MC Insider: Cabinet reshuffle candidates, crypto dilemma, privatisation fears at banks, internet IPO buzz and more

Reports of NITI Aayog list shortlisting two public sector banks (PSBs) for privatisation — namely Central Bank of India and Indian Overseas Bank — have triggered panic among the employees of these banks. Many employees have already moved or are hunting for jobs at bigger banks such as the State Bank of India, we hear. Others are waiting from some clarity on the voluntary retirement plan, which is rumoured to be in the works. Why the sudden panic? That’s because reports suggest that post privatisation, NITI Aayog has proposed there will be only a one-year job guarantee for employees of nationalised banks. So what happens after one year? The anxiety of the staff is quite warranted, isn’t it?

An an Asian fund whose name in Sanskrit translates to “sea animal” seems to be gradually inching ahead as a front-runner when it comes to the capital infusion needs of a shadow bank, which was hit hard by the pandemic. A North American private equity rival is also in the fray for this deal which is being monitored by the central bank. So, will the popular Swiss Challenge method be adopted in this case to get the best offer? Watch this space for more!

The likes of Zomato and Paytm may be looking to make their market debut on the Indian bourses, but there are some e-commerce firms which are still eyeing an overseas listing. Take this one for example, which was a big beneficiary of COVID-19. We hear it has taken on board one of the Big 4 firms as it looks to get its systems, processes and accounts in place well in advance. So will it look at the SPAC route or the overseas direct listing route which requires clarity on the tax front? Guess by the time this company gets IPO ready, the regulatory regime would be clearer, helping it to choose what serves it best.

The funding frenzy for late-stage internet startups has led top investments bankers to believe that all these companies are ready to go public in the next year or so. Even though founders and their investors disagree, bankers from all the top multinational firms have been pitching to founders, saying they can take these companies public at eye popping valuations — generally twice their valuation from a few months ago. Startup investors have often complained about the lack of technology IPOs in India. Now we seem to heading for the opposite!

A long list of probables is looking forward to their induction into the Union Cabinet as a reshuffle of the ministers looks imminent. We hear the frontrunners are Jyotiraditya Scindia, Sushil Modi and Sarbananda Sonowal. Scindia has long been waiting after being instrumental in bringing down the Congress government in Madhya Pradesh while Sushil Modi and Sonowal were moved out as the Deputy CM of Bihar and the CM of Assam, respectively, to give others a chance. Nitish Kumar’s JDU also desires to finally join the Cabinet with names of its senior leaders RCP Singh and Rajiv Ranjan Singh being proposed as inductions from Bihar. The Prime Minister would also want to induct a couple of names from the poll-bound states of Uttar Pradesh as well as Punjab after Harsimrat Badal of the Shiromani Akali Dal had quit as minister. The four top ministers, who are part of the CCS or Cabinet Committee On Security (which includes the home, defence, finance and corporate affairs and external affairs portfolios) may see no change. Insiders say performance of ministers will be a key factor in the reshuffle exercise as well — with the PM holding long meetings with them recently.

The RBI’s clarification on the 2018 circular that banks cannot rely on it or use it for official communications has put bank officials in a tight spot. Now, they cannot use the old invalid RBI circular to say no to crypto enquiries from customers. At the same time, these lenders are aware that the RBI has major concerns about cryptocurrencies in India. In short, banks have no clue how to deal with crypto enquiries due to the regulatory uncertainty. Remember, the banks had recently cautioned customers against dealing in crypto but withdrew the communication after the RBI clarification. There’s only one way to soothe the frayed nerves. Clear, detailed regulations on the much-hyped cryptocurrencies is the need of the hour.

A few large corporate hospital chains with deep pockets and scale are accused of cornering much of the COVID-19 vaccine supplies in the private market. They started to see some real cash flows too, as there was no limit on how much they can charge as service fee. One top executive of a hospital chain in a recent earnings call spoke at length to analysts about the COVID-19 vaccine opportunity. Some hospitals began vaccinating people through camps at offices and residential complexes and this definitely brought a lot of convenience, but buzz was that the charges were 40-50 percent over and above the vaccine procurement cost. Now, with the government announcing a Rs 150-cap on service fee and nudging vaccine manufacturers to ensure smaller hospitals and clinics also get priority in supplies, we hear the large chains are ​clearly disappointed. Some of these big hospital executives now want people to believe that their participation in COVID-19 vaccination was never the core business and was done for the sake of national interest. Hmm … so is anyone buying this line?

A global private equity fund with an India office is facing an odd conundrum. The fund’s managing partner has been declining meetings with global fund managers, the movers and shakers of investing. The partner says he is caught up in frenetic deal making and hence is unable to make time. Okay, but where are the deals? The partner explains that he has been wanting to do six investments in the last year, but keeps getting beaten out because another investor swoops in with a higher valuation. The gentleman concerned has diligently worked on dozens of deals. Unfortunately, he hasn’t made more than two investments! His friends are stymied and the partner is now hoping to actually close a few hot deals to prove his dealmaking chops and show that he has actually been busy. Well, guess perception is everything!