IDBI Bank is in discussions with the Government to examine various fund raising options including a rights issue to fuel its expansion plans in the next two-three years, a top official of the bank said on Friday. "We have approached the Government to evaluate various options including a rights issue to meet the capital requirements in the next 2-3 years," IDBI Bank's Chief Financial Officer R K Bansal said. IDBI Bank's fund requirement over the next 2-3 years will be around Rs 7,000 crore, that would help the banking major to finance its growth plans including overseas expansion, Bansal said. The bank is also considering Tier-I and Tier-II routes to raise funds, Bansal said. Government owns nearly 53 per cent stake in the bank. IDBI Bank has targeted a loan growth of 20 per cent in the current fiscal. It has a capital adequacy ratio of 11.57 per cent.
Source: Economic Times
Saturday, April 25, 2009
Vikram Pandit may have to leave Citigroup
US regulators who are concluding “stress tests” on banks may remove Citigroup Inc chief executive Vikram Pandit, the New York Post reported, citing sources it did not identify further. The regulators may have to take such a step to show the government is taking as strong a stand on banks as it did with General Motors Corp when it removed Rick Wagoner, the paper said. Citigroup finance director Ned Kelly told the paper in an interview: “Replacing (Pandit) would be dramatically destabilizing both for Citi and the system”. “Our recent quarterly results reveal the underlying strength of the franchise and Vikram Pandit’s strategy at work to restore Citi to profitability,” a Citigroup spokeswoman told the paper. A Citigroup spokesman in Hong Kong declined to comment on the report. US Treasury Secretary Timothy Geithner’s visit to Citigroup’s offices a week and a half ago was simply to conduct a check-up on the bank, the paper said, citing people familiar with the meeting. On Monday, the Financial Times website said that senior Federal Deposit Insurance Corp officials have privately discussed who might replace Pandit if the bank needed more government aid. Successors being discussed by FDIC officials included CFO Ned Kelly, Gary Crittenden, his predecessor and chairman of the division containing the New York company’s non-core assets, and one of Citi’s new board members, FT had said, citing people close to the situation.
Source: FT
Source: FT
PE firms allowing warrants to expire
Following the steep decline in the equity market in 2008, some private equity (PE) firms that had invested in companies through warrants are now left with no option but to let them expire because shares on the open market are cheaper than the exercise price of the warrants.
Warrants are securities that stakeholders use to purchase or increase equity in a company at a future date. An investor pays 10% of the value of the investment up front, and acquires the option of converting the warrants into shares any time within 18 months at a pre-decided price. This price is known as the exercise price.
A Mint analysis of data provided by Delhi-based investment banking outfit SMC Capital Ltd shows that there are at least 13 companies in the National Stock Exchange’s S&P CNX 500 index in which PE investors had warrants exercisable after 1 January 2007. The S&P CNX 500 represents about 95% of the total market capitalization of the stocks listed on the exchange. This index declined by 57.13% in 2008.
In at least six firms, warrants have been allowed to expire by their PE investors. The six are Abhishek Industries Ltd, Anantraj Industries Ltd, KPIT Cummins Infosystem Ltd, Nagarjuna Construction Co. Ltd, RSWM Ltd and S Kumars Nationwide Ltd. These warrants, if converted into shares before they expired, would have been worth Rs550.04 crore.
For RSWM Ltd, the expiry date of the warrants issued to New Vernon Bharat Ltd, an investment vehicle of New Jersey-based private equity and hedge fund New Vernon Capital Llc, was 29 May 2007. This could mean that the conversion did not happen because of some reason other than the market fall, which began only around January 2008. For the other five, the expiry date was either late last year or early this year.
Investors have fully converted their warrants into shares in only two companies—KS Oils Ltd and Oracle Financial Services Software Ltd.
Warrants issued to PE investors in at least five other companies are yet to expire and haven’t been fully converted. These firms are Everonn Systems India Ltd, Havells India Ltd, Shriram City Union Finance Ltd, SpiceJet Ltd and Uflex Ltd. The collective value of these warrants, if converted, works out to Rs377.93 crore.
The expiry date for Shriram City Union Finance’s warrants, originally set for mid-May, has been extended by six months. The investors are Bessemer Venture Partners, Asiabridge Fund I Llc, ICICI Venture Funds Management Co. Ltd and ChrysCapital. On whether it would convert in that time, senior managing director of ChrysCapital Ashish Dhawan said in an email: “We don’t need to decide for six months.”
“There is little likelihood of these getting converted for the reason that all these warrants are out-of-money or the current share price in all these cases is at a discount of between 17% and 77% to the exercise price,” said Jagannadham Thunuguntla, head of equity at SMC Capital.
In February 2009, the capital markets regulator Securities and Exchange Board of India changed the rules for warrant-conversion, saying that in forthcoming warrant issues, the holder would need to pay 25% up front. All the companies reviewed by SMC Capital had issued their warrants before February 2009.
