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#Linkfest – Peerless Group Gets Dinged, SEBI Relief to REITs and InVITs, Reliance Mutual Fund Loses Big Money, Crypto, Changes at Yes Bank and more.

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At Capitalmind Premium, we have a very active Slack channel where we discuss a lot of interesting topics. In there,  a number of interesting links come our way. Here’s the most interesting of such links shared by our members in recent days.

IEPF Forces Peerless to Cough Up Investors’ Money

Astute investors may be aware of this scam. A company collects small sums of money from lower and middle income group citizens, promising them a decent return on their investment. But years later, the investors are often untraceable. However, people have wizened up over the years. So when the Peerless General Finance and Investment Company pulled a similar scam (and tried to pocket the gains), it raised alarms at the Investor Education and Protection Fund. Link.

REITs and InVITs Heave a Sigh of Relief After SEBI Move

In a circular released on 23rd April, 2019, SEBI has reduced the minimum investment limit for retail investors in REITs and InVITs from Rs. 2 lakhs to Rs. 50,000 and Rs. 10 lakhs to Rs. 1 lakh, respectively. This will come as a relief to REITs and InVITs, who are languishing for lack of investor interest (Embassy Office Park’s recent REIT not included). It is possible, the high investment threshold threw people off from investing in these instruments. But thanks to SEBI, things might just change now. Link

Reliance MF Taken to the Cleaners, Courtesy of Two ADAG Companies

The bosses at Reliance Mutual Fund must be a troubled lot because of what happened at the fund over the past few days. It all began when rating agencies downgraded two Anil Ambani Group companies, Reliance Home Finance and Reliance Commercial Finance, for delaying repayment to lenders and for stressed liquidity. Consequently, Reliance Mutual Fund had no choice but to write-off Rs. 1618 crore it had invested in these companies. Meanwhile, RMF also holds around Rs. 205 crores worth of secured long-term non-convertible debentures of Reliance Capital, which continue to be safe as of now. Link

Hotel Leela Might Soon be Wedded to Brookfield, Courtesy of Shareholders

Close to 86% of the shareholders of the Hotel Leela Group have backed a deal to sell the group’s hotel assets to Brookfield. Meanwhile, ITC and LIC have approached the National Company Law Tribunal to stop the sale, accusing the Hotel Leela management of ‘oppression of minority shareholders’ and ‘mismanagement’. Strangely, the NCLAT has accepted LIC and ITC’s petition and has issued an order to stop the sale until the issue is resolved. Link

Slack to Go Public, Becomes the Latest Tech Company to Do So

Collaboration service provider Slack has unveiled plans to go public, with an Initial Public Offer. The company will be listed on the New York Stock Exchange. The company also disclosed it earned $400 million in revenues last year, while posting a loss of $139 million. With this, Slack joins a long list of popular tech companies, such as Lyft, Zoom, Pinterest, and Zoom who’ve come out with IPOs in 2019. Link

The Indian Government Wants to Throw Cryptocurrencies Under the Bus

The Indian government is mulling a ban on cryptocurrencies of all kinds. Cryptocurrencies are a form of digital currency but they are not backed by any government body or institution. Currently, there are tens of cryptocurrencies soliciting investments in India. Their ownership is a maze and they are often used to launder money. Many of them are actually ponzi schemes. Link

Amazon Weathers Government E-commerce Storm and Emerges Successfully

Amazon has said, the Indian government’s decision to tighten e-commerce rules had a minimal impact on the company’s India’s operations. Brain Olsavsky, the company’s Chief Financial Officer made these revelations during a conference call after the company announced its Q1 results. In December, the Indian government had mandated that e-commerce companies can’t sell products from entities in which they own a stake. It also said e-commerce companies can’t force a seller to sell products exclusively on their portal. The rules became applicable from February 1st, 2019. Link

The Indian Government is in No Mood to Loosen its Grip on PSUs

According to the rule book, a company is a PSU if the government has a 51% stake in it. So when the government’s stake in Power Finance Corporation falls below 45% post its merger with Rural Electrification Corporation, PFC should no longer be a PSU. However, the government doesn’t want that to happen and is said to be exploring ways to try and keep PFC’s PSU status intact. One of the strategies proposed is a golden share. A golden share will give the government special voting rights and the authority to veto changes to PFC’s charter. Link

200 U.S Companies Interested in Shifting Manufacturing to India, Claims USISPF

The United States-India Strategic and Partnership Forum has said that close to 200 U.S companies would like to shift their manufacturing to India, if India accelerates its reforms and makes decision-making more transparent. This is good news for India, which is grappling with a large trade deficit visa-a vis China and a large population that is facing a shortage of jobs. The USISPF has also suggested that the U.S and India should sign a Free Trade Agreement to accelerate this process. Link

SoftBank Wants a Piece of the Reliance Jio Action

There are rumours that SoftBank wants to buy a stake in Reliance Jio Infocomm, India’s third largest mobile service provider. Analysts say, the investment will likely be in the range of $2-3 billion. Mukesh Ambani is looking to deleverage certain businesses, including Jio Infocomm. If SoftBank’s offer fructifies into a sale, it will help him par some debt. The news also comes in the wake of rumours that Saudi Aramco is looking to purchase a 25% stake in Reliance’s refining and petrochemical business. Link

‘Winds of Change’, feat Yes Bank

Ravneet Gill, the new CEO of Yes Bank might soon purge his company’s entire top management. The company is said to have hired a top head hunting firm to find replacements for the employees who will be let go. If this rumour is true, at least 14 top lieutenants of ousted MD and CEO Rana Kapoor will soon be out of a job. In the past, the RBI had suggested to the Yes Bank board that it should feel free to reverse any decision taken by Rana Kapoor if it will help the bank improve its governance. Link

Maruti Suzuki to Bid Adieu to Diesel Cars From April 2020

Come April 2020, customers will no longer be able to buy diesel cars from Maruti Suzuki because the company has decided to stop producing diesel cars. The decision comes just in time as India moves to a new air pollutants compliance regime, the BS-6. However, the company also said it might review its decision after accessing customers’ reaction. If there is still a market for diesel cars, it will develop one in a ‘reasonable’ amount of time. Link

Why There Might No Longer be Any DHFL

According to the corporate grape vine, DHFL is in talks with a consortium of companies to sell its retail and wholesale business. At least, three foreign companies and one Indian company are said to be in discussions for the sale. If that happens, DHFL will have effectively exited the non-banking finance business. NBFC companies like DHFL have been facing a liquidity crunch, for some time now, which has only exacerbated after the demise of IL&FS. Link

ABG Shipyard to be Scrapped After NCLAT Rejects Liberty House Bid

ABG Shipyard which owes its lenders a little over Rs. 16,000 crores will soon join the ranks of companies that have been liquidated on the orders of the NCLAT. This happened after the NCLAT rejected Liberty House’s bid for ABG Shipyard. Some time earlier, an independent valuer had said the liquidation value of ABG Shipyard is around Rs. 2000 crores. To its credit, Liberty House said it would pay more than ABG Shipyard’s liquidation value. But the lenders refused to accept the bid, because they didn’t trust Liberty House’s bona fides. Link