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Weekly Indian Finance Review

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Newsletter weekly

  1. 1. Top Headlines Microfinance firm Bandhan Financial Services to sell Rs 500-cr farm loans to IDBI. SBI decides to cut interest on Education loan SKS securities Rs 354 cr from PSB DLF expects Rs 700 cr sales realization from housing project. OrbiMed To Pick 12% In Shasun Pharmaceuticals For $10M. Accel Partners & Tiger Global Invest $6M In E-com Startup Zansaar Berggruen Holdings Putting In Fresh Money In Accentia Technologies 1
  2. 2. Weekly Economic ReviewNew figures show economic growth has slowed down drastically in the fiscalthird quarter. GDP expansion decelerated to just 6.1% in the three months toDecember. The latest numbers are worse than most expectations. Thegovernment had already revised India growth target for 2011-12 to just 6.9%.But the poor showing in the third quarter makes it unlikely India will even hitthat modest target.Broken sector-wise, it’s clear some sectors have done especially badly.Manufacturing grew a paltry 0.4% in the third quarter compared to the year-ago period. And mining actually fell 3.1%. Farms showed a modest gain of2.7%. But the pleasant surprise came from construction, which went up 7.2%.Switching to corporate, GVK Power could sell off some of its stake in its deepwater hydrocarbon blocks. There are seven oil and gas fields in question, all ofthem in the Arabian Sea. Mint has learnt the company is talking to the UK-based B-G Group about a potential sale. GVK could also sell some of its stake toBHP Billiton, its partner in the hydrocarbon fields. GVK currently owns 74% ofthese blocks, with BHP Billiton holding the remaining 26%. The potentialstake sale may be part of a larger effort to raise funds for other ventures.Moving on, India’s aviation industry may be in crisis, but at least one promoterhas cast a vote of confidence in the sector. On Friday, Spice Jet announced itspromoter, Kalanidhi Maran, had agreed to infuse Rs. 100 crore into theairlines. The deal will give him 42.9 million shares, which is 5% of the totalequity. Maran will now own 48.6% of Spice Jet. Spice Jet had 16.3% of India’stotal market share as of January.A nationwide strike on Tuesday brought businesses to a halt in many areas.Some banks and transportation services were affected, but many otherscontinued to function normally. The protestors were from 11 trade unionsaffiliated to both ruling and opposition parties. They were protesting againstrising prices, disinvestment and violations of labour laws. 2
  3. 3. Inside The StoryMicrofinance firm Bandhan Financial Services to sell Rs500-cr farm loans to IDBI.Microfinance company Bandhan Financial Services plans to sell Rs 500crore worth of farm loans to IDBI Bank in what would be the biggestsecuritisation deal this year. Selling loans releases capital for MFIs andhelps them deploy fresh loans to the poor without borrowing directlyfrom banks. The transaction will be through within a week.Ghosh saidboth the parties will execute the deal once ratings agency Icra providesa rating for the pool of 4.5 lakh small farm loans.SBI decides to cut interest on Education loanThe countrys largest lender State Bank of India (SBI) has taken in-principle decision to slash interest on education loans by up to 1percentage point. "The bank has taken in-principle decision to cut(interest on) education loan," SBI Managing Director and Chief FinanceOfficer Diwakar Gupta said. "Announcement would be made soon. Thebank will issue the notification shortly," he added. Without givingdetails of quantum of rate cut, he said, it may be up to 100 basis points.Interest rates on education loans range from 12.25 per cent to 14.50 percent, depending on their quantum and the duration.SKS securities Rs 354 Cr. from PSBSKS Microfinance, the countrys only listed micro lender, today said ithas securitized Rs 354 crore of receivables from 18 states, exceptAndhra Pradesh. The securitization was done by a major public sectorbank, SKS said in a statement, without naming the lender. SKS shareswere up 1.64 per cent at Rs 130.40 on the BSE in late morning trade.Under the pool securitization, bundling micro loans made to borrowerslike micro-entrepreneurs are sold to investors such as banks to raisefunds. 3
  4. 4. DLF expects Rs 700 cr sales realization from housingproject.Realty giant DLF will soon launch a luxury housing project in Gurgaonwith an expected sales realization of about Rs 700 crore. According tosources, the company will offer 562 premium apartments in the projectRegal Gardens, which is spread over 11 acres. The project is part of the450-acre integrated township Garden City in Gurgaon. The companyexpects a sales realization of about Rs 700 crore from the project, theysaid.OrbiMed to Pick 12% in Shasun Pharmaceuticals for $10MOrbiMed Advisors, one of the world’s largest healthcare-dedicatedinvestment firms, is acquiring close to 12 per cent stake in midsizedrug-maker Shasun Pharmaceuticals Ltd by investing Rs 50 crore ($10million).The investment is done through a preferential allotment whereCaduceus Asia Mauritius Ltd, an investment arm of OrbiMed AdvisorsLLC, is subscribing to around 6.5 million shares of Shasun at a price ofRs 76 per share, the company has disclosed in a statement to theBombay Stock Exchange. This would translate into an equity stake ofaround 12 per cent post-dilution.Accel Partners & Tiger Global Invest $6M in E-com StartupZansaarBangalore-based e-tailor of home décor products (a brandowned by Singapore-based Salar Online Pvt Ltd) has raised $6 millionfunding from Accel Partners and Tiger Global, two of the most prolificventure capital and private equity investors in the Indian e-commercesector. As per the official release, the money raised will be utilised byZansaar towards meeting its working capital requirements andsupporting organic growth, planned for the coming months. Part of thecapital will be also used for maintaining inventory and meeting 4
  5. 5. marketing expenses. Speaking about the investment, Subrata Mitra,Partner at Accel Partners, said, “We think very highly of the Zansaarteam and are confident that they are well-aligned to execute in a rathercomplex category. We expect very healthy growth, and are proud andconfident to associate with and assist in Zansaar’s growth.”Berggruen Holdings Putting In Fresh Money In AccentiaTechnologiesMumbai-based Accentia Technologies Ltd has received its board’sapproval to issue shares and warrants to its promoters and also to theUS-based private equity firm Berggruen Holdings and the hedge fundCycladic Capital LLP, the company has disclosed in a statement to theBombay Stock Exchange. The company will issue 24, 25,000 equityshares and 5, 59,615 warrants to the investors. Although the issue pricehas not been disclosed yet, Accentia will be able to raise around Rs 17crore ($3.5 million) at the current market price.Berggruen Holdings isan existing investor in the company and holds 12.67 per cent stake as ofDecember 30, 2011. It had originally invested in Q4 of 2007, whenvaluations were close to peaking out. Although the stock price did moveup in 2010, the PE firm stuck around and is now sitting on unbookedlosses of over 75 per cent. 5