SEBI allows foreign venture funds to register as FPIs, plans to finalize listing norms for startups soon

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Capital markets regulator SEBI has said that Foreign Venture Capital Investors (FVCIs) can be granted registration as a foreign portfolio investor if they meet certain guidelines.

The announcement came following a query from designated depository participant seeking clarification with regard to any restrictions on applicants, holding registration as a FVCI, from obtaining registration as a FPI (Foreign Portfolio Investor).

FVCI is an investor incorporated or established outside of India who can invest either in a domestic venture capital fund or a venture capital undertaking (domestic unlisted company), while FPI comprises of FIIs, sub-accounts and Qualified Foreign Investors.

In the circular, Securities and Exchange Board of India (SEBI) said depository participants may consider an applicant, holding FVCI registration, for grant of registration as a FPI.

The capital markets regulator “do not expressly prohibit FVCI from holding registration as a FPI.” However, the registration is subject to certain criteria like the applicant complies with the eligibility criteria as prescribed under the FPI regulations.

Other criteria include funds raised, allocated and invested must be clearly segregated for both registrations, reporting of transactions must be done separately and there should be clear segregation of securities held under FVCI and FPI registrations.

“Separate accounts must be maintained with the custodian for execution of trades. However, such an applicant shall have same custodian for its activities as FPI and FVCI,” SEBI noted.

Also, to attract technology startups to the domestic stock markets, SEBI is all set to make their listing and fund raising requirements easier. The final norms, which would be presented for approval from the SEBI’s board later this month, have been finalised after taking into account suggestions from all stakeholders to the draft guidelines released in March, sources said.

Asking technology startups founded by Indians to remain within the country, SEBI Chairman U K Sinha, last weekend, had promised an easier set of regulations for them to get listed and raise funds from the domestic stock market. “We are going to take a decision very soon in this regard. We are looking into how to make it easier for them to raise money,” Sinha had said.

The new norms are expected to help startup companies raise funds within India and stop their flight to overseas markets. “What is happening today is most of these startups, who have been reasonably successful, they are getting attracted to the New York Stock Exchange or Singapore Stock Exchange,” Sinha had said.

“They do not want to get listed here for varieties of reasons. They are getting attracted to foreign markets. Our effort is to provide a mechanism that they get listed in India itself, for the benefit of the country and for the benefit that the country’s startups remain within the country,” he had added.

Under the new norms, the entire pre-issue capital is expected to be locked-in for a period of six months for all shareholders. At present, promoters are required to offer a minimum of 20 per cent of post-issue capital as lock-in for a period of three years. Besides, SEBI is expected to make easier disclosure norms for startup listings. While filing the draft offer document with the capital market watchdog, such firms will only need to disclose broad objectives in line with the major international jurisdictions.

SEBI has already made it easier for the Small and Medium Enterprises (SMEs) to raise money from capital markets. “SMEs are primarily dependent on bank loans today and we know that banks have their own limitations. We have created separate platforms for SMEs at the two top exchanges BSE and NSE. We have balanced the requirement of safeguarding the investors and also facilitating the fund requirement of the SMEs.
Source: http://yourstory.com/2015/06/sebi-allows-foreign-venture-funds/

Japan’s SoftBank wins first solar project in India

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Marking its debut in the Indian solar sector after its investment announcement of $20 billion, Japan’s SoftBank won its first solar power project in India. The Japanese firm won the 350 megawatt (Mw) project, under the Jawaharlal Nehru National Solar Mission (NSM), through its joint venture (JV) company SBG Cleantech.

SBG Cleantech bid the lowest tariff of Rs 4.63 per unit to win the entire tendered capacity of 350 Mw. This is the lowest bid this year for solar power. Last month, US firm SunEdison had won a 500-Mw solar power park in Andhra Pradesh at the same tariff.

Indiabulls’ Yarrow Infrastructure, Azure Power, Reliance CleanGen, Goldman Sachs-backed ReNew Power, US’ First Solar and China’s Trina Solar were also in the fray.

“Our goal is to create a market-leading renewable energy company, to fuel India’s growth with clean, reliable and affordable sources of energy. I am glad we could open our account with this win. This project will immensely contribute to the Prime Minister’s vision of meeting the country’s energy demands through clean sources and India’s commitment to providing a safe environment, following the recent Paris convention,” said Nikesh Arora, president and chief operating officer of SoftBank, in a statement.

