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.

SEBI to fine 7 i-bankers

The regulator’s Market Intermediaries Regulation and Supervision Department (MIRSD) has uncovered serious shortcomings in the due diligence process for initial public and rights offerings, besides open offers, carried out by seven investment bankers — Kotak, Enam, DSP Merrill Lynch, SBI Caps, HSBC, Keynote and Aryaman Financial.

According to sources,the arbitration proceedings against Enam and Kotak pertain to YES Bank and IDFC IPOs dating back to 2006. A SEBI probe had revealed a scam involving manipulation of retail category in these IPOs. DSP Merrill Lynch was also rapped by SEBI for the YES Bank IPO as the regulator’s inspection showed that the details of the promoters as mentioned in the IPO document were different from the one filed with the Reserve Bank of India.


Read mor4e in
The Economic Times article.

VCs may not get to invest in listed cos

The new guidelines, being drafted by the finance ministry and the capital market regulator SEBI, may not allow VCs to invest in listed companies and restrict them only to startups.The guidelines will also seek to remove the differences in the treatment of foreign and domestic VC funds. One of the aspects being reviewed is the minimum capital required for VCs to set up shop in India. Currently, domestic VCs need to have a minimum capital of Rs 5 crore to operate, while foreign VCs don’t have any such requirement.The new guidelines will attempt to provide a level playing field for domestic and foreign funds. The government is studying norms in other countries, where mere commitments to provide capital to a VC fund would be sufficient.

VCs, who are currently exempt from SEBI’s takeover code or lock-in period for shares held would be allowed to enjoy this exemption only if they invested in “genuine new ventures.” The government feels that VCs should provide capital to new ventures and not invest in established listed companies.

On another count, while domestic VCs can get a tax exemption only if they invest in high-risk areas like biotechnology or nanotechnology, foreign VCs escape taxes altogether as they normally operate from offices established abroad. Most foreign VCs do not have to pay any tax, as they have no permanent establishment in India. The differences in tax treatment between domestic and foreign VCs is also under review.

The government is also understood to be looking at redefining the investments that are more risky instead of categorising certain sectors such as biotechnology as risky. The government’s intention is to have a new classification of risky areas of funding irrespective of the sectors.

India’s first silver ETF in the offing

Benchmark Asset Management plans to launch India’s first exchange-traded fund (ETF) tracking silver as part of a strategy to expand its bouquet of passively managed funds.

Sebi regulations restrict mutual funds from investing in commodities other than gold. But they can invest in global funds tracking any commodity, a path that Benchmark hopes to follow. The fund house filed initial papers with the Sebi to launch Silver Benchmark Exchange-Traded Scheme, which will invest at least 90 per cent of its assets in units of overseas mutual funds tracking silver.

In February, Benchmark sought the regulator’s nod to launch four fund of funds that would mainly invest in foreign exchange-traded funds (ETFs) tracking clean energy, private equity, commodities and water indices.

Sebi may allow NRIs to manage FII funds

The Securities and Exchange Board of India (Sebi) is shortly expected to allow non-resident Indian (NRI) fund managers to manage the investment portfolios of foreign institutional investors (FIIs).

"We are looking into the issue because we have received many requests. We will permit NRI fund managers who have at least a year's experience in managing FII funds as long as they do not put their proprietary funds into it," confirmed a senior Sebi official.

Sources said fund managers are regulated in their home countries and the restrictions on investing proprietary money were aimed at ensuring that there is little scope for manipulation besides putting checks on possible round-tripping of funds.

The move would overturn a 2000 provision that was inserted in the Securities and Exchange Board of India (FII Regulations), prohibiting NRIs and overseas corporate bodies (OCBs) from investing as FII sub-accounts or as FIIs.

Sebi has already registered several funds that are managed by people of Indian origin. The restriction is only on OCBs and NRIs registering themselves as FIIs.An amendment to the regulations removing this prohibition will allow several hedge funds to register as FIIs or sub-accounts.

Some of these funds have sought Sebi permission to invest in India as FIIs but their applications have not been processed. In certain cases the regulator has sought clarifications since NRI money or managers were involved.

"There are quite a few applications from investment advisors where NRIs account for a majority stake in the entity. These have been put on hold. An amendment will send a clear message to NRI-sponsored fund management companies that they can expect to receive FII registration without any hassle if they comply with criteria prescribed in the regulation," said Suneet Barve, a senior associate with law firm Nishith Desai Associates.

"I believe Sebi ought to permit NRIs and investment management companies owned by NRIs to be registered as FIIs. There is no reason to discriminate against investment companies that are owned by people of Indian origin," said Somasekhar Sundaresan, a partner with legal firm J Sagar Associates.

