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News Roundup: PSU Bank Cut Rates, Hindalco Raises $1Bn Loan

07 November, 2008

Policy

PSU Banks Slash Lending Rates – Top state-owned banks, including State Bank of India, have lowered their prime lending rates by around 75 basis points (bps). The large private sector banks, HDFC and ICICI Bank, are yet to follow the suit. The rate cuts have come even as inflation rose marginally for week ending October 25, owing to festival spendings.

Govt Proposes Change In FDI Guidelines – The changes proposed by the government could impact FDI in industries like telecom, infrastructure, real estate and broadcasting. The proposals include measures like Indian companies in which foreign firms have beneficial investment and direct investments by NRIs to be counted as direct FDI.

M&A

Hindalco Raises $1 Bn For Novelis Bridge Loan – India’s largest aluminium maker has raised a five-year loan of $1 billion at 315 basis points above the London Interbank Offered Rate (Libor). This follows Hindalco’s Rs 5,000 crore rights issue, which failed to attract interest from investors. The promoters and five underwriters subscribed to 90% he issue. The debt has been raised to repay part of a $3 billion bridge loan which Hindalco took to buy North American company Novelis.

Ten Firms In Race To Buy Stake In Deccan Chargers – Hyderabad’s Deccan Chargers, the Deccan Chronicle owned IPL cricket team is being eyed by about 10 firms which include few media houses and some of the leading private equity funds, competing to acquire a majority stake in it. KPMG, the advisors on the stake sale of Deccan Chargers, is currently in talks with at least 8-10 ‘interested parties’. The team has been on the block since last month after the Deccan Chronicle group acquired it earlier this year by paying $107 mn to the BCCI.

Plethico To Invest In UAE Pharma Chain – Plethico Pharmaceuticals is investing around $20-22 million in UAE-based pharma retail chain for a  20% stake. The chain has operations in CIS region. The UAE firm has around 300-350 stores across the CIS countries which will help Plethico to sell its products directly.

Venture Capital/Private Equity

Apax Partners To Set Up China Shop – European private equity giant Apax Partners will set up its office in Shanghai later this year. The firm set up its office in Mumbai in 2006 and its India team is lead by Neeraj Bharadwaj. The firm has a $40 billion global portfolio and India and China will be its main investment targets in Asia.

Tata Capital, IDG Venture Hire From IIM-K – Tata Capital and IDG Ventures India were among the  recruiters at Indian Institute of Management Kozhikode this year. A total of 261 students got placed, of which 27% went to financial services sector. Also students received 14 international offers. Some other recruiters were Arthur D. Little, Citibank, Standard Chartered Bank, American Express and IBM.

RBI Clears 10 Foreign Funds – The Reserve Bank of India has in the last fortnight cleared proposals of as many as 10 foreign VCFs. The proposals of these funds were stuck as they were under-capitalised under RBI regulations. Foreign investors only prefer to park their funds once the fund managers get the necessary approvals.

The Downturn Impact

Ashok Leyland To Have A Three-Day Week – Hinduja’s Ashok Leyland said it will restrict production activity to only three days a week at its plants until December to downsize the high inventory. This comes after Tata Motors announced to shutdown its Jamshedpur plant for a three-days. Ashok Leyland has been facing several problems, which include inadequate funding and high interest costs. Also the demand for medium- and heavy-duty commercial vehicles has been hit due to the downturn.

US IT Spend To Be Down By 5% – A report by Goldman Sachs has found that IT spending budgets could further decline by 5% in 2009 compared with 2008. Sectors such as government and communications are also expected to cut their budgets. The survey was done among 100 IT executives from Fortune 1,000 companies.

Ramco Systems Cuts Top Mgmt’s Pay – The Chennai-based IT solutions provider has decided to cut the salaries of senior managers by 10-15%. The move is likely to affect close to 220 of its 1,663 employees. Ramco laid off around 200 workers in May.

Goldman, Citigroup To Layoff 12,000 – Investment bank turned commercial bank Goldman Sachs is cutting 3,200 employees from its work force, amid global slowdown. Citigroup plans to let go 9,100 employees over the next 12 months, or about 2.6% of its headcount. These layoffs are in addition to 12,900 that Citigroup has shed over the past year.

Jet Airways May Lay Off 100 Expat Pilots – Jet Airways is expected to lay off 100 of its 240 expatriate pilots. To initiate, it has decided not to renew the service contracts of 27 pilots. Expatriate salaries are at least 40% higher than those of their Indian counterparts as a thumb rule in the industry. Very recently, the airline had to succumb to the political pressure to withdraw its 1900 retrenched cabin crew last month.

Lehman’s Richard Fuld To Step Down, Not To Claim Severance!

– Lehman Brothers Chief Executive Richard Fuld will down from his post by December and will not claim any severance or bonus while departing. He will continue as non-management chairman of the board after leaving as CEO. A new CEO was not named as Lehman is in the process of unwinding its business. Fuld does not even appear in a document that outlines the company’s new organizational structure.

Public Equity

Alkali Metals Debuts 75% Up – As the BSE fell by 3.81%, shares of Hyderabad-based Alkali Metals jumped up by 75% on its debut on Thursday. The BSE Metal index fell by 8.41% yesterday. The stock was sold at an IPO price Rs 103, and reached a high of Rs 179.

Retail Investors Pump Rs 4,000 Crore In Markets – At a time when FIIs are selling their holdings in the stock markets, non-institutional investors or retail investors have bought stocks worth over Rs 4,000 crore over 45 days between September 1 and October 23. The net buying of mutual funds stood at Rs 1,300 crore while net sales FIIs were Rs 18,800 crore.

 


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News Roundup: PSU Bank Cut Rates, Hindalco Raises $1Bn Loan

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