In June this year, SoftBank had tied up with Foxconn and Bharti Enterprises to invest in the Indian solar energy sector, committing $20 billion. This is its second bid participation after the AP solar park and the first win for any power project through its JV, SBG Cleantech.

“SoftBank is establishing itself as a serious player. The company is likely to be a strong contender in the upcoming national bids as well,” said Jasmeet Khurana, associate director (consulting), Bridge to India.

SBG Cleantech has Bharti veterans Manoj Kohli as executive chairman and Raman Nanda as chief executive. The company is headquartered in New Delhi.

“Of the 100 gigawatt (Gw) target set by the PM, the SoftBank venture will look at solar power generation of 20 Gw. The investment will be made through the next 10 years. Acceleration will depend on the support of the central and local governments, and NTPC,” SoftBank founder & CEO Masayoshi Son had said in June during the launch of the joint venture.

According to market experts, the recent bids show there are only 10-12 developers who have the appetite to continuously try and take up large projects at current tariff levels, which has gone below Rs 5 a unit.

“The government and power distribution companies must be happy about the results and this might be good for continued policy support for new allocations across India. With such results, the states are likely to be much more willing to allocate land to solar parks and take the NSM route to attract solar investments,” said Khurana.

Sun Power

Company Tariff                                                              (Rs per unit)

SBG CLEANTECH LTD (SoftBank)                                      – 4.63

Yarrow Infrastructure Limited (IndiaBulls)                          – 4.64

Azure Power India Private Limited                                        – 4.76

Reliance CleanGen Limited                                                     – 4.88

ReNew Solar Power Private Limited                                       – 5.17

MIRA ZAVAS PRIVATE LIMITED (China’s Trina Solar)  – 5.18

Marikal Solar Parks Pvt Ltd (US’ First Solar)                       – 5.34

*Parent  institutions in brackets

 

Source: http://www.business-standard.com/article/companies/japan-s-softbank-wins-first-solar-project-in-india-115121500246_1.html

Integrated e-Form INC-29 for Company Incorporation and Ease of doing business

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INC 29Analysis of integrated e-Form INC-29 for Company Incorporation and Ease of doing business

With the introduction of the INC-29, the Ministry of Corporate Affairs (MCA) has begun to make good on its promise to improve India’s ranking on the World Bank’s Ease of Starting a Business Index to within the top 50 from the current 158.

The INC-29 form for company registration, combines the application for DIN allotment, name reservation, incorporation and even PAN & TAN, while making the process faster and simpler. As the entire incorporation process is in a single form, correct filing could mean approval in 48 hours. Compared to the old process, this helps in formation of company saving a lot of time, if properly implemented.

Purpose of the eForm – eForm INC-29 deals with the single application for reservation of name, incorporation of a new company and/or application for allotment of DIN. This eForm is accompanied by supporting documents including details of Directors & subscribers, MoA and AoA etc. Once the eForm is processed and found complete, company would be incorporated with Corporate Identification Number (CIN) and the Certificate of Incorporation would be issued. Also DINs gets issued to the proposed Directors, who do not have a valid DIN. Maximum three Directors are allowed for using this integrated form for allotment of DIN while incorporating a company.

Key Features of e-form INC-29 

  1. The integrated e-Form INC-29 is available with effect from 01.05.2015 for One Person Company, Private Company as well as Public Company.
  2. INC-29 does away with filing of multiple applications/forms saving time and payable fees.

It combines the processes relating to:-

  • Allotment of Director Identification Number (DIN) (up to three Directors),
  • Incorporation of a company, and
  • Appointment of first Directors of the company.

3. The new e-Form does away with the need for reserving a name for the company prior to applying for its incorporation.

  1. Declarations are in-built in the e-Form. Separate attachments containing such declarations are not required.
  1. The e-Form is enabled for future integration with e-Biz platform of DIPP for generating applications for PAN, ESIC and EPFO numbers on the platform and therefore provides a single interface for these applications also.

 

Forms no longer to be filed individually as per the new Form INC 29:

Continued

Japanese PM assures stronger biz ties with India

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Prime Minister Shinzo Abe on Friday urged Indian industry to invest in Japan even as he highlighted Japan’s interest in the development of India’s infrastructure.