"If it is investment of NRI funds that is felt undesirable, Sebi can simply get such NRI-owned investment management companies to undertake that they will not invest their own funds through the FII route," he added.

HB Stockholdings gets Sebi nod for DSIL open offer

The battle for control of DCM Shriram Industries (DSIL), the Delhi-based sugar-to-industrial fibres company, is set to intensify with Harish Bhasin's HB Stockholdings getting the Securities and Exchange Board of India's (Sebi) approval to launch the open offer for purchase of 22.88 per stake in DSIL.Bhasin already owns over 25 per cent in the company. If the open offer succeeds, Bhasin will end up with a stake in excess of the 40.7 per cent held by the promoters, led by Tilak Dhar.

Bhasin has invested Rs 22 crore in the last five-and-a-half months to increase his stake in DSIL from 12.87 per cent to 25.05 per cent through open market purchase of shares. The DSIL promoters, sons of Late Lala Bansi Dhar, have in turn raised their stake in the company from 32.54 to 40.7 per cent through an issue of warrants.

Bhasin had announced the open offer on November 19 last year. The price of the open offer was Rs 70 a share and was subsequently revised to Rs 120.However, since HB Stockholdings bought some shares for Rs 127, the open offer price automatically stands revised at Rs 127. However, HB may consider revising it depending upon the market conditions.

Read more in The Business Standard aricle.

New delisting norms soon

After a wait of almost two years, the government and the Securities and Exchange Board of India (Sebi) have firmed up their views on finalising the guidelines for delisting of companies from stock exchanges.The government has also kick-started the process of corporatisation of clearing corporations. Despite differences of opinion, the reverse book-building process remains the choice for finalising the delisting price of shares.

In its draft proposal, Sebi has mooted a fixed price for delisting, which will be a 25 per cent premium over a fixed floor price. The fixed floor price is to be calculated by an accredited rating agency.

Sebi has mooted the alternative price discovery method as it considers that the reverse book-building process has failed to serve its purpose of fixing fair exit value for shareholders, giving disproportionate powers to public shareholders for cartelisation in price discovery.Meanwhile, the issue of a threshold level of shareholding to decide on delisting still remains a bone of contention.

In its presentation to the finance ministry, Sebi has given two options. Promoters should either acquire at least half of the public shareholding in their respective companies or buy shares that will take their shareholding to a little over 90 per cent, whichever ensures a larger number of shares.The existing rules do not specify a minimum level of public participation for delisting. Sebi has further suggested that if half of the shareholders are not willing to participate in the buyback programme, the company should remain listed.

The government, however, is not in favour of this suggestion on the ground that delisting should not be withheld if the promoter has already acquired over 90 per cent of the shares.It will block the exit route for those investors who have sold their shares to the promoter and are not happy with the management.

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.

FTto set up corp bond bourse

Financial Technologies, which is also the promoter of commodities derivatives exchange MCX, has submitted the proposal to the Securities and Exchange Board of India,plans to set up an exchange for illiquid corporate bonds.The company recently got the government approval to set up an energy exchange

The move is a part of Financial Technologies strategy to take advantage of opportunities in the business of running exchanges. The company also has plans to start an exchange for trading in shares of small and medium enterprises.

The company, which also holds 49 per cent stake in the Dubai Gold and Commodities Exchange, recently received the go-ahead from the CentralElectricity Regulatory Commission to set up Indian Energy Exchange. The proposal submitted by Financial Technologies envisages a demutualised exchange, wherein strategic and financial investors would hold equity stakes. An official spokesperson of Financial Technologies declined to comment.

According to the Securities and Exchange Board of India (Sebi) data, trading in corporate bonds, including over the counter trades and trading through exchanges, stood at Rs 53,664.26 crore between January and August.

In this month (till September 20), the trading stood at Rs 532.66 crore. Market sources said in the absence of primary market reforms, actual trading in bonds would not take place and even a separate corporate bond exchange is set up, it would only diversify the present trading.

Read more in The Business Standard article.

Tata Investment Corp hits 20% upper circuit on open offer

Tata Investment Corporation hit 20 per cent upper circuit early on Monday after Tata Sons made an open offer of Rs 600 per share to public share holders to acquire additional 29.29 per cent stake.

At 10:06 am, Tata Investment was at Rs 540.10, up Rs 90 with volume of 1550 shares. The open offer is at 33 per cent premium to the share’s closing price of Rs 450 on Friday on the Bombay Stock Exchange.

