Indian Stock Market

Soros picks 4% stake in BSE

Sumitomo Mitsui picks 4.5% stake in Kotak Mahindra Bank for Rs 1366 crore.

About Sumito Mitsui:

Sumitomo Mitsui Banking Corporation is a Japan based Banking Major.

Stake Buy:

Sumitomo Bank will buy 4.5% in Kotak Mahindra Bank for Rs 1,366 crore through a preferential allotment. The transaction will reduce the combined shareholding of the promoters — the Kotak and Mahindra families — in the bank from 51% to a little over 49%.

The preferential allotment, which is subject to Reserve Bank of India (RBI) clearance, will be done at Rs 833 per share.

Capital Spending:

“The capital will be used for expanding our insurance and banking business,” Uday Kotak, vice chairman and managing director Kotak Bank told ET, adding that his bank was open to acquisitions as there were opportunities in the brokerage, insurance and banking sector Sumitomo Mitsui Banking Corporation (SMBC) has also signed an agreement with Kotak Mahindra Bank for a possible private equity fund for infrastructure sector, debt syndication, raising offshore money through Kotak’s mutual fund and cross border investments.

Equity Dilution:

On further dilution of equity stake, Mr Kotak said that promoters do not need to dilute any more stake. He said when they were issued the banking licence in 2002, the Reserve Bank of India (RBI) had said that the promoter holding should not be more than 49% and the same applied to them.

RBI Banking Regulations:

In 2004, RBI said that no single entity or group could hold more than 10% in a bank. “The 2004 guideline said that the licensing condition (of new private banks) be kept in mind and secondly, more than 10% is permitted, provided some conditions are met. Take the two together and we are not mandated to lower the stake,” said Mr Kotak.

Following the dilution of equity, shareholding of private equity firm Warburg Pincus will also come down to 9% from 10%. Warburg Pincus holds a stake in the bank through foreign institutional investors — Melany Holdings and Madison Holding, with 4.91% each.

Following the preferential investment, the capital adequacy ratio (CAR) will increase to 24% from 18%, giving Kotak Bank enormous scope to increase its loan book. On the stake sale to SMBC, Mr Kotak said it made business and strategic sense, “Japan is a high-savings country looking for growth and Indian is a high- growth country looking for savings.

SBI gets back SBI Capital Markets stake from ADB.

State Bank of India ( SBI ) , has bought back a nearly 13.84 per cent stake in its investment banking arm, SBI Capital Markets, from the Asian Development Bank for an undisclosed amount.

The transaction makes SBI Caps a wholly-owned subsidiary of SBI.
ADB, which bought the stake in 1997, decided to exit as it wanted to invest in “other development activities and ventures” in the country and felt that it has achieved its initial goal of “giving a fillip” to the local firm, SBI Caps Managing Director and CEO S Vishvanathan said.

“ADB sold its stake to State Bank in March as it wanted to invest in other development activities. The deal has made SBI Cap as the wholly-owned subsidiary of State Bank,” Visvanathan told PTI in Mumbai, but declined to divulge the valuation amount.

According to a senior official with the State Bank Group, SBI paid a hefty premium for ADB’s stake. It decided to buyback the shares as ADB’s holding contributed “hardly any value” to the company any more, as the agency had achieved its investment goal in SBI Caps.

Asked whether SBI plans to sell the stake to another partner, the official said SBI is unlikely to look for another partner in the near future and is likely to keep the entity as a wholly-owned subsidiary of the bank.

Punjab & Sind Bank IPO

This is going to be a Rs.500 crore IPO from Banking side. Banking IPOs have been hitting market consistently either from government or private sector.

Punjab & Sind Bank plans to file its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India next week

Government had previously accepted the restructuring plans . Wait for more information . come back again

Shares of State Bank of India , the country’s largest bank fell as results were disappointing . Q 4 results were 32% down compared to corresponding quarter.

The fall in profit is due to provisioning of bad debts.

Gross non-performing assets of the bank as a percentage of loans rose to 3.1 percent at end-March from 2.9 percent in the year ago period. Provisions for bad loans jumped 69 percent to 21.87 billion rupees ($485 million), weighing down earnings.

Sequoia Capital has sold its 11% stake in Manappuram General Finance & Leasing for Rs. 300 crores in open market.