“Japan is going to realise a GDP growth of about $100 trillion. So I want you to come and see a rejuvenated Japan. Like PM Modi, I will also tell you, come, invest in Japan,” he said.

Abe was addressing a seminar on India-Japan Innovation jointly organised by Confederation of Indian Industry (CII) and Japan External Trade Organization (JETRO).

“Common to all of PM Modi’s initiatives – Skill India, Digital India, Smart City – is protection of people, taking care of them and in return taking care of your customers. This is the key to growth,” he added.

Bullet train

“If Shinkansen – the bullet train – starts plying in India then the distances between cities will be shorter contributing to growth with pollution-free technology. We have made financing easier for Indian businesses. We have all resources available for them,” Abe said. “India and Japan should cooperate more in innovation,” he added.

Abe, who is a on a three-day visit here, will be holding the Annual Summit meeting with Prime Minister Narendra Modi on Saturday. Prior to that, both leaders will also be meeting business leaders and captains of Indian and Japanese industry.

The Japanese Premier, who last visited India in January 2014, is accompanied by a high-powered delegation consisting of NEC Corporation, Fujifilm, East Japan Railway, Hitachi Ltd. and LIXIL Corporation among others.

Japan and India are expected to sign a $15-billion bullet train project.

This will be set up between Mumbai and Ahmedabad. The announcement will be made by both the leaders on Saturday. Abe will be addressing the business community again on Saturday along with Modi. Later in the day both leaders will hold the Annual Summit meeting before leaving for Varanasi together.

Two-way trade between India and Japan stood at $15.51 billion in 2014-15 from $13.72 billion in 2010-2011 when both sides had signed the Comprehensive Economic Partnership Agreement (CEPA). Even under the CEPA, while imports from Japan to India have risen sharply, exports from India to that country have not witnessed a proportionate rise.

In fact in the last fiscal, exports to Japan from India contracted 21 per cent to $5.38 billion compared to $6.81 billion in 2013-14.

Source: http://www.thehindubusinessline.com/todays-paper/tp-news/japanese-pm-assures-stronger-biz-ties-with-india/article7978059.ece

Singapore pips Mauritius as India’s top FDI source

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Singapore has replaced Mauritius as the top source of foreign direct investment (FDI) into India during the first half of the current financial year.

During April-September 2015, India has attracted $6.69 billion (Rs 43,096 crore) FDI from Singapore while from Mauritius, it received $3.66 billion (Rs 23,490 crore), according to data from the Department of Industrial Policy and Promotion (DIPP).

Foreign investment from Singapore was $2.41 billion in the year-ago period.

According to experts, the Double Taxation Avoidance Agreement (DTAA) with Singapore incorporates Limit-of-Benefit (LoB) clause, which has provided comfort to foreign investors based there to invest in India.

“Investors are preferring Singapore to Mauritius as the LoB clause in India-Singapore treaty provides substance and certainty,” said Krishan Malhotra, head of tax and an expert on FDI with corporate law firm Shardul Amarchand and Mangaldas.

FDI from Singapore during the first six months of the current financial year is also more than what it had invested in India for the whole of 2013-14 ($5.98 billion). India had attracted $6.74 billion foreign investment during 2014-15.

Overall, Singapore accounts for 15 per cent of the total FDI India received between April 2000 and September 2015. However, Mauritius makes up 34 per cent of FDI during the same period.

Sectors that attracted the highest foreign investment during April-September 2015 include computer software and hardware ($3.05 billion), trading ($2.30 billion), services and automobile ($1.46 billion each) and telecommunications ($659 million).

Foreign investment is crucial for India, which needs about $1 trillion by March 2017 to overhaul infrastructure such as ports, airports and highways, and to boost growth.

Source: http://www.business-standard.com/article/economy-policy/singapore-pips-mauritius-as-india-s-top-fdi-source-115120700040_1.html

$2 trillion rated debt under risk due to environment issues: Moody’s

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Aside from these legacy issues, the underlying asset trend for Indian banks will be stable because of a generally supportive operating environment, said Moody’s Vice President.

Many sectors, other than power and coal, face environmental risks that could translate into credit risk, according to Moody’s Investor Service. These include automobiles, oil & gas, mining, steel, and commodity chemicals. Moody’s has identified 11 sectors with around $2 trillion in rated debt as having credit exposure to environmental risks in the next five years.

