares.The funds raised through this transaction would be utilised by MAPE as working capital to boost its institutional broking business.
Post stake sale, Mr Mathew and Mr M Ramprasad, the promoters of MAPE, will own roughly 70% of the company’s equity.MAPE, which was founded in 2001, focuses on M&As, private equity fund raising, debt syndication, cross border advisory services and institutional broking.
It has closed over 60 transactions — the recent ones being Mahindra's acquisition of Kinetic Motors, CVCI's investments into Mumbai-based broking firm Sharekhan and ICICI Ventures, and Baring's investments into Karvy Stock Broking — across various sectors.
The total value of these deals add up to nearly $1.9 billion. MAPE currently employs around 60 professionals across its offices in India and the United States.
This strategic alliance finally gives Global a toehold in India. It may be recalled that the Kuwait-based firm was a strong contender for UTI Securities, which was eventually lapped up by Standard Chartered bank.Global is one of the leading mid-sized investment banks in the Gulf and has registered itself as a foreign institutional investor (FII) with SEBI.
Post stake sale, Mr Mathew and Mr M Ramprasad, the promoters of MAPE, will own roughly 70% of the company’s equity.MAPE, which was founded in 2001, focuses on M&As, private equity fund raising, debt syndication, cross border advisory services and institutional broking.
It has closed over 60 transactions — the recent ones being Mahindra's acquisition of Kinetic Motors, CVCI's investments into Mumbai-based broking firm Sharekhan and ICICI Ventures, and Baring's investments into Karvy Stock Broking — across various sectors.
The total value of these deals add up to nearly $1.9 billion. MAPE currently employs around 60 professionals across its offices in India and the United States.
This strategic alliance finally gives Global a toehold in India. It may be recalled that the Kuwait-based firm was a strong contender for UTI Securities, which was eventually lapped up by Standard Chartered bank.Global is one of the leading mid-sized investment banks in the Gulf and has registered itself as a foreign institutional investor (FII) with SEBI.
Nifty ends 5% lower on weak global sentiments
Weakness in global markets and lack of investor confidence saw the Indian stock market benchmarks wipe off gains made in last two trading sessions on Wednesday.Markets opened sharply lower, in line with the Asian peers, on concerns of global economic slowdown. Expectations of further cooling in inflation rate failed to cheer the market. Inflation rate for the week ended Oct 11 is seen at 11.35 per cent, lower from 11.44 per cent previous week.
Bombay Stock Exchange’s Sensex ended at 10,169.90, down 513.49 points or 4.81 per cent from Tuesday’s close. The index touched a low of 10,128.22 and high of 10,484.85. National Stock Exchange’s Nifty closed at 3065.15, down 5.25 per cent or 169.75 points. The broader index touched a low of 3051.80 and a high of 3235.75.
Among frontline stocks, Tata Steel (-12.04%), Sterlite Industries (-10.04%), Reliance Communications (-8.79%), ICICI Bank (10.04%), Jaiprakash Associates (-7.88%) and Tata Motors (-7.87%) were the worst hit.ITC (1.04%) and Hindustan Unilever (0.5%) were the only gainers in the 30-share index.Market breadth remained weak through the day, with 1,733 declines and 778 advances on BSE.
Wednesday, October 8, 2008
TCS to buy Citigroup Global Services for $505mn
Tata Consultancy Services (TCS) signed an agreement with Citigroup Inc to acquire its captive BPO-Citigroup Global Services (CGSL) for $505 million (around Rs 2,424 crore) in an all-cash transaction. In addition to the sale, Citi has signed an agreement with TCS to provide, through CGSL, process outsourcing services to Citi and its affiliates in an aggregate amount of $2.5 billion over a period of 9.5 years.
The acquisition broadens TCS’s portfolio of end-to-end IT and BPO services in the global Banking and Financial Services (BFS) sector.TCS has provided IT services to Citi since 1992 and is currently one of the largest IT services partners for Citi, delivering IT and business processing outsourcing services to Citi across its operations in North America, Europe, India, Japan, Singapore and the rest of Asia Pacific.The parties expect to close the transaction in the fourth quarter of 2008. Merrill Lynch acted as advisors to TCS in this transaction.
