India Agri Business Fund invests Rs 100 crore in Parijat Ind

Rabobank-promoted private equity fund ‘India Agri Business Fund II’ has invested around Rs 100 crore in agrochemical firm Parijat Industries to acquire a minority stake.

Rabo Equity Advisors, the investment advisors for PE fund ‘India Agri Business Fund II’, announced an “undisclosed investment” into Parijat Industries to acquire minority stake. Sources said that an investment of about Rs 100 crore has been made in Parijat Industries.

This is the second investment by India Agri Business Fund II, Rabo Equity advisors said in a statement. The first investment, which was also of about Rs 100 crore, was announced last week in Cremica Food Industries.

India Agri Business Fund II is a USD 200 million private equity fund targeted at expansion/growth of Indian food and agri-business companies in India across the value chain.

The fund sponsored by Rabobank along with pedigreed anchors namely CDC Group and Asian Development Bank.

Commenting on the investment, Rabo Equity Advisors CMD Rajesh Srivastava said that it expects Parijat to be a leading agrochemical player in the high potential sector. “We are especially excited at the company’s export forays and new products expected to be launched in the domestic market over the next few years,” he added.

Parijat is looking to achieve sales of Rs 1,500 crore by 2021 and also expand its domestic distribution network to 10,000 retail points in three years from 4,500 at present. “Our team at Parijat is committed to exponentially growing its domestic presence besides the international footprint. We are delighted to have Rabo Equity as our partner and hope to leverage their extensive domain knowledge and global outreach in the food and agri sector,” said Keshav Anand, Chairman & Managing Director, Parijat Industries.

Rabo Equity Advisors currently advises two funds in India, IABF-I and IABF-II. India Agri Business Fund I, a USD 120 million fund which is invested in 10 companies across sectors like biotechnology, warehousing, edible oils, dairy and basmati rice.

 

Source: http://www.moneycontrol.com/news/business/india-agri-business-fund-invests-rs-100-croreparijat-ind_6839841.html

India, US to expand economic cooperation, break down trade barriers

India and the US today vowed to expand economic relation between the two nations and explore new opportunities to break down barriers to facilitate movement of goods and services.

The leaders of the two countries resolved to pursue US- India Totalisation Agreement and enhance engagement on intellectual property rights with a view to promote innovation and creativity.

“In order to substantially increase bilateral trade, they (leaders) pledged to explore new opportunities to break down barriers to the movement of goods and services, and support deeper integration into global supply chains, thereby creating jobs and generating prosperity in both economies,” said the joint statement issued after a meeting between Indian Prime Minister Narendra Modi and US President Barack Obama.

They look forward to the second annual Strategic and Commercial Dialogue in India later this year to identify concrete steps in this regard, it added.

Highlighting the strong and expanding economic relations between the US and India, the leaders committed to support sustainable, inclusive, and robust economic growth, and common efforts to stimulate consumer demand, job creation, skill development and innovation.

It was decided to continue discussion later this year on the US-India Totalisation Agreement.

The ‘Totalisation Agreement’ seeks to do away with double taxation of income with respect to social security taxes.

Under this agreement, professionals of both the countries would be exempted from social security taxes when they go to work for a short period in the other country.

The two leaders also committed to make concrete progress on IPR issues by working to enhance bilateral cooperation among the drivers of innovation and creativity.

They also commended the increased engagement on trade and investment issues under the Trade Policy Forum (TPF) and encouraged substantive results for the next TPF later this year.

The leaders also welcomed the engagement of the US’ private sector companies in India’s Smart City programme.

The leaders resolved to facilitate greater movement of professionals, investors and business travellers, students, and exchange visitors between their countries to enhance people-to-people contact as well as their economic and technological partnership.

On the MoU for Development of an International Expedited Traveller Initiative (also known as Global Entry Programme) the statement said efforts will be made for entry of India into the said programme within three months.

