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Groww to acquire Indiabulls MF for Rs 175 cr, BFSI News, ET BFSI

May 11, 2021 root Personal Finance

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Online investment platform Groww on Tuesday announced that it will be acquiring Indiabulls Mutual Fund for a total consideration of Rs 175 crore. The digital platform will acquire Indiabulls Asset Management Company (IBAMC) and the trustee company for Rs 175 crore, which includes a cash and equivalent component of Rs 100 crore, an official statement said, adding that the transaction is subject to regulatory approvals.

The Alternate Investment Fund (AIF) and Portfolio Management Service (PMS) businesses will be demerged from the existing IBAMC structure, and remain under Indiabulls Housing Finance, it said.

The announcement comes months after capital markets regulator Sebi had allowed digital platforms like fintechs to enter the mutual funds business and Groww becomes the first fintech to enter the asset management space.

Indiabulls Mutual Fund has 13 funds with the Quarterly Average Assets Under Management at Rs 663.68 crore as of March 2021, down from the Rs 921.33 crore in December 2021.

Selling the MF will help the parent Indiabulls Housing Finance’s capital position.

Groww has over 1.5 crore customers who use the platform to invest in mutual funds, stocks and exchange-traded funds (ETFs) and wishes to increase the retail participation in equity, the statement said.

“With the capability to create products, we plan to make mutual funds even more accessible – by making them simpler, more transparent, and by lowering the cost further,” Lalit Keshre, the chief executive and co-founder of Groww, said.

Indiabulls Housing Finance plans to grow its Real Estate Asset Management business through AIF structures in line with its asset-light strategy. While IBHFL will focus largely on retail disbursements, the AIF structure will be used for the wholesale opportunity of early-stage project finance, the statement said.

“We have made the decision to divest our interest in the retail mutual fund business to be able to consolidate capital and provide greater focus in building the company’s real estate asset management business by way of Alternate Investment Fund, in line with the company’s asset-light strategy,” Gagan Banga, the vice chairman and managing director of Indiabulls Housing Finance, said.

The Indiabulls Housing Finance scrip was trading 1.63 per cent down at Rs 183.80 a piece on the BSE.

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Fincare Small Finance Bank files Rs 1,330-cr IPO papers with Sebi, BFSI News, ET BFSI

May 9, 2021 root Banking & Finance

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New Delhi, May 9 () Digital lender Fincare Small Finance Bank has filed preliminary papers with capital market regulator Sebi to raise Rs 1,330 crore through an initial share-sale. The initial public offer (IPO) comprises fresh issue of equity share of the bank worth Rs 330 crore and an offer for sale aggregating up to Rs 1,000 crore by promoter Fincare Business Services Limited, according to the Draft Red Herring Prospectus (DRHP).

This offer includes a reservation for subscription by employees.

The bank would utilise net proceeds from the fresh issue towards augmenting its Tier-1 capital base to meet future capital requirements. Further, a small portion of the proceeds will be used towards meeting the expenses in relation to the offer.

Under the terms of the RBI final approval and the small finance bank (SFB) licensing guidelines, the lender is required to list its equity shares on the stock exchanges within a period of three years from reaching a net worth of Rs 500 crore.

The Bengaluru-based MFI-turned small finance bank started operations in July 2017. Before converting into a small finance bank, Fincare Small Finance Bank largely conducted business from two entities – Disha Microfin focused on the western region and the south-focused Future Financial Services.

On May 3, Motilal Oswal Private Equity (PE) announced that it has picked up a minority stake in Fincare Small Finance Bank through a secondary acquisition worth around Rs 185 crore (USD 25 million).

The investment was through India Business Excellence Fund-III, a fund managed and advised by Motilal PE.

ICICI Securities, Axis Capital, IIFL Securities, SBI Capital Markets and Ambit Private Limited have been appointed as merchant bankers to advise the SFB on the IPO.

The equity shares of the lender will be listed on BSE and NSE.

