Category: Excerpts

Categories
Excerpts

Should UPL Shareholders worry about Black Magic?

Running a business in India is no easy task.Along with the typical risks,Indian businesses run risks that appear very unique to them.

Take for example,the risk faced by shareholders of United Phosphorus Ltd (UPL).

Their CEO Jaidev Shroff is widely respected in the industry with Sunil Singhania of Reliance Mutual Fund once calling him “The Best CEO he has ever met”

Now it appears that this fine fellow is a victim of Black Magic !:

Jaidev had earlier filed an FIR at the Khar police station, saying that his wife Poonam had spiked his drink with a mysterious powder concoction on the advice of a ‘Bengali baba’. The said drink had then left him drowsy and disoriented, he said.

Earlier this week, Poonam had filed an anticipatory bail application (ABA) in the sessions court, following Jaideep’s FIR. Police had arrested the ‘Bengali baba’, Gulam Moin Shattir Hakim Sufi, after he confessed to the crime during questioning.

On April 16, Jaidev also submitted a CD to police, in which Poonam is allegedly heard talking to the ‘Bengali baba’. The transcript mentions conversations like, “Maine unke paani ke andar dal diya thoda,” (I have added some of it in his water) and another instance where she mentions making banana juice for Jaidev, from which he took a sip.-from Mumbai Mirror

Maybe the IIMs should make Hanuman Chalisa a mandatory course requirement for MBA students !

Categories
Excerpts

The most profitable kind of investing

Source:Li Lu’s interview at Columbia

CoabW-bWcAAj50m

Categories
Excerpts IPO

IPOs: They Exit, You Enter

Although primary markets have witnessed initial public offerings(IPOs) worth more than `10,000 crore during CY16, the larger portion of money raised during the year has found its way to existing shareholders.

According to data compiled from National Stock Exchange (NSE), of the `10,740 crore raised during the year via initial share sales, around `5,978 crore was mopped by promoters and private equity (PE) players who sold stakes. The remaining `4,763 crore will be used by companies either to pare debt or as growth capital.

The PE players who pared their holding through IPOs during 2016 include Sequoia Capital, Gaja Capital, Helion Venture Partners, Sarva Capital and Gaja Capital.

The initial share sale of both Mahanagar Gas and L&T Infotech was completely offer for sale(OFS). While Mahanagar Gas raised `1,039.63 crore via IPO, L&T Infotech garnered `1,260 crore, data showed.

Equitas Holdings the biggest IPO during 2016 so far also had a substantial OFS component. The company raised `2,176 crore of which `1,456 crore was on account of complete exits made by six PE players including Sequoia Capital, WestBridge Ventures and Aquarius Investments.

The IPO of Advanced Enzyme, which will hit markets during next week, is also largely an OFS. Out of the `411 crore the company is planning to raise, `361.48 crore is on account of exit by various existing shareholders including Kotak Private Equity.

The trend is also evident in the upcoming IPOs. For instance, ICICI Prudential — insurance arm of India’s largest private bank ICICI Bank —which is planning to launch its IPO by the end of 2016 is a complete OFS. ICICI Bank is planning to sell 10% of its stake in the insurer to fetch more than `5,000 crore-from FE

Categories
Excerpts

30% Compounded

I also do know that India now has the best digital infrastructure for financial inclusion or financial universalisation and the fact that we have the Jan-Dhan, Aadhaar and Mobile (JAM) layer, we have Indian stack that allows you to paperless, presence-less and cashless transactions.

The fact that India is going to go from being data poor to data rich, which allows lending to be based on data, will actually make it safer. 

All these are incredibly powerful things that didn’t exist earlier and we have the perfect trifecta because India is going to grow.

So let’s say GDP plus interest rate, nominal GDP growth at 12-13 percent, credit is going to deepen because more people will get loans, so lets say that institute to 20 percent and then the fact that the PSU bank lending is going to be muted for whatever issues they have NPAs, lack of capital and so on.

So a good private sector lender whether it’s a bank or NBFC, I see no reason why they can’t grow at 30 percent compounded for the next several years simply because of the market situation.-said Nandan Nilekani

Categories
Excerpts

No Contest

I am very glad we only do India and that we are doing India now.

I don’t know how a global investor gets out of bed in the morning. You would be looking forward to what, exactly? Perhaps a “comforting” comment by some central banker?

We get out of bed and have the strongest GDP (gross domestic product) growth in the world, an Econ 101 slowdown ending and—we assume—an economy starting to accelerate, and some of the best-managed companies in the world with very little debt.

To the extent that any investor knows and/ or understands these things, then they will allocate to India. And vice versa.

I assume that increasingly they will become comparatively aware of this new India and, therefore, absolutely convinced they should buy it. How can they come to the opposite conclusion?

If (Federal Reserve chief Janet) Yellen, (European Central Bank president) Draghi and (Bank of Japan governor Haruhiko) Kuroda were to promise liquidity forever, then maybe that is as exciting.

Otherwise, I look forward to tomorrow morning and assuming, God willing, that I can get out of bed, then I know that growth and profits will be on the breakfast table, rather than the rash promise of a failed liquidity continuity.

No contest.

-said Jon Thorn of India Capital Fund Management