This price is also well in excess of the minimum price of Rs 439 based on SEBI formula, as per the announcement on the BSE website. Tata Sons and other Tata companies currently hold 60.61 per cent in Tata Investment Corporation.

This will not result in de-listing the company's shares from the stock exchange.

Reliance- Indian Petrochemicals merger becomes effective

Reliance Industries on thursday said the amalgamation of Indian Petrochemicals Corporation Ltd (IPCL) with itself has come into effect from September 5.

The certified copies of the orders of the Gujarat and Bombay High Court, sanctioning the scheme of amalgamation of IPCL with Reliance Industries, were filed with the respective registrar of companies yesterday.Earlier on September 3, the Gujarat High Court approved the scheme of amalgamation of IPCL with Mukesh Ambani- controlled Reliance Industries.

In June 2002, the government as part of its disinvestment programme sold 26 per cent of its equity in IPCL to Reliance Petroinvestments Ltd (RPIL), a Reliance Group company.
RPIL acquired an additional 20 per cent equity shares through a cash offer in terms of SEBI (Takeover Regulations) and currently holds 46 per cent of the company's equity.

Read more in The Economic Times article.

Fortis Financial's offer for 20% in Asian CERC

Fortis Financial Services today said its offer to the shareholders of Asian CERC Information Technology for acquiring 20 per cent stake in the company would open from September 14.

Securities and Exchange Board of India (SEBI) issued comments on the draft letter of offer on July 23, and therefore the dates with respect to open offer have undergone a change, Asian CERC said in a filing to the Bombay Stock Exchange.

As per the revised schedule, the offer would remain open from September 14 till October 4. While as per the original schedule the offer was supposed to remain open from October 12 to November 1, 2006.

Fortis Financial made an open offer for acquiring over 24.76 lakh equity shares of Rs 5 each representing 20 per cent of the paid-up equity share capital of Asian CERC at Rs 53.45 each, subject to the terms and conditions.

OIL allowed to sell 10% through IPO

The government has approved Oil India Ltd’s (OIL) proposal for 10% fresh equity issue through an initial public offer (IPO) along with disinvestment of 10% equity in favour of public sector oil marketing companies.

OIL is expected to raise around Rs 1,425 crore through the IPO at a price of Rs 600 per share. The move will enable the company to get listed on the stock exchanges.

The public sector company will also offer 1% stake to its employees, finance minister P Chidambaram said after the Cabinet Committee of Economic Affairs (CCEA) meeting.The divestment of 10% of OIL’s paid up capital in favour of IOC, HPCL and BPCL would be done in the ratio of 2:1:1 respectively.

The fresh issue of 10% of its paid up capital would meet Sebi’s requirement of listing of the company’s share on the stock exchanges. This would not only make OIL more amenable to market discipline but would also boost the company’s image. Besides, it would help OIL to raise resources for its future expansion and growth. The additional 1% allocation for its employees would motivate them towards better performance, it added.

OIL is 98.13% owned by the government and the remainder by employees. The proposed IPO of the company is aimed at financing the expansion and investment projects totalling about $ 3.5 billion over the next five years. The investments are proposed on expanding the exploration activities, including acquisitions overseas along with IOCL.

Baer plans $250 mn hedge fund

Private equity player Baer Capital Partners plans to launch $ 250 million India-dedicated hedge fund by the year-end. Baer Capital is the first hedge fund to announce its India plans, after the recent proposal by the Securities and Exchange Board of India allowing direct entry of hedge funds.The fund is likely to be called Beacon India Growth Fund.

Baer Capital will have to register as a foreign institutional investor (FII).The fund will be investing in public (or listed) companies. It will be a long biased hedge fund using futures/derivatives to hedge itself against market decline. It will have more flexibility to stay in cash or take concentrated position and will be focused mainly on the mid-cap stocks across sectors.

The shareholders of Baer Capital Partners are the Fleming Family (10 per cent), Dubai Holding (15 per cent), founders Michael Baer, Alok Sama and Brij Raj Singh (together 50 per cent) and the balance by Shuaa Capital and CQS Management, London-based leading hedge fund company.

Read more in The Business Standard article.

Wockhardt Hospitals plans Rs 812 cr IPO

Wockhardt Hospitals Ltd plans to raise over Rs 812 crore from its proposed initial public offering, for which it has filed papers with the Securities and Exchange Board of India.

The Wockhardt Ltd subsidiary will take the book building route for its 3 crore equity share float of Rs 10 each. The issue will constitute 28.77% of the post-issue capital.

The company is also considering a pre-IPO placement of up to 75 lakh shares, following which the net issue will reduce by that number, subject to minimum 10% of the post issue capital.