However, at Rs1,251 crore, the conversion value of warrants issued to PE investors and exercisable after 1 January 2007 is minuscule compared with those for promoters.
Mint had reported on 15 April that out of warrants worth Rs25,153.04 crore issued to promoters of 34 companies, only Rs3,886.41 crore worth had been converted to equity. This was because the warrants were out of money, meaning that the share price of these companies was at a steep discount of anywhere between 15% and 86% to the exercise price of the warrants issued to promoters.
Source: Livemint
Warrants are securities that stakeholders use to purchase or increase equity in a company at a future date. An investor pays 10% of the value of the investment up front, and acquires the option of converting the warrants into shares any time within 18 months at a pre-decided price. This price is known as the exercise price.
A Mint analysis of data provided by Delhi-based investment banking outfit SMC Capital Ltd shows that there are at least 13 companies in the National Stock Exchange’s S&P CNX 500 index in which PE investors had warrants exercisable after 1 January 2007. The S&P CNX 500 represents about 95% of the total market capitalization of the stocks listed on the exchange. This index declined by 57.13% in 2008.
In at least six firms, warrants have been allowed to expire by their PE investors. The six are Abhishek Industries Ltd, Anantraj Industries Ltd, KPIT Cummins Infosystem Ltd, Nagarjuna Construction Co. Ltd, RSWM Ltd and S Kumars Nationwide Ltd. These warrants, if converted into shares before they expired, would have been worth Rs550.04 crore.
For RSWM Ltd, the expiry date of the warrants issued to New Vernon Bharat Ltd, an investment vehicle of New Jersey-based private equity and hedge fund New Vernon Capital Llc, was 29 May 2007. This could mean that the conversion did not happen because of some reason other than the market fall, which began only around January 2008. For the other five, the expiry date was either late last year or early this year.
Investors have fully converted their warrants into shares in only two companies—KS Oils Ltd and Oracle Financial Services Software Ltd.
Warrants issued to PE investors in at least five other companies are yet to expire and haven’t been fully converted. These firms are Everonn Systems India Ltd, Havells India Ltd, Shriram City Union Finance Ltd, SpiceJet Ltd and Uflex Ltd. The collective value of these warrants, if converted, works out to Rs377.93 crore.
The expiry date for Shriram City Union Finance’s warrants, originally set for mid-May, has been extended by six months. The investors are Bessemer Venture Partners, Asiabridge Fund I Llc, ICICI Venture Funds Management Co. Ltd and ChrysCapital. On whether it would convert in that time, senior managing director of ChrysCapital Ashish Dhawan said in an email: “We don’t need to decide for six months.”
“There is little likelihood of these getting converted for the reason that all these warrants are out-of-money or the current share price in all these cases is at a discount of between 17% and 77% to the exercise price,” said Jagannadham Thunuguntla, head of equity at SMC Capital.
In February 2009, the capital markets regulator Securities and Exchange Board of India changed the rules for warrant-conversion, saying that in forthcoming warrant issues, the holder would need to pay 25% up front. All the companies reviewed by SMC Capital had issued their warrants before February 2009.
However, at Rs1,251 crore, the conversion value of warrants issued to PE investors and exercisable after 1 January 2007 is minuscule compared with those for promoters.
Mint had reported on 15 April that out of warrants worth Rs25,153.04 crore issued to promoters of 34 companies, only Rs3,886.41 crore worth had been converted to equity. This was because the warrants were out of money, meaning that the share price of these companies was at a steep discount of anywhere between 15% and 86% to the exercise price of the warrants issued to promoters.
Source: Livemint
Friday, April 24, 2009
Government to replace AI-IA CMD Raghu Menon
In a surprise move, the government has started the hunt for a new Air India -Indian Airlines CMD to replace Raghu Menon, the current CMD, who has still two years to go. Menon, an IAS officer of 1974 batch, was appointed CMD last April.Cabinet secretary K M Chandrasekhar is scheduled to have a meeting of search committee with heads of other ministries on Friday to finalise the chairman of Airport Economic Regulatory Authority (AERA) and now finding Menon's successor has also been added to this meeting's agenda.The move to begin search for a new AI CMD has been kept secret as the mega airline is struggling to get over merger issues, especially with distrust running deep between former AI and IA employees. "The merger has been only on paper. At a time like this, the news that the government is trying to get a new head for AI would just send a message to worried employees that the owner (the state) is struggling to find someone to run the airline," said sources.Aviation secretary M M Nambiar will also attend Friday's meeting with the cabinet secretary. According to sources, Menon might be appointed head of AERA. While he had applied for the post first time round, the government had called for applications for the post again and that time he did not reapply.
Source: Times of India
Origo Sino-India invests $5m in risk management solutions business
Origo Sino-India (OSI), a London Stock Exchange-listed, Beijing-based private equity and consultancy firm, has made a follow-on investment of $5m in IGH, an international provider of risk management solutions. The deal was made in conjunction with a subsidiary of the firm, Origo Resource Partners (ORP).
