20 Nov 2015

Religare set to exit MF business

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In the midst of foreign entities exiting the Indian mutual fund segment, Invesco, a large global player in asset management, has decided to show a long-term commitment here.

Religare on Wednesday informed the stock exchanges that Invesco Ltd had agreed to raise its stake in Religare Invesco Asset Management Company to 100 per cent, from the existing 49 per cent. It could, say company sources, be a Rs 500-550 crore deal, to be finalised after regulatory clearances.

“Invesco had a call option to increase their stake to 100 per cent by March 2016. Invesco decided to announce it ahead of the deadline, so that the regulatory clearance could be in place (by then),” said a company official.

MANAGING ASSETS
Foreign players exiting MF

  • Goldman Sachs sold to Reliance MF
  • Pinebridge sold to Kotak AMC
  • ING sold to Birla Sunlife MF
  • Morgan Stanley to HDFC MF
  • Daiwa sold to SBI MF
  • Fidelity sold to L&T Finance

Foreign players increasing MF India presence

  • Invesco agrees to increase stake to 100% in Religare Invesco fund house
  • Nippon agreed to increase stake to 49% in Reliance Mutual Fund
  • Schroders acquired 25% stake in Axis Mutual Fund

The reason for the sale by Religare was not disclosed to the stock exchanges. Sources indicated it could be due to the promoters wanting to monetise some assets to meet other financial obligations. Religare’s shares reacted negatively to the announcement, with a fall of nearly two per cent on Thursday morning.

This deal marks the bucking of a trend, with seven foreign entities quitting the fund management space in the past seven years. The latest was the buyout of Goldman Sachs’ Indian asset management business by Reliance MF. Reportedly, Nomura is also planning to end its joint venture with Life Insurance Corporation, in LIC Nomura MF. “We are excited about the long-term prospects of the important Indian market. By taking full ownership of this business, we will further deepen our presence in India and enhance our ability to meet client needs across the globe,” said Andrew Lo, head of Asia-Pacific for Invesco.

Globally, Invesco manages Rs 52.8 lakh crore. Outside of America, it is the largest fund manager in Britain and also has operations in other parts of Europe, Canada and Asia.

Religare Invesco MF managed Rs 21,593 crore of assets as of end-September. Invesco first invested in Religare in 2013 when the assets under management stood at Rs 14,000 crore. The global firm had bought stake from the promoters, Delhi-based brothers Malvinder and Shivinder Singh, for Rs 450 crore.

Invesco says it has decided to continue with the same management team, headed by Saurabh Nanavati as chief executive.

“We will look at introducing more products from Invesco’s global portfolio which will be suitable to the sensibilities of Indian customers,” said another company official.

Source: http://www.business-standard.com/article/markets/religare-set-to-exit-mf-business-115111900827_1.html

17 Nov 2015

India, Japan sign action plan to double investments in 5-years

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The governments of India and Japan signed an agreement on Thursday for doubling of Japanese investment into Indian firms in the next five years, and  boosting two-way trade. The signatories were Commerce and Industry Minister Nirmala Sitharaman and Japan’s minister for economy, trade and industry, Yoichi Miyazawa.

The plan was categorised into five broad areas: development of selected townships in India, promotion of investment and infrastructure development, further development and cooperation in information technology, enhancing cooperation in strategic sectors and Asia-Pacific economic integration.

Signing of the action plan is seen “as a step further in improving the trade relationship between India and Japan as a follow-up of Prime Minister Narendra Modi’s visit to Japan last year,” stated a release quoting Miyazawa.

According to Sitharaman, the agenda was in line with PM’s Make in India plan that will further investments from Japan into the country’s manufacturing sector.

Last year, the Department of Industrial Policy and Promotion under the ministry of commerce and industry had set up a mechanism to fast-track Japanese investments named ‘Japan Plus.’

During Modi’s visit, Japanese Prime Minister Shinzo Abe had set a target of 3.5 trillion yen ($33.5 billion) of public and private investment and financing from Japan including official development assistance to India to be made over five years. There are already 1,209 Japanese firms operating in India out of which 137 have started their operations after October 2013.

Japan is the fourth largest foreign direct investment (FDI) contributor to India, with major interests in pharmaceuticals, automobiles, and services sectors accounting for 7.46 per cent of total FDI equity inflows into India. During April 2000-November 2014, FDI from Japan into India stood at $17.55 billion.

Under the Tokyo Declaration for Japan-India Special Strategic and Global Partnership, Modi and Abe have set a target of doubling Japanese FDI and the number of Japanese firms in India by 2019.

Source: http://www.business-standard.com/article/economy-policy/india-japan-sign-action-plan-to-double-investments-in-5-years-115043000401_1.html

15 Nov 2015

Optimistic About India Growth Prospects: IMF

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IMF

Confident that the Indian economy is increasingly on a stable footing, the International Monetary Fund (IMF) on Sunday said further progress is required on the long-standing supply bottlenecks and for achieving faster and more inclusive growth.