At the same time, 57 sectors, representing $59 trillion of rated debt, are considered low risk, with environmental risks unlikely to materially impact credit quality. While some like telecommunication operate with fundamentally low exposure to environmental risks, others such as banks and insurance companies, have business diversity to mitigate their current exposures.

Unregulated power generators, which do not receive the benefits of cost recovery from their customers, coal mining and coal terminals, are the most exposed. Moody’s has developed a heat map that qualitatively scores the relative exposure of 86 sectors globally to environmental risks, in terms of both the materiality and timing of any likely credit effects. The amount of rated debt covered by this sector review is $67.9 trillion.

Environmental risks have been classified into two broad categories — the effects of environmental hazards, and the consequences of regulation designed to prevent or reduce those hazards.

Another set of 18 sectors, accounting for $7 trillion in rated debt, face environmental risks that could be material, but over five or more years. In this “emerging, moderate risk” category are developing economy sovereign and regional governments, integrated oil & gas companies and regulated power generation utilities. These have a clear exposure to environmental risks that could affect their credit quality. However, it is less certain that the identified risks will develop in a way to impact credit ratings for most issuers in these sectors.

“The longer runway to respond to risks could provide time to implement policy changes, adjust business models or financial profiles, or develop technological or lower-cost solutions, mitigating the impact of such risks,” said the report.

Sovereigns with developing economy as well as regional and local governments face increasing infrastructure challenges to manage environmental risks from water shortages, pollution or natural disasters. Unlike the overall scores, the sub-category scores were assessed based on the sector’s general level of exposure to that particular environmental risk, rather than any potential to affect ratings.

Source: http://www.business-standard.com/article/economy-policy/2-trillion-rated-debt-under-risk-due-to-environment-issues-moody-s-115113000680_1.html

UAE earmarks key sectors like railways, housing, ports, roads for investments in India

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It is part of the $ 75 bn announced during Prime Minister’s August trip to the Gulf nation that marked a paradigm shift in bilateral strategic and economic partnership.

Oil-rich United Arab Emirates (UAE) has identified key sectors including railways, housing, ports, roads and renewable energy (mainly solar) for investments in India as part of the $75 billion announced during Prime Minister’s August trip to the Gulf nation that marked a paradigm shift in bilateral strategic and economic partnership.

UAE had announced to investment $75 billion for various sectors in India when Narendra Modi made a two-day trip to Abu Dhabi and Dubai last August — first by an Indian PM to the Gulf nation in three decades. Earlier this month, Finance Minister Arun Jaitley was in UAE to discuss this investment proposal among other issues and met senior officials of the Abu Dhabi Investment Authority (ADIA), one of the largest sovereign funds in the Gulf nation, officials from Abu Dhabi said.

ADIA would contribute to the $75-billion fund allotted for investments in India in sectors including railways, roads, housing, ports and renewable energy (solar initiatives) where the Modi government is seeking foreign direct investment to boost economy, officials from the Gulf state indicated. The Indian PM is likely to announce a solar mission at the Paris climate change summit.


However, UAE is pushing to begin the process of investments in near future by various ministries in keeping with Modi’s promise. “India is now a strategic partner for UAE and Abu Dhabi wants to invest in India’s growth and seeking expedition of the process on the ground,” a person familiar with the developments told ET.
With this goal in mind Jaitley met Sheikh Hamdan Bin Rashid Al Makhtoum, Minister of Finance, UAE, to discuss issues of mutual cooperation in the field of economic and trade development during his trip there. His visit follows that of UAE’s Foreign Minister to India within weeks of Modi’s trip to Abu Dhabi and this shows the seriousness of both nations which have now expanded their counter terror cooperation amid growing threat from IS and other terror groups in South Asia. Strengthening counter-terror cooperation also figured during Jaitley’s deliberations with UAE leadership.

The finance minister also invited large participation and investment in recently constituted National Investment and Infrastructure Fund (NIIF) by the Sovereign Wealth Funds and Pensions Funds of the UAE. He said the investment in NIIF will ensure good returns on investment as the government will invest these funds in infrastructure projects.

Source: http://economictimes.indiatimes.com/articleshow/49976782.cms