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.

Citigroup considers $400 bn of asset sales

Citigroup Inc will identify, today, as much as $400 billion in non-core assets that could be sold as part of a cost-cutting effort.The asset sell-off was likely to take years and some of the non-core holdings may never be sold.

In todays meeting with analysts, Citigroup Chief Executive Vikram Pandit would confirm his pledge to cut Citigroup's cost base of more than $60 billion by about 20 percent.

M&A deals slump 71% in value terms

The mergers and acquisitions (M&A) activity of India Inc seems to be running out of steam as the deal value has fallen 71 per cent in the first three months of this calendar year, compared with the same period in 2007.

While there has been a marginal decline in the number of deals from 148 to 125 in 2008, the deal value has seen a sharp slump from $33.85 billion to $9.64 billion, according to a Grant Thornton study.

Fears of an expanding credit squeeze in global markets have put a question mark on the M&A appetite of companies, more so because financing has become a challenging task. Global markets have plunged more than 25 per cent since last year, putting brakes on the expansion plans of companies.

Even though the M&A drive of India Inc has witnessed a slowdown, India Inc’s acquisition spree is restless with outbound deals continuing to steal the show. And if experts are to be believed, 2008 will see more outbound deals than inbound ones.

Read more in The Business Standard article.

India Inc opposes 25% public holding norm

Corporate India is not in favour of a uniform 25 per cent minimum public shareholding for all listed companies as proposed by a recent finance ministry discussion paper.Some large companies said the measure would broaden and deepen the equity cult in the country, but feel that a blanket 25 per cent minimum public shareholding norm should not be applied indiscriminately to all companies.

The ministry had floated the paper on February 1 and asked for public comments by the month-end. The minimum public shareholding limit now is 10 per cent.Finance ministry officials have received around 40 responses.

The finance ministry and The Institute of Company Secretaries of India (ICSI) will hold discussions with company representatives on March 29 to evolve a consensus on the proposal.

Read more in
The Business Standard article.

Wockhardt cuts IPO price band on mkt woes

The volatility in the Indian stock market has forced Wockhardt Hospitals to revise the price band to Rs 225 (20 per cent at the lower end) and Rs 260 (16 per cent at the upper end) per equity share (from Rs 280 to Rs 310) for its initial public offering (IPO) of 25.09 million equity shares of Rs 10 each for cash at a price determined through a 100 per cent book-building process.The issue opens on January 31 and closes on February 5.

The Emaar-MGF management, on the other hand, has decided to stick to its price band of Rs 610-690 for 10.26 million shares.The issue will open on February 1. The IRB Infrastructure Developers issue of 51.06 million equity shares (which opens tomorrow) has a price band of Rs 185 to Rs 220.

The proposed IPO of Wockhardt Hospitals has been assigned an IPO grade of 4 out of 5 by rating agency Fitch Ratings India, indicating above-average fundamentals.Wockhardt Hospitals intends to utilise the proceeds from the issue to meet the cost of development and construction of greenfield and brownfield hospitals of the company, pre-pay some of the short-term loans and to meet general corporate expenses.The equity shares are proposed to be listed on the Bombay Stock Exchange and National Stock Exchange.

Madras Cements buyback at Rs 4,200/share

The board of directors of Madras Cements, which met today, approved a proposal to buy back shares at a maximum price of Rs 4,200 per share.The current market price is around Rs 3,831.

According to a release issued to the BSE today, the maximum amount for which the shares could be purchased (10% of the paid-up capital and free reserves) would be Rs 644.726 crore.The board meeting also declared a second interim dividend of Rs 10 per share of Rs 10 each for 2007-08.

"The company has commissioned, on January 20, 2008, an additional clinkering facility at its Jayanthipuram unit because of which the installed cement manufacturing capacity of the company has increased from six million tonne per annum to eight million tonne per annum," the release added.

SBI rights at a 35% discount

State Bank of India, the public sector banking giant, has priced its rights issue at a 35% discount to its closing price on Friday.The bank, 59.73% government-owned, will raise Rs 16,736 crore by offering one share for every five held at Rs 1,590 apiece, a discount to its Rs 2,437.25 stock price on January 11. The cut-off date for the issue is February 4.

The discount should act as an extra incentive for investors of the bank which has seen its stock price soar 101% in the last one year — from Rs 1,222 to Rs 2,462 currently. The stock closed at Rs 2,462.25 on Monday.

Sources said the bank plans to sell over 10 crore shares, of which 86 lakh will be reserved for employees holding shares of the bank, the first such instance among public sector banks.

Officials said the price of the issue was arrived at using the one-year average, which came to Rs 1,533 per share.

The bank’s capital will grow to Rs 650 crore from the existing Rs 526.30 crore.Analysts said a lower discount could possibly allow the bank to raise more money, but the discount will ensure that the issue will “cruise through”.

Read more in The DNA Money article.

SBI to absorb 6 associates by Mar ’09

SBI chairman O P Bhatt, who had convened the meeting of six associate banks of SBI at its Nariman Point office, made it clear that he wanted nothing less than a “bullet” merger — all the six associates, three of which are listed entities, should be fused into the mothership in one shot, before March 31, 2009.

He was insistent because separate integration exercises — as was done in the case of State Bank of Saurashtra, which ceases to be an entity on January 26, 2008, — would be extremely cumbersome, gargantuan and mind-numbing considering the complexity of manoeuvres needed to keep the 3.3 lakh combined employees happy.

The boards of the SBI and the six associates will now hold a meeting on January 25 to give their in-principle nod to the merger.The finance ministry and the Reserve Bank of India are expected to give their green signals.The goal is to have a common balance-sheet as on March 31, 2009, said an SBI official in the know.

That’s important because India will open its doors fully to foreign banks by then. The size of operations of the foreign banks could dwarf the domestic players, which is why the government has been at pains to encourage consolidation.

Read more in The DNA Money article.

India Inc to have easier M&A ride

The government has decided to simplify the norms for mergers and acquisitions by removing the bottlenecks that slow down India Inc’s inorganic growth. The idea is to offer a fast-track system which will spare companies from the lengthy process of securing high court sanctions for M&As, if they meet certain criteria.

The ministry of corporate affairs is working on two types of fast-track clearances for M&As. The first one is a new concept called ‘contractual mergers’. Under this, companies needn’t wait for the high court approval, which will take at least six months to materialise.

This proposal, originally mooted by a panel headed by eminent lawyer Shardul Shroff and later endorsed by the JJ Irani panel on company law, will get legal recognition soon, officials said. The second proposal is a simplified procedure for M&As between group companies and unrelated private companies.

Under the contractual merger plan, companies can decide to merge through a contract which should be approved by the shareholders later. Such a window is available in many other countries. Currently, all private sector companies need to get the approval of high courts for M&A activities, while state-run companies have to obtain the government approval.

Read more in The Economic Times article.

Ujala maker Jyothy Laboratories plans Rs. 300 crore-IPO

Mumbai-based fast moving consumer goods company Jyothy Laboratories, famous for its Ujala brand of fabric whiteners, is planning to list on the stock exchanges by end of 2007. Jyothy Laboratories will raise Rs. 300 crores in an initial public offering. The company has reportedly appointed Kotak and Enam as advisors to the issue.

Jyothy Labs is a closely held company with about 70% stake being held by founder chairman and managing director M P Ramachandran and his family. The balance 30% is held by private equity firms CLSA and Actis along with a foreign subsidiary of ICICI Bank. The foreign investors are likely to exit the company at the time of the IPO.

Sales of Jyothy Laboratories are pegged at between Rs. 400-500 crores. The company is said to have been valued at around Rs. 1000 crores.

Read more on Moneycontrol.com

Post-Morgan, Kampani revamps business with seven strategic units

Nimesh Kampani, after the separation of his firm JM Financial with JV partner Morgan Stanley, is re-organizing the his operations to exploit future opportunities, with a view of giving the foreign investment banks, who are opening offices in India, a run for their money.

A new management structure is being formalized for the group flagship company JM Financial. Mr. Kampani has carved up the operations of JM Financial into seven strategic business units to be managed by independent managing directors.

The investment banking business is split into corporate finance, M&A and global capital markets. Dipti Neelkantan, 48, who joined JM as a research analyst 25 years ago, has recently risen to the rank of MD & COO of the investment banking business. She is in charge of overall operations. Two MDs have been appointed for the corporate finance division, which is scaling up its operations. Nimesh Kampani’s son Vishal Kampani, 30, and BK Bansal, 53, will be heading this division.

Adi Patel, 38, has been designated as head of the M&A division, while Atul Mehra, 39, has recently been elevated to the post of MD (global capital markets). Adi Patel, Atul Mehra and BK Bansal have been with JM for more than 15 years.

JM Financial is bringing in talent from outside to run the new-age businesses. Last month, Nityanath Ghanekar, 61, joined as CEO and MD of the mutual-fund business from global consulting firm PricewaterhouseCoopers. A few months ago, Dilip Kothari joined JM to head its private equity business from Olympus Capital. Rajeev Chitrabanu, 35, is CEO and MD of the financial services business, which includes wealth management and IPO distribution. Subodh Shinkar, 39, is the new COO of the division.

While Vipin Gupta, 35, is the MD of the fast-growing commodity business, Basant
Agarwal, 40, heads the special situations fund. JM Financial is also planning to create independent divisions for the fixed-income and research portfolios.

Union Budget 2007-08 Presented: Proposals for Capital Markets and Private Equity

The Finance Minister of India Mr. P Chidambaram has presented the Union Budget for the year 2007-08 today in the Parliament. Some of the proposals suggested for the capital markets are:PAN to be made sole identification number for all participants in securities market with an alpha-numeric prefix or suffix to distinguish a particular kind of accountIdea of Self Regulating Organizations (SRO) to be taken forward for different market participants under regulations to be made by SEBIMutual funds to be permitted to launch and operate dedicated infrastructure fundsIndividuals to be permitted to invest in overseas securities through Indian mutual fundsShort-selling settled by delivery, and securities lending and borrowing to facilitate delivery, by institutions to be allowedEnabling mechanism to be put in place to permit Indian companies to unlock a part of their holdings in group companies for meeting their financing requirements by issue of exchangeable bondsRate of dividend distribution tax to be raised from 12.5% to 15% on dividends distributed by companies and to 25% on dividends paid by money market mutual funds and liquid mutual funds to all investorsIn case of venture capital funds, pass-through status will be granted to those VCFs only in respect of investments in venture capital undertakings in biotechnology; information technology relating to hardware and software development; nanotechnology; seed research and development; research and development of new chemical entities in the pharmaceutical sector; dairy industry; poultry industry; and production of bio-fuels. In order to promote business tourism, this benefit also will be granted to those VCFs that invest in hotel-cum-convention centres of a certain description and size