About Sequoia Capital – Manappuram capital deal

A bulk of the shares were purchased through convertible preference shares at Rs 100 a piece. Sequoia later also invested in another group firm Manappuram Finance (Tamil Nadu) Limited, that eventually merged with Manappuram General Finance.

Post amalgamation, Sequoia held as much as 3.9 million shares and is believed to have sold all its shares, in one of the single largest PE exits in recent times. Although the company is yet to make disclosure of the same and details of share sale will be clear later in the evening, there was trading of as many as 4.2 million share of the firm at BSE alone against the two week average of 30,000.

The shares traded around between Rs 740 and 796 a piece on Friday, which means Sequoia would have netted close to 8x returns on its less than year-old-investment.

Other investors in Manappuram General Finance include Hudson Equity, a fund managed by India Equity Partners that co-invested with Sequoia in 2007. Thereafter the NBFC raised further rounds of investments from US-based private equity fund Granite Hill besides UK-based Alchemy Ashmore– a joint venture between Alchemy and Ashmore.

Services offered by Manappuram include deposits, gold and vehicle financing, forex and general and life insurance. It had also entered into an alliance with IDBI Fortis Life Insurance Company Ltd to provide wealth building and insurance products to customers in Kerala.

Source: VCCIRCLE

Dewan Housing raising 5000 crores.  Economic Times article. DHFL – Fund raising

Mortgage lender Dewan Housing Finance (DHFL) plans to raise up to Rs 5,000 crore in the current fiscal to support its expansion plans besides meeting the capital adequacy needs. Out of the total amount, Rs 500 crore tier-I (equity) capital will be raised in the next few weeks, said Dewan Housing CMD Kapil Wadhawan.

“We will soon raise Rs 500 crore tier-I capital and the board will meet in the next few weeks to approve this. The rest Rs 4,500 crore debt capital will be raised from various sources,” Wadhawan said. The company will tap sources like bank term-loans, refinance from National Housing Bank and non-convertible debentures, Wadhawan said.

Nokia Mobile Banking soon.

Economic Times article

Finnish telephone supplier Nokia is planning to roll out its mobile banking service, Nokia Money, in many Indian cities soon, a Nokia official said Wednesday.

A pilot of this service launched in Pune in February with YES Bank had received “extremely encouraging” response, the official said.

The company is now looking to have similar tie-ups with other banks to roll out the service in other parts of the country.

“A decision will be taken after the six-month test period. The process involves getting approvals from Reserve Bank of India,” said the official, who did not want to be named.

Nokia Money is like a wallet on phone as it lets people transfer money through the mobile phone. Subscribers also can pay utility bills and top up SIM cards. There will also be the facility to pay for goods and services.

“By using this facility a person living in one place can transfer the money to another person not having bank account and the latter can receive the money from Nokia dealer in his area,” said the official, explaining the working of the scheme.

Nokia has 200,000 retailers in India who could serve as mobile money services agents.

India today is the world’s fastest growing cell phone market. There are 500 million mobile phones in the country and this is expected to cross 900 million by the end of 2013.

At the same time, an estimated 41 per cent of Indians and 46 per cent of mobile subscribers do not have bank accounts.

Nokia feels the potential for mobile money services is huge. It expects the value of mobile payment transactions in India will reach up to $1.28 billion by 2013.

Standard Chartered IPO

update: IPO Allotment status – IPO has been successful to some extent . So next on investors radar will be the allotment status and allocation date , rate etc. Will keep you updated,check back again.

British Banking Giant , Standard Chartered may launch IPO of its Indian Operations.

Indian Operations of Standard Chartered is already the 2nd largest contributer of Profits in Standard Chartered balance Sheet.

Hong Kong and Indian Operations together contribute more than 45% of the Bank’s earnings.

Standard Chartered is one of the largest Banks of the world. Its a British Bank with presence all over the world.

Financials of Indian Subsidiary:

Net Profit : Rs. 4900 Crores ( 2009 )

StanChart India witnessed a 10 per cent growth in its loan book in 2009 on the back of a healthy rise in consumer advances and loans to small companies.

India is the 2nd largest market for Standard Charterd in terms of earnings after Hong Kong, where the net profit went up to $1.062 billion in 2009 from $989 million in the previous year.

