Centre explores new law to shield global investors
The Centre is exploring a law to protect investments affected by state governments’ decisions to scrap contracts as it moves to reassure foreign investors who are riled up by Andhra Pradesh’s plan to annul some clean energy agreements, Mint reported. In a controversial move, the Y.S. Jagan Mohan Reddy-led Andhra Pradesh government decided to reopen renewable energy contracts inked under the previous state government led by his rival N. Chandrababu Naidu, drawing criticism from the Union government, as well as governments of France, Canada and Japan. Investors claimed that Andhra Pradesh’s decision could put at risk 5.2 gigawatts (GW) of solar and wind energy projects, with an estimated debt exposure of more than ₹21,000 crore. Global investors in Andhra Pradesh’s clean energy space include Goldman Sachs, Brookfield, SoftBank, Canada Pension Plan Investment Board, Caisse de dépôt et placement du Québec, JERA Co. Inc., GIC Holdings Pte Ltd, Global Infrastructure Partners, CDC Group Plc, EverSource Capital and World Bank’s International Finance Corp. They have invested in Indian companies, including ReNew Power, Greenko, Adani Power, PTC India Ltd, SB Energy, Mytrah and Hero Future Energies. Andhra Pradesh is trying to rework PPAs for wind and solar power with average tariffs (FY14) of ₹4.70 per unit and ₹5.8 per unit, respectively.The state has clarified that it will not open all power purchase agreements (PPAs), but only those where malfeasance has been established. Andhra Pradesh has quoted an initial figure of ₹2.43 per unit for wind and ₹2.44 per unit for solar power tariff.
Muthoot Finance to buy IDBI Bank’s MF business
Gold loan financier Muthoot Finance Ltd is in advanced stages of acquiring IDBI Asset Management Ltd, the mutual fund unit of Life Insurance Corp. of India (LIC)-owned private sector lender IDBI Bank Ltd, Mint reported citing three people aware of the development. The deal is expected to close this week. Initially, the binding offers had come in from Muthoot Finance and Vikas Khemani’s Carnelian Capital Advisors Llp, but the former has emerged as the winning bidder. As on 31 March, IDBI Bank owned 66.67% stake in IDBI Asset Management with IDBI Capital Markets and Securities holding a 33.33% stake. IDBI Asset Management, also referred to as IDBI Mutual Fund, managed 22 schemes during FY19, comprising 12 equity fund schemes, six debt fund schemes, two hybrid fund schemes and one each Gold Fund of Funds and Gold Exchange Traded Funds scheme. The company’s total assets under management (AUM) fell 16% year-on-year (y-o-y) to ₹6,238 crore in FY19 due to decrease in equity and liquid AUMs, according to the latest data available on its website. The company plunged to a loss of ₹4.34 crore in FY19 from a year-earlier profit of ₹8 crore. Revenue from operations fell 25% y-o-y to about ₹60 crore.
Language learning startup Multibhashi raises capital from Japan’s RareJob
RareJob of Japan, which conducts online English tutorials, has made its first Indian investment in language learning platform Multibhashi, Mint reported citing top executives at the two companies. The value of investment was not disclosed. The proceeds would mainly be used in expanding the team, improving the technology, enhancing the product with new features and in acquiring new users," said Anuradha Agarwal, who founded Multibhashi in 2016. “The company aims to become a go-to player for anyone trying to learn English. It also plans to expand to other languages of India and its neighbouring countries.We look forward to learning from the Japanese player’s experience of having scaled the product and the team in a competitive market. A few other investors are also going to participate in this round," she added. Multibhashi uses a mobile application to teach 11 Indian languages, including English, Hindi and nine regional languages. While its users can sign up for free for some limited content, they can later upgrade to blended learning models, which involve self-learning plus virtual tutor-led learning. The premium courses can range from anywhere between ₹200- ₹5,000. The firm also uses chatbots and community learning features for an immersive experience.
Bharti Airtel withdraws bid for RCom assets citing questionable, unfair conduct
Telecom operator Bharti Airtel has withdrawn its bid to purchase assets of Reliance Communications (RCom) after terming the move of committee of creditors to extend the bid submission deadline on the request of Reliance Jio as "extremely unfair" and "biased", PTI reported. Without naming Reliance Jio, Bharti Airtel Director (Finance) Harjeet Kohli in a letter to resolution professional Anish Niranjan Nanavaty said his company's request to extend the deadline was turned down by the committee of creditors (CoC) of RCom but surprisingly, the dates have been extended to accommodate submission by a bidder. Bharti Airtel, Bharti Infratel and private equity firm Varde Partners have already submitted their bids for assets of Reliance Communications, while Reliance Jio has sought extension of the asset sale deal deadline by another 10 days. Airtel has placed conditional bid to buy spectrum of RCom, while Bharti Infratel has submitted bids for mobile towers. The CoC extended the deadline by 10 days and has decided to open bid now on November 25. "To our utter shock, we have learnt that the CoC has now decided to extend the submission timeline to November 25, 2019, until 1200 hours, solely based on the request of another potential bidder," Kohli said.
