Tag: Corporate Banks

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Delhi News

Govt starts process for filling posts of independent directors in PSBs, FIs

Private banks have better loss-absorption capacity, but are nonetheless bolstering core capital



The government has initiated the process of filling about 100 vacancies of independent directors in public sector banks and financial institutions to meet regulatory norms of corporate governance.


There have been vacancies at the independent director level across the public sector space leading to regulatory non-compliance, sources said.





As per the Companies Act 2013, every listed public company shall have at least one-third of the total number of directors as independent directors.


Since many listed public sector banks (PSBs) and some financial institutions (FIs) are short of mandated number of directors, it is in violation of Companies Act as well as listing norms of market regulator Securities and Exchange Board of India, sources said.


For example, some of the banks like Indian Overseas Bank, Indian Bank and UCO Bank are not compliant with independent director norms.


Except State Bank of India (SBI) and Bank of Baroda, the position of chairman in most of the state-owned banks is vacant. The posts of Workman Director and Officer Director, representing the employees and officers of the banks, respectively, have been vacant for the past 7 years.


According to a study, there were 72 public sector undertaking (PSU) companies as a part of the NIFTY 500 in both 2019 and 2020. PSUs forming part of NIFTY 500 had 133 fewer independent directors in 2020 compared to the earlier year.


There are 12 public sector banks, four public sector general insurance companies while one life insurance firm. Besides, there are some specialised insurance players like Agriculture Insurance Company of India Ltd.


In addition, there are state-owned financial institutions like IFCI, IIFCL, ECGC Ltd and EXIM Bank.


As many as 52 per cent of the director posts in the 11 nationalised banks were vacant, All India Bank Employees’ Association (AIBEA) said in a letter written to Finance Minister Nirmala Sitharaman recently.


Of the 175 board-level positions, 91 are lying vacant and there is urgent need to address the issue, AIBEA general secretary C H Venkatachalam said in the letter.


The posts of Workman Director and Officer Director have remained vacant in 11 nationalised banks for the last seven years, he said, adding, the board of each bank has 7-9 board level vacancies.


This defeats the very purpose for which these posts were envisaged and created to take care of the varied interests and fields of banking operations of the banks, he added.


The Boards of Directors of nationalised banks are guided by the provisions of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and Nationalised Banks (Management and Miscellaneous Provisions ) Scheme, 1970.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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30 firms may float public issues in Oct-Nov to mop up Rs 45,000 cr



Hectic fundraising through initial public offerings (IPOs) is expected in October-November, with at least 30 companies are looking to collectively raise over Rs 45,000 crore through initial share-sales, merchant banking sources said.


Of the total fundraising, a large chunk would be garnered by technology-driven companies.





The successful IPO of food delivery company Zomato, which was overwhelmingly subscribed by over 38 times, encouraged new-age tech companies to come out with their primary share-sales.


Historically, companies like Zomato have raised funds from private equity players and the IPO has opened up a new source of funding for new-age tech companies, Jyoti Roy, deputy vice-president (equity strategist) of Angel One, said.


The firms that are expected to raise funds through their IPOs during October-November include Policybazaar (Rs 6,017 crore), Emcure Pharmaceuticals (Rs 4,500 crore) Nykaa (Rs 4,000 crore), CMS Info Systems (Rs 2,000 crore), MobiKwik Systems (Rs 1,900 crore), the merchant banking sources said.


In addition, Northern Arc Capital (Rs 1,800 crore), Ixigo (Rs 1,600 crore), Sapphire Foods (Rs 1,500 crore), Fincare Small Finance Bank (Rs 1,330 crore), Sterlite Power (Rs 1,250 crore) RateGain Travel Technologies (Rs 1,200 crore) and Supriya Lifescience (Rs 1,200 crore) may float their IPOs during the period under review, they added.


Angel One’s Roy attributed the impressive IPO pipeline in the coming month to several factors, including a stronger-than-expected recovery in the economy after the second wave, continued FPIs and domestic flows in the markets and an increase in retail participation in the stock market in the past one year.


Going forward, the IPO boom is expected to extend in the coming year if the prevailing market situation remains constant or doesn’t change much, Kaushlendra Singh Sengar, founder and CEO at INVEST19, said.


Making a similar statement, Nikhil Kamath, co-founder of True Beacon and Zerodha, said if the bull run continues for the next 1-2 years, the IPO rush will continue. Moreover, the technology sector is expected to remain a major market driver.


So far, in 2021, as many as 40 companies have floated their IPOs to raise Rs 64,217 crore. Further, Aditya Birla Sun Life AMC will launch its Rs 2,778-crore initial share-sale on September 29.


Apart from these, PowerGrid InvIT, the infrastructure investment trust (InvIT) sponsored by Power Grid Corporation of India, mopped up Rs 7,735 crore through its IPO, and Brookfield India Real Estate Trust raised Rs 3,800 crore via its initial share-sale.


This was way higher than Rs 26,611 crore raised by 15 companies through initial share-sales in the entire 2020.


Such impressive fundraising through IPOs was last seen in 2017 when firms mobilised Rs 67,147 crore through 36 initial share-sales.


According to Kamath, IPOs rely heavily on market cycles and the IPO exuberance that has been witnessed in the last 18 months is a function of the current bull cycle. Companies look to take advantage of investor sentiments.


