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

MC Insider: Valuation game, impact of IPO boom, funding woes, startup in zen mode and more

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

Last Updated: August 02, 2021 / 08:57 AM IST

VALUATION GAME

VALUATION GAME

It’s not just the new-age consumer and internet firms that are commanding more than hefty valuations. We hear a leading bourse is likely to be valued in excess of 1 lakh crores as part of the latest transaction involving a prominent investor. HNIs have been lapping up the firm’s unlisted shares for several months and ever since a market veteran pumped in close to Rs 800 crores, valuations have nearly doubled on the back of a bump up in trading volumes and business growth across various segments.

RETAIL SAFETY

RETAIL SAFETY

2021 is witnessing a  truly incredible IPO wave in the equity capital markets with around 27 IPO’s raising more than 41,000 crores. But the lay investor needs to be careful during such bull markets and not get carried away in the frenzy. Buzz is that the regulator is considering some serious safeguards in the IPO regime and is in discussions with stakeholders to make the rules more stringent so that retail participants don’t burn their fingers. Let’s wait and watch for the fine print.

PROBLEM OF PLENTY

PROBLEM OF PLENTY

According to a few i-bankers, one of the unintended consequences of the IPO boom across sectors is the sudden dearth of law firms for fresh deals which have to be executed on a fast track basis. There are more than a dozen i-banks to absorb the deluge of work, but only around 7 law firms which can handle substantial capital markets mandates, so you do the math! Now capital market lawyers have traditionally had lower margins compared to their m&A counterparts and some of these law firms have upped their ECM fees depending on the sector, size and role, as compared to last year.  But in many cases, even with higher fees, we hear they are forced to turn selective and say no to new deals due to sheer lack of bandwidth and a never seen before crunch. Wonder what wise crack Harvey Specter would have had for this scenario!

AS YOU SOW, SO SHALL YOU REAP

AS YOU SOW, SO SHALL YOU REAP

This startup has been the subject of murmurs and whispers in the entire industry because a large fund pulled out of funding it at the eleventh hour, after discovering that the company had exaggerated its numbers. Now MC Insider learns that the company's existing investors are putting in a few million dollars, at roughly 30 percent of the valuation that the large fund had promised. It hurts the pride of those involved, but the startup will live to see another day.

TURNING OVER A NEW LEAF

TURNING OVER A NEW LEAF

A startup which is infamous for landing up with disputes with its sellers is suddenly going into a zen mode ahead of its initial public offering. The aggregator has mellowed down on the way it deals with its seller partners and the change has been visible since the last couple of months. According to legal experts, the company which would earlier just ask the lawyers to get stay orders on legal disputes with the sellers is focussing heavily on amicably resolving issues. It is learnt to be spending more time with legal advisors trying to understand how to be contractually on strong footings. The aim is to win back as many of the sellers as possible ahead of going public. Now this is some A level preparedness for an IPO.

TIME TO MAKE THE CODE A LAW?

TIME TO MAKE THE CODE A LAW?

Last a major domestic drugmaker said that it had received a subpoena from the Securities Exchange Commission (SEC) to submit relevant documents under the US Foreign Corrupt Practices Act. for alleged bribery of doctors. The announcement has sent its stock into a tail spin. In the past, the US has imposed huge penalties on big companies for similar allegations. Bribery of doctors to generate prescriptions, has been an issue in the India pharma sector as well, despite the presence of voluntary codes such as the Uniform Code of Pharmaceuticals Marketing Practices (UCPMP) to regulate unethical promotional practices. What is worrying is that promotional strategies of certain pharma companies have shifted from providing scientific information to doctors to merely focusing on business generation at all costs. Why can't India just start by making UCPMP a law?

CRACKING THE WHIP ON DUAL EMPLOYMENT

CRACKING THE WHIP ON DUAL EMPLOYMENT

Sticking to fears. Well going by recent HR trick in India Inc, the fear of employees taking up dual employment is now pretty real at India Inc. Since it is obvious that none of the salaried, full-time staff would admit to working elsewhere for extra remuneration, a few corporates especially in the IT and fintech sectors have come with a new surveillance strategy so to say! So here’s how it works folks! Employees are asked to submit their office laptops to the technology team during the weekend. The laptops, word files and other system documents are then thoroughly scanned to check for traces of dual employment including proof of work done, project files that don't belong to his/her current work role. Any proof found would mean that the concerned employee would have a lot of questions to answer. Point to remember: dual employment by full-time staff is a clause for termination at most companies.

A NOT SO HANDSOME OTS

A NOT SO HANDSOME OTS

What's going on in this high-profile NCLT case where a well-known ex- promoter has offered a one-time deal for banks, but is game to offer just a fraction of what he actually owes to them? Banks have accepted the promoter's settlement offer but the ball is now in NCLT's court. And the NCLT is yet to decide on the case even after many weeks. The delay is making the lenders very angsty. Their biggest fear ? A final ruling  not favourable to the CoC's decision is in the offing.

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