With 72 deals worth $3.7 bn, PE investments register growth in Oct: Report

Source: Business Standard, Nov 28, 2019

New Delhi: Private equity investments witnessed a robust yearly growth in October with 72 PE deals garnering around $3.7 billion, even as merger and acquisition activity saw a downtrend, a report said on Thursday.

According to Grant Thornton’s monthly PE Dealtracker, private equity/venture capital transactions reported 22 per cent and 25 per cent increase in deal volumes and values, respectively as compared to October 2018.

The rise in PE deal values was largely driven by the corporate tax rate cut, which has improved both investor sentiment and confidence.

Last month, the average deal size stood at $52 million, up from $28 million recorded in September 2019.

“There were 72 deals aggregating to $3.7 billion reported in October 2019. Upbeat PE/VC activity during the month offsets the shortfall in merger and acquisition (M&A) activity,” Pankaj Chopda, Director, Grant Thornton India LLP said.

“The key investments were primarily to pare debt, expand markets and capitalise on inorganic growth opportunities. Considering the current economic situation, we expect big ticket PE/VC investments to continue,” Chopda said.

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Government hikes authorised capital of FCI to Rs 10,000 cr

Source: The Economic Times, Nov 27, 2019

NEW DELHI: The Cabinet Committee on Economic Affairs chaired by the Prime Minister Narendra Modi has approved to increase the authorized capital of Food Corporation of India (FCI) from existing Rs 3,500 crore to Rs 10,000 crore.

With the increase of authorized capital, additional equity capital can be infused in FCI through union budget, to fund the foodgrains stock, perpetually held by FCI. This will reduce the borrowings of FCI, save interest cost of FCI and reduce food subsidy in consequence.

The operations of Food Corporation of India require maintaining perpetual stock of foodgrains which needs to be funded by the government through equity or long term loan. The government is providing equity to FCI for maintaining stocks. The present authorized equity capital of FCI is Rs 3,500 crore and paid up equity capital as on 31.03.2019 is Rs 3,447.58 crore.
FCI was constituted under the Food Corporations Act, 1964, to implement the food policy of Government of India. Its primary objective is to ensure minimum support price to farmers, maintain buffer stock of foodgrains and distribution of foodgrains under National Food Security Act and other welfare schemes of the centre.

RIL shares hit record high, near ₹10 lakh crore milestone in market cap

Source: LiveMint.com, Nov 26, 2019

Shares of Mukesh Ambani-led Reliance Industries Ltd (RIL) today jumped to a record high of ₹1,576 apiece when they rose over 1%, pushing its market capitalisation closer to ₹10 lakh crore. The broader markets also hit a new high today, with Sensex crossing the 41,000 mark.

RIL shares have outperformed the market since the start of this year, surging nearly 40%. Investors were encouraged after Mukesh Ambani announced plans to cut the company’s net debt to zero in 18 months through measures including a stake sale in the oil-to-chemicals business to Saudi Aramco. Recently, its telecom arm Jio announced that it will increase tariffs in the next few weeks.

RIL operates the world’s biggest oil-refining complex in Jamnagar, Gujarat, which can process low-quality crude and turn it into higher-grade fuels, partly protecting it from volatility in prices.

Last month, RIL had announced that it would invest over ₹100 lakh crore to create a digital services company as it seeks to cut debt at Jio, potentially making way for the entry of a strategic investor.

RIL will have rights to convert its ₹108 lakh crore investment in the new digital company into equity. The new unit will, in turn, invest the funds in Jio, making the telecoms venture almost net debt free by the end of March 2020.

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India Inc’s M&A deal value slips 45 pc to USD 1.5 bn in October: Report

Source: The Economic Times, Nov 21, 2019

NEW DELHI: Corporate India witnessed merger and acquisition deals worth USD 1.5 billion through 28 transactions in October, registering a 45 per cent decline over the same month last year, a report said on Thursday.

According to Grant Thornton’s latest M&A Dealtracker, there were 28 M&A deals worth USD 1.5 billion in October this year, while in the same period last year 47 such deals were announced worth USD 2.8 billion.

While the overall M&A deal value and volume in October declined as compared to the year-ago period, on a month-on-month basis, there was an increase, showing signs of improved sentiments.

“This was driven by the corporate tax cut, which has improved both investor sentiment and confidence. This also resulted in the average deal size more than doubling from USD 24 million in September 2019 to USD 55 million in October 2019,” the report said.

