Tag: SEBI

Equitas SFB gets RBI nod to apply for amalgamation of promoter into itself, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


New Delhi: Equitas Holdings, the promoter of Equitas Small Finance Bank (SFB), on Saturday said the bank has received Reserve Bank of India‘s (RBI) nod to apply for amalgamation of the promoter into itself. As per the SFB licensing guidelines of RBI, a promoter of SFB can exit or cease to be a promoter after the mandatory initial lock-in period of five years (initial promoter lock-in) depending on RBI’s regulatory and supervisory comfort and SEBI regulations at that time.

“In the case of Equitas Small Finance Bank (the bank), our subsidiary for which the company is the promoter, the said initial promoter lock-in for the company expires on September 4, 2021.” it said in a regulatory filing.

Hence, the bank had requested RBI if a scheme of amalgamation of the company with the bank, resulting in the exit of the promoter, can be submitted to RBI for approval, prior to the expiry of the said five years, to take effect after the initial promoter lock-in expires, it said.

“RBI vide its communication dated July 9, 2021, to the bank has permitted the bank to apply to RBI seeking approval for scheme of amalgamation.” Equitas Holdings said.

RBI has also conveyed that any ‘no objection’, if and when given on the scheme of amalgamation, would be without prejudice to the powers of RBI to initiate action, if any, for violation of any licensing guidelines or any terms and conditions of the license, or any other applicable instruction, it added.

“Accordingly, we would be initiating steps to finalise the scheme of amalgamation, submit to the boards of the company and the bank for approval, and take further action thereafter in accordance with applicable regulations and guidelines.” Equitas Holdings said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Top banks eye overseas AT1 bond sale as domestic investors turn wary, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


As mutual funds turn wary of AT1 bonds, banks are looking overseas to raise capital through the instrument.

Five top lenders, including HDFC Bank, Axis Bank and State Bank of India, are looking to raise up to $2 billion overseas in the next few months through Additional Tier I (AT1) as they anticipate an increase in credit demand.

State Bank of India, plans to raise upto Rs 14,000 crore through additional tier-I bonds (AT1 bonds) in the current financial year (FY22) to enhance capital adequacy profile.

The Central Board approved the capital raise by way of issuance of Basel lll-compliant debt instruments in rupee and/or US dollar in FY22, the bank said last month.

Canara Bank is planning to raise up to Rs 3,400 crore in capital by issuing fresh AT1 bonds.

These bonds are expected to offer yields between 4 per cent and 5 per cent. Covering currency risks, the total cost may go up to 9 per cent.

AT1 bonds

AT1 bonds, also known as perpetual bonds, add to a bank’s capital base and allow a lender to meet fund adequacy thresholds set by regulators. Such securities do not have any fixed maturity but generally have a five-year call option, giving defined exit routes to investors. These papers are always rated one or two notches below the same issuer’s

general corporate rating. Domestic investors, including mutual funds, are wary of AT1 bonds after Yes Bank wrote off over Rs 8,000 crore of such bonds during its bailout in 2020.

State Bank of India was the only bank from the country to raise AT1 bonds overseas in 2016. Five-year call options on that series of AT1 bonds could be exercised this year.

Between FY18 and FY21, perpetual bond sales by banks have nearly halved to Rs 18,772 crore from Rs 34,860 crore three years ago. In FY22, AT1 bond sales have so far been negligible.

Sebi directive

Capital market regulator Sebi has eased the valuation rule pertaining to perpetual bonds in March last year.

The move came after the finance ministry asked the Securities and Exchange Board of India (Sebi) to withdraw its directive to mutual fund houses to treat additional tier-I (AT-1) bonds as having maturity of 100 years as it could disrupt the market and impact capital-raising by banks.

Sebi said the deemed residual maturity of Basel III AT-1 bonds will be 10 years until 31 March, 2022, and would be increased to 20 and 30 years over the subsequent six-month period.

From April 1, 2023, onwards, the residual maturity of AT-1 bonds will become 100 years from the date of issuance of the bonds.