The acquisition broadens TCS’s portfolio of end-to-end IT and BPO services in the global Banking and Financial Services (BFS) sector.TCS has provided IT services to Citi since 1992 and is currently one of the largest IT services partners for Citi, delivering IT and business processing outsourcing services to Citi across its operations in North America, Europe, India, Japan, Singapore and the rest of Asia Pacific.The parties expect to close the transaction in the fourth quarter of 2008. Merrill Lynch acted as advisors to TCS in this transaction.
Monday, October 6, 2008
Nomura to buy Lehman's Indian operations
Japan's top broker Nomura Holdings today announced that it had agreed to acquire Lehman Brothers' operations in India, giving jobs to 3,000 more workers from the bankrupt Wall Street giant.Nomura, which is already buying Lehman's operations in the Asia-Pacific, the Middle East and Europe, will take on the failed US bank's India-based back office and IT support businesses for an undisclosed sum.The subsidiaries, based in the financial hub of Mumbai, were not included in the earlier deal because they were under the wing of Lehman's North American business, which is being bought by the British bank Barclays.
L&T buys 4.2% stake in Kalindee Rail
The country’s largest engineering firm Larsen & Toubro (L&T) has picked up 4.2% stake in Delhi-based Kalindee Rail Nirman Engineers from open market. L&T Capital, a subsidiary of L&T, on Friday bought 4.5 lakh shares of Kalindee at an average cost of Rs 121.21 a piece, according to statistics with BSE.Blackstone Asia was the possible seller.
KRNL is a significant beneficiary of aggressive capex plans of Indian Railways and makes a strategic fit with L&T’s future plans. The company has proven skills in tracks, signalling and telecommunications.KRNL has a strong relationship with the Indian Railways and qualifies for required technical specification and safety norms by it. It has also entered into various tie-ups and JVs with leading international players to keep pace with technology.
Some of the other shareholders in the company include Quantum, HDFC Trustee Company, JPMorgan, Sundaram BNP Paribas, Morgan Stanley who along with others hold about 44% in the firm as per the shareholding patter as of June 2008. Promoters currently hold 24.66% stake in the company.
Provogue sells further stake in realty unit
Apparel retailer Provogue (India) Ltd announced today that UK's LTG International Ltd will invest 569.7 mn rupees to pick up 3.36 per cent stake in a unit of real estate arm Prozone Enterprises Pvt Ltd.LTG is founded by Lewis Trust Group of UK and Prozone is a joint venture between Provogue and Liberty International Plc.
In April, Provogue sold 27 per cent stake in the unit for 4.57 bn rupees to Triangle India Real Estate Fund, founded by Old Mutual Investment and ICS Realty.
Friday, October 3, 2008
Private players can participate in N-power projects: FICCI
A day after the US Senate gave a resounding 86-13 approval to the historic India-US nuclear deal, the Federation of Indian Chambers of Commerce and Industry (FICCI) on Thursday urged the government to immediately initiate the next steps for building nuclear power generation capacity in a big way.
According to the FICCI, the Indian private sector has already acquired capabilities for participating in nuclear power projects.This will boost private investment in nuclear power sector.The country has the potential to generate 60,000 MW of nuclear power over the next 25 years, which needs an investment of over $100 billion.The government is already vetting 10 nuclear power projects.
Companies like National Thermal Power Corp (NTPC), Reliance Energy, Tata Power, Larsen and Toubro, and Bharat Heavy Electricals Ltd can now look forward to working as partners with international companies like General Electric, Westinghouse, Areva and Atomstroy in the field of nuclear energy generation.
LIC hikes stake in select blue chips beyond 10%
Domestic insurance giant Life Insurance Corporation (LIC) has raised its stake beyond 10% in a few blue chip companies even after the insurance regulator IRDA decided to impose a cap of 10% on the institution’s investment in a single company.LIC has made fresh investments in companies like Siemens, PTC India, Tata Power and Cipla in which it now holds more than 10% stake each. Based on Wednesday’s closing, the combined value of the institution’s additional investments in these companies amounted to nearly Rs 800 crore.
According to disclosures filed with BSE, LIC bought 97,34,113 shares of Siemens between February 6 and September 5, 2008, resulting in a hike in its stake from 7.7% as on December 31, 2007 to the current 11.3%. The company’s shares have tanked nearly 30% in the past one month.PTC India and Tata Power are the two other notable examples where LIC now holds a little over 10% after acquiring additional shares in September. The stocks of these companies have lost 18% and 12% respectively in one month.