“The market is touching new highs and the strong response that we see in the primary market is nudging companies who were sitting on the fences to come and take advantage of the buoyant market,” Vikas Singhania, CEO of TradeSmart, said.


He, further, said that companies are raising money for growth capital or inorganic growth opportunities in the future.


Many of the IPOs are an offer for sale (OFS), where private equity players or the promoter wants to cash out part of their holding.


“Nowadays, the entire process of IPO garners a lot of attention for such companies that act as an indirect promotion,” Kamath said.


Initial share-sales are receiving tremendous applications from investors and IPOs have been subscribing multifold times. This has pushed companies to raise funds through IPO.


The initial share-sales of almost a dozen companies including Paras Defense and Space Technologies, MTAR Technologies, Easy Trip Planners, Devyani International, Rolex Rings, Tatva Chintan Pharma Chem and Nazara Technologies subscribed over 100 times.


Interestingly, the ongoing calendar year saw most of the IPOs opening with a premium over the issue price suggesting a strong investor appetite.


Laxmi Organic Industries, MTAR Technologies, Easy Trip Planners, GR Infraprojects, Clean Science and Technology, Macrotech Developers and Ami Organics which got listed this year, are trading above their issue price, giving smart returns in the range of 110 to 320 per cent, since listing, to investors.


INVEST19’s Sengar said that with the current favourable interest rate scenario along with high liquidity, financial institutions offer IPO funding products at lower rates. The lower cost of funding will continue to support the IPO boom.


Further, PSU disinvestment will be a blockbuster to support to ongoing IPO boom. Listing of LIC is expected to happen in 2021-2022, which will be one of the largest IPOs in the history of the Indian market. This will aid the current ongoing buoyancy in the IPO market for 2022, he added.


Earlier this month, Sebi Chairman Ajay Tyagi said that growth-oriented technology companies have raised Rs 15,000 crore through initial share sales in the last 18 months and IPOs worth around Rs 30,000 crore by such firms are in the pipeline.


“Growing number of unicorns in the startup ecosystem is a testimony of the new-age tech companies coming of age in our economy. These companies often follow a unique business model focusing more on rapid growth than immediate profitability,” he had said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)





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Retro tax scrapping revived foreign interest in India’s privatisation plan



The governments decision to nullify retrospective taxation provisions has brought fresh lease of life to its strategic disinvestment plan with growing overseas investor interest in picking up management control of public sector undertakings put on the block for privatisation.


Government sources said that they have received enquiries from foreign multinational corporations about participation on its strategic disinvestment plan and the pace has increased post the Centre’s decision to amend retrospective taxation provisions in the Income tax Act, bringing about certainty on taxation regulations and improving country’s ranking several notches on ease of doing business index.





Accordingly, the strategic disinvestment proposals of companies Ferro Scrap Nigam Limited (FSNL), Rashtriya Ispat Nigam Ltd, Container Corporation, IDBI Bank Ltd., Neelanchal ispat Nigam ltd may get extensions if more time is required to bring larger number of overseas investor participation. Also, government is seeing increased interest of foreign investors in the proposed initial public offer of Life Insurance Corporation (LIC) that is like later this year.


“The government’s move (on scrapping retrospective taxation proposals) would also build confidence of foreign investors to attract new investments that are crucial for reviving economic growth,” said Vipul Jhaveri, Managing Partner-Tax, Deloitte India.


“This amendment (retrospective taxation) tainted India’s image as an investment destination. The new changes will not only end prolonged litigation in numerous cases but will also uplift India’s image internationally as a fair and equitable taxing nation, said Mukul Bagla, Chair, Direct Tax Committee, PHDCCI.


While the government has not yet made its stand clear on the pending cases of disinvestment where the process has reached financial bidding stage, sources said that a second thought on re-inviting investors even in these cases may be considered. This could help increase the participation of MNCs in disinvestment of containers such as Bharat Petroleum Corporation Ltd (BPCL), Air India, BEML, Shipping Corporation, Pawan Hans.


Disinvestment department Dipam’s views on this could not be ascertained but recently it’s secretary Tuhin Kanta Pandey has said that in all these enterprises, government has got sufficient interest from bidders, who are now at the second stage of due diligence.


Both portfolio investors and direct foreign investors have shown increased interest in running and investing in Indian companies up for privatisation.


The government had budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including 2 PSU banks and one insurance company, in 2021-22. It is hoping that larger overseas participation would help in completing strategic disinvestment of larger PSUs quickly.


So far, government has mobilised only Rs 8,368.56 crore as disinvestment proceed from minority equity sale in PSUs under the offer for sale route (OFS).


(Subhash Narayan can be contacted at subhash.n@ians.in)


–IANS


sn/ksk/


 

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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IDBI Bank strategic sale: 7 firms in race for transaction advisor



As many as seven firms, including JM Financial, Ernst and Young and Deloitte, have bid for managing the strategic sale of IDBI Bank.


These firms would make a virtual presentation before the Department of Investment and Public Asset Management, which is handling the sale process, on August 10, according to a notice by DIPAM.





The firms that have bid for acting as transaction advisor are Deloitte Touche Tohmatsu India LLP, Ernst and Young LLP, ICICI Securities, JM Financial Ltd, KPMG, RBSA Capital Advisors LLP and SBI Capital Markets.


DIPAM would appoint one transaction advisