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.

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.

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.

Bajaj Auto listed on BSE; Bajaj FinServ on NSE

Bajaj Group on Monday listed two of its companies on the stock exchanges after it was demerged from Bajaj Holdings and Investments.Group Chairman Rahul Bajaj listed two-wheeler maker Bajaj Auto on the Bombay Stock Exchange, while Group Vice- Chairman Madhur Bajaj listed Bajaj FinServ on the National Stock Exchange.

Bajaj Holdings and Investments has 30 per cent stake each in Bajaj Auto and Bajaj FinServ.

Bajaj Auto would continue to launch new models in association with Kawasaki and KTM. It plans to raise its stake in KTM to 30 per cent from 25 per cent in due course of time, he said.

Bajaj said if the government allows higher FDI in insurance then its German partner Allianz has the call option to raise it from the present 26 per cent to 49 per cent in the insurance joint venture.

However, Bajaj said he doesn't see the FDI hike in insurance cap happening now. It would be taken up by the next government in the Centre, the Rajya Sabha MP said.

More fund-raising options for co-op banks

In order to offer a level playing field to co-operative banks, the Reserve Bank of India (RBI) may allow them to use new products for raising funds from the debt market.
The co-operative banks could come out with subordinate debt structures like tier-II bonds, tier-III bonds and upper tier-II or perpetual bonds to raise finance.

At present, these banks get financed from the National Bank for Agricultural and Rural Development (Nabard) to on-lend. A part of its funding also comes from the state government. They do not have independent fund-raising options.

In a meeting held recently, RBI and the Securities and Exchange Board of India have in principle zeroed in on the National Stock Exchange (NSE) as the favoured platform for launching the currency futures trading in India.However, NSE may have to float an independent subsidiary to start currency futures. RBI has set up a committee to look into the operational details for launching currency futures.

Nearly 50 brokers register for SLB

Though securities lending and borrowing (SLB) mechanism is yet to register meaningful volumes, almost 50 brokerages have gone ahead and registered with the stock exchanges to be a part of the new market.

Brokerages that wish to participate in SLB are required to enter into separate agreements with both the stock exchanges (BSE and NSE) and deposit a base capital. Interestingly, domestic brokerages have outnumbered their foreign counterparts in being amongst the first ones to register for SLB.

According to people familiar with the development, domestic entities like Edelweiss Securities, Geojit Financial Services, Prabhudas Lilladher, Sharekhan, BRICS Securities, Nirmal Bang Securities, Networth Stock Broking, JM Financial and Religare Securities are some of the entities that have registered for SLB.

Among the foreign brokerages, DSP Merrill Lynch, HSBC Securities, Deutsche Equities and ABN AMRO Asia Equities have taken the lead. The list also includes many niche brokerages like Marwadi Shares and Finance, BLB and MF Global which are well-known in the arbitrage arena.

It is also believed that on an average around four to five brokerages apply for registration every week with the stock exchanges to participate in SLB. However, if the volumes are an indication, it would be some time before SLB starts generating income for these entities.

As per NSE data, since April 21 (when SLB was introduced) only six trades have been reported in the SLB window. On April 21, there were four trades, while Tuesday and Wednesday witnessed one trade each. There were no trades on Thursday in the SLB window. The volume has also been quite low with no more than hundred odd shares being traded every day.

Read more in The Economic Times article.

Bloodbath on Dalal Street, Sensex ends 1400 pts down

Fears of recession in the US becoming a reality saw global indices tumble. The worst to get affected in this mayhem was the Indian market.The bears went berserk on Dalal Street creating panic to such an extent that trading in Bombay Stock Exchange’s benchmark Sensex was halted briefly.

Sensex saw the biggest absolute fall in history by falling 2062 points intra-day. It closed at 17,605.35, down 1408.35 points or 7.4 per cent. It fell to a low of 16,951.50.National Stock Exchange’s Nifty plummeted 8.7 per cent or 497 points to close at 5208.80. It slumped to a low of 4977.10.

NTPC, down 15.07%, was the worst hit, followed by Reliance Energy (down 14.79%), ACC (14.53%), ACC (14.53%), Reliance Communications (13.84%), Grasim Industries (13.19%) and DLF (9.62%).

Bucking the trend, Satyam Computer posted nearly 5 per cent gains after the IT major reported a 29 per cent rise in consolidated third-quarter net profit on continued growth in sales and said it expects a 45-45.2 per cent increase in revenue growth in 2008 over 2007.

UB group ups stake in Deccan Aviation by 3%

UB group has increased its stake in low-cost airline firm Deccan Aviation by almost 3% through market purchases, stock exchange data showed on Wednesday.UB group firm Kingfisher Radio, that runs Kighfisher Airlines, purchased a total of four million shares (2.95%) on Wednesday on BSE and NSE combined at Rs 275 each.Most of the shares were purchased from Money Matters Advisory and Money Matters (India), according to the BSE and NSE data.

With these purchases, Kingfisher Radio and other group companies of UB group have increased their stake to almost 49%.In September, UB group had made an open offer to the shareholders of Deccan Aviation at Rs 155 a share for a 20% stake.Last week, Deccan Aviation had announced it would merge the airline operations of Kighfisher Airlines with it.

HDFC AMC hikes stake in Biocon to 5.15%

HDFC Asset Management Company (AMC) has hiked its stake in Biocon, a Bangalore-based biotech company.The company in a release to NSE, said it has hiked its stake to 5.15% from existing 4.97% through market purchase from Edelweiss Securities executed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

The HDFC Mutual Fund comprising of HDFC Capital Builder Fund, HDFC Equity Fund, HDFC Children's Gift Fund - Investment Plan, HDFC Growth Fund, HDFC Top 200 Fund, HDFC Long Term Advantage Fund, HDFC TaxSaver, HDFC Core & Satellite Fund, HDFC Premier Multi-Cap Fund, and HDFC Long Term Equity Fund has made investments in Biocon.

L&T signs JV with US firm for pipelines

Engineering and construction firm, Larsen & Toubro Ltd, said on Friday it had signed a joint venture for pipelines with US-based Gulf Interstate Engineering Co."The joint venture company will augment L&T's offering in pipelines," L&T said in a statement to the National Stock Exchange.

Sebi to allow 30 firms to raise funds quickly

In a bid to encourage Indian corporates raise money domestically, the Securities and Exchange Board of India (Sebi) is in the process of rolling out a package.The package, Sebi chief M Damodaran said, will help corporates raise capital at an advantageous cost and within a shorter timeframe.

The first move would be to announce the framework for fast-track issuances, wherein listed companies with proven track records would be able to raise money immediately after filing with Sebi.The draft of the proposal has been approved by the primary market committee, Damodaran said.

This would be on the lines of the Well Known Seasoned Investor or WKSI model in the US. It’s likely to be introduced by the end of this month.Damodaran said that about 30 Indian companies, which comply with the norms set by the committee, will be allowed such issuances.

According to the draft guidelines issued on August 24, 2007, such companies would have to be listed on the BSE or the NSE for at least three years and must have an average free-float market capitalisation of at least Rs 10,000 crore during the past year.

Blackstone, GE Capital, HDFC expected to bid for stake in IFCI

Manager of the world’s biggest buyout fund Blackstone Group LP., General Electric Capital Corp. and a group led by billionaire Wilbur Ross are among investors who may bid for a 26% stake in India’s oldest state-owned project financier, the Industrial Finance Corporation of India Ltd (IFCI).

Ross’s group, including Goldman Sachs Group Inc., Standard Chartered Plc. and Housing Development Finance Corp. Ltd (HDFC), is vying with Cargill Financial Services Corp., Natixis SA and Newbridge Asia HT LP, IFCI said in a statement to the Bombay Stock Exchange (BSE).

The successful bidder would gain access to a market where lending grew 28% last year, and where the Reserve Bank of India (RBI) limits foreign banks’ ownership of local private rivals to 5%.IFCI, which was bailed out by the government in 2003 because of bad debts, in July announced plans to sell a stake to a local or overseas investor to bolster its capital.

Other potential bidders for a stake in IFCI include a group comprising Sterlite Industries (India) Ltd and Morgan Stanley, and a team consisting of Japan’s Shinsei Bank Ltd, India’s Punjab National Bank Ltd and J.C. Flowers & Co., IFCI said. Kotak Mahindra Bank Ltd and Infrastructure Development Finance Co. (IDFC) may also submit offers, the lender said.

Read more in The Livemint article.

RBI may block Citi`s plan to buy 3% in NSE

The Reserve Bank of India (RBI) may block Citibank India’s proposal to pick up 3 per cent stake in the National Stock Exchange (NSE).Citigroup already holds 2 per cent in the exchange.

A source close to development said the bank proposed to buy shares from the State Bank of India group, which holds 12 per cent (9 per cent by the State Bank of India and 3 per cent by subsidiary, SBI Caps).The bank has submitted a proposal to the RBI.

The banking regulator is of the view that Citibank India is a member of the Citigroup, which already owns 2 per cent stake in the NSE. Therefore, granting permission to Citibank India may lead to conflict of interest among related entities holding stake in the same entity.

As per the demutualisation norms, an individual entity cannot hold more than 5 per cent stake in an exchange. SBI and SBI Capital Markets have already pared their stake by 3 per cent and 2 per cent, respectively ,thus bringing down the combined stake to 12 per cent from 17 per cent earlier.

NSE has institutional holding from SBI, Industrial Development Bank of India, Corporation Bank, Oriental Bank of Commerce, Union Bank, Bank of Baroda and Canara Bank.Thus, NSE has already offloaded 26 per cent stake in favour of foreign investors as permissible under the foreign direct investment norms for stock exchanges.

PE firm eyes 49% in KC Securities

Gaja Capital Partners, an India-focused private equity firm, is in talks with the Mumbai-based Kaycee Group to pick up a 49% stake in Kantilal Chhaganlal (KC) Securities, according to a source familiar with the development.

The deal size for the the Mumbai-based broking house is pegged at roughly $40 million (around Rs 160 crore). Kantilal Chhaganlal Securities managing director Jayesh Sheth confirmed that he is in talks with more than one prospective
investor.

However, he refused to divulge more details.Gaja Capital Partners, too, refused to comment on the issue. Gaja has investments in companies Educomp and Vishal Retail.
Sources involved with the deal process said KC Securities had been in talks with a UK-based firm. However, the deal fell through as both parties could not reach an agreement over valuation.

KC Securities is a member of both the National Stock Exchange and the Bombay Stock Exchange. It has a 150-odd franchisee network and offers retail and institutional broking in equities, commodity broking, wealth management services and mutual fund distribution services among others. The company plans to foray into investment banking and services specifically targeted at NRIs.

Govt plans to divest NTPC stake; may raise up to Rs 6,000 cr

The government plans to divest 4.75 per cent of its stake in NTPC Ltd, the country's biggest power generation utility, through a public offer that could fetch it nearly Rs 6,000 crore.

Power Ministry, acting on a request from the state-run firm, has approached the Department of Disinvestment in Ministry of Finance for approval of a Follow on Public Offer (FPO) of 4.75 per cent shares, official sources said.

NTPC had a few years back proposed an initial public offering (IPO) of 24 per cent. But in February 2004, the government allowed NTPC to go for an IPO of 10 per cent of its paid-up capital in one or more stages to augment resources.

The company chose to go for an IPO of 5.25 per cent, leaving balance 4.75 per cent of approved IPO for later date. The IPO of 5.25 per cent was tagged with government divesting an equal shareholding. Subsequent to the offer, government shareholding in NTPC fell to 89.5 per cent from 100 per cent.

Sources said NTPC has stated that as a result of low level of free float, turnover of the shares of the company was quite low. Besides, for listing the company in National Stock Exchange's NIFTY and MSCI, it was required to have a free float of at least 12 per cent and 15 per cent respectively.

NSE likely to buy 5% in Chennai, B'lore SEs

The National Stock Exchange ( NSE) is planning to pick up stakes in the Chennai Stock Exchange and the Bangalore Stock Exchange.According to sources close to the development, the exchange could pick up 5 per cent each in these exchanges as per the demutualisation norms laid down by the market regulator Securities and Exchange Board of India.

The government has fixed a limit of 5 per cent as the maximum holding by an institution or an individual. However, no final decision has been taken as yet since the board will have to approve the stake purchase, said the sources.They added that if the decision to this effect is taken by the NSE, it will help promoting the regional stock exchanges. For the NSE, indications are that as of now this will be financial investment.

At a later date, the stock exchange may also promote a platform for an interconnected exchange for small and medium sector enterprises. If that happens, investment in regional exchanges will deliver fruits.

Read more in The Business Standard article.

Fin Tech buys 1% NSE stake for Rs 125cr

Software firm Financial Technologies India has acquired 4,50,000 shares (1%) stake in National Stock Exchange from ICICI Bank for Rs 125 crore.According to a release issued by Financial Technologies to the BSE today, the company joins other NSE shareholders including the New York Stock Exchange (NSE), Goldman Sachs, ICICI, SBI, IDBI, LIC and various public sector banks.

NYSE and three financial investors — General Atlantic, Goldman Sachs and Softbank Asian Infrastructure Fund — had picked up 5% stake each in NSE for $490 million (Rs 2,205 crore) in January this year.That had pegged the upper-end valuation of the country’s largest bourse at $2.5 billion (Rs 11,250 crore). NSE had recorded a net profit of Rs 191 crore on a revenue of Rs 472 crore for the financial year ended March 31, 2006.
With the current FT-ICICI Bank deal, the valuation of NSE has moved up to Rs 12,500 crore - an increase of around 11% in seven months.

PGCIL aims to raise Rs 580 cr through IPO

Power Grid Corporation of India Ltd (PGCIL), the country's biggest transmission utility, on Wednesday filed its red herring prospectus with market regulator SEBI for its initial public offer to raise an estimated 580 crore.

PGCIL is the third central power utility to tap the capital market for raising funds after NTPC Ltd in 2004 and Power Finance Corporation early this year.Like NTPC and PFC, the government will piggyback on PGCIL IPO to divest five per cent of its stake. While NTPC had raised around Rs 5,400 crore, PFC had mopped up nearly Rs 1,000 crore. Power Grid is expected to mobilise up to Rs 580 crore, sources said.

The public issue comprises 57.39 crore equity shares of Rs 10 each. This includes a fresh issue of 38.26 crore shares by PGCIL and an offer for sale of 19.13 crore shares by the government. About 1.39 crore shares have been reserved for employees and the net issue to public is 55.99 crore shares.

The company will issue shares at a price to be decided through the book building process and the shares will be listed on Bombay Stock Exchange and National Stock Exchange.

Kotak Mahindra Capital Company Ltd, Citigroup global Markets India and Enam Financial Consultants are the book running lead managers to the issue.

Motilal IPO subscribed 1.96 times on first day

The initial public offering (IPO) of Motilal Oswal Financial Services got subscribed by 1.96 times, according to the National Stock Exchange website. Nearly 1 per cent of the total bids received for close to 30 lakh equity shares on offer were at the cut-off price. The shares were priced in a band of Rs 725 to Rs 825. The issue closes on August 23.

The qualified institutional buyers’ (QIB) portion has been subscribed by 3.33 times. Foreign institutional investors have placed bids for all shares in the QIB portion. Nearly 6 per cent of the total shares reserved for retail investors have received bids so far. The portion for non-institutional investors has been subscribed 0.4 times.

Central Bank IPO fully subscribed

The initial public offering of Central Bank of India got fully subscribed just hours after the issue opened.As per the NSE website, the issue was subscribed 1.09 times. It received 8.70 crore bids for the issue size of 8 crore shares. Around 98,040 bids were made at cut-off price.The price band of the issue is fixed at Rs 85-102 per share. The issue closes Friday.

The bank plans to raise Rs 680 crore at the lower price band of Rs 85 and Rs 816 crore at the upper price band of Rs 102 through the issue.The issue proceeds will be utilised to augment the capital base of the bank to meet future capital requirements.

The bank has reserved 60 per cent of the shares for the qualified institutional buyers and 30 per cent of the shares for retail investors.Post issue, the shareholding of the union government in the bank will come down to 80.20 per cent.