In addition, Sebi said that deemed residual maturity of Basel III Tier 2 bonds would be considered 10 years or contractual maturity, whichever is earlier, until March 2022. After that, it will be in accordance with the contractual maturity.

AT-1 bonds are considered perpetual in nature, similar to equity shares as per the Basel III guidelines. They form part of the tier-I capital of banks.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

CDSL becomes the first depository to open 4- crore active Demat accounts, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


Central Depository Services (India) Limited (CDSL), India’s leading and only listed depository, has announced the first depository to open Four crores plus (40 million) active Demat accounts.

CDSL is currently the largest depository in the country in terms of active Demat accounts.

CDSL facilitates holding and transacting in securities in the electronic form and facilitates settlement of trades on stock exchanges.

CDSL has an objective of delivering quality services and innovative products. Since the financial services industry has become increasingly IT-reliant, CDSL is adopting technology as a part of its strategic vision. Major shareholders of CDSL include BSE, Canara Bank, HDFC Bank, LIC and Standard Chartered Bank.

Nehal Vora, CEO of CDSL said “I will firstly congratulate SEBI – the capital market regulator for being the visionary leader that guided us to this digital growth and safe ecosystem. It is their foresight that transited the long Demat account opening procedure into an easy digital experience without compromising on the necessary controls. Our milestones are a result of the hard work and coordination of all the market infrastructure institutions and the market intermediaries. I wish to thank the investors for choosing CDSL to be their depository. I would like to thank all the participants of the capital market for their contribution in accelerating the digital and financial growth of India.”

This journey of financial inclusion has to enhance to engage with a higher number of persons to foray into the securities market to achieve the objective to make India a capital market hub that is highly focused on corporate governance, technology, investor protection, transparency, and sustainability.

Further, CDSL will continue to provide services for the progress of the securities markets, for the valued investors in line with our vision of “Empowering the Atma-nirbhar Niveshak” through our digital services.”



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

Beacon Trusteeship appoints Sanjay Sinha as Independent Director on the Board of the Company, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


SEBI registered Debenture Trustee Beacon has announced the appointment of Sanjay Sinha as Independent Director on the Board of the company.

Sanjay Sinha, Ex-MD and CEO, Axis Trustee Services, brings with him more than 35 years of diverse experience in areas such as credit granting and administration, credit risk management, debt resolutions, FX transaction execution with hedging solutions, trusteeship services for loans, debt securities and other asset classes, agency services, compliance management, according to a statement.

Pratapsingh Nathani, Chairman and MD, Beacon Trusteeship, said, “We are delighted to have Sinha on board and learn from his rich experience. His in-depth knowledge would enhance the existing strengths and capabilities of Beacon Trusteeship Board which already includes some of the most respected names as its independent board members.”

In his earlier stints, Sinha has held apex positions at Axis Bank and SBI. He served as Group Head – Corporate Credit at Axis Bank and also served as the Head of Credit and Investment Banking at Axis Bank UK, the statement added.

He is currently the President of the Trustee Association of India (TAI) and is also on various working groups formed by SEBI for strengthening the regulatory framework for domestic bond markets.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

SAT hearing on PNB Housing-Carlyle deal put off a week

Banking & Finance

[ad_1]

Read More/Less


The Securities Appellate Tribunal (SAT) will hear the case related to the PNB Housing Finance-Carlyle deal next Monday.

The order in the matter was expected on July 5, however, it was adjourned for July 12.

PNB Housing had filed an appeal before the SAT against the letter issued by the Securities and Exchange Board of India last month, requesting it not to go ahead with the proposal until due diligence was done.

“As sought by the company, the Securities Appellate Tribunal, in its hearing on July 5, 2021, adjourned the case for Monday, July 12, 2021,” PNB Housing Finance said in a regulatory filing on Tuesday.

Capital infusion by Carlyle

Under the deal announced on May 31, the US-based Carlyle, alongside other investors, is slated to infuse ₹4,000 crore capital into PNB Housing through the issuance of preference shares and warrants.