Following is a list of companies where LIC holds 10%-plus stake:
Tata Motors
Tata Steel
Corporation Bank
Ranbaxy
Cipla
M&M
Maruti Suzuki
Dr Reddy’s Labs
MTNL
HPCL
Oriental Bank
Reliance Infrastructure
Wednesday, October 1, 2008
RIL to sell crude at $5 discount
Reliance Industries (RIL), the country’s largest company by market capitalisation, will sell its Krishna-Godavari (KG) basin oil at a discount of around $5 per barrel to Brent crude oil, the global benchmark.At present, Brent crude oil, which is produced primarily from oil fields in the North Sea near Norway, is trading at around $100-105 per barrel.
The company, which had reported sales of Rs 41,579 crore in the first quarter of the current financial year ended June 2008, may add around $300 million (Rs 1,400 crore) to its turnover in the October-December quarter as it begins sale of the KG oil to Indian refiners.RIL will produce around 35,000 barrels of crude oil per day from the field at peak rate. This is around 5 per cent of the total crude oil produced in India. The company will initially produce around 10,000 barrels per day and increase it to peak rate in a month’s time.
As per the terms of the agreement, the government will earn profit from the sale of oil only after Reliance Industries recovers its $2 billion investment made towards producing the oil.
Read more in The Business Standard article.
Reliance Money gets nod to acquire 10 pc stake in NMCE
Financial services firm Reliance Money has obtained approval from Ministry of Consumer Affairs to acquire a 10 per cent stake in the National Multi-Commodity Exchange of India (NMCE) Board.Reliance Money had proposed to acquire a total of up to 26 per cent stake in NMCE in two phases. NMCE had accordingly applied for necessary approvals from the regulator Forward Markets Commission (FMC), which in turn, recommended the acquisition to the Ministry of Consumer Affairs.
The Anil Ambani-led Reliance ADAG is the first large business group to get into the commodity exchange space in India.
US institutions plan to sell off assets in India
Large institutions such as AIG, Morgan Stanley, Wachovia and others are planning to liquidate some of the Indian assets in which they had invested their proprietary capital.Investment banking sources and PE funds have confirmed that a number of such deals have been available in the market for the last few weeks.Some of these institutions are highly leveraged and their mortgage related assets in the US are getting marked down. There is a need to liquidate some of the assets they bought with their proprietary capital to get cash and strengthen their balance sheet.
Most of these large institutions have been investing in real estate in India through both managed and proprietary capital. Wachovia does not have a fund and has been investing from its proprietary books for the last two years, though at the moment they are looking at investing selectively from their proprietary books in India.Market sources though confirm that there are a few of Wachovia's real estate deals that are being looked at closely. Interestingly, Merrill Lynch had merged its proprietary book with its third-party fund early this year so they are safe on that front after the recent events. DSP Merrill Lynch has made proprietary investments of $500 million in the real estate segment.
Most of these large institutions have been investing in real estate in India through both managed and proprietary capital. Wachovia does not have a fund and has been investing from its proprietary books for the last two years, though at the moment they are looking at investing selectively from their proprietary books in India.Market sources though confirm that there are a few of Wachovia's real estate deals that are being looked at closely. Interestingly, Merrill Lynch had merged its proprietary book with its third-party fund early this year so they are safe on that front after the recent events. DSP Merrill Lynch has made proprietary investments of $500 million in the real estate segment.
Tuesday, September 30, 2008
Jet Air to sell 10% stake to global funds
Naresh Goyal who holds close to 80% stake in Jet Airways, today announced plans to dilute 10% equity to international funds. He however did not disclose the identity of the fund, nor the timing or price. Jet Airways is country’s largest private airline and controls one-third of the domestic market share. It also runs JetLite, a low-cost airline.
At the current stock price, a 10% dilution may bring in Rs 340 crore to the struggling airline.This is over and above the company’s plans to raise up to $800 million through a qualified institutional placement of equity shares and $400 million through a rights issue.The company also is raising $1 bn through debts to finance the delivery of five A330 Airbus and three Boeing 777.
Read more in The Economic Times article.
Actis Biologics taps PE firms to raise Rs 125 cr
Actis Biologics (India) is close to finalising a deal with private equity (PE) players to sell 15% stake. The company is in advanced stages of discussions with three foreign players to raise Rs 125 crore through issue of fresh shares, said Actis Biologics CEO Sanjeev Saxena.
