1. The Indian Economy is Gathering Momentum
The latest economic data released last week by the bean counters in New Delhi should be a relief for the Narendra Modi government, especially since it was followed a few days later by historic political wins in northeast India. These tailwinds cannot harm the incumbent regime in the months leading to the next general election – even though political outcomes are never simple extrapolations of economic trends.
The numbers for the third quarter show that the Indian economy is well on the recovery track, after the twin shocks from demonetisation and the messy transition to the new goods and services tax (GST). At 7.2 percent, gross domestic product (GDP) at constant prices clocked its best rate of expansion in five quarters – and a full 1.5 percentage points higher than the bottom hit during the first quarter of the current fiscal year. GDP growth has been rising for three consecutive quarters now.
(Source: LiveMint)
2. HDFC Bank Seeks to Raise $2.5 Billion via Share Sale
Private sector lender HDFC Bank Ltd is looking to launch its equity share sale of up to $2.5 billion (around Rs 15,000 crore) in a fortnight, while HDFC Asset Management Co Ltd (HDFC AMC) will be filing its draft initial public offer (IPO) papers, said three people aware of the developments.
In December, HDFC Bank said it is planning to raise up to Rs 24,000 crore through a combination of preferential allotment and qualified institutional placement (QIP). The bank said it will be raising nearly one-third (Rs 8,500 crore) of the sum from parent Housing Development Finance Corp Ltd (HDFC). “The bank will be launching its fund-raising very soon, likely around mid-March. They are waiting for regulatory approval, which should come this week,” said one of the people cited above, requesting anonymity as he is not authorised to speak to the media.
(Source: LiveMint)
3. Air India Looks to Raise Rs 500 Crore Through Sale of Land Assets in FY19
Divestment-bound national carrier Air India is looking at raising Rs 500 crore by selling land and real estate in 2018-19, and is likely to sell some of its prime properties across the country, two senior officials of the airlines said.
The airline is looking to sell several of its land blocks and real estate including a four-acre piece of land at Delhi’s Baba Kharak Singh Marg, residential colony at Vasant Vihar, a piece of land in Chennai, and a half-acre plot in Mumbai’s Pali Hill that houses about 14 apartments, one of the officials said.
(Source: LiveMint)
4. Adani Gas Plans Direct Listing of Shares
Adani Gas Ltd, the gas distribution business of Adani Group, is planning to go for a direct listing of shares instead of an initial public offering, two people aware of the development said.
In January, the Adani Group decided to demerge its gas sourcing and distribution business into a new company called Adani Gas Ltd.
The board of Adani Enterprises Ltd approved the scheme of arrangement among Adani Enterprises Ltd, Adani Gas Ltd and Adani Gas Holdings Ltd, according to one of the two people cited above.
(Source: LiveMint)
5. Proxy Advisory Firm Questions Exemptions In The ONGC-HPCL Deal
Proxy advisory firm IiAS questioned ONGC seeking exemption from taking shareholders’ nod to acquire the government’s stake in HPCL, adding that such leniency with regard to public votes is not warranted.
Oil and Natural Gas Corporation had bought the government’s 51.1 percent stake in Hindustan Petroleum Corporation Ltd for Rs 36,916 crore in January 2018.
The acquisition price of Rs 473.97 apiece was finalised on 20 January, and the deal was completed as an off-market transaction on 31 January, while ONGC is now asking the shareholders to ratify it, IiAS said.
The purchase qualified as a related party transaction (RPT) as the government holds majority stake in ONGC and was selling its stake in HPCL.
(Source: BloombergQuint)
6. Low Base Helps Auto Sales Rise In February
Passenger vehicle, truck and two-wheeler sales rose in February, helped by a strong rural demand, new launches and a low base a year ago, when volumes were yet to recover after demonetisation.
The low base effect will now taper as sales had started gaining momentum around this time a year ago after the note ban.
(Source: BloombergQuint)
7. Five PSBs on Brink of Being Put Under RBI's Prompt Corrective Action Plan
Five public sector banks (PSBs), including Canara and Union Bank of India, are on the brink of being put under the Reserve Bank of India’s (RBI’s) prompt corrective action (PCA) plan. According to rating agency Icra, their net non-performing assets (NPAs) rose above six percent in December 2017.
If the banking regulator places them under PCA, the action may drive these banks to recall additional tier-1 (AT-1) bonds, which is included in Tier-1 capital, of Rs 157 billion from investors.
(Source: Business Standard)
8. Equity Investors Now Turn Their Attention to Export-Driven Sectors
After betting on the domestic consumption story for over three years, equity investors could now turn their attention to export-driven sectors. In the last month, the S&P BSE Sensex is down six percent, while the Nifty IT (information technology) index is down only 1.5 percent during this period. Other export-focused companies in pharmaceutical, automobile and agrochemicals sectors have also seen share prices rise.
Investors are now betting on recovery in global economic growth to lift these companies’ fortunes. According to the International Monetary Fund’s latest World Economic Outlook, global growth at constant prices is expected to accelerate to an eight-year high of 3.71 percent in 2018, up from 3.21 percent in 2016. This is expected to result in faster revenue and profit growth for companies such as Tata Consultancy Services, Infosys, Tata Motors, Motherson Sumi, Bharat Forge, Bajaj Auto, Sun Pharmaceutical, Cadila Healthcare, and United Phosphorus Limited among others.
(Source: Business Standard)
9. Global Investment in Fintech Sees All-Time High in 2017, Says Report
Global investment in financial technology (fintech) ventures reached another all-time high in 2017, buoyed by a surge in funding for start-ups in the United States, United Kingdom and India, according to Accenture analysis of data from CB Insights, a global venture-finance data and analytics firm. Fintech financing rose 18 percent in 2017, to $27.4 billion, with the value of deals in the US jumping 31 percent, to $11.3 billion. Deal values almost quadrupled in the UK, to $3.4 billion, and soared nearly fivefold in India, to $2.4 billion. The number of fintech deals also rose sharply, from just over 1,800 in 2016 to nearly 2,700 in 2017, underscoring continued appetite from investors scouring the globe for innovation in insurance, banking and capital markets start-ups.
India’s digital payments start-up Paytm received $1.4 billion in venture capital, helping drive fintech fundraising activity to nearly five times the 2016 levels. The number of fintech deals in India increased 65 percent over 2016. This was largely spurred by the central bank’s demonetisation initiative geared to combat corruption by banning high-value banknotes, which prompted millions to shift to mobile payments and other cashless service providers such as Paytm.
(Source: Business Standard)
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