“We are optimistic about India’s prospects and view the economy being on an increasingly stable footing,” said Kalpana Kochhar, deputy director of the IMF’s Asia and Pacific department.

“Inflation has declined, the current account deficit is in check, international reserves are ample and economic growth is picking up,” she added.

Listing out various positive developments, Ms Kochhar said a number of important economic and structural reforms have also been initiated.

These include diesel price deregulation, steps to create more flexible labour markets (particularly at the state level), coal sector reforms, adoption of the flexible inflation targeting framework by the Reserve Bank of India (RBI), increasing infrastructure spending, and enhancing financial inclusion, Ms Kochhar told PTI in an interview.

“But further progress is needed to relax long-standing supply bottlenecks (especially in the energy, mining and power sectors) and achieve faster and more inclusive growth,” she said.

The IMF has often said that India is among the few bright spots in an otherwise gloomier world economy.

In a recent report published ahead of the G20 Summit, which began in Turkey on Sunday, the Washington-based multilateral institution said India’s growth will benefit from recent policy reforms, a consequent pickup in investment and lower commodity prices.

It also projected a 7.5 per cent growth rate for India in 2016, as against China’s 6.3 per cent.

However, for the current 2015 year, the IMF has projected 7.3 per cent growth rate, which is 0.2 per cent less than its projection made for the year in July.

“Growth in China is expected to decline as excesses in real estate, credit, and investment continue to unwind. India’s growth will benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices,” the report said.

Source: http://profit.ndtv.com/news/economy/article-optimistic-about-india-growth-prospects-imf-1243581

15 Nov 2015

Modi government announces FDI (Foreign Direct Investment) reforms in 15 sectors

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Giving the much needed reforms impetus to the economy, Prime Minister Narendra Modi-led NDA government on Tuesday announced Foreign Direct Investment (FDI) reforms in as many as 15 sectors.

According to the government’s release, “The crux of these reforms is to further ease, rationalise and simplify the process of foreign investments in the country and to put more and more FDI proposals on automatic route instead of government route where time and energy of the investors is wasted.”

These FDI reforms are set to benefit sectors such as agriculture and animal husbandry, plantation, defence, broadcasting, civil aviation and manufacturing. “Further refining of foreign investments in key sectors like construction where 50 million houses for poor are to be built. Opening up the manufacturing Sector for wholesale, retail and e-Commerce so that the industries are motivated to Make In India and sell it to the customers here instead of importing from other countries,” the release added..

The proposed reforms also enhance the limit of Foreign Investment Promotion Board (FIPB) from current Rs 3,000 crore to Rs 5,000 crore. The proposal also contains many other long pending corrections including those being felt by the limited liability partnerships as well as NRI owned companies who seem motivated to invest in India. Few other proposals seek to enhance the sectoral caps so that foreign investors don’t have to face fragmented ownership issues and get motivated to deploy resources and technology with full force.

India got FDI of $19.39 billion in the April-June period, according to government data, up 29.5% over the year earlier. The Modi government has been pushing hard to drum up overseas investment, easing FDI regulations in various sectors including the railways, medical devices, insurance, pension, construction and defence.

Last week, ET had reported that the government plans to launch a series of policy reforms, signalling its intent to get moving again on economic changes and putting the Opposition on notice before Parliament convenes for the winter session.

Key to the Narendra Modi government’s renewed development push will be power, labour and infrastructure, three senior government officials had told ET. Among the highlights are a revival package for power distribution companies, freeing up labour rules and a possible push for the railways, ET had said in its report.

The road map for the phasing out of corporate tax exemptions and reduction in the tax rate to 25% is being drawn up. Besides this, the Startup India, Standup India plan and the rollout of the National Investment and Infrastructure Fund (NIIF) are also being worked on.

A simpler foreign direct investment (FDI) policy, further easing of the external commercial borrowing (ECB) regime and changes in the public-private partnership (PPP) framework to attract more private investment could also announced.

Source: http://economictimes.indiatimes.com/articleshow/49735873.cms

 

7 Nov 2015

RBI allows foreign currency-rupee swap transactions

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RBI said that such swap transactions could be undertaken by the MFI/IFI concerned on a back-to-back basis with an authorised dealers (AD) Category-I bank in India

The Reserve Bank of India (RBI) on Thursday allowed residents having a long-term foreign currency liability to enter into foreign currency-rupee swaps with multilateral or international financial institutions (MFI/IFI) in which the government of India is a shareholding member, subject to certain conditions.

RBI said that such swap transactions could be undertaken by the MFI/IFI concerned on a back-to-back basis with an authorised dealers (AD) Category-I bank in India. The tenure of such swaps should be at least three years, according to a notification issued by the central bank.

In the event of a default by the resident borrower on its swap obligations, the MFI/IFI concerned will have to bring in foreign currency funds to meet its corresponding liabilities to the counter-party AD Cat-I bank in India, the central bank said.