 

Source: http://www.ptinews.com/news/7531712_India–US-to-expand-economic-cooperation–break-down-trade-barriers-.html

Japan banks enter ranks of biggest energy lenders

JapanJapanese banks, known for the risk-aversion that spared them the worst of the credit crisis, have quietly grown into some of the world’s largest energy lenders.

Mitsubishi UFJ Financial Group Inc (MUFG), Japan’s largest bank, disclosed last month it has become one of the biggest oil and gas lenders with 9.2 trillion yen, or about $85 billion, in exposure – $45 billion more than it had reported at the end of the year. Sumitomo Mitsui Financial Group Inc is not far behind with about $77 billion and Mizuho Financial Group Inc has about $48 billion, calculations based on the companies’ websites show.

The megabanks sought profits in the oil patch during the boom as Japan’s shrinking population and years of economic stagnation sapped the profitability of domestic lending. While energy is only a fraction of their business, souring loans have been a drag on earnings. MUFG sees full-year profit falling 11 per cent as negative interest rates squeeze loan profitability and bad-loan costs increase.

“Japanese banks were thought to have no exposure at all and all of a sudden they’re some of the most exposed companies around the world,” said Nicholas Smith, a strategist at brokerage CLSA Ltd in Tokyo who has covered Japanese equities for over 25 years. “Perhaps we shouldn’t be surprised, given their scramble to get overseas exposure.”

The longer oil remains around $50 a barrel, the worse it gets. MUFG and Sumitomo Mitsui reported in May that the cost of bad energy loans rose in the past 12 months to a combined $994 million. Sumitomo Mitsui said that number could rise in the next year. Mizuho didn’t disclose energy-related credit costs.

Brent gained 14 cents, or 0.3 per cent, to $52.65 a barrel on the London-based ICE Futures Europe exchange at 12:28 pm Singapore time.

“Considering that we have downgraded more than 100 rated energy companies globally since December 2015, the banks’ energy and resource-related exposures in this uncertain environment could create losses that would reduce their capital,” Raymond Spencer, an analyst for Moody’s Investors Service in Tokyo, wrote in a May 19 note.

With defaults on the rise, bank investors around the world have been demanding more information about energy lending. MUFG’s exposure jumped after the bank expanded its most recent disclosure to include refineries and pipelines, borrowers that were left out of previous reports.

“I don’t believe that proactively lending to the natural resource and energy sector is in itself a mistake,” said Nobuyuki Hirano, president of MUFG, at a May 16 briefing discussing the company’s financial results. He said the company has prepared “appropriately” for potential losses. One concern for Japanese lenders is the deteriorating finances of the US shale industry. During the boom, drillers that outspent cash flow even when oil was $100 a barrel tapped credit from Japanese banks that were pushing to expand overseas lending.

Then prices plummeted below $30. Since the start of 2015, 142 oilfield service companies and oil and gas producers have gone bankrupt, owing almost $62 billion, according to law firm Haynes & Boone.

Sumitomo Mitsui is among the lenders to Stone Energy Corp., which is in restructuring talks. MUFG and Mizuho are among Linn Energy LLC,’s creditors, company records show. Linn owed $2.55 billion on two credit lines when it filed for bankruptcy May 11. Mizuho was also a lender to Breitburn Energy Partners LP, which owed $1.2 billion on its credit line when it filed for bankruptcy May 15.

While these credit lines are split up among a dozen or more lenders, and collateral in the form of oil and gas reserves may mitigate any losses, the risk is adding up. MUFG said in April that its North American subsidiary has made $5.52 billion in loans to exploration and production companies. Almost half of those loans are now marked as “criticised,” a regulatory designation that means that, at best, the loans exhibit potential weaknesses and at worst will result in losses.

The size of Sumitomo Mitsui’s total oil and gas-related exposure to non-Japanese borrowers, which is the area most vulnerable to changes in oil prices, is 6 per cent of its total portfolio, Koichi Miyata, president of the group holding company, said at a results briefing in Tokyo on May 13. “And this is a diverse mix including oil majors, 85 per cent of which I think is fair to say is extremely good credit,” he said.

