Government to sell BPCL in mega push for privatization
The cabinet committee on economic affairs (CCEA) cleared one of the government’s largest asset-sale exercises involving five companies, including the privatization of Bharat Petroleum Corp. Ltd (BPCL) and Shipping Corp. of India (SCI), Mint reported. Other companies in which the government will sell stakes include Container Corp, of India Ltd (Concor), THDC India Ltd (THDC) and North Eastern Electric Power Corp. Ltd (Neepco). As part of a consolidation exercise of the state run hydropower firms, the GoI will sell its 74.23% and 100% stake in THDC and Neepco respectively along with management control to state run India’s largest power generation company-NTPC Ltd. In 2014, a concept paper on the possibility of a merger of all state-owned hydroelectric companies recommended a phased approach, starting with North Eastern Electric Power Corp Ltd (Neepco) to be combined with NHPC Ltd, followed by THDC India Ltd and SJVN Ltd. Also, the government will sell its 63.75% and 30.8% stake share in Shipping Corporation of India and Container Corporation of India respectively along with management control to a strategic buyer. In the case of BPCL, the government will sell its 53.29% stake to a strategic buyer, ceding management control, according to finance minister Nirmala Sitharaman. The proposed sale will, however, exclude the strategic Numaligarh Refinery Ltd (NRL) in Assam, which will be later sold to another state-run firm, given India’s need to secure fuel supplies for security forces in the north-east.
Subhash Chandra to sell 16.5% stake in Zee
Media baron Subhash Chandra’s cash-strapped Essel Group is set to see its stake plunge to around 5% in Zee Entertainment Enterprises Ltd, Mint reported citing a company statement. The conglomerate plans to sell an additional 16.5% stake in Zee Entertainment Enterprises Ltd (ZEEL) to meet repayment obligations. The deal includes a 2.3% stake, which is in the process of being sold. Pursuant to the aforementioned transactions, the post-transaction overall holdings of the group in ZEEL will be about 5%, out of which encumbered holdings of the group will reduce to approximately 1.1% of ZEEL. The Essel Group said the development reaffirms the “positive progress on its overall asset divestment approach, undertaken to generate adequate liquidity for the repayment process." In July, the Essel Group had said it would sell a 11% stake in ZEEL to US-based Invesco Oppenheimer Developing Markets Fund, an existing public shareholder in ZEEL, for ₹4,224 crore. Of this, 8.7% has already been sold to OFI Global China Fund, and a private investment vehicle Invesco, while the remaining 2.3% will also be divested soon. The balance 14.2% stake will be offloaded through off and on market sales. The company expects to close the transaction within a week.
Cube Highways wins third TOT bundle with ₹5,011 crore bid
Road developer Cube Highways and Infrastructure Pte Ltd has emerged as the highest bidder in round three of road auctions under the toll-operate-transfer (TOT) model, although its price offer was marginally more than the reserve price set by the National Highways Authority of India (NHAI), Mint reported citing two people close to the development. Cube Highways, which is backed by global infrastructure fund I Squared Capital and the International Finance Corp. (IFC), offered ₹5,011 crore to the government for a 30-year concession period. This is against the initial estimated concession value (IECV), or reserve price, of ₹4,995.48 crore set by the NHAI for the road bundle. The state-run highway developer had put up nine stretches of roads, totaling 566.27km across Uttar Pradesh, Jharkhand, Bihar and Tamil Nadu, in the third round. It had deferred the deadline for bids twice—from mid-September to 31 October—as potential investors sought more time. National Infrastructure and Investment Fund and IRB Infrastructure Developers also bid for the assets, quoting ₹4,230 crore and ₹3,510 crore, respectively. Even before the bidding for the third round was completed, the NHAI started the process to invite expressions of interest for the fourth round of TOT auctions, as it seeks to meet divestment targets and raise funds for new projects. The NHAI, which is the nodal agency of the ministry of road transport and highways, has set an initial estimated concession value of ₹4,170 crore for the fourth bundle. Bidding is expected to close by 14 January.
Martin Sorrell's S4 Capital acquires Delhi-based content company WhiteBalance
S4 Capital Plc, the digital advertising and marketing services company, announced that its global content practice MediaMonks has acquired Delhi-based content creation and production company WhiteBalance, Mint reported. The firm refused to divulge the financial details saying that it was an equal parts cash and equity deal. As part of the agreement, WhiteBalance will merge and be known as MediaMonks India. Founded in 2010 by Robert Godinho WhiteBalance produces feature films, commercials and documentaries to high-end digital content. The 65 people strong WhiteBalance is based out of Delhi but will be ramping up its presence in Mumbai and Bengaluru. With the merger, MediaMonks adds the WhiteBalance employees to its team, with the intent of doubling the India business in the coming six months. MediaMonks will also continue to invest in growing the content studio in Bengaluru into a creative hub for Asia Pacific (APAC), and aims to size up the teams and studio facility in Delhi.
