Morning Scan: All the big stories to get you started for the day

The Reserve Bank of India has stopped lenders from evergreening loans through the use of alternative investment funds. Lenders will not be allowed to invest in the schemes of any AIF that has invested in a borrower or investee of that lender. These AIFs were under regulatory scrutiny for being supposedly used to extend the life of loans, often unpaid or restructured.

Why it’s important: The stock market regulator had earlier expressed concerns over the evergreening of dubious loans. The move will stem the flow of institutional money into high-risk corpuses.

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#3. Omnichannel retailer FirstCry to seek to raise up to $600 million through IPO

After last year’s postponement, retailer FirstCry is looking to file its draft IPO papers in the next few days to raise $500-600 million. The draft red herring prospectus is likely to be filed before December 29 and the listing is expected to take place after the 2024 general elections. The firm might be valued at around $4 billion during the offering.

Why it’s important: The Pune-headquartered company that sell products for children and mothers will be the second specialized Indian ecommerce platform to go public after Nykaa’s IPO in 2021. FirstCry is said to be operationally profitable.

#4. Ford unexpectedly abandons plan to sell Tamil Nadu factory to JSW Group

Ford Motor has abandoned plans to sell its Tamil Nadu plant, its sole remaining factory in India, after finalizing a deal with the Sajjan Jindal-led JSW Group. The company’s Maraimalai Nagar plant was on the block since shutting down in July 2022 after Ford got out of India amid mounting losses. JSW had finalised an agreement to buy the plant for around $100 million.

Why it’s important: The development would fuel speculation that Ford may consider a re-entry into the Indian market after exiting it over two years ago.

#5. Sony yet to decide extending December 21 deadline for merger with Zee

Sony Pictures Networks India said it hasn’t yet decided on extending the Thursday deadline to complete the merger with Zee Entertainment Enterprises. The Punit Goenka-led Zee had asked for an extension on December 17. The Sony Group Corporation-owned company said Zee has acknowledged that it will not be able to meet the deadline and it looks forward to hearing Zee plans to meet the remaining key conditions.

Why it’s important: The biggest merger in India’s entertainment sector hangs in the balance. There are said to be differences over Punit Goenka leading the merged entity.

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#6. Banks to give early hearing to borrowers to stop willful defaults

The Reserve Bank of India may provide lenders more flexibility in dealing with potential willful defaulters as the central bank may make in-person hearings with borrowers mandatory at the time of identifying a loan account as stressed. Earlier, in-person hearings were optional, and were conducted at the last stage just before classifying a borrower as willful defaulter.

Why it’s important: Once a borrower is declared willful defaulter, it is shut out from the formal banking sector. The chances of recoveries could be higher if a dialogue is started at an early stage.

#7. International Monetary Fund warns on vulnerable government debt, Centre disagrees

The International Monetary Fund has warned that India’s government debt could exceed 100 percent of GDP in the medium term, also cautioning that long-term debt sustainability risks are high due to the investments required to meet climate mitigation targets. The central government has disagreed, arguing risks from sovereign debt are limited as it is predominantly denominated in domestic currency.

Why it’s important: The IMF has argued that a flexible exchange rate would act as the first line of defence in absorbing external shocks, which the Indian government has denounced, terming it unjustified.

#8. Bain Capital in discussions to acquire majority stake in Vibrant Energy

Private equity firm Bain Capital has entered into talks with Macquarie Capital to acquire a majority stake in Vibrant Energy, a provider of green power to commercial and industrial units. Bain is doing due diligence on the company, which is likely to fetch an equity value of around $200 million with an enterprise value of close to $500 million.

Why it’s important: As India’s green energy transition picks up pace, investor interest will keep rising to make the most of it. Recent deals in this space bear testimony to that.

#9. Google to pay $700 million to settle Play Store lawsuit over anti-competition charges

Google has agreed to pay $700 million and to allow for greater competition in its Play app store, according to the terms of an antitrust settlement with US states and consumers. Google will pay $630 million into a settlement fund for consumers and $70 million into a fund that will be used by states,
according to the settlement, which still requires a judge’s final approval.

Why it’s important: The settlement will have wider ramifications as regulators and courts across the Western world are coming down heavily on tech giants on overcharging and monopolistic pricing.

#10. IPL auction shatters Rs 20 crore ceiling, Aussies sparkle in mega deals

Australian fast bowlers Mitchell Starc and Pat Cummins racked up record bids to enter new franchises at the 17th auction of the Indian Premier League held in Dubai. Cummins was sold to Sunrisers Hyderabad for a record Rs 20.5 crore but was pipped by Starc, who went to Kolkata Knight Riders for Rs 24.75 crore following a bidding war with Gujarat Titans. Both bids beat the earlier record held by Sam Curran, who was bought by Punjab Kings for Rs 18.5 crore in 2022.

Why it’s important: The increasing popularity of the cricket league is driving franchises to place ever higher bids for star players. The brand value of the tournament has risen to $3.2 billion this year.