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Provisions for MFI loan write-offs lead Bandhan Bank to post 80% drop in Q4 net, BFSI News, ET BFSI

May 9, 2021 root Banking & Finance

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Bandhan Bank on Saturday reported an 80 per cent dip in its March quarter net profit at Rs 103 crore, as it wrote off a huge portfolio of loans in the flagship microlending business by recognising stress upfront. The bank’s post-tax profit for FY21 also reduced by 27.1 per cent to Rs 2,205 crore as a result of the hit to the business in the last quarter.

Its managing director and chief executive C S Ghosh said the bank wrote off Rs 1,929 crore of loans, a bulk of them in the microfinance segment, in the March quarter because it wanted to start the new fiscal with a clean balance sheet.

As a result of the accelerated write-off, the bank’s overall provisions shot up to Rs 1,594 crore from the year-ago period’s Rs 827 crore, which had a direct impact on the profit line. Operating profit, which is arrived at by excluding the provisions, was up 13 per cent to Rs 1,729 crore.

Its chief financial officer Sunil Samdhani said performance of the last 3-6 months was assessed before taking a call on the write-offs, and added that most of these accounts are contact-based businesses like beauty parlour, gym, school bus owner.

The bnak had restructured less than Rs 200 crore of advances in the year-ago period, and most of the loans which were written-off in the reporting quarter were microloans, he said.

Additionally, Bandhan Bank also restructured over Rs 600 crore of advances, which were majorly from the home loan book, he said, adding that with such accounts, it has got greater possibility of an account normalizing if its defers the repayments.

The gross non performing assets ratio improved to 6.8 per cent as against 7.1 per cent in December, including the proforma NPAs.

If one were to include the impact of the write-offs and NPAs, the overall repayments for the bank stand at over 98 per cent, Ghosh said, pointing out that the troubles in two key markets of West Bengal and Assam, arising due to factors like the state elections, a local law in Assam and the second wave of the pandemic, have subsided, with both the states showing collection performance at over 90 per cent.

Ghosh said that Bandhan Bank will suffer some reductions in repayments over the next two months because of the second wave induced localised lockdowns in many states.

Samdhani, however, said that the reverses on the overall economic climate front will not impact its loan growth in FY22 because advances growth mostly happens in the second half of a fiscal starting October every year. The bank, which posted a 27 per cent rise in advances for FY21, did not share an advances growth target.

The core net interest income rose by only 4.6 per cent during the reporting quarter to Rs 1,757 crore despite the advances growth. Restricting the growth was a Rs 538 crore interest reversal on recognitions made in the past on assets which turned NPAs after the Supreme Court order on asset classification, which also reduced the net interest margins by 1 percentage point to 7.8 per cent.

The non-interest income grew 57.4 per cent to Rs 787.3 crore during the quarter.

From a business growth perspective, de-risking has been prime on the agenda with limited network expansion in West Bengal and Assam, Ghosh said.

The bank has turned 11 of its training centres into COVID-care facilities to accommodate 700 beds and is also donating 500 oxygen concentrators, he said.

The overall capital adequacy ratio of the bank stood at a healthy 23.5 per cent, and was down when compared with the 27.2 per cent in the year-ago period.

The bank scrip had gained 0.80 per cent to close at Rs 297 a piece on Friday’s trade on the BSE, as against gains of 0.52 per cent on the benchmark.

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PSU banks told to withdraw funds in overseas accounts fearing seizure by Carin, BFSI News, ET BFSI

May 7, 2021 root Banking & Finance

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The central government has asked public sector banks to withdraw funds from their foreign currency accounts abroad, as New Delhi fears Cairn Energy may try to seize the cash after an arbitration ruling in a tax dispute.

Earlier this week a guidance was sent to state-run banks to withdraw funds from their nostro accounts.

A nostro account refers to an account a bank holds overseas at another bank in the currency of that jurisdiction. Such accounts are used for international trade and to settle other foreign exchange transactions.

While the Indian government has filed an appeal, the London-listed firm has started identifying Indian assets overseas, including bank accounts, that could be seized in the absence of a settlement, which Cairn says it is still pursuing.

The company has registered its claim against India in courts in the United States, Britain, France, the Netherlands, Singapore and Quebec, moves that could make it easier to seize assets and enforce the arbitration award.

