US firm 8minutenergy to build solar facility in India

A US renewable energy company, 8minutenergy Renewables LLC, will set up 4 GW of solar power capacity in India.“8minutenergy Renewables will pursue a 4 GW solar photovoltaic project pipeline in India,” a statement from the White House said. “These utility-scale solar projects are expected to generate over 10,000 jobs in the construction phase in India.”

Founded in 2009 by Martin Hermann and Tom Buttgenbach, the California-based company has 330 MW of operating solar plants. Plants of total capacity of 400 MW are under construction, while another 3,000 MW are in the pipeline. These include an 800 MW solar farm at Mount Signal in California, claimed to be the world’s largest.

Another US company, SunLink Corporation “is partnering with Indian companies to deploy 1.4 GW of solar projects over the next five years,” the statement said. SunLink manufactures solar racking systems, or the frames on which modules are mounted. It also provides performance monitoring solutions.

In the meantime, the US has announced the setting up of a Clean Energy Finance Hub, which “will serve as a coordinating mechanism to focus US Government effort that, in partnership with leading Indian financial institutions, will increase renewable energy investment in India,” the statement said.

Source: http://www.thehindubusinessline.com/companies/us-firm-8minutenergy-to-build-solar-facility-in-india/article8714858.ece

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

Indian private bank new loans outpace state-owned rivals for first time

India’s privately owned banks are extending new loans faster than their state-run rivals for the first time ever, as government lenders struggle to bring surging bad loans under control.

New credit from private lenders amounted to Rs.3,50,000 crore ($52.4 billion) in the year to 31 March, taking their outstanding advances to Rs.17,90,000 crore, while state banks’ loans grew Rs.2,00,000 crore to Rs.51,20,000 crore, according to a finance ministry document, a copy of which was reviewed by Bloomberg News. Finance ministry spokesman D.S. Malik didn’t respond to two calls to his mobile phone on Tuesday seeking comment.

The stressed-loan ratio for state banks climbed to a 16-year high of 14.34% in the year through March, according to the document. Surging delinquent loans and inadequate risk buffers at India’s government-controlled lenders, which account for more than 70% of loans in the nation’s banking system, have been hindering Prime Minister Narendra Modi’s attempts to revive credit growth in Asia’s third-largest economy.

“Private sector banks will continue to take away market share from state-run banks in coming years,” Siddharth Purohit, a Mumbai-based analyst at Angel Broking Ltd., said by phone. “With limited capital and high bad loans, most state-run banks are not in a position to focus on loan growth.”

The private-sector banks’ faster loan growth is in line with a May 2014 estimate from a central bank-appointed committee, which predicted that the lenders’ share of total Indian banking assets will rise to 32% by 2025, from 12.3% in 2000.

Capital constraints.

Modi needs to revive bank lending as he strives to maintain the fastest growth rate among the world’s major economies. Indian credit grew 9.8% in the 12 months through 13 May, compared with an average of about 14% over the last five years, fortnightly central bank data compiled by Bloomberg show.

Timely capital infusions into constrained public sector banks will aid credit flow, the Reserve Bank of India (RBI) said in its monetary policy statement on Tuesday. Rules requiring government stakes of at least 51% have curtailed state banks’ ability to sell shares, while an audit of loan books by the RBI uncovered more soured debt, making them less capitalized than privately-owned lenders.

While some investors had anticipated the six-month-long central-bank audit, which ended on 31 March, to result in higher non-performing-asset (NPA) disclosures, the scale of losses and statements from bank executives highlighting the uncertain outlook for bad debt have surprised analysts. Thirteen state-owned lenders reported combined losses of Rs.18,000 crore for the year to March, finance ministry data shows.

Government lenders are the worst performers this year on the S&P BSE India Bankex Index, led by Punjab National Bank’s 32% slump and State Bank of India’s 6.4% drop. The gauge has gained 6.1% this year. Bloomberg

Source:  http://www.livemint.com/Industry/a9wEXC7uUXU0HpWgGYJEJM/Indian-private-bank-new-loans-outpace-stateowned-rivals-for.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