Mizuho said its bad debts in the energy and resource sector totalled about $279 million as of March. “Even based on oil prices at the moment, we’re absolutely not seeing the recording of any major concentration of credit costs,” Mizuho’s President Yasuhiro Sato said at a May 13 briefing on the bank’s financial results.

“I don’t think we need to be worried at the current point in time,” said Nana Otsuki, chief analyst at Monex Group Inc, a Tokyo-based online securities firm. “But we’ll need to watch risks more carefully next year, particularly if there are any movements in the price of oil.”

 

Source: http://www.business-standard.com/article/international/japan-banks-enter-ranks-of-biggest-energy-lenders-116060901307_1.html

After Italy & Greece, PE seeks to partner Indian lenders for bad loan portfolio

Storied asset manager KKR & Co has approached lenders like State Bank of India and ICICI Bank with a proposal to manage and create value from their loan portfolios to under-performing Indian companies. The American private equity investor will build a platform to deploy fairly long-term capital and operational expertise to turnaround troubled assets, with banks on board sharing the future upsides.

 

The proposal – discussed with a few public and private sector banks – is modelled on Pillarstone, a similar European platform created by KKR for stressed loans in markets like Greece and Italy . India’s central bank governor Raghuram Rajan has pushed lenders to purge bad loans and has urged global alternate asset managers to play a bigger role in easing India Inc’s bad loan crisis. But most Indian banks have opted for ‘fire sale’ of stressed assets to rival corporate houses rather than staying on course with a turnaround plan, though it would help these lenders unlock better value eventually.

“They are talking about jointly managing a portfolio of loans to these stressed companies as against acquiring a one-off asset. It involves sweating underlying assets to generate more value rather than writing down. This is also different than the prevailing approach by the under-capitalized asset reconstruction companies, which is more focused on asset-stripping,” said a source directly familiar with the matter. The discussions are ongoing but may not lead to any conclusive agreement with KKR, a second source cautioned.

When contacted, KKR declined to comment on the story. SBI and ICICI Bank too offered no comments. Traditionally, India’s public sector banks have stayed away from dealing with foreign investors in the stressed loan market.

Bulge-bracket global funds such as KKR, Brookfield Asset Management and Apollo Global management have looked at opportunities to acquire stressed assets put on the block by lenders. KKR was in contention to acquire Jaypee’s cement units, which was clinched by Aditya Birla-led UltraTech Cements for Rs 16,000 crore, mostly through a refinancing deal. KKR’s offer centred around acquiring 51% ownership (leaving the rest with lenders) and turning around operations under a new management team. The lenders would recoup a part of the loan upfront, while waiting for future upsides riding on a business rejig. The banks preferred a one-time deal offered by Birla’s UltraTech.

Brookfield’s acquisition of debt-laden Gammon’s road and power assets is one of the few recent instances where a global investor acquired assets of a stressed entity. “Indian lenders have opted for selling assets in distress rather than exploring ways to shore up value on troubled loans. Yesterday’s lenders have become today’s collectors. Hopefully, there will be a time when bankers will behave like bankers,” Anil Singhvi, a shareholder activist and co-founder of proxy advisory firm Institutional Investor Advisory Services (IIAS), said.

Last year, KKR along with Italian lenders UniCredit and Intesa Sanpaolo launched Pillarstone as a platform to help big corporate borrowers recover and grow. It later signed up with lenders such as Alpha Bank and Eurobank to expand the platform into Greece. Both Italian and Greek lenders have agreed to pool in about EUR 1 billion of loans each as part of the engagement with Pillarstone. KKR has said European Bank for Reconstruction and Development is also considering co-investing in the platform, which is planning to start operations into other European markets.

KKR has argued that Pillarstone is a “timely intervention” in European markets where hefty bad loans are hampering a broader economic recovery, a concern shared by policymakers in India as well. In recent weeks, the top 20 public sector banks have reported a cumulative loss of almost Rs 15,000 crore in the fourth quarter of the last fiscal. This was triggered by an unprecedented surge in provisioning for bad loans following the RBI’s asset quality review. The non-performing assets on their balance sheets is estimated at Rs 3 lakh crore.

“Nearly 15% of system assets are stressed and even if we optimistically assume that only a third of these stressed assets are going to be ultimately written off, that still means that nearly 30% the shareholders’ equity in the banking system is currently at serious risk,” Saurabh Mukherjea of Ambit Capital said in his latest research report. “The problem-facing public sector banks is more serious as 17% of their assets are stressed. It would imply that nearly 50% of the shareholders’ equity of PSBs will be written off by the end of FY18, requiring $30 billion (equivalent to nearly 1.5% of our GDP) in equity infusion. It is unlikely the government will find resources to recapitalize these ailing public sector banks,” Mukherjea added.

Source:http://economictimes.indiatimes.com/articleshow/52634610.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 

SEBI to make it easier for fund managers to move to India

To make it easier for the foreign fund managers keen to relocate to India, markets regulator SEBI is considering allowing them to function as ‘Portfolio Managers’ under an easier regulatory regime.

The move assumes significance in the wake of the government already having announced taxation incentives for the offshore fund managers willing to relocate to India.

A new section in the Income Tax Act provides that the fund management activity carried out through an Eligible Fund Manager (EFM) located in India and acting on behalf of an Eligible Investment Fund (EIF) would not constitute business connection in India of such a fund.

Following the issuance of notification by the tax department in this regard, SEBI held meetings with various stakeholders to discuss the registration framework for EFMs, during which several impediments were pointed out in the existing regulations for Investment Advisers and Portfolio Managers.

Subsequently, SEBI has decided to initiate a consultation process for changes to its norms for Portfolio Managers while putting in place a framework for allowing EFMs to act as Portfolio Managers to their EIFs.

A proposal in this regard would be put up for approval of SEBI’s board next week, a senior official said.

Among the proposed measures, an existing SEBI-registered Portfolio Manager will also be allowed to act as EFM with prior intimation from SEBI and subject to certain conditions.

SEBI also plans to put in place a procedure for registration of an existing foreign-based fund manager desirous of relocating to India, or as a fresh applicant.

Such applicants will be granted registration as Portfolio Managers to act as an EFM, provided they meet existing eligibility norms of being a body corporate, having net worth of Rs 2 crore, appointment of a Principal Officer and minimum two employees with requisite credentials.

The EFMs would be required to segregate the funds and securities of the EIFs from that of other clients, provide information to Sebi on a half-yearly basis, ensure compliance to the Prevention of Money Laundering Act and other regulations.

However, EFMs would be exempted from several provisions of the PMS Regulations with respect to the EIF, and would have to comply with the applicable regulatory and disclosure requirements of the jurisdiction of the EIF.

Source: http://economictimes.indiatimes.com/articleshow/52640330.cms

No funding for Adani project, says Australia PM

There will be no government funding for Adani’s $21.7-billion coal mine project, Australian prime minister Malcolm Turnbull said on Friday as he sought to assure a protester in fish costume that he took climate change “as seriously as you”.

Turnbull made these remarks during an election campaign in South Australia. An environmental protester dressed as a clown fish from animated movie Finding Nemo asked him to commit to no public funding for Indian mining firm Adani’s controversial project.

“Adani’s plan to build one of the world’s biggest coal mines in Australia has been hampered time and again. A federal court in August last year had revoked the original approval due to environmental concerns. In October last year, the project got a new lease of life after the Australian government gave its re-approval.

An email to Adani on Friday did not get any response. Analysts said the prime minister’s statement was a major policy shift by the Australian government as until now it had been looking at all sorts of angles to get financial support to the proposal, including the idea of the A$117-billion Future Fund stepping in. A$ is Australian dollar.