Actis Biologics had recently purchased a technology ‘Liv1’ and is looking to set up an office in the US, for which these funds would be used. Actis has already invested $10 million in its R&D lab in Mumbai. The company plans to launch its new technology ‘VFF2’ in 8-10 months.
Actis Biologics had recently purchased a technology ‘Liv1’ and is looking to set up an office in the US, for which these funds would be used. Actis has already invested $10 million in its R&D lab in Mumbai. The company plans to launch its new technology ‘VFF2’ in 8-10 months.
RNRL mulls Rs 12,000 cr capex for cement, shipping foray
Anil Ambani-controlled Reliance Natural Resources plans to enter cement manufacturing and shipping activities with an investment of Rs 12,000 crore.Earlier at the meeting, RNRL Chairman Anil Ambani said that "we are actively considering entering into cement manufacturing with 20-million tonnes capacity".
For supporting its ambitious cement business, RNRL is looking to run a shipping service. It will help the company in transporting raw materials and finished products. At present, RNRL is engaged in sourcing, supply and transportation of various fuels along with exploration, production and distribution of gas.
Asia jittery after US bailout reject
Even before the vote by US lawmakers on the $700 billion bailout plan, Asian and European markets had fallen on fears the crisis was spreading, while US regional lender Wachovia became the latest big bank to succumb to the crisis.Retail investors from Tokyo to Melbourne kept nervous vigil over their investments and some dumped shares on Tuesday following the shock rejection of the US bailout plan, which sent global equity markets tumbling.
In Japan, the Nikkei fell more than four percent to a new low for the year, following a rout in the US, Latin American and European stock markets earlier, as investors sought refuge in cash and safer investments, such as gold and government bonds.
In Australia, stocks fell more than five percent in early trade as brokerages scrambled to deal with spooked investors looking to cut their losses given the bleak outlook.
In Japan, the Nikkei fell more than four percent to a new low for the year, following a rout in the US, Latin American and European stock markets earlier, as investors sought refuge in cash and safer investments, such as gold and government bonds.
In Australia, stocks fell more than five percent in early trade as brokerages scrambled to deal with spooked investors looking to cut their losses given the bleak outlook.
Monday, September 15, 2008
Bank of America to buy Merrill for $50 bn
Bank of America Corp said it agreed to buy Merrill Lynch & Co Inc in an all-stock deal worth $50 billion, snagging the world's largest retail brokerage after one of the worst-ever weekends on Wall Street.Bank of America now has one of the best and largest retail brokerages in the country, one of the top investment banks in the world, and a large stake in one of the best investment managers in the world.
The bank is buying about $44 billion of Merrill's common shares, as well as $6 billion of options, convertibles, and restricted stock units.Bank of America agreed to pay 0.8595 shares of Bank of America common stock for each Merrill Lynch share. The price is 1.8 times stated tangible book value.The bank also said it expects to achieve $7 billion in pretax expense savings, fully realized by 2012, and expects the deal to be accretive to earnings by 2010. The transaction is expected to close in the first quarter of next year.
The price, which comes to about $29 per share, represents a 70 percent premium to Merrill's share price on Friday, although Merrill's shares were trading at $50 in May and over $90 at the beginning of January 2007.The deal has been approved by directors of both companies. Three Merrill directors will join the Bank of America board.
Read more in The Economic Times article.
Chronology: History of Merrill Lynch
Lehman to file for bankruptcy, plans to sell units
Lehman Brothers Holdings Inc said it plans to file for bankruptcy protection, but the Chapter 11 filing will not include its broker-dealer operations and other units, including Neuberger Berman.Lehman is looking at selling its broker-dealer operations, and is still in advanced discussions with a number of potential buyers of its investment management division.
Bankruptcy represents the end of a 158-year old company that survived world wars and the collapse of Long-Term Capital Management but could not survive the global credit crunch.Investors in recent weeks had grown increasingly jittery about Lehman's $46 billion of mortgages and asset-backed securities, as well as its credit rating and its ability to raise capital.
Friday, September 12, 2008
Edelweiss plans to set up asset reconstruction unit
Financial services firm Edelweiss Capital Ltd plans to set up an asset reconstruction firm and apply for regulatory approval in the next six months, a top official said on Friday.
Asset reconstruction firms buy bad loans in a pool format at a discount and recover the money from the borrowers subsequently. Loan growth of nearly 30 percent in India over the past few years has resulted in creation of non-performing assets, an opportunity which is luring several state-run and private sector banks as well as financial institutions.