Aramco declares $1.71 trillion valuation in blockbuster IPO
Saudi Arabia on Sunday put a value of up to $1.71 trillion on energy giant Aramco in what could be the world's biggest IPO, but missed Crown Prince Mohammed bin Salman's initial target of $2 trillion, AFP reported. Aramco said it would sell 1.5 percent of the company in a blockbuster initial public offering worth at least $24 billion. The much-delayed offering is scaled down from original plans, but it still rivals the world's biggest listing so far -- the $25 billion float of Chinese retail giant Alibaba in 2014. Aramco had initially been expected to sell a total of five percent on two exchanges, with a first listing of two percent on the kingdom's Tadawul bourse, followed by a further three percent on an overseas exchange. But the firm has said there are no current plans for an international stock sale, indicating that the long-discussed goal had been shelved for the time being. Saudi Arabia is pulling out all the stops to ensure the success of the IPO, a cornerstone of de facto ruler Prince Mohammed's ambitious plan to diversify the economy by pumping funds into megaprojects and non-energy industries. S&P Global Ratings said the stock market debut could enable the kingdom to strengthen its financial position. The government has reportedly pressed wealthy Saudi business families and institutions to invest, and many nationalists have labelled it a patriotic duty.
LIC invests ₹1,000 crore in Tata Capital Housing Finance bonds
The country’s largest insurer Life Insurance Corp. (LIC) of India invested ₹1000 crore in Tata Capital Housing Finance amid signs of improving debt market sentiment, The Economic Times reported citing three people with the direct knowledge of the matter. More than a year ago, infrastructure conglomerate IL&FS triggered a crisis of capital that kept the largest domestic institutional investor away from taking usual bets on privately held companies. While Tata Capital Housing Finance wanted to raise up to ₹1,500 crore, it closed subscriptions with the single large investor. The company directly placed those bonds with LIC. Those bonds offered 8.35% with staggered maturities up to 10 years. The rate is 183 basis points higher than the benchmark yield. A basis point is 0.01 percentage point. “TCHFL raises funds from time to time for its business operations. As part of this fund raising, it received a bid of ₹1000 crore for a 10 year non-convertible debentures (NCD) issuance," said Rajiv Sabharwal, CEO, Tata Capital, in an email to ET. One-fourths of the sum will be repaid in November, 2026. The rest will follow in next three consecutive years. In the aftermath of the NBFC crisis, large institutional investors have preferred bonds sold by government-owned companies including Power Finance Corporation, Rural Electrification Corporation and the National Highways Authority of India. Investor apprehension reflected through much higher bond yields in the secondary market with select yields of lower rated papers surging between 42% and 93%. Bond yields and prices move in the opposite directions.
TA, Warburg Pincus, ChrysCap shortlisted to buy stake in SRL
Three leading private equity firms — TA Associates, Warburg Pincus and ChrysCapital — have been shortlisted from a group of five suitors competing to buy up to 44% equity stake in SRL, the diagnostics arm of Fortis Healthcare, The Economic Times reported citing multiple sources. The three shortlisted bidders have proposed offers, which peg the valuation of SRL between ₹3,700- ₹4,200 crore. NY Jacob Ballas, Siguler Guff & Co and International Finance Corporation, whose exit from SRL was stalled after a legal setback, have restarted the process of selling their combined 31.5% stake and had appointed Kotak Mahindra Capital Company as merchant banker for the proposed divestment. In addition to this, two other existing investors — Axis Bank (5.5%) and the family of Gurinder Singh Dhillon of Radha Soami Satsang Beas (5%) — may also exit the diagnostics firm if they get the same terms. If these shares are also sold, the new owner can end up controlling 40-44% of the company. Fortis Healthcare owns about 56% in its diagnostics arm. Incoming investors will have to fork out at least ₹1,750 crore or $250 million but the final deal size will depend on the amount of stake they eventually acquire. The shortlisted bidders held management meetings with the leadership of Fortis and representatives from Malaysia’s IHH Healthcare in the first week of November. They have been asked to revise their financial offers. Malaysia’s IHH Healthcare, which owns a significant stake in Fortis, is facilitating the transaction. IHH has a preference for an investor who will play a passive role. Originally five PE firms had shown interest for this significant minority stake. New Silk Route and West Bridge Capital also participated in the preliminary round of discussion.
Synechron reaches out to NTT, Cognizant for takeover
Synechron Technologies, a bootstrapped IT services company being valued in excess of a billion dollars, is on the block and Cognizant and NTT are among the global companies approached to take over the firm the founders are reportedly exiting, The Economic Times reported citing multiple people aware of the development. The company, focused on the financial services vertical, is being valued around $1.2-1.3 billion. Morgan Stanley has been mandated to act as an adviser on the potential sale. Synechron Technologies was established in 2001, and is a subsidiary of privately-owned Synechron Holdings, British Virgin Islands. It has a presence in more than 18 locations in India and globally. It provides IT services, including application development and maintenance, and remote infrastructure management to clients, primarily in the US. It has acquired a series of smaller IT companies in the United States and Europe. Apart from the three founders who own around 25-27% stake each in the company, the management and other smaller companies that have come into the fold own the remaining stake.