However, the deal has come under the scanner of the regulator. The company was directed to carry out the valuation process of shares as per the relevant legal provisions.

PNB Housing contended that it has followed SEBI norms in deciding the issue price at ₹390 apiece.

The scrip of the company traded at ₹695.35 apiece on BSE, down 1 per cent from its last close.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Can FDI investor also be an FPI, Zomato IPO will answer, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Investors in Zomato want more of it as the company heads for an IPO.

Several foreign investors who have pumped in money in Zomato are keen to subscribe to the company’s upcoming Rs Rs 8,250 crore initial public offering.

However, they may not be able to invest according to a 2019 rule which debars investment in a company through both FDI and FPI routes.

“A person resident outside India may hold foreign investment either as FDI or as FPI in any particular Indian company,” according to Foreign Exchange Management (Non-debt Instruments) Rules of October 2019.

Investors have now approached Reserve Bank of India (RBI) and Securities and Exchange Board of India (Sebi) to figure out whether existing foreign investors in the company can participate in the maiden equity offering.

FDI

Foreign direct investment or FDI pertains to international investment in which the investor buys a lasting interest in an enterprise in another country. It may take the form of buying or constructing a factory in a foreign country or adding improvements to such a facility, in the form of property, plants, or equipment. FDI is a cross-border investment, by a resident or a company domiciled in a country, to a company based in another country, with an objective of establishing a lasting interest in the economy.

FPI

Foreign Portfolio Investment or FPI refers to the investment made in the financial assets of an enterprise, based in one country, by foreign investors. FPI involves the purchase of securities that can be easily bought or sold. The intent with FPI is generally to invest money into another country’s stock market with the hope of generating a quick return. Such an investment is made with the aim of making short-term financial gain and not for obtaining significant control over the managerial operations of the enterprise.

Zomato IPO

Zomato has filed preliminary papers with Sebi to raise Rs 8,250 crore through an initial share sale.

The IPO comprises fresh issue of equity shares worth Rs 7,500 crore and offer for sale to the tune of Rs 750 crore by Info Edge (India) Ltd, draft red herring prospectus filed with Sebi showed on Wednesday.

Proceeds from the fresh issue would be used towards funding organic and inorganic growth initiatives; and general corporate purposes.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Sebi brings in rules to make stock exchanges pay for technical glitches, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


MUMBAI: In an unprecedented move to minimize the instances of technical glitches occurring at market infrastructure institutions like stock exchanges, the Securities and Exchange Board of India (Sebi) on Monday released new rules that will make such institutions and their officials liable in the event of failure to provide services.

“Considering the criticality of smooth functioning of systems of MIIs, specifying a pre-defined threshold for downtime of systems of MIIs becomes desirable. For any downtime or unavailability of services, beyond such pre-defined time, there is a need to ensure that ‘Financial Disincentive’ is paid by the MIIs as well as Managing Director and Chief Technology Officer,” Sebi said in a circular issued on Monday.

Sebi’s move comes in the backdrop of the substantial failure of NSE’s systems in February when various aspects of the stock exchange’s functions failed to perform for over four hours.

“This will encourage MIIs to constantly monitor the performance and efficiency of their systems and upgrade their systems etc. to avoid any possibility of technical glitches and restart their operations expeditiously in the event of glitch,” Sebi said.

Sebi said that the new rules are being issued in the interest of investors to promoting the development of the securities market in the country, and will come into effect from August 16, 2021.

Sebi has mandated that market infrastructure institutions report technical glitches in their services within two hours of the occurrence of the event. However, if the technical glitch is declared a disaster by the MII, its reporting should be immediate.

Further, the MII must submit a preliminary report on the technical glitch within 24 hours followed by a root cause analysis and a corrective action report within 21 days. “Such report shall be submitted to Sebi, after placing the same before the Standing Committee on Technology and the Governing Board of the MII and confirming compliance with their observations,” the regulator said.

In terms of the penalties that MIIs and their officials will be required to pay in the event of a technical glitch, the market regulator has released a slab structure.