IGH, which completed its first full year of operation in 2008, produces risk management products and services for the public sector and mining, power, construction and manufacturing industries. The company comprises a network of 15 subsidiaries across five continents, including operations in China. The investment will initially be in the form of new convertible loan stock to be issued by IGH, which will be split between OSI and ORP on a 30:70 basis, in accordance with their shareholding in IGH. Assuming the loan stock is converted, the $1.5m investment by OSI will result in its equity interest increasing to a maximum of 19.2 per cent. The capital will be used to fund a proposed acquisition by IGH and to complete another, both within the next month. The acquisitions will provide scope for expanding IGH's operations in Asia Pacific, South America and the Middle East. Chris Rynning, CEO of OSI, said, "I am delighted that Origo has been able to play such an important role in the development of IGH. This transaction provides IGH with significant growth opportunities and underlines how our strategy of investing and working with promising companies, in our chosen sectors, can deliver value to shareholders." OSI is a private equity investor and strategic consultancy business focusing on core economic growth opportunities in China and India. Last year the firm made a £3m deal with global investment manager GLG Partners to provide research on investment opportunities in the Chinese and Indian markets.
Source: AltAssets
IGH, which completed its first full year of operation in 2008, produces risk management products and services for the public sector and mining, power, construction and manufacturing industries. The company comprises a network of 15 subsidiaries across five continents, including operations in China. The investment will initially be in the form of new convertible loan stock to be issued by IGH, which will be split between OSI and ORP on a 30:70 basis, in accordance with their shareholding in IGH. Assuming the loan stock is converted, the $1.5m investment by OSI will result in its equity interest increasing to a maximum of 19.2 per cent. The capital will be used to fund a proposed acquisition by IGH and to complete another, both within the next month. The acquisitions will provide scope for expanding IGH's operations in Asia Pacific, South America and the Middle East. Chris Rynning, CEO of OSI, said, "I am delighted that Origo has been able to play such an important role in the development of IGH. This transaction provides IGH with significant growth opportunities and underlines how our strategy of investing and working with promising companies, in our chosen sectors, can deliver value to shareholders." OSI is a private equity investor and strategic consultancy business focusing on core economic growth opportunities in China and India. Last year the firm made a £3m deal with global investment manager GLG Partners to provide research on investment opportunities in the Chinese and Indian markets.
Source: AltAssets
Inbound merger and acquisitions set to increase: Assocham
Strong financials of domestic companies and robust demand in sectors like telecom, pharma and capital goods will kickstart inbound merger and acquisition (M&A) activities in India in the next six to nine months, an industry lobby report said Thursday. The report by the Associated Chambers of Commerce and Industry (Assocham) said: 'Inbound M&As, which had witnessed a steep fall of 85 percent due to the global financial crisis, and consolidation deals are expected to show signs of revival by October-December period 2009.' Assocham president Sajjan Jindal said in the report: 'Indian companies could attract greater number of inbound M&A deals as the equity valuations of certain sectors like telecom, pharma, and capital goods offer lucrative strategic option to bigger foreign companies.' In January-March 2009, the inbound M&A deals, which had the maximum share in total M&A deal size during October-December 2008, contracted by a whopping 85.28 percent. The outbound M&A deals shrunk 48.62 percent as the number of deals declined from 28 in October-December 2008 to 16 in January-March 2009, the report said. The aggregate M&A deals size plunged more than 70 percent in the first quarter of 2009. The number of deals also declined from 58 to 45 during the period. The Study also found that if it was the telecom sector that attracted the maximum share in the M&A deals in the last quarter of 2008, the pharmaceutical and IT sectors dominated the corporate M&A activities in the first three months of 2009.
Source: Reuters
India Inc's March deal value at $2.27 bn - Grant Thornton
Merger and acquisition deals' volume of India Inc soared about nine fold to $2.27 billion in March over the previous month, the first upsurge in about a year on monthly basis, on a large number of consolidation and reorganisation activities. The total number of M&A and group restructuring deals for March 2009 stood at 21 with an announced value of $2.27 billion, a nine-fold jump from that in February, global consultancy firm Grant Thornton said in the issue of Dealtracker. The volume of M&A deal in February 2009 stood at around $250 million. "One of the key reasons for the surge in deal values is an increase in the announced value of consolidation and reorganisation activities, in addition to a more positive outlook towards strategic acquisitions. "We expect the consolidation initiatives to increase in future," Grant Thornton Specialist Advisory Services Partner C G Srividya said. During March, there were 11 domestic deals where both acquirer and target company were Indian with an announced value of $86.89 million and eight cross-border deals with an announced value of $296.67 million.
Source: Economic Times
Source: Economic Times
Subscribe to:
Posts (Atom)
