Category: Excerpts

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Excerpts IPO

Disclaimer

Deepak Shenoy at Capital Mind has done a nice review of the Adlabs Imagica IPO

But I found his disclaimer even better than the review:

Very important note: Look, we’re in a bull market. Any share can go up. In 2006, We didn’t like the GMR IPO issue. It went from 250 to 800. We looked like fools. Then after a 10:1 split the price is now less than Rs. 18 (which would be Rs. 180 for the 2006 IPO holders). That makes us look better. But remember, the price went 4x before it fell – anything can happen, don’t just trust us. We have effectively ditched a potential 4x return earlier. That’s our disclaimer.

 

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Excerpts

Temasek in talks over ICICI Insurance Stake

(Disclosure: I am market making in the shares of ICICI Pru Life)
ICICI Bank Ltd , India’s largest private-sector lender, is in talks to sell part of its stake in a life insurance joint venture to Temasek Holdings Pte and Carmignac Gestion for about USD 300 million, according to a Media report.
The lender plans to complete an agreement to sell about 5 percent of ICICI Prudential Life Insurance Co. by the end of March, the report said, citing unnamed sources. ICICI owns 74 percent of the joint venture, with the remaining 26 percent held by UK insurer Prudential . A Temasek spokesman declined to comment
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Excerpts

Ray Dalio: How to make money in the markets

 To make money in the markets, you have to think independently and be humble. You have to be an independent thinker because you can’t make money agreeing with the consensus view, which is already embedded in the price. Yet whenever you’re betting against the consensus,there’s a significant probability you’re going to be wrong, so you have to be humble.

There’ s an art to this process of seeking out thoughtful disagreement. People who are successful at it realize that there is always some probability they might be wrong and that it’s worth the effort to consider what others are saying ; not simply the others’ conclusions, but the reasoning behind them ; to be assured that they aren’t making a mistake themselves. They approach disagreement with curiosity, not antagonism, and are what I call open-minded and assertive at the same time.This means that they possess the ability to calmly take in what other people are thinking rather than block it out, and to clearly lay out the reasons why they haven’t reached the same conclusion. They are able to listen carefully and objectively to the reasoning behind differing opinions.

When most people hear me describe this approach, they typically say,”No problem, I’m open-minded!”;But what they really mean is that they’re open to being wrong. True open-mindedness is an entirely different mind-set. It is a process of being intensely worried about being wrong and asking questions instead of defending a position. It demands that you get over your ego-driven desire to have whatever answer you happen to have in your head be right. Instead, you need to actively question all of your opinions and seek out the reasoning behind alternative points of view.

Operating this way just seems like common sense to me. After all, when two people disagree, logic demands that one of them must be wrong. Why wouldn’t you want to make sure that that person isn’t you?–wrote Ray Dalio

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Insurance FDI hike to bring in Rs.50,000 Crore Capital

(Disclosure:I am market making in the shares of ICICI Pru Life)

The passage of the Insurance Bill in the Lok Sabha is most welcome as it would spur the sector’s growth and penetration of insurance, and bring in Rs.50,000 crore capital, said a top official of Life Insurance Council.

“We have been wanting this for a very long time for industry’s betterment. Life insurance is capital intensive and needs large doses of the same for the industry to grow,” V. Manickam, secretary general, Life Insurance Council told IANS.

The proposed law increases the foreign direct investment (FDI) cap to 49 percent from the current 26 percent, a major demand of the industry players.

Manickam said that if the FDI limit is increased more foreign players would come to India as the uninsured population in the country is around 30 crore.

He said the upward revision in the FDI limit is expected to result in additional capital infusion of around Rs.50,000 crore in five years’ time.

Manickam hoped that Rajya Sabha too passes the bill so that it becomes a law.”The total capital of the life insurance industry is now at around Rs.30,000 crore of which the foreign component is 26 percent. On the face value a minimum of Rs.7,500 crore additional fund is expected to come,” Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services told IANS earlier.

However, dilution of equity stakes does not happen at par values, he remarked.”As per market value, an additional infusion would be around Rs.55,000 crore,” Parekh added.

According to him, life insurers that are 10 years’ and above old would get a valuation of seven to eight times of their original investment whereas for companies that are around seven years’ old it will be six times and for those which are much younger the multiple will be two to four times.-from Deccan Herald

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ICICI Pru Life’s assets crosses 1 Lakh Crore

(Disclosure:I am market making in the shares of ICICI Pru Life)

ICICI Prudential Life Insurance’s decision to shift focus back to unit-linked insurance plans (Ulips) has paid off, with the private insurer being the first to cross Rs 1 lakh crore mark in terms of assets under management. The company, which generates nearly 80% of its new business premium through the sale of Ulips, has seen new business grow 40% during the first nine months of the fiscal – as against 16% growth by other private companies and with LIC showing a fall in new business premium.

“We are the only private insurer with assets of over Rs 1 lakh crore. In the mutual fund industry — which has been around longer, seen consolidation, and has significant wholesale assets — there are only four or five private funds with assets over Rs1 lakh crore,” said Puneet Nanda, executive director, ICICI Pru Life.

The growth in assets are a big boost for the insurer as it comes at a time when its parent ICICI Bank has an opportunity to unlock value with the government notifying amendments to allowing foreign direct investments up to 40%. ICICI Bank has been looking at selling a minority stake, similar to HDFC which sold a 0.95% stake to Azim Premji Trust for Rs 198.9 crore, valuing the company at close to Rs 20,000 crore. HDFC Life has moved up to the number two slot following a growth push last year. ICICI Prudential has been in the number one position consistently since the industry opened up in 2000.

According to Nanda, the growth in AUM will have implication for earnings. “A large part of the costs are fixed, which includes infrastructure cost and employee costs. The more scale you build up, the more you are able to defray costs and you are able to become more efficient. In our case since a large part of the business is Ulips, the earnings are from fund management charges.”-from TOI