Wockhardt Hospitals plans to use the IPO proceeds to meet the cost of development and construction of greenfield and brownfield hospitals estimated at Rs 617.2 crore and prepay some of the short term loans estimated at Rs 195 crore.The equity shares will be listed on the Bombay Stock Exchange and National Stock Exchange.

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.

FIPB rejects plan to sell 5% DSE stake to FII

The Foreign Investment Promotion Board (FIPB) has rejected Mauritius-based Passport India Investments proposal to buy a 5 per cent stake in the Delhi Stock Exchange (DSE), while deferring a decision on five other FDI proposals.

The FIPB rejected the proposal of Passport India, a fund promoted by US-based Passport Capital LLC, after the Securities and Exchange Board of India objected to a foreign institutional investor buying shares in the primary issue of a stock exchange, DSE sources said.

The rejection and deferment were announced today. According to an official release, Finance Minister P Chidambaram has approved the FIPB’s recommendations for 20 FDI proposals, made at its meeting on August 17.

Of the six investment proposals in the DSE for a 26 per cent stake, the FIPB cleared four proposals for taking a 20 per cent stake in the bourse. The FIPB deferred decision on the proposal of non-resident Indian Bhupendra Kumar Modi to buy 1 per cent stake in the DSE.

With the August-end deadline approaching to finalise domestic and foreign investors for offloading a minimum of a 51 per cent stake in the bourse according to Sebi’s demutualisation scheme, two new FDI proposals have been submitted to the FIPB for investing in the DSE, sources say.The DSE can offload a maximum 26 per cent stake in the exchange to foreign investors.

The two new foreign investment proposals in DSE are from Mauritius-based funds, New Vernon Private Equity Fund and Passport Global Master Fund.

The DSE is trying to secure an approval for the new proposals prior to the next FIPB meeting scheduled for August 31 as it has to submit the name of investors to Sebi at the earliest.

While the DSE is selling 26 per cent stake to foreign investors, it proposes to dilute a minimum 25 per cent stake to domestic investors. The DSE, defunct for the last three years, is trying to revive itself.

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.

Lehman picks 26% in Edelweiss` NBFC

The New York-headquartered Lehman Brothers has picked up 26 per cent stake in ECL Finance, the non-banking finance company of Edelweiss Capital, for close to Rs 180 crore.The acquisition comes within days after Lehman Brothers bought the institutional broking business of Brics Securities, a Mumbai-based broking house.

In March, the Mumbai-based financial services company Edelweiss announced its foray into the non-banking financial space and asset management by investing a total of Rs 400 crore in the new ventures.The NBFC would be looking at mortgage business and other credit instruments.

Last week, Edelweiss filed a prospectus with the capital market regulator, the Securities and Exchange Board of India (Sebi), for its initial public offering. The company will be offering 8.3 million equity shares of Rs 5 each and the post issue dilution is 10.92 per cent.A portion of the proceeds of the issue will be used to buy office space of about 30,000 sq ft either for ECL Finance or for Edelweiss Securities.

Read more in The Business Standard article.

Oracle not to delist i-flex for 5 more yrs

Stung by the lukewarm response to its earlier open offer to buy i-flex shares, US-based Oracle has maintained it has no plans to come out with additional open offers for i-flex shareholders for at least the next five years. In a recent filing with the US Securities and Exchange Commission, however, it added a rider stating it may think of an open offer if the share price is below Rs 2,100 per share — its offer price of December 7, 2006.

Oracle holds 83 per cent of i-flex’s shares and has been consistently trying to acquire the rest in a bid to delist i-flex from the Indian bourses. It would require a little over 90 per cent of shares to do so. The move will help it to integrate i-flex with its business worldwide.

Under current norms, if the minority shareholders do not surrender shares willingly to the new promoter, the Securities and Exchange Board of India’s (Sebi’s) takeover code requires the new promoter to come out with a proposal to buy back the rest of the shares from the minority shareholders under a proposal to delist the company.

The buy-back price is decided on the basis of the market price under the reverse book building process. Reverse book-building requires generating offers from sellers.

However, since its open offers received a tepid response, the US-based firm has reportedly been lobbying the Indian government for over a year to amend the Sebi takeover code. The amendment was aimed at compelling the minority shareholders to surrender the shares of i-flex in favour of Oracle, a government source said.

The amendment was suggested on the lines of the “minority squeeze-out norms” of the US under which minority shareholders of an acquired company are compelled to surrender their shares in favour of the new promoter that has acquired a majority stake. Official sources close to the development said the Indian government did not agree to amend the code.

Read more in The Business Standard article.