Under the deal, Edelweiss would offer advisory services on wealth management products to customers of the bank with an average net worth of over 1 million rupees each, Shah said. Several banks such as ICICI Bank, HDFC Bank , ABN Amro and Kotak Mahindra Bank have increased their focus on wealth management as wealthy Indians demand specialised advisory services.
Thursday, September 11, 2008
Governmet re-starts attempts to see IFCI stake
Goverment has revived its effort to sell 26% stake in IFCI, plans of which were shelved in December last year.The stake sale process is expected to begin next quarter.Differences, however, persist over whether the new partner should be given management control. This was what had caused the IFCI board to cancel the process last year after the lone bidder, the Sterlite Industries-Morgan Stanley-led consortium, demanded management control.
The bidding process last year was fraught with problems after the board set a minimum reserve price of Rs 107, which was considered too steep. As a result, most prospective bidders withdrew. Of the three bids, two were for less than Rs 107 per share and were disqualified.
Read more in The Business Standard article.
Related Stories:
IFCI to sell 26% stake to strategic investor
IFCI raises bar for strategic investor
IFCI stake sale called off !
DoCoMo may buy stake in Tata Tele
NTT DoCoMo, Japan's biggest mobile phone operator, is in talks to buy a stake in India's Tata Teleservices in a deal that may exceed $933 million, company sources said. The news boosted shares in a unit of Tata Teleservices, Tata Teleservices (Maharashtra), by as much as 4% in Indian market.
DoCoMo is increasingly expanding its overseas presence as growth in the Japanese market slows, and the Tata deal would follow its $350 million investment in Bangladesh's No. 3 cellphone carrier TM International (Bangladesh) Ltd. The sources said DoCoMo's investment would likely only amount to a minority stake and it was unclear if the Japanese firm would clinch the deal as other carriers were keen to take a stake in sixth-largest player Tata Teleservices, part of the Tata Group conglomerate. DoCoMo, which competes with KDDI Corp and Softbank Corp, said in June it would seek more acquisitions overseas and particularly in Asia, and it will look into China and India if the chance arose.
India is the second-biggest market in the world after China, and the market is growing some 50% annually as only 23% of the population are now carrying cellphone. Demand for data communication is expected to show explosive growth after 2009 when 3G services starts, enabling faster transmission.
DoCoMo is increasingly expanding its overseas presence as growth in the Japanese market slows, and the Tata deal would follow its $350 million investment in Bangladesh's No. 3 cellphone carrier TM International (Bangladesh) Ltd. The sources said DoCoMo's investment would likely only amount to a minority stake and it was unclear if the Japanese firm would clinch the deal as other carriers were keen to take a stake in sixth-largest player Tata Teleservices, part of the Tata Group conglomerate. DoCoMo, which competes with KDDI Corp and Softbank Corp, said in June it would seek more acquisitions overseas and particularly in Asia, and it will look into China and India if the chance arose.
India is the second-biggest market in the world after China, and the market is growing some 50% annually as only 23% of the population are now carrying cellphone. Demand for data communication is expected to show explosive growth after 2009 when 3G services starts, enabling faster transmission.
Orchid plans to sell 15-20% stake in research unit
Orchid Chemicals & Pharmaceuticals (Orchid) is considering selling stake in its research subsidiary by next year.A strategic investor may also be considered for Orchid Research Laboratories.However, before the fund-raising, Orchid plans value addition through work on molecules.
Orchid Research operates in four therapeutic areas — diabetes, pain, oncology and infectious diseases — at its two R&D centres at Sholinganallur and Irungattukottai in Chennai.The therapeutic areas have lead molecules which will go into trials by next year.
This would be the value-add after which Orchid Research would look at generating funds to meet the demands of the molecules, Rao said.Hence, putting a number on the amount of funds raised would be premature now.
The company currently invests 5-6% of its revenue every year for research and development, which was Rs 60 crore last year.
Orchid Research operates in four therapeutic areas — diabetes, pain, oncology and infectious diseases — at its two R&D centres at Sholinganallur and Irungattukottai in Chennai.The therapeutic areas have lead molecules which will go into trials by next year.
This would be the value-add after which Orchid Research would look at generating funds to meet the demands of the molecules, Rao said.Hence, putting a number on the amount of funds raised would be premature now.
The company currently invests 5-6% of its revenue every year for research and development, which was Rs 60 crore last year.
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