SEBI tweaks rules for IPOs, buybacks and takeovers

The Securities and Exchange Board of India (Sebi) on Thursday eased several rules relating to Initial Public Offers (IPO), rights issues, buybacks and takeovers. The regulator’s board approved these changes as also those relating tenures of managing directors of market intermediaries. The capital markets watchdog reduced the time for announcing the price band of initial […]
The Securities and Exchange Board of India (Sebi) on Thursday eased several rules relating to Initial Public Offers (IPO), rights issues, buybacks and takeovers.

The regulator’s board approved these changes as also those relating tenures of managing directors of market intermediaries. The capital markets watchdog reduced the time for announcing the price band of initial public offers (IPO) from five working days before the opening of the issue to two working days. This will give companies more time to fix the price band.

 

Companies now need to provide investors with financial disclosures — for public issues and rights issues — for only three years. Currently, information is provided in the offer documents for five years. Also, companies need to provide only consolidated audited financial disclosures in the IPO offer document; audited standalone financials of the issuer and subsidiaries must be disclosed on the company website.

 

Following a board meeting on Thursday, the capital markets regulator tweaked the buyback norms. The buyback period has been defined as the time between the board resolution or the date of declaration of results for a special resolution authorizing the buyback of shares and the day on which the shares are paid.

Also, Sebi has amended the takeover rules. It has given companies additional time to revise the open offer price upwards till one working day before the start the tendering period.

 

The Sebi board also approved some recommendations of R Gandhi committee on regulations relating to market infrastructure institutions (MIIs). For rights issues the threshold for submission of the draft letter of offer to Sebi has been increased to Rs.10 crore as against the earlier prescribed Rs 50 lakh. The regular also tweaked the rules relating to the underwriting of all non-SME public issues. If 90% of the fresh issue of share is subscribed, the underwriting will be restricted to that portion only. Accordingly, the requirement to underwrite 100% of the issue without regard to the minimum subscription requirements has been deleted.

 

Sebi also reduced minimum anchor investor size to Rs 2 crore from the existing Rs 10 crore, for SME issuances. This will allow companies to attract more anchor investors for an issue.

 

The board has permitted eligible domestic and foreign entities to hold up to 15% shareholding in case of Depository and Clearing Corporation. Moreover, multilateral and bilateral financial institutions, as notified by the government, have also been recommended to hold up to 15% in an MII. Moreover, Sebi has decided to limit the tenure of managing directors of an MII for a for a maximum of two terms of up to 5 years each or up to 65 years of age, whichever is earlier. The requirement would also apply to incumbent MDs of MIIs.

 

The regulator is also looking into the issues regarding IPO ICICI Securities in ICIC AMC bought the large stake.The regulator had sought details of a significant investment made by ICICI Prudential Mutual Fund in the IPO of ICICI Securities. “Yes we are looking into that, and we have sought some information from them, and we are yet to get their replies,” Tyagi said.

 

Source: Financial Express

Private equity investors bring in deals worth $983 mn in January: Thornton

January was dominated by investments in start-ups which contributed to 52% of total investment volumes

Private equity (PE) investors announced deals worth $983 million in January, a 23 per cent rise in value terms over last year, driven by big ticket transactions, says a Grant Thornton report.

According to the assurance, tax and advisory firm, in January, there were 84 PE deals worth $983 million, against 81 such transactions worth $796 million in January 2017.

“Private equity deals recorded 4 per cent increase in deal volumes and 23 per cent increase in deal value in January 2018 as compared to January 2017,” said Pankaj Chopda Director at Grant Thornton India LLP.

January was dominated by investments in start-ups which contributed to 52 per cent of total investment volumes. On the other hand, energy & natural resources and real estate sectors witnessed big-ticket PE investment over $100 million together capturing 39 per cent of total PE deal values.

Altico Capital’s investment of $195 million across five realty projects in Hyderabad and Pune was the top PE deal in January.

Other major transactions include Canada Pension Plan Investment Board’s 6 per cent stake acquisition in ReNew Power Ventures for $144 million and Warburg Pincus and SAIF Partners’ $50 million investment in Rivigo Services.

Going forward, the PE deal outlook looks bullish especially for the start-up sector.

“Increasing customer penetration in online transactions and increasing solutions to simplify online transactions offered by start-ups will attract interest in start-ups engaged in retail, fintech, foodtech, on demand services and travel and logistics,” Chopda said.

“Government reforms such as RERA, focus on cleantech and on increasing digital financial transactions will drive the momentum in banking and financial, real estate and energy and natural resources.

India-specific strategies by global and already present PE firms and funds raised by new players will act as catalyst for PE transactions,” he added.

Source: Business Standard

 

M&M opens $230-m manufacturing facility in Detroit

Will roll out in early 2018 off-highway vehicle Roxor

Automotive major Mahindra & Mahindra broke fresh ground as an Indian multinational when it inaugurated its factory in the original Land of Automobile Manufacture, Detroit.

As Executive Chairman, Anand Mahindra, and the Lt. Governor of Michigan, Brian Calley, cut the ribbon to declare open the plant of Mahindra Automotive North America (MANA), they heralded the first investment in 25 years in a new OEM operation in Detroit.