In terms of earnings after Hong Kong, where the net profit went up to $1.062 billion in 2009 from $989 million in the previous year.

As part of ramping up its operations in the country, the bank plans to hire 2,000 more people here this year, Swaroop said. At present, the lender has total loan book of $9 billion (around Rs 41,400 crore) while the deposits are $11 billion (Rs 50,600 crore).

The proportion of current and savings account deposits to total deposits stood of StanChart India at 43 per cent, which grew by 25 per cent during the year, Swaroop said.

Total income of the bank, during the year went up to $1.813 billion as against $1.694 billion. At present, the bank has a capital adequacy ratio of 12.6 per cent.

During the year, the bank saw a slight rise in its loan impairments, which rose to $182 million from $157 million in the previous year. Net non-performing assets rose to 1.9 per cent during the year while gross NPAs stood at 2.9 per cent as of December 2009.

PNB Factoring.

Punjab National Bank (PNB) planning to launch two subsidiaries to enter new areas of business. It is set to
foray into investment services through its investment-banking subsidiary PNB Investment Services Limited while enter the factoring business through another subsidiary – PNB Factoring.

PNB chief general manager (PNB Credit Card Venture Division and Overseas Operations) Ranjan Dhawan told ET that the bank has completed all the formalities for launching its investment-banking arm in next two months. “We will launch the services with a corpus of Rs 20 crore.

We have appointed Anil Ahuja as Chief Operating Officer. We will be hiring 30 more professionals and merchant bankers,” he said.

The company would be offering investment banking advice and execution in capital market deals, issue management services apart from offering innovative fund raising solutions, both domestically and internationally in debt, equity and hybrids. “We would also provide advisory services to our clients on potential takeover targets with the objective of taking over of the management/assets/businesses/brands. We would also offer advisory services for corporate and capital Structuring and restructuring,” Mr. Dhawan said.

In another initiative, the bank is planning to enter the Rs 1000-crore factoring business with an investment of Rs 100 crore. Mr. Dhawan told ET that the factoring subsidiary would be operation by next year with an aim to provide instant cash facility to MSMEs. “We would be offering receivables factoring facility for small vendors and MSMEs.

In this facility, the seller invoices the goods to the buyer, assigns the same to us and receives prepayment up to a certain percentage of the invoice value immediately. The balance amount is paid to the client when the customer pays us. The terms and conditions of the business will be decided later,” he said adding that the bank is starting this service to promote SME segment.

State Bank of India and Global Trade Finance are the other two major players in the factoring business.

PNB Investment Services is a new subsidiary from Punjab national bank. PNB.

PNB World Travel Card

PNB , Punjab National Bank is planning to launch World Travel Card for the globetrotters. PNB chief general manager –credit card venture division – Ranjan Dhawan told ET that the bank would be launching this pre-loaded travel card by November this year for the convenience of people traveling abroad. “It would be the safest and the convenient currency instrument to carry.

Instead of carrying traveller’s cheque or global currency like Dollar or Pound, the World Travel Card holders would be able to withdraw local currency convertibles from any bank ATM of respective countries they visit. The holder has to pre load the card with the amount he would like to carry,” he said.

The bank is also planning to promote products like PNB Principal Mutual Fund through its branches. “We want to promote financial instruments among our customers which are conservative in nature. If it will not grow meteorically in boom time, it will not dip drastically during the ebb either. Besides metros and tier I cities we will also focus on tier II and III cities to grow our card business,” he said. Apart from that, the bank is also planning to add new products to its Global Credit Card portfolio with an aim to clock Rs 200 crore business selling 2 lakh credit card in this fiscal.

At present, the bank offers PNB Gold and PNB Global Classic to its customers of various income groups. “We are going to launch corporate cards and platinum cards in next few months. Corporate Cards will be meant for senior executives of companies who often travel for business purposes while Platinum card is being designed for high-end customers. This card will meet the requirements of customers like premium gold membership, lounge expenses etc,” Mr. Dhawan said.

Oriental Bank of Commerce  plans  to soon bring down its prime lending rates by 25-50 basis points. This will lower its prime lending rates from the current 12 per cent up to 11.50 per cent.

Sharekhan has issued a Buy ICICI Bank report with target price of Rs 552