Monday, March 19, 2007

Dutch firm Robeco to buy 49% in Canbank MF

Dutch asset manager Robeco Groep NV, a part of European banking giant Rabobank Groep, will buy 49% stake in Canara Bank's asset management arm to gain a foothold in the Indian mutual fund industry.

Robeco has assets under management of €139 bn worldwide and posted operating profits of €233 mn in 2005. It will pay Rs. 115 crores to Canara Bank for its stake in Canbank Investment Management Services Limited (CIMS).

Reserve Bank has given its assent to the proposed venture, and approval from market regulator SEBI and Foreign Investment Promotion Board would be sought soon.

In all, India has 32 mutual fund players with total AUMs of more than Rs. 350,000 crores. Canbank is a relatively smaller player with AUMs of about Rs. 2200 crores.

The asset management company, to be called Canara Robeco, would aim to capture 5% market share in the next five years. The JV would float five new products, especially equity-based, in the coming months.

Read The Economic Times article.

UTI Bank to set up $500 mn offshore fund

The effects of the change in the pass-through status of domestic private equity firms are already showing on the players concerned. UTI Bank is now planning to set up a $500 mn-offshore fund. The bank had earlier received SEBI approval to start a PE fund in India as a domestic venture capital. It will now file for a fresh application as a foreign venture capital investor. The proposed $500 mn fund will also mark the entry of UTI Bank in private equity.

Of the total equity of $500 mn, UTI Bank will provide $50 mn equity as its principal sponsor. The remaining part of the corpus will be raised from foreign institutional investors and the like. The investments will be made through the bank’s subsidiary UBL AMC.

Since the mandate of the proposed fund will be to invest in infrastructure projects, it does not fall in the nine sectors identified in this year’s budget where venture capital funds registered in India will continue to enjoy a pass-through status. Tax exemptions will now only apply to biotechnology, nanotechnology, IT hardware/software, R&D for new chemical entities, seed research, dairy, poultry bio-fuels and large hotel-cum-convention centres. Till now, private equity funds were exempted from I paying tax with its investors paying capital gains tax. According to the change in rules, the fund will also pay taxes if its investment does not fall in the nine specified sectors.

Read the article in The Economic Times.

Sharekhan to raise funds for expansion

Sharekhan is planning to raise funding for its aggressive expansion plans. Sharekhan is the retail broking arm of Mumbai-based financial services group SSKI. The company has held discussions with investment banks for raising resources. These may be in the form of an initial public offering, private placement, debt or a combination of all of these.

As earlier reported in the media, the promoters of the firm, the Morakhia family, also the single largest shareholder in the company, are not planning to quit the firm as yet. Private equity firm General Atlantic had invested about Rs. 144 crores ($31 mn) in April 2006 in the company through a combination of primary investment in the company and secondary investment through buying out the entire shareholding of First Carlyle Ventures. The other investors in the retail and online brokerage outfit are Intel Capital and a group of funds advised by HSBC Private Equity India.

Sharekhan is among the top five retail brokerage outfits in the country with over 100 branches across 150 cities. The investment banking and the institutional brokerage outfit of the group, SSKI has no fund raising plans.

Read the Business Standard article.

Reliance Industries in JV talks with US-based Nova Chemicals

Apart from Dow Chemicals, it is learnt that Reliance Industries is said to be in advanced stage of discussions with North American plastics and petrochemicals major Nova Chemicals as part of its bid to spread wings to foreign shores. The possible alliance could include product swaps, infrastructure sharing as well as joint exploration of business growth opportunities.

Nova Chemicals has a market capitalization of about $2.5 bn, and has seven manufacturing facilities in the US, six in Canada and two others in South America, while it is also present in Europe through various joint ventures. It has an annual turnover of over $6.5 bn.

Read more in the Business Standard article.
Related Post:
Reliance Industries giving shape to global ambitions; in talks with Carrefour, Dow Chemicals for strategic alliances

SEBI to allow hedge funds direct entry into Indian capital markets

The capital markets regulator, the Securities and Exchange Board of India (SEBI), is considering direct participation of hedge funds in the Indian stock markets. SEBI has invited hedge funds to register with the regulator and invest in the Indian stock markets without the cover of participatory notes, currently the most preferred route of hedge funds for channeling investments in the Indian markets.

Participatory notes are often seen as tools for money laundering and there have been numerous calls, including from the Reserve Bank of India, to curtail them. It is widely estimated that 48% of the $50 bn investment by foreign institutional investors in the Indian markets has come through offshore participatory notes. Allowing hedge funds direct entry will help SEBI track the source of funds coming into the capital markets more efficiently. It is difficult to track the source of funds coming in through participatory notes.

SEBI’s thinking was articulated by its chairman, M Damodaran, at a meeting organized by ICICI Securities in Singapore early this month, which foreign investors, including several hedge funds, attended.

Read more in the article in Business Standard.

The Times Group acquires 5% stake in Ahmedabad-based IT firm

Bennett, Coleman & Company (BCCL) will acquire around 5% stake in Ahmedabad-based IT firm Sai InfoSystem (SIS), for an undisclosed sum. SIS offers total IT solutions to end users comprising hardware, software, networking and related services. It operates in the area of system integration, call-centre solutions and has been focusing on four verticals namely telecom, power, defence and the state government, and has added two more verticals, retail and gaming.

The company may come up with an initial public offering in three years.

Read The Economic Times article.