That this is a major breakthrough for the city, which was badly hit by the financial and housing crisis, was evident from the official turnout at the inauguration. Two members of Congress, the Michigan Lt. Governor and a State Department official were all not only in attendance but also spoke evocatively about the investment.

M&M has invested $230 million and created 250 jobs in the plant, which will have a capacity to produce 10,000 units of Roxor, an off-highway vehicle.

MANA will invest another $600 million in the facility by 2020, adding a further 400 jobs.

The Roxor, designed and developed by MANA, was not unveiled but Richard P Haas, President and CEO, MANA, said that it would be launched in the market early 2018.

Speaking at the inauguration, Anand Mahindra struck a personal note on how he first came to the US in 1973 as a freshman student and how this was his way of giving back to the country for all that he had learnt as a student, which he said he had applied in his business.

Answering a question at a media interaction on whether the next step is to enter the US utility vehicles market Mahindra said that it is “not imminent, though it remains an aspiration”.

“Americans are familiar with Korean brands and the logical step is for Korean group company Ssangyong to come in with its models. But it is for the Ssangyong board to take the call,” he said.

Richard Haas added: “We’re watching how people react to the brand and are preparing for different scenarios. Over the next year or two we’ll learn, understand and move forward.”

Mahindra emphasised that MANA was not playing the volumes game saying that sometimes scarcity works better and that the days of requiring enormous scale to succeed are over.

He explained the rationale for the business as bringing together the engineering expertise of Detroit and a start-up culture.

“We’ve created an incubator here — Richard (Haas) has come with rich start-up experience from Tesla and the operation is based in Detroit to leverage conventional manufacturing skills. MANA will be an asset-light operation with a start-up mentality.”

Source: The Hindu Business Line

No more rejection for start-ups seeking tax sops

Companies will be given a chance to amend and re-submit proposals, says DIPP

In what could be a morale booster for start-ups, the government has decided to do away with the practice of rejecting applications for tax sops.

Instead, start-ups will get an opportunity to apply again after making changes to the proposal based on the explanation given to them on the initial one.

Supportive policy

The Department of Industrial Policy and Promotion is also reworking the qualification criteria for start-ups for non-tax benefits, a government official told Business Line.

“Instead of dismissing proposals that do not meet the mark for tax-sops with a simple ‘rejected’, the inter-ministerial group examining it will give details of where they fell short. This will give the start-ups an opportunity to rework their proposals, and apply again for tax benefits,” the official said. “There has been no change in the criteria of judging whether a start-up qualifies for tax benefits. It still depends on how innovative the idea is.”

In the last meeting of the Inter Ministerial Group (IMG) on startups which met on May 1, about a dozen applications were approved.

The change in the Central government’s stance has been triggered by a general sense of dissatisfaction among start-ups with the new policy, as only about 10 proposals had qualified for tax sops till last month out of the 140 proposals vetted by the inter-ministerial group since the policy was announced last year. “The DIPP has decided to be a bit more empathetic while dealing with start-ups. After all, what good are tax sops if very few are able to benefit from it,” the official said. The 130 applicants for tax apps, who were rejected over the past year, will also get a detailed note on why their cases did not pass the test. As per the existing rules, start-ups (companies and Limited Liability Partnerships or LLPs) can get income tax exemption for three years in a block of seven years, if they are incorporated between April 1, 2016, and March 31, 2019.

Expanding definition

An IMG, including officials from the Department of Bio-technology, Department of Science and Technology and the DIPP, examine the proposals on the basis of innovation and use, and determine whether they qualify for tax sops or not.

“An official from the Ministry of Electronics, IT and Technology has been added to the IMG from May 1,” the official said.

The DIPP will come up with a new set of rules over the next few weeks, tweaking the definition of a start-up that will result in more companies and LLPs coming under in the category.

Source: https://www.pressreader.com/india/the-hindu-business-line/20170508/

Bandhan Bank reports FY17 profit at Rs1,111.95 crore

Bandhan Bank’s net interest income stood at Rs 2,403.50 crore in the financial year 2017

Bandhan Bank on Thursday reported a net profit of Rs1,111.95 crore for the financial year that ended on 31 March. A comparable year-ago figure wasn’t available because the lender started operations only in August 2015.

Net interest income, or the core income a bank earns by giving loans, was Rs2,403.50 crore. Gross advances were Rs23,543.29 crore and deposits stood at Rs23,229 crore.

Current and savings accounts at the end of the March quarter made up 29.43% of deposits. Bandhan Bank’s capital adequacy ratio, an indicator of financial strength expressed as a ratio of capital to risk-weighted assets, was 26.36%. The bank has 840 branches and 10.5 million customers.

Bandhan Bank, which converted from a microfinance institution to a full-fledged lender, kept its focus on borrowers who make up more than 90% of its loan book. Going forward, the bank intends to diversify into affordable housing and loans to micro enterprises.

According to Chandra Shekhar Ghosh, founding managing director and chief executive officer of Bandhan Bank, deposit and credit growth for the bank will continue to grow at 30%.

