Hush-hush tales from the world of stock markets, banking, corporate world and corridors of power
Last Updated: September 28, 2020 / 10:53 AM IST
‘PAI’S TO BE PATIENT
Getting this going with a well-known hospital chain. We know it’s really ambitious— it was all primed to acquire prime assets and surf towards a pan-India footprint. But things didn’t go as planned. What happened? More like what didn’t happen. Extended bidding wars with rivals, valuation mismatch and a whole bunch of other factors. But all that might change soon. A little birdie tells us that the firm is busy applying the finishing touches to buy out the Indian assets of an overseas healthcare provider. It can fancy its chances this time because it is the lone horse left in the race. An official announcement was on the cards much earlier, but shucks, the pandemic played spoilsport. Nonetheless, what adds more comfort is the fact that the hospital chain’s PE backer has acquired a few assets of the same target earlier. All eyes on whether the deal jinx will be broken this time around.
To the list of businesses having a forgettable 2020, add ARCs, or asset reconstruction companies. They are a miffed lot these days. This can be traced back to the RBI’s recent rejection of the sale of bankrupt telecom operator Aircel to a solo bidder, an ARC, under the insolvency and bankruptcy code, or IBC. The move has led to the ARC community knocking hard on the doors of the banking regulator. ARCs believe IBC provisions do not bar their participation. The regulator’s stance is clear: ARCs cannot directly buy equity in a company, they can only buy debt and convert the debt to equity at a later stage if they want. So can ARCs participate in IBC proceedings? Some experts believe they can, but as joint applicants, with a separate equity partner on board, and not go solo. If that’s the case, then what’s the brouhaha about? What’s more, we hear even the MCA and Insolvency and Bankruptcy Board of India have swung into action and reached out to the RBI on this thorny issue. Maybe the regulator needs to set the record straight once and for all.
MAY THE ‘FORBES’ BE WITH YOU
Ever since a debt-ridden group with significant interests in hard assets like real estate and construction decided to part ways and sell its chunky stake in a top salt-to-software conglomerate, the street has been abuzz with various deal structures and formulas on valuation and financing. But that’s not the only debt reduction strategy of the group which wants to say ‘Tata’ to its 70-year-old partner. We hear its consumer durables arm, known for its massive direct sales taskforce, is betting big on a new product to combat the air and surface borne transmission of the Coronavirus. The demerger of this arm was recently approved by its parent and word on deal street is that initial discussions linked to its proposed sale process have begun again. Will PE funds take a bite? Watch this space for more.
WEAVING IN AND OUT OF SCRIPS
Three stocks falling in a sector that has witnessed a lot of pain have suddenly found favour with a bunch of market observers. The bet is that all three will clock strong revenue and Ebitda growth in the coming quarters. But why the sudden beast mode? Is it because of the world de-risking itself from China or is a mouth-watering PLI scheme in the works for the sector? We’ll know soon enough. But one needs to tread cautiously as many investors have been left bruised in the past betting on this large employer and an integral part of the nation’s fabric.
HEAVY METAL BET
Post a near successful delisting of a midcap software player, the first by an Indian company since December 2018, a "professorial" investor has made his debut in a metal stock walking the same path. The "professor" and his HNI students have cornered large positions in this stock, hoping it will rally just like the software scrip did. However, the software firm benefited from a bullish global tailwind. That may not be the case in the metals segment. Plus, the billionaire owner of the metals company is known to have a tight-fisted approach when it comes to parting with the moolah.
ANOTHER BIG AMC EXIT
PSU banking stocks may come under selling pressure in the near term. Reason: a "deep" value hunter fund manager is hanging up his boots after more than two decades at a pioneering AMC. This fund manager who saw "deep" value on most PSUs, seems to have met his "Waterloo" as most of his equity funds are underperforming compared with that of his peers. One hopes the successor will get a clean slate to work his magic.
Here’s some good news for cash-hungry startups. A private equity heavyweight which shares its name with a domestic cricket team is under immense pressure from its global bosses to invest in the startups and tech segment in India. On its radar are unicorns where large cheques can be signed. The fund has come close to sealing two deals in this niche space but backed off due to issues on diligence. After all, it’s not that simple for a PE fund to go against the grain and strike riskier deals at Himalayan valuation multiples.
MOUNTAIN VIEW VS NOIDA
The Paytm vs Google slugfest has brought the debate around the requirement of an 'Atmanirbhar' app store out in the open. After all, Paytm is a regulated entity and an applicant for a small bank license. And there are questions being raised in hushed tones in banking circles. Firstly, what all can a regulated entity put in its mobile banking platform and secondly how can Google simply knock off a banking app from the Play Store on the basis of non-compliance with its gambling policies. A source in the know asked if this will reinvigorate the discussion around the need for Paytm to have a separate banking app which we hear is what was always on the regulator’s wish list. Watch this space for more on the tussle between the Mountain View based search giant and the Noida based payment major.
As Indian corporates gradually start moving away from the WFH policy and call in folks to offices, employees don't seem to be fully convinced about their safety in the COVID-19 era. Employees now want their companies to state officially on email that the organisation will be fully responsible for the health of their staff and will pay for the coronavirus-related expenses in case the employee contracts it after resuming work in office. A Mumbai-based financial services firm was stumped when five employees wrote to the HR seeking an 'official guarantee' after two colleagues tested positive. Needless to say, the company went back to the policy of 'come to work if circumstances permit'.
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