QBiz: IDFC-Shriram Merger Called Off; Lenders to Take Over RCom

Here’s a quick roundup of top business stories for the day

5 min read
l Ambani, chairman of the Reliance Anil Dhirubhai Ambani Group during a news conference in Mumbai.&n

1. Lenders to Take Over Anil Ambani’s RCom

Lenders are set to take control of Anil Ambani’s Reliance Communications Ltd after the company’s debt reduction plan failed.

The banks have decided to convert Rs 7,000 crore of loans into equity. The conversion will take place between 7 and 15 December, Punit Garg, executive director at RCom, said in an interaction with BloombergQuint.

The lenders will get at least 51 percent of the stake in the operator after they invoked the Strategic Debt Reduction mechanism. That followed the default rating for its debt after the operator missed payments. It won a reprieve citing its plan to merge wireless business with Aircel Ltd. and sell a majority stake in its tower arm. The merger failed to get regulatory approvals.

(Source: BloombergQuint)

2. Best Yet to Come for Sensex and Nifty, Say Goldman Sachs, Citigroup

Even as stock markets continue to scale lifetime highs, top investment banks have begun revising upwards their targets for the benchmark indices.

Not only are they betting on an economic recovery and endorsing the recent reform initiatives undertaken by the Union government, they are also signalling that the best for the markets is yet to come.

Goldman Sachs Group Inc and Citigroup Inc have raised their targets citing the bank recapitalisation programme, infrastructure push and continued inflow of domestic savings into equities. They believe these factors more than offset concerns on valuation and poor earnings growth and are sufficient to propel the Sensex and Nifty to newer highs in 2018.

(Source: Livemint)


3. Cybersecurity Jobs Now at a Premium as India Goes Digital

India Inc, facing a scarcity of cybersecurity professionals, especially at the leadership level, has increased salaries offered for such roles by 25-35% over the past year.

Hacking and cyberattacks are compelling firms to hire talent at a premium, with compensation packages for top roles at upwards of Rs 2 crore, and in some instances, close to Rs 4 crore, inclusive of variables. In addition, last year’s demonetisation and the government’s push for Digital India have pushed demand for cybersecurity talent.


4. IDFC-Shriram Merger Called Off Over Differences on Swap Ratio

IDFC Group and Shriram Group have called off their talks for a merger after failing to agree on a swap ratio. The two parties had, on 8 July, entered into a 90-day agreement to evaluate a strategic combination of their relevant financial services. With no finality in sight, the parties had extended talks by a month till early November.

“Despite best efforts the two groups have not been able to reach an agreement on a mutually acceptable swap ratio. As a consequence, the exclusivity period stands terminated with immediate effect,” IDFC informed the stock exchanges.

Shriram City Union Finance and Shriram Transport Finance also issued statements saying, “Despite best efforts by both Shriram and IDFC, we could not reach common ground and arrive at a mutually acceptable structure and valuation.” Both parties had agreed to terminate any further discussions on the proposed potential combination, the statement added.


5. Spot Power Prices at Three-Year High amid Coal Crunch

A sudden spurt in power demand during the festival season has left India’s coal stock at its lowest in nearly three years, pushing up electricity prices in the spot market to their highest during the period.

Coal-fired plants meet nearly three-quarters of India’s power demand, according to the Central Electricity Authority. About a quarter of 112 such units are close to running out of fuel – 16 had coal for less than four days, a super-critical level; and 10 for less than the critical seven days, said the 26 October report of the regulator. Fifteen plants with a combined capacity of eight gigawatts were shut due to coal shortage in September-October, the CEA data show.

(Source: BloombergQuint)


6. Bharti Infratel Looks to Take Over Indus Towers

Bharti Infratel Ltd is exploring buying additional stake in Indus Towers Ltd to create the world’s largest wireless tower operator.

The Sunil Bharti Mittal-backed company will look at buying stake in Indus Towers in one or more tranches with the aim to make it a subsidiary or wholly owned unit of the company, it said in a media statement today. The combined entity would have more than 1,60,000 towers, ahead of American Tower Corp.’s 1,44,000 across four regions.

Bharti Infratel has a 42 percent stake in Indus, while Vodafone Group Plc and Idea Cellular Ltd. together hold additional 53 percent of the tower company. Bharti Infratel has not specified from which company it would buy shares and at what valuation.

(Source: BloombergQuint)


7. Vedanta to Invest $9 Billion in India, Says Anil Agarwal

Vedanta Resources Plc will invest roughly $9 billion in India over the next few years to expand its hydrocarbons, metals and mining businesses and meet more of India’s requirements of these commodities locally, executive chairman Anil Agarwal said in an interview.

Vedanta’s plan to invest in the resources sector comes at a time when the commodities market is showing signs of a pick-up. Agarwal said these investments will create over a million jobs directly and indirectly.

The proposed investments are in sectors such as oil and gas, production of aluminium, zinc, copper, silver and steel and mining of bauxite and rock phosphate.

(Source: Livemint)


8. Bain Capital Readies Rs 4,800-6,400 Crore Bet on Axis Bank

Bain Capital is in advanced talks with Axis BankBSE -0.04 % to invest between $750 million and $1 billion (Rs 4,800-6,400 crore), in what could be one of the largest private equity investments in the Indian banking sector.
India’s third-biggest private lender is in talks to raise money amidst worsening asset quality and regulatory glare.

Bain’s proposed investment will come as a primary issuance of shares through a preferential allotment that will allow the PE fund to own up to 5% of Axis.


9. Jaiprakash Power: 2 of 11 Suitors Put in Final Bids

Only 2 out of 11 suitors have put in final bids for the beleaguered Jaiprakash Power Ventures. On the block as part of strategic debt restructuring (SDR), the company has drawn non-binding bids from Resurgent Power Ventures Pte and Brookfield Asset Management, a person close to the development said.

Earlier, Adani Power and JSW Energy and Edelweiss Asset Reconstruction Company were among those formally expressing interest in the company carrying a debt of Rs 12,440 crore as of March-end. Of the five companies that gave a presentation to the lenders’ consortium, only two put in bids. The person quoted above said both the bids implied banks going in for huge haircuts.

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