In the financial year 2016-17, the bank sold inter-bank participatory certificates worth Rs6,704.21 crore, which helped the bank boost its net interest margin.

The net interest margin, the difference between the rate a bank charges for loans and pays for deposits, for the year was close to 10%.

Under the inter-bank participatory certificates arrangement, banks can sell a part of their portfolio to other banks that are short of their targets for lending to the priority sector that includes agriculture and small businesses.

Source: http://www.livemint.com/Companies/SQyBR1lyNbg2sKNrL42ELM/Bandhan-Bank-reports-FY17-profit-at-Rs111195-crore.html

UrbanClap receives Rs 20 Crore as NCD from Trifecta Capital

Home service startup UrbanClap has raised Rs.20 Crore of debt funding from California-Based Trifecta Capital through Non-Convertible Debentures.

A Non – Convertible debenture or NCD do not have the option of conversion into shares and on maturity, the principal amount along with accumulated interest is paid to the holder of the instrument. There are two types of NCDs-secured and unsecured.

Previously, UrbanClap raised an undisclosed amount funding from Ratan TATA in December 2015. The total equity funding from UrbanClap is about $36.6 Millions. The startup investors base include SAIF Capitals, Rohit Bhansal, Accel Partners, Bessemer Venture Capital and others.

The startup has also acquired similar startups like GoodServices and Mumbai-Based HandyHome.

The Delhi-Based startup was founded in October 2014 by Varun Khaitan, Raghav Chandra and Abhiraj Bhal. UrbanClap is the simplest way to hire trusted services. The startup helps their customers to find the right service professionals for activities important house works. Their vision is to use technology and smart processes to structure the highly unorganised services market in India and emerging markets.

Trifecta Capital is an early stage technology fund that invests in the best start-ups. Current portfolio companies include Equipment Share, Second Spectrum, Moltin and others. Trifecta Capital is a top quartile Silicon Valley-based seed fund. The venture capitalist is industry agnostic and look to support companies starting at seed stage but continue our support until IPO.

Commenting on the funding Rahul Khanna, managing partner at Trifecta Capital, said: “We are very focused on identifying category leaders. The venture debt firm has so far committed Rs 300 crore to 21 startups in the last 18 months through its Trifecta Venture Debt Fund I, the target corpus for which is Rs 500 crore.”

The venture debt firm has invested in several startups such as BigBasket, Rivigo and Urban Ladder.

Source: https://indianceo.in/news/urbanclap-receives-rs-20-crore-ncd-trifecta-capital/

Smaller VC firms ride on SIDBI and local investors

In the past six months, several venture capital (VCs) funds have raised money or are in the process of raising money. These include funds from IDG Ventures, DSG Consumer Partners, Orios Venture Partners, Kae Capital, Blume Ventures, Saama Capital, Fireside Ventures, Stellaris Venture Partners, Endiya Partners and Pravega Ventures.

 

What’s common between them is Sidbi, the lending institution managing several start-up funds, including the government’s, which plays an anchor investor to many of these funds with a 15-20 per cent stake. This is helping these funds raise money from other domestic investors — family offices and high networth individuals (HNIs).

 

‘‘Fundraising is not easy, especially for smaller VC firms. They don’t get large institutional investors; they get family offices and HNIs,” says a VC. Having an institution like Sidbi comforts other local investors.

 

‘‘Sidbi does extensive amount of due-diligence, reporting, appoints board members. They have a proper investment committee. So, you have comfort that there’s institutional due-diligence on the fund,” says Rehan Yar Khan, managing partner, Orios Venture Partners.

 

In February, Sidbi said its fund of funds operations has sanctioned Rs 1,112 crore to 30 funds in FY17, double of Rs 607 crore for 16 funds it did in FY16. Sidbi manages many fund of funds, including the government’s Rs 10,000-crore fund of funds for start-ups.

 

The funds, which have received Sidbi’s commitment under this programme, are Orios Venture Partners Fund II (Rs 50 crore), Kae Capital (Rs 45 crore), and two little known funds, Saha Trust (Rs 10 crore) and Kitven Fund III (Rs 5 crore), Sidbi disclosed in response to an RTI query from Business Standard. There are others like Blume Ventures, IDG Ventures, India Quotient, which have received Sidbi’s funding.

 

Interestingly, several funds — maiden funds and second funds — have hit the market in the past one year, all targeting domestic investors. Yet, all of them are able to raise money and announced their first or final close, which shows the increasing depth of domestic investors.

 

These include professionals in large firms, like Infosys founders, who have made money through ESOPs, family offices of traditional business families and others which are starting to get organised.

 

Many wealth management and advisory firms have come up, who are able to reach these family offices in a more effective way.  But are we seeing too many funds raising too much capital?

 

‘‘There’s a big need for early stage capital. In the US, the size of the VC market is $25-26 billion and the seed capital of $22 billion. As opposed to that, we are at a pittance. The game has not even started here,” says another VC. Besides, bigger VC firms like Accel, Sequoia also do seed-stage deals, but mostly do VC.

Source: http://www.business-standard.com/article/economy-policy/smaller-vc-firms-ride-on-sidbi-and-local-investors-117030900003_1.html