In an event where an MII fails to declare a technical glitch that affects one or many critical systems as a disaster within 30 minutes, the MII will pay 10 per cent of its average standalone net profit for past two years or Rs 2 crore, whichever is higher. Further, the managing director and the CTO will pay 10 per cent each of their annual pay for the year in which disaster occurred.

If the MII is unable to restore operations within the recovery time objective set by Sebi within 45 minutes of a disaster, the MII must pay 10 per cent of its average standalone net profit for past two years or Rs. 2 crore, whichever is higher. And, MD and CTO must pay 10 per cent each of their annual pay for the year.

The penalty structure will also apply in the event the MII fails to restore critical operations within three hours of declaring disaster. This penalty will be over and above the two penalties stated above.

Sebi said that the penalties will be paid by the MIIs and their officials to the Investor Protection Fund of the stock exchange, the core settlement guarantee fund of the clear corporation and teh Investor Protection Fund of depositories.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

LIC’s auditor appointment made a board process, ahead of IPO

Banking & Finance

[ad_1]

Read More/Less


 

The Centre has taken one more step towards making Life Insurance Corporation (LIC) ‘IPO ready’ by turning the statutory auditor appointment into a board driven process, in line with SEBI’s listing requirements. Hitherto, the statutory auditor for central office and zones required the Centre’s approval.

The Finance Ministry’s Department of Financial Services has amended the LIC Rules, 1956 for a new framework on the selection of auditors.

No longer will the government appoint the auditor, but it will be the shareholders at the Annual General Meeting, according to LIC observers.

Under the new process, LIC’s Audit Committee will recommend to the board for adoption a policy for selection of auditors. On the Board adopting this policy, the Audit Committee will draw up a panel of auditors and recommend to the board an individual or a firm for appointment. The board will then place the matter before shareholders for their approval at the AGM.

 

SN Ananthasubramanian, former ICSI President and practising company secretary, said: “The amendments to the LIC Rules which introduce various aspects of board-monitored governance, are essentially to make LIC IPO ready.”

Ashok Haldia, former CA Institute Secretary, said that the overhaul in auditor appointment provisions, “together with other amendments to the LIC Act/Rules is a step that could enhance corporate governance and transparency, giving more comfort to investors looking to come on board LIC,”

The Centre has brought made 27 amendments to the LIC Act through this year’s Finance Act. It is expected to issue later this month a request for proposals/expression of interest for appointment of merchant banks for the mega LIC IPO, which is set to mop-up at least ₹1-lakh crore for the government. While retaining its ‘corporation’ status, the government is moving to align the LIC Act’s corporate governance provisions with SEBI’s listing requirements. Recently, the government tweaked Securities Contracts Rules to enable public float of large issuers (like LIC), eyeing post listing market capitalisation of over ₹1-lakh crore.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Bond yields and equities – it takes two to tango

Personal Finance

[ad_1]

Read More/Less


In recent months inflation expectations have been on the rise both in India and the developed markets and its impact has been felt on bond yields globally, central bank QE (quantitative easing) notwithstanding. Since then a new narrative has been taking hold amongst some market bulls. This new narrative is that the long-term correlation between bond yields and equities is positive, and hence is not a cause for alarm among equity investors. If expectations of better growth is driving inflation upwards and results in a rise in yields, then it reflects optimism on the economy and equities are likely to do well in such a scenario, is their argument. Is there data to support these claims? Is increase in bond yield actually good or bad for equities?

Inconsistent narratives

When movement of bond yields in any direction is used as a justification for equities to go up, then you must become circumspect. Since the launch of monetary stimulus last year globally by central banks and the crash in bond yields and deposit rates, the narrative that was used to justify a bull case for equities (which played out since the lows of March 2020) was that there is no alternative to equities. Hence, when bond yields actually start moving up as they have since early part of this year, an alternative for equities is actually emerging. So, market bulls have now shifted the narrative to why increase in bond yields this time is positive for equities as in their view bond yields are rising in anticipation of better economic growth. Well actually by this logic, last year bond yields fell in anticipation of a recession, so ideally it should have been negative for equities, right? Logic is the casualty when goal posts are changed.