The energy sector dominated October’s M&A in terms of values with 64 per cent contribution to total M&A deals, driven by the largest bet on India’s clean energy with Total SA’s 37 per cent stake acquisition in Adani Gas for USD 0.9 billion.

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Non-food credit growth falls to 2-year low of 7.9%

Source: Financial Express, Nov 21, 2019

Non-food credit growth in the banking system fell to a two-year-low of 7.92% year-on-year (y-o-y) during the fortnight ended November 9. The credit growth figure is the lowest since October 2017.

According to provisional data released by the central bank, outstanding loans to companies and individuals were at Rs 97.67 lakh crore as on November 9, up from Rs 90.5 lakh crore during the comparable fortnight of 2018. Between October 25 and November 8, non-food credit declined by 0.01% from Rs 97.69 lakh crore.

Earlier, non-food credit growth had fallen to a single-digit record low of 8.69% in the fortnight ended September 27. The credit growth rose marginally to 8.79% during the fortnight ended October 25, buoyed by the festive season and loan melas organised by the public sector banks (PSBs) in October to push retail loan growth. Deposit growth in the banking system fell to 9.92% y-o-y to Rs 129.99 lakh crore during the fortnight ended November 9. During the comparable fortnight of 2018, deposits with banks had grown by 9.14%. The credit deposit (CD) ratio for the fortnight stood at 75.14, down from 75.27 in the previous fortnight.

Billion-dollar boost: AIIB plans $1 billion investment in India

Source: Financial Express, Nov 16, 2019

Asian Infrastructure Investment Bank (AIIB) plans to invest $1 billion funds in India over the next one year. The multilateral development bank has already approved a project loan worth $500 million (Rs 3,589 crore) to Mumbai Urban Transport Project (MUTP) towards the development of suburban infrastructure around Mumbai.

“Within the next year or so, (we have committed) at least an additional $1 billion in projects, primarily power and water projects… There is a power distribution project in Assam (with a funding requirement of Rs 400 million), there is also another project in the works in West Bengal,” Laurel Ostfield, director-general, communications, AIIB told FE. AIIB was started by 67 countries, and India is its second largest shareholder in it after China.

The Beijing-headquartered bank also approved $75 million (Rs 538.39 crore) in September to renewable energy financier Tata Cleantech Capital for onward lending to projects. The total committed financing by AIIB in India as of now stands at $2.9 billion (Rs 20,817 crore).

“The MUTP project is mainly to make a four-lane between Virar and Dahanu, and also to introduce a new two-lane from Panvel to Karjat. In addition to that, in 36 places we want to strengthen the crossings,” said D J Pandian, vice president and chief investment officer, AIIB. He added that the MUTP funding will be disbursed after 90% of the land acquisition is completed. Currently, around 50-60% land acquisition is done for the project. The loan for the project will be for a duration of 35 years and local authorities will pay 0.75- 1.40% over the London Interbank Offered Rate (LIBOR) as interest, Pandian said.

Apart from MUTP, the bank is in talks with authorities for funding metro railway projects in Mumbai as well. India is the largest borrower from AIIB, with 30% share of the bank’s total lending coming to the country. Pandian said the bank aims total funding approvals to reach $10 billion per annum by 2025, and expects investments into India growing proportionately. Apart from these projects, AIIB has also approved an investment of up to $50 million in Oriental Structural Engineering’s infrastructure investment fund and $100 million funding for L&T Infrastructure Finance.

Forex kitty continues to swell, touches a new high of $448 bn

Source: The Economic Times, Nov 15, 2019

Foreign exchange reserves continued their upward march surging USD 1.710 billion to touch a new high of USD 447.81 billion in the week to November 8, according to weekly data released by the Reserve Bank.

In the previous week, the reserves surged by USD 3.515 billion to reach USD 446.098 billion.

The increase was mainly on account of a rise in foreign currency assets, a major component of the overall reserves and jumped by USD 2.174 billion to USD 415.828 billion in the reporting week, as per the data released on Friday.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and the yen held in forex reserves.

During the week, gold reserves declined by USD 443 million to USD 26.910 billion.

The special drawing rights with the International Monetary Fund (IMF) were down by USD 3 million to USD 1.44 billion during the week.
The country’s reserve position with the IMF also decreased by USD 17 million to USD 3.630 billion, the data showed.