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MC Insider: Closing in on Citi India's retail business, PEs line up for digital arm, ridiculous valuation expectations, deal buzz and more

Last Updated: February 28, 2022 / 08:24 AM IST

HAS CITI FOUND ITS AXIS?

HAS CITI FOUND ITS AXIS?

The race for Citi India's retail business has been a subject of intense media speculation ever since the global leadership announced the plan. In India, a few private banks and foreign banks threw the hat in the ring initially. The race then narrowed to two private banks--Kotak Mahindra and Axis Bank. As the process enters the final stage, we hear Axis has now got the final go-ahead from supervisory authorities and a timeline has been asked by the regulator from both parties to conclude the sale and integration without disturbing customer services. Sources say that work is progressing fast and an announcement is expected soon. Fingers crossed!

THE PRIVATE EQUITY JUGGERNAUT

THE PRIVATE EQUITY JUGGERNAUT

Sticking to Deal Street, our birdies tell us that the digital arm of a domestic firm with overseas presence is in fundraising mode. A clutch of private equity funds we hear are lining up for this proposed transaction. Any guesses, folks?!

EXCUSE ME?!

EXCUSE ME?!

That seems to be the word from the IPO market to all tech companies wanting to list. Nearly all internet companies currently looking to list, including a pharmacy, a hotel chain and a logistics firm, have been told that valuation expectations are "hilariously ridiculous" and that they can "go take a hike" as per a banker. While tech stocks have crashed already, Russia's attack on Ukraine has spooked stock investors further. These companies are going to be in a limbo for the time being, our sources say.

‘PITCH’ PERFECT?!

‘PITCH’ PERFECT?!

According to gupshup circles, a major investor in this fintech, which is currently raising money, has been going around telling global investors that this founder, also a prominent angel investor, will create India's first $100 billion tech company, and that investors should line up today. What's amusing though is that this fintech barely has a business model, and is better known for its quirky ads and founder's philosophical tweets than any business that could be worth $100 billion. When does a startup party become a delusion festival, we wonder!

THE PHOTOSHOPPED DIRECTOR

THE PHOTOSHOPPED DIRECTOR

Photoshop is an extremely handy tool not just for models and image-conscious celebs but even ‘absent directors’. The director of a family-run consumer goods firm, a few years back was on a trip abroad, and could not be part of a leading magazine’s photo op. Much to his dismay, the picture was widely circulated and is often used by media platforms. Every time a publication uses the picture, a corporate communications professional with the company embarrassingly goes around requesting the media outlet to remove the image and replace it with a similar one that has ‘the director’ photoshopped in it! Tee Hee!

THE SPECIALITY CHEMICALS IPO PARTY

THE SPECIALITY CHEMICALS IPO PARTY

The last 2 years of the COVID-19 era have seen the emergence of the speciality chemicals segment in the domestic stock markets with players like Laxmi Organics, Anupam Rasayan and Chemcon Speciality making their debuts on Dalal Street and others filing papers with Sebi. Archean Chemicals Industries, Aether Industries..the list goes on. Now it’s the turn of the speciality chemicals subsidiary of this West India based firm to kickstart the process for a listing and buzz is that it has already roped in i-bankers for the same.

WAITING AND WATCHING FOR WINNINGS

WAITING AND WATCHING FOR WINNINGS

With the authorities cracking the whip on former executives of this controversy hit bourse, one wonders what will be the fate of the long pending listing which is the top priority of impatient investors. Multiple global investors and financial institutions have their skin in the game and one of them believes that the IPO has been pushed back by a year at least. But since the bourse has healthy financial parameters, no one is pressing the panic buttons yet and most of them are in wait and watch mode when it comes to pocketing their winnings.

GAMES INSURERS PLAY

GAMES INSURERS PLAY

Insurance can be a tricky business. For years, we have heard about stories of insurance being mis-sold – agents lured by commission earnings in endowment and moneyback policies would sell such policies without highlighting the poor returns that such policies generate. A mirage of a cash-back at the end of specific tenure has been good enough to hoodwink an unsuspecting policyholder. Over the years, the Insurance Regulatory and Development Authority (IRDAI) has stepped in to tighten regulations and restored significant transparency.

Lately new types of malice are being heard about. The first is that a listed insurance company has started to reject health insurance claims. Some rarely invoked clauses are commonly applied. Two of these are "reasonable expenses" and treatment to be taken in a network hospital, unless in case of emergency. Reducing claims helps insurers protect the interests of their shareholders. Less claims paid means more profits, which can be shared with their shareholders. Policyholders have been accustomed to claiming reimbursement for treatment availed at non-network hospitals. In the absence of any pricing guidelines for hospitals, a patient has very little bargaining power with a hospital. These are facts well known to insurers. That's why they have never penalised policyholders for these actions. How valid is an insurer's stand to ignore such precedents?

The other malice we hear is that flushed with money raised from venture funds, some insurtech firms are getting a bit ahead of themselves. Some of these are underwriting risks and directly offering their own versions of insurance policies to customers. By doing so, they collect and pocket the premiums themselves. They act like an insurance firm selling policies. Only problem is these firms are not insurance companies. They are merely distributors, unlicensed at that. To actively solicit business, one needs a broking or agency licence from IRDAI. However, some of these firms are not recognised by IRDAI, yet solicit business. Fortunately here, IRDAI has started to take note. In the meantime, policyholders are exposed to an unlicensed entity selling insurance.

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