Economic theory vs reality

Theoretically, increase in bond yields is negative for equities. This is for four reasons.

One, increase in yields will make borrowing costs more expensive and will negatively impact the profits of corporates and the savings of individuals who have taken debt.

Two, increase in bond yields is on expectations of inflation and inflation erodes the value of savings. Lower value of savings, implies lower purchasing power, which will affect demand for companies.

Three, increase in bond yields makes them relatively more attractive as an investment option; and four, higher yields reduce the value of the net present value of future expected earnings of companies. The NPV is used to discount estimates of future corporate profits to determine the fundamental value of a stock. The discounting rate increases when bond yields increase, and this lowers the NPV and the fundamental value of the stock.

What does reality and data indicate to us? Well, it depends on the period to which you restrict or expand the analysis (see table). For example if you restrict the analysis to the time when India had its best bull market and rising bond yields (2004-07), the correlation between the 10-year G-Sec yield and Nifty 50 (based on quarterly data from Bloomberg) was 0.78. However if you extend your horizon and compare for the 20 year period from beginning of 2001 till now, the correlation is negative 0.15. The correlation for the last 10 years is also negative 0.75.

In the table, we have taken 4 year periods since 2000 and analysed the correlation, on the assumption that investors have a 3-5 year horizon. The correlation is not strong across any time period except 2004-07 . It appears unlikely we will see the kind of economic boom of that period right now. That was one of the best periods in global economy since World War 2, driven by Chinese spending and US housing boom as compared to current growth driven by monetary and fiscal stimulus, the sustainability of which is in doubt in the absence of stimuli. This apart, Nifty 50 was trading at the lower end of its historical valuation range then versus at around its highest levels ever now. Inflationary pressures too are higher now. In this backdrop, the case for a strong positive correlation between equities and bond yields is weak.

What it means to you

What this implies is that the data is not conclusive and claims that bond yields and equities are positively correlated cannot be used as basis for investment decisions. At best, one can analyse sectors and stocks and invest in those that may have a clear path to better profitability when interest rates increase for specific reasons. For example, a company having a stronger balance sheet can gain market share versus debt-laden competitors; market leaders with good pricing power can gain even when inflation is on the rise.

A final point to ponder upon is whether a market rally that has been built on the premise that there is no alternative to equities in ultra-low interest rate environment, can make a transition without tantrums to a new paradigm of higher interest rates even if that is driven by optimism around growth. An increase in Fed expectations for the first interest rate increase a full two years from now, caused temporary sell-offs across equites, bonds and emerging market currencies, till comments from Fed Governor calmed the markets. These may be indications of how fragile markets are to US interest rates and yields.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

IPO pie set to grow bigger as over a dozen financial services players line up Rs 55,000 crore issues, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


MUMBAI: With payments major Paytm‘s board reportedly approving a bumper share sale plan running north of Rs 22,000 crore, the IPO market is set for a big days as over a dozen financial services players, including fintechs, are set to mop up over Rs 55,000 crore this fiscal from the market, according to investment bankers.

With more than a dozen insurance, asset management, commercial banking, non-banks, microfinance, housing finance and payment bank players already filing draft documents with the market regulator Sebi for public offerings, the financial services sector is set to dominate the primary issues or initial public offerings (IPOs) over the coming months.

Some of those who have already filed the draft red herring prospectus (DRHPs) with the Sebi include Aadhar Housing Finance (Rs 7,500 crore), Policy Bazaar (Rs 4,000 crore), Aptus Housing Finance (Rs 3,000 crore), Star Health Insurance (Rs 2,000 crore), Aditya Birla Sun Life AMC (Rs 1,500-2,000 crore) Arohan Financial Services (Rs 1,800 crore), Fusion Microfinance (Rs 1,700 crore), Fincare Small Finance Bank (Rs 1,330 crore), Tamilnad Mercantile Bank (Rs 1,000-1,300 crore), Medi Assist (Rs 840 crore) and Jana Small Finance Bank (Rs 700 crore), among others.