Varde Partners may invest ₹ 1,000 crore in Altico Capital
In a day of mixed developments at stressed home financier Altico Capital, one of its three owners— Varde Partners, would lead the equity infusion of up to ₹1,000 crore, while the company said its chief executive officer is quitting and would cease to be in that role as early as next week, The Economic Times reported. The company is likely to submit a resolution plan at the lenders’ steering committee meeting to be held next week. According to the plan, US-based Varde will repay the lenders in full and seek additional credit lines from them. The financier is also in advanced talks with SBI Capital. Further, the firm may seek another ₹1,000 crore of new loans from lenders as it will collectively help finish all those stalled builders’ projects. To be sure, one of the existing investors in Altico bonds reportedly sold the debt recently at yields beyond 71%. Separately, Altico told BSE that CEO Sanjeev Agrawal has “tendered his resignation" and that November 26 will be his last working day as chief executive. Abu Dhabi Investment Council, Clearwater Capital and Varde are the three sponsors of the property-focused financier. The US-based private equity firm owns about 22%, ADIC holds about 33% and the remainder is in the hands of Singapore-based Clearwater Capital. Altico’s credit exposure is yet to turn into a non-performing asset in bank books. The company has about ₹800 crore of repayment liabilities until December. Its total outstanding debt stands at ₹4,361.5 crore.
ONGC plans to raise $500 million via dollar bond sale
Oil & Natural Gas Corp (ONGC), India’s largest fuel explorer, plans to raise at least $500 million in a dollar bond sale as soon as next week to refinance part of its debt through cheaper funds, The Economic Times reported citing three people familiar with the matter. This is the state-owned company’s first sale of overseas bonds, although its subsidiary ONGC Videsh has raised dollar funds before. ONGC launched a $2 billion medium-term note programme in August, which allows the company to tap the overseas bond market when needed, subject to market conditions. The bonds are likely to be listed on the Singapore Stock Exchange. The company’s capital expenditure over the past five years totalled ₹1,45,915 crore and it plans to invest ₹32,921 crore in the current financial year. If demand for the bond is strong, the company may choose to retain as much as $1billion, the people said. DBS Bank from Singapore, Mitsubishi UFJ Financial Group and Standard Chartered are some of the banks involved in the issue.
SBI raises ₹ 3,800 crore via perpetual bond sale
State Bank of India (SBI), the country’s biggest mass-lender, has raised ₹3,800 crore by selling perpetual bonds at 8.50% yield to several institutional investors, such as mutual funds, insurance companies and pension funds, The Economic Times reported. The money raised will augment the bank’s Tier I capital ratio, likely easing pressure on the lender to raise cash soon through a qualified institutional placement (QIP). HDFC Mutual Fund is said to have bought a large amount of these bonds that are rated AAA/ Stable by Crisil. Nippon India Mutual Fund, Aditya Birla Mutual Fund, Edelweiss Mutual Fund and ICICI Primary Dealership were among the buyers. According to Basel III capital norms, the systemically important SBI needs to maintain a capital adequacy of 12.10%, which includes 8.60% of common equity, 1.5% of Tier I bonds like the perpetual debt raised by the bank on Wednesday and 2% of Tier II bonds. Capital adequacy at 13.59% was higher than required as of September. “With this sale, our capital adequacy improves further to 14%, which means we are more than 150 basis points above what is required by April 2020. This is a cost-effective way of raising capital compared to equity. We expect internal accruals to also add to capital; so there is no urgent need to dilute equity as of now," the official cited above said. Earlier this year, the bank had mandated Bank of America Merrill Lynch, CLSA, Kotak Mahindra Capital, and SBI Capital Markets to raise what was touted to be the largest QIP at about ₹18,000 crore. However, the bank’s shares have fallen from a peak of ₹372 apiece in July to ₹329 on Wednesday.
Allcargo’s European arm buys logistics firms in Hong Kong, Singapore
ECU Worldwide, the European subsidiary of Mumbai-headquartered logistics firm Allcargo Logistics, has acquired majority stakes in Hong Kong-based PAK DA (HK) Logistics and Singapore-based Spechem Supply Chain Management (Asia), The Economic Times reported citing a senior executive. ECU Worldwide has acquired 75% stake in PAK DA. The Hong Kong acquisition will help it gain access to 50 export trade lanes and 20 import services. The Singapore entity provides dangerous goods warehousing capabilities. ECU Worldwide — Allcargo’s biggest revenue earner — will also be able to expand its product offering and make inroads by connecting the Asia Pacific region with Europe. Allcargo is also in the final rounds of discussions to pick up controlling stake in Hyderabad-based express logistics company Gati. Allcargo gets 88% of its revenue from its multimodal transport operations, primarily from ECU Worldwide. The rest come from container freight stations, project and engineering solutions and supply chain management.