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Hush-hush tales from the world of stock markets, banking, corporate world and corridors of power

MC Insider: Skipping call option, patience wearing thin, super difficult super app, eyeing early stage bucks, and more

Last Updated: November 30, 2022 / 07:03 AM IST

'CALL' ME, MAYBE!

Breaking promises is the easiest way to lose trust. But in the bond market, breaking unspoken rules will also lead to the same outcome. Banks here know this, but some cannot help themselves. Market chatter suggests that one bank may avoid exercising the call option in its bonds, a practice taken for granted by investors ever since the option was allowed. Calling back bonds that have a tenure of 10-15 years well before maturity is considered sound practice and this helped banks get big money for their papers. Surplus liquidity glossed over the ugly episode three years ago that led to some banks skipping the call option on perpetual bonds. Now a nasty reminder awaits investors. But as a trader pointed out, there is no greater risk than missing out on a bargain. “Everything gets burnt in a forest fire. But you don’t miss the spring in fear of this.” Hopefully, the troubled lender would rethink its strategy and keep the grass greener for its peers. After all, this is the best of times for getting capital from debt to fund the tide of credit demand that awaits lenders.

BUYBACK SNUB

BUYBACK SNUB

Shareholders are always a patient lot as long as they believe that the management keeps their interest and the company’s best interest in mind. For shareholders of a lubricant company, however, the patience may be wearing thin. Word on the street is that a clutch of influential shareholders of the company recently wrote to the board to consider distributing a part of its bulging cash chest with them through a share buyback -- a useful means to reward shareholders while improving the stock's performance. Instead the company chose to go ahead with its plan to invest in the front-end of its business by spending a chunk of its cash on a digital platform, believing it to be a better way to spend its capital than a buyback. No pressure!

SUPER-STRESSED BY SUPER APP

SUPER-STRESSED BY SUPER APP

Super apps are super difficult to establish in the market. But, once they are established -- by attracting enough users and earning their loyalty -- their customers keep generating revenue with little by way of added cost. They promise the mythical El Dorado. Exciting prospect, and senior execs gladly joined the effort at an established and well-respected conglomerate. However, it has been taxing, to say the least. The app has had multiple tech glitches and the business house is pushing for quicker results, which has meant punishing work hours and the constant threat of dismissal hanging over senior execs’ head. And, this is at a business house that is otherwise considered employee friendly.

TO POP THE PILL OR NOT?

TO POP THE PILL OR NOT?

Time to shift focus now to deal street. Even though the top brass may have ruled out any plans to further dilute its shareholding, market whispers keep surfacing on the intentions of this firm in the healthcare and life-sciences segment to raise capital by selling a minority stake in one of its arms. Will it take the plunge or not?

SARKARI M&A

SARKARI M&A

More from transaction square and let's check out the latest on this non-core asset monetisation programme…we hear that a clutch of strategic investors are eyeing the stake of this sarkari lender in a mutual fund house. The lender recently got the nod to exit its holding in a single tranche or a series of tranches. So, who do you think will seal the deal?

NO FUNDING WINTER?

NO FUNDING WINTER?

On Startup Street, a bunch of emerging firms in the consumer, technology, healthcare and logistics segments from Bengaluru, Delhi-NCR, and Mumbai are eyeing early stage funding rounds from VCs and family offices. “Valuations may have corrected for sure, but if the team is good and the company is good, dry powder is still available from domestic investors and, remember, family officers are becoming bigger,” said a person closely tracking the space.

ALL EYES ON THE EOI

ALL EYES ON THE EOI

According to buzz in the corridors of power, the much awaited expression of interest for perhaps the biggest divestment deal by the government (with BPCL off the table for now) worth more than Rs 40,000 crore is likely to be floated in the month of December. “The realty issues have been sorted and strong overseas interest is expected for the asset,” said a little birdie.

AGAINST THE TIDE

AGAINST THE TIDE

Much to everyone's surprise, at a time when investors are running away from edtech companies, this edtech startup is running away from an edtech-focused venture capital investor. The startup, which is "very close to profitability", believes that external capital would put a lot more pressure on its board to grow, and expand aggressively. The startup's founder firmly believes that the space his company caters to has a lot of potential to grow organically and thus he doesn't need any external investment currently. While most edtech companies have struggled to raise capital this year, this rare instance of a founder denying an investor would surely raise eyebrows! It will be interesting to see how far the startup goes without external investment!

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