And the board of the biggest payments bank Paytm has reportedly cleared an over Rs 22,000 crore IPO. Together, these financial services companies are set to garner around Rs 55,000 crore from the public.

If materialised, the Paytm issue will be the largest IPO ever in the country, eclipsing the hitherto largest issue — the Rs 15,000-crore share sale by the government in national miner Coal India in October 2010, says investment bankers seeking not to be quoted.

Investment bankers and analysts consider the IPO boom to be reflective of the ongoing bull run and thus advice retail investors to be cautious while parking money in new companies.

V K Vijayakumar, chief investment strategist at Geojit Financial Services in Kochi, said the performance of the IPO market usually has a strong correlation to the performance of the secondary market.

“If the stock market is bullish, it attracts a large number of investors into IPOs. Particularly, new investors lured by high potential profits, get attracted to new offers and the IPO market has always done well during market booms, Vijayakumar told .

Rupen Rajguru, head of equity investments and strategy at global wealth management firm Julius Baer in Mumbai, concurs and cautions retail investors to study the valuations very carefully before investing as the market is a but over-heated now.

“The current IPO market buoyancy is expected to continue into the next few quarters. IPOs are in fact playing on the financialisation of savings theme, which is a big structural shift in the country,” Rajguru told .

He said Julius Baer at the global level is “bullish on India as it considers it to be one of the preferred emerging markets after China”.

Though stating that the present bull market provides a favourable setting for IPOs, Vijayakumar also cautioned retail investors to be careful while applying for IPOs as some of the recent IPOs got listed at a huge discount to the tune of 30-40 per cent below the issue price. Kalyan Jewellers and Suryoday Small Finance Bank are even now quoting at a discount to the issue price, he said.

“Promoters and merchant bakers have a responsibility to price the issue reasonably to leave something on the table for retail investors. Aggressive pricing will be damaging to all,” Vijayakumar warned.

Pointing out that even good issues will be impacted by an adverse market, he said since markets are overvalued now, there is a possibility of a sharp correction. If IPOs are to sail through even under difficult market conditions, the pricing has to be right, he said.

Apart from traditional financial services players, several digital payment and fintech players are also planning to tap the IPO market.

Digital payments major Paytm’s board has approved a proposal to raise over Rs 22,000 crore from IPO, while online insurance platform Policy Bazaar is also looking to float a Rs 4,000-crore offering, industry sources said.

Two small finance banks — Jana SFB and Fincare SFB — have also filed their draft papers with the markets watchdog. While Fincare is planning to mop up Rs 1,330 crore through public offering, Jana is looking to raise around Rs 700 crore.

Aditya Birla Sun Life AMC, the largest non-bank sponsored AMC, is looking to go public with Rs 1,500-2,000 crore offering. With an AUM of Rs 2.7 lakh crore, this is among the top five asset managers and will become the fourth AMC to get traded on the domestic bourses.

From the insurance sector, there are two IPOs – Westbridge Capital and billionaire investor Rakesh Jhunjhunwala-backed Star Health & Allied Insurance, and the largest health benefits administrator Bengaluru-based Medi Assist TPA.

Medi Assist filed IPO papers last month to raise around Rs 840 crore and it will be the first IPO by an insurance TPA (third-party administrator), while Star Health is firming up a Rs 2,000 crore issue.

Private equity firm Blackstone-backed Aadhar Housing Finance and Chennai-based Aptus Housing Finance are also looking to raise Rs 7,500 crore and Rs 3,000 crore respectively through IPOs.

Microfinance players like Arohan Financial Services, Fusion Microfinance and digital debt platform Northern Arc are also looking to hit the IPO market.

The southern Tamil Nadu-based old generation private sector lender Tamilnad Mercantile Bank is also planning a Rs 1,000-crore issue before the end of the calendar year, according to sources.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,
1 … 7 8 9 10 11 … 13