The government was concerned courts abroad could order funds in their jurisdiction be remitted to Cairn.

Cairn said in February it was discussing several proposals with the government to find a solution.

India’s stand

Finance Minister Nirmala Sitharaman has earlier said that an international arbitration ruling on India’s sovereign right to taxation sets the wrong precedent, but said the government is looking at how best it can sort out the issue arising out of New Delhi being ordered to return $1.2 billion plus interest and cost to UK’s Cairn Energy Plc.

The government, which participated in an international arbitration brought by the Scottish firm against being taxed retrospectively, has appealed against The Hague based tribunal’s ruling asking the government to return the value of shares expropriated and liquidated, tax refunds withheld and dividend seized to recover a wrongly levied retroactive tax demand.

“We don’t believe in retrospective taxation,” she had said. “However, when issues are taken at arbitration… which question India’s sovereign right to taxation, we are worried that it sets a wrong precedent.” The Indian government argues that tax levied by a sovereign power should not be subject to private arbitration. Cairn had previously said the award is binding and it can enforce it by seizing overseas Indian assets.

Sitharaman, however, added that the government is looking to sort out the issue.

“I want to see how we can best sort this out,” she said, without elaborating.

The award

Cairn was awarded damages of more than $1.2 billion-plus interest and costs in December in a long-drawn-out tussle with the Indian government over its retrospective tax claims.

The Scottish firm invested in the oil and gas sector in India in 1994 and a decade later it made a huge oil discovery in Rajasthan. In 2006, it listed its Indian assets on the BSE.

Five years after that, the government passed a retroactive tax law and billed Cairn Rs 10,247 crore plus interest and penalty for the reorganisation tied to the flotation.

The state then expropriated and liquidated Cairn’s remaining shares in the Indian entity, seized dividends and withheld tax refunds to recover a part of the demand.

Cairn challenged the move before an arbitration tribunal in The Hague, which in December awarded it $1.2 billion (over Rs 8,800 crore) plus costs and interest, which totals USD 1.725 billion (Rs 12,600 crore) as of December 2020.

The company has since then been in talks with the finance ministry to get the government to pay the award.

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Bank of India EGM next week to seek shareholders’ nod for preference shares to govt, BFSI News, ET BFSI

April 30, 2021 root Banking & Finance

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New Delhi, Apr 30 () State-owned Bank of India (BOI) has convened extraordinary general meeting (EGM) of shareholders next week to seek approval for issuance of equity shares to government for capital infusion of Rs 3,000 crore. EGM of the shareholders of Bank of India will be held on Wednesday, May 5, 2021 through video conferencing and other audio visual means, the bank said in a regulatory filing.

The board will seek consent of shareholders of the bank to issue and allot up to 42,11,70,854 equity shares for cash at Rs 71.23 per equity share including premium of Rs 61.23 aggregating up to Rs 3,000 crore on preferential basis to government, the bank said in a regulatory filing.

The government in March had sanctioned to infuse the capital in BOI as part of equity during the financial year 2020-21.

Bank of India said it has been growing very diligently and cautiously for the last many years and there is a constant requirement to augment capital.

In order to meet this growing requirement, bank needs long term capital, it added.

The lender said it will utilise the funds to shore up the capital adequacy of the bank and to fund the general business needs of the bank.

After the preferential issue of shares, government’s shareholding in bank will go up to 90.34 per cent from 89.10 per cent now.

Stock of the bank closed at Rs 66.35 apiece on the BSE, down 1.63 per cent from the previous close. KPM MKJ

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Net profit jumps 110% to Rs 175 cr; revenue declines to Rs 2,309 cr, BFSI News, ET BFSI

April 27, 2021 root Personal Finance

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SBI Cards and Payment Services on Monday reported a 110 per cent rise in net profit at Rs 175 crore for the quarter ended March 2021.

The credit card company, promoted by the country’s largest lender SBI, had posted a net profit of Rs 84 crore in the corresponding January-March period of the preceding fiscal year 2019-20.

The company, which operates under the brand name SBI Card, reported decline in revenue to Rs 2,309 crore during the fourth quarter as against Rs 2,433 crore in same period a year ago, it said in a regulatory filing.

Total income too dropped to Rs 2,468 crore from Rs 2,510 crore in the same quarter a year ago.

The total expenses were lower at Rs 2,234 crore as compared to Rs 2,398 crore earlier.

For the full year 2020-21, net profit slipped by 21 per cent to Rs 985 crore from Rs 1,245 crore in preceding fiscal.

With regard to asset quality, the company registered a deterioration with gross non performing assets (NPAs) more than doubling to 4.99 per cent at the end of March 2021, as compared to 2.01 per cent at March 2020.

Similarly, net non-performing assets rose to 1.15 per cent as against 0.67 per cent earlier.

As of March 31, 2021, the company’s capital-to-risk weighted assets ratio (CRAR) was 24.8 per cent compared to 22.4 per cent last year.

During the quarter ended March 2020, the company had come up with its Initial Public Offering (IPO) and was listed on BSE and NSE.

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How to use online stock screeners

April 24, 2021 root Personal Finance

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Do you depend on your friends for suggestions or advice on picking stocks for your portfolio? Well, it’s good to have such friends but it is very important that you do the due diligence yourself to make sure you are selecting the right ones from the lot. Stock screeners help you narrow down on a few select stocks based on specific criteria. Platforms such as Screener.in, Tickertape, Yahoo Finance, StockEdge and Investing.com help you do this conveniently.

Common screeners

Most of these platforms already have a few templated screeners that you can use for stock selection. These are screeners based on various factors such as popular investment themes, formulas and valuations. A few common screeners that one can find on almost all platforms include growth and value-tap companies, debt-reducing entities, bluechips, high ROCE (return on capital employed) firms, high dividend yield and cash-rich companies.

Before selecting a particular templated screener, one should go through the criteria used for developing it. For example, Screener.in’s ‘value stocks’ screener filters stocks with the following criteria – last year’s EPS (earnings per share) greater than ₹20, debt to equity ratio of less than 0.1, average return on capital employed of greater than 35 per cent in the last five years, market capitalisation of more of ₹500 crore and operating profit margin of greater than 15 per cent in the last five years.

On most platforms, you can also alter the criteria to match your investment strategy. One can further narrow down the filtered stocks based on industry/sector and market cap.

The filtered stocks can be further analysed by clicking on any stock from the list. Almost all the platforms provide the company balance sheet, and profit and loss and cash flow statements, ratios and quarterly results with a historical perspective. In addition to the above details, StockEdge also provides instant details on mutual fund holdings for a particular stock as on a particular date.

Besides editing the existing templates, you can also create your own screener based on your requirements. Some platforms such as StockEdge allow creating a bundled screener with both fundamental and technical metrics.

You can also save the created screener for further use.

Premium plans

The good news is that most of the above mentioned facilities are provided for free by the platforms. However, there are some services which are behind a paywall. The free and premium services differ from one provider to another. For instance, narrowing down filters industry-wise and exporting data come as a free service by Investing.com while it is chargeable by Screener.in. Having said that, Screener.in provides more than 1000 templated screeners which is not the case with the former. Screener.in’s premium plan comes at Rs 4,999 per annum and provides options to add more colums to the screener, in addition to providing material such as detailed notes to accounts and credit rating reports that comes handy during fundamental analysis.

In the same way, while inserting a customised ratio comes under a free plan in Screener.in, it is chargeable under other platforms such as Tickertape. Tickertape’s Pro plan comes at Rs 1,133 per annum which includes offering earnings forecasts, brokerage reports, and metrics such as percentage of analysts recommending buy call on a stock. Meanwhile, StockEdge premium plan comes at Rs 2,999 per year for unlocking higher number of metrics for the screener. It provides inhouse stock reports for some of the stocks. While screeners from Investing.com and Yahoo Finance may come free, the screener options would be limited.

The cost and the services offered by these platforms cannot be compared as facilities provided by each one of them vary.