“Adani’s pivot into Australian solar project development is looking like a clear insight into how they are going to react. At least with the solar projects, they will have a multi-decade tax holiday in Australia, given they will probably end up having to write off their entire A$1.3-billion ($940 million) investment in Adani Mining Australia profit and loss to-date. This would have a major impact on shareholder equity of the listed Adani Enterprises Ltd, which stood at $2.03 billion on March 31, given Adani Mining Australia represents 46 per cent of the net book value of equity of the entire group,” said Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis (IEEFA).

The admission from the minister that Adani’s proposed Carmichael coal mine project will receive no government money removes one of the final remote funding options for the beleaguered project, he said.

Buckley said Adani Enterprises remained relatively heavily geared, with net debt of $2.6 billion representing 1.3 times book value of shareholders equity. And taking into account the 2015 accounts filed with Australian authorities, Adani Mining Australia Pty is entirely debt-funded and is operating with negative shareholder funds. Hence, financial leverage remains an insurmountable barrier to develop the Carmichael coal proposal. “Adani appears to have no capacity to undertake the high risk A$10-billion Carmichael coal proposal, particularly since the company is now well underway on its new $5-10-billion solar investment programme in India and abroad,” said Buckley.

Apart from Adani, GVK group and Lanco group are also stuck after buying coal mines in Australia.

The Adani group had said they would go ahead with the Australian project to supply cheap coal to Indian power stations. At the same time, Coal India’s production has touched a record high to provide coal to Indian power plants. Besides, with coal-based power plants now shutting down due to high pollution in the developed world, the future of coal mines look uncertain.

Danish companies keen to take part in Make in India

Denmark-based companies such as Danfoss, Grunfdfoss, sRamboll, Novo Nordisk and Novozymes are eyeing the benefits of Narendra Modi’s Make-in-India programme to set up their base in the country.

 

Indian ambasssador to Copenhagen Rajeev Shahare said Denmark has embarked on a number of steps to be ahead of the curve in doing business with India. “The Danish Confederation of Industries (DI) has an office in Mumbai; the Danish Trade Council (part of its Ministry of Foreign Office) has a strong representative office in Bangalore; Asia House in Copenhagen has commissioned a study on how to effectively participate in the Smart Cities project in India,” the ambassador told FE.

 

While many big companies like Danfoss and Carlsberg already have their units, some others are in the process of doing so. “One company is setting up a unit in Hyderabad for manufacturing of ocean cleaning pumps and equipment; another consulting company is exploring Mumbai for its regional office,” he said.

 

The Scandinavian country is keen on setting up production facilities in India taking advantage of India’s low cost of production, availability of technical and English speaking manpower and a compatible working environment, he added.

 

India can also partner Denmark and learn from its best practices in areas like health services, food technology, dairy management, agro services, solid waste management and waste water management.

 

There are around 125 Danish companies in India and probably all top companies have a strong presence — the shipping giant Maersk (AP Moller) which also developed the Pipavav port and is now looking for investments in ports on the eastern coast; Danfoss, Grunfdfoss, Ramboll, leading pharma company Novo Nordisk etc. The Danish companies operating in India are directly or indirectly providing around two lakh jobs to locals here.

 

According to Statistics Denmark, the Danish FDI in India was $854 million in 2014, $731 million in 2013 compared to $931 million in 2012 (up from $877 million in 2011). Major Danish investments in India have been made in sectors such as manufacturing, trade and transport, financial and business services.

 

On the other hand, the Indian investment in Denmark were $71 million in 2014, $89 million in 2013 compared to $103 million in 2012 (up from $112 million in 2011) (Source: Statistics Denmark). Around 30 Indian companies have a presence in Denmark. Of them, 24 are IT companies, two belong to life sciences field and four are diversified mainly in the renewable space.

 

There are some major success stories of companies from Denmark that need to be highlighted. “The largest Danish bank- Danske Bank has all its back end operations in India; the entire Kommune (municipal) operations of KMD are handled by an Indian software company,” according to Shahare.

Source: http://www.financialexpress.com/article/industry/companies/danish-companies-keen-to-take-part-in-make-in-india/269514/