The AD Cat-I bank will have to report the FCY-INR swaps transactions entered into with the MFIs/IFIs on a back-to-back basis to CCIL reporting platform, including the details of the foreign currency borrower. Furthermore, the banks will have to bring the contents of this circular to the notice of their constituents and customers concerned.

5 Nov 2015

Services sector growth hits 8-month high in October

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India’s services sector activity touched an eight-month high in October driven by a significant rise in new business orders even as growth in manufacturing output eased, a Nikkei survey said.

The Nikkei Business Activity index climbed to 53.2 in October, from 51.3 in September, as fresh orders expanded at a solid pace and were most pronounced since February.

“Services companies saw a faster rise in new businesses than their manufacturing counterparts,” said Pollyanna De Lima, economist at Markit, which compiled the survey.

Meanwhile, the seasonally adjusted Nikkei India Composite PMI Output index, which maps manufacturing and services sectors, rose to 52.6 in October from 51.5 in September helped by new businesses.

A reading of 50 divides growth and contraction.

“India’s economic growth shifted into higher gear in October driven by the services sector. Although manufacturing production continued to expand, the growth eased and was sluggish by historical standards,” Lima added.

Lima noted that “the upward trend in private sector output reflected stronger inflows of incoming new works, one that was most marked since March”.

Going forward, services business sentiment regarding the 12-month business outlook remained positive in October.

Notwithstanding the growth in services activity, October data indicated that services sector employment remained unchanged. Around 98 per cent of respondents reported no change in payroll numbers since the preceding month.

“Private sector firms remained wary of costs and payroll numbers, once again, were unchanged,” Lima said.

On the prices front, the Nikkei survey said average input costs rose in both services and manufacturing sectors, albeit at a slower pace.

Reserve Bank Governor Raghuram Rajan on September 29 effected a more-than-expected interest rate cut of half a per cent to spur the economy.

Moreover, RBI has also lowered its economic growth forecast for the current fiscal to 7.4 per cent, from its previous projection of 7.6 per cent.

The April-June quarter GDP slipped to 7 per cent, from 7.5 per cent in the preceding quarter.

Source:http://economictimes.indiatimes.com/articleshow/49654978.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

5 Nov 2015

Private equity investors discover gold mine in e-commerce backend

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Private equity investors, who have stayed away from investing in online retail companies, have instead quietly reaped a windfall by backing logistics companies providing back-end support in the e-commerce rush.

In the latest deal, Peepul Capital recorded an over six-fold return on its investment in Ecom Express according to people aware of the transaction. Earlier this year Multiples Alternate Asset Management also made a partial exit from Delhivery, when the company raised fresh capital led by Tiger Global Management.

“These kinds of returns are only possible if there is multiple re-rating of both a company and a sector, which is not very common,” said Prakash Nene, MD at Multiples, who declined to comment on specifics of the deal.

The PE firm made a partial exit after Tiger Global led a round of about Rs 542 crore in the Delhi-based firm in May.

Peepul Capital is estimated to have earned Rs 500 crore on an initial investment of Rs 80 crore in Ecom Express. The firm made an exit when the logistics firm raised fresh capital in a round led by Warburg Pincus according to two people privy to the details.

The returns have been even higher for early seed and angel investors in these two companies, which handle delivery for top online retailers like Flipkart, Amazon and Snapdeal.

According to filings with the ministry of corporate affairs (MCA), seed fund Oliphans Capital bought shares in Ecom Express at around Rs 70 per share in 2013. The fund is estimated to have sold some of these shares to Warburg Pincus during the investment round in June this year. Regulatory filings indicate Warburg — through its unit Eaglebay Investments — paid Rs 2,276 per share of Ecom Express; this would imply that Oliphans netted a return of over 30 times.

“It’s only logical that investment is also about exits,” said Anish Jhaveri, MD at Oliphans, declining to comment on returns made by his firm. “When we invested around $1 million in the company (Ecom Express) there were just four people in front of us who had just quit Blue Dart.”

Ecom Express was founded in 2012 by TA Krishnan, Sanjeev Saxena, K Satyanarayana and Manju Dhawan who had launched the e-tailing business at Blue Dart. The Delhi-based company expects to deliver goods in over 10,000 pin codes covering more than 1,500 towns and cities, across the country in the next few years.

The increasing interest in these companies is driven by the rapid growth in logistic support for online retail. A recent report on the Indian internet sector by brokerage IIFL estimates that the order volume for e-commerce shipments will increase 13x by 2020, with overall volume of e-commerce orders amounting to 2,000 tonnes per day.

Investors are of the view that just as tower companies gained in the telecom boom, the online retail rush will benefit from the back-end support companies.
“There are a lot of enablers which are important from a shadow driving perspective broadly similar to what telecom towers are to telco industry and EPC companies are to infrastructure,” said Sreeni Vudayagiri, investment director at Peepul Capital, a PE firm with $700 million under management which primarily invests in mid-sized consumption and manufacturing businesses.

Source: http://timesofindia.indiatimes.com/tech/tech-news/Private-equity-investors-discover-gold-mine-in-e-commerce-backend/articleshow/49656651.cms