Points to note

Whether you go for the free service or the paid option, note that not all platforms work alike. For example, a value stocks screener from one platform may not result in the same stocks as that from another as the criteria used could be different across platforms. Thus, understanding the criteria used is essential before using the screener data.

Also, when using a screener across industries, make sure the criteria used is relevant for all sectors. Further, if you would like to save the screeners used for picking stocks, go for platforms that allow you to export the data. Screener.in and Investing.com are two such platforms.

Finally, make sure you opt for ‘latest data’ while selecting a screener. This will pull out data only for those stocks for which the latest data is available..

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IDFC First Bank raises Rs 3,000 cr equity capital through QIP, BFSI News, ET BFSI

April 8, 2021 root Banking & Finance

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NEW DELHI: IDFC First Bank has raised Rs 3,000 crore through QIP in which global marquee investors like BNP Paribas and Baillie Gifford participated alongside domestic players such as Bajaj Allianz Life and HDFC Life.

The qualified institutional placement (QIP) closed on Tuesday and the lender issued 52.31 crore fresh equity shares at Rs 57.35 per share.

“On April 6, 2021, the bank has raised Rs 3,000 crore through Qualified Institutional Placement to marquee international and domestic investors by issuing 52.31 crore fresh equity shares having face value of Rs 10 each, at a price of Rs 57.35 per share,” IDFC First Bank said in a regulatory filing on Wednesday.

Out of this, 68.33 per cent of the allotment was made to foreign investors and 31.67 per cent to domestic investors.

Pursuant to the allotment of equity shares in the issue, the paid-up equity share capital of the bank stands increased from Rs 5,675.85 crore to Rs 6,198.95 crore, it said.

As many as eight investors subscribed to more than 5 per cent of the shares offered in the QIP.

These are: Bajaj Allianz Life Insurance 11.98 per cent, Baillie Gifford Emerging Markets Equities Fund 11.39 per cent, Baillie Gifford Pacific Fund (a sub fund of Baillie Gifford Overseas Growth Fund) 8.95 per cent, and BNP Paribas Arbitrage-ODI received 8.62 per cent of the shares in the issue.

City of New York Group Trust was allotted 8.53 per cent shares under the QIP, Baillie Gifford Emerging Markets Growth Fund 6.79 per cent, HDFC Life Insurance 6.67 per cent and Tata AIA Life Insurance 5.83 per cent.

The private sector bank also released some provisional data, witnessing over 10 per cent yearly growth in its total funded assets at Rs 1,17,803 crore as of March 31, 2021 from Rs 1,07,004 crore a year ago.

Total consumer deposits grew by 43.15 per cent year-on-year to Rs 82,628 crore from Rs 57,719 crore for the period.

Bank’s CASA deposits (current account and savings account) jumped by 122.74 per cent to Rs 46,022 crore from Rs 20,661 crore by March 2020. The CASA ratio stood at 51.95 per cent by end of March 2021, up from 31.87 per cent by year ago same period.

However, the top 20 depositors’ concentration witnessed a decline at 7.76 per cent against 20.26 per cent.

IDFC First Bank said these figures are being released under Sebi norms on disclosure requirements. The figures mentioned as on March 31, 2021 are provisional and subject to audit undertaken by the statutory auditors of the bank, it added.

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Bank of India raises Rs.602 crores via AT-1 Bonds, BFSI News, ET BFSI

March 27, 2021 root Banking & Finance

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Public lender, Bank of India (BOI) has raised Rs.602 crores via Basel III compliant Additional Tier 1 (AT-1) bonds on March 26, 2021 on private placement basis.

Bank of India in a regulatory filing on March 24, 2021(Wednesday) said the bank is issuing Basel III compliant tier 1 bonds for the base issue size of ₹ 250 crore and green shoe option of ₹ 500 crore. The total amount aggregates to ₹ 750 crore.

The bidding for the Basel III compliant additional tier I bonds started today and will end on March 30 (settlement date). The minimum lot size of the bond issue will be of ₹1 crore and in multiples of ₹1 crore thereafter, said the public sector lender.

Stock of Bank of India closed 0.29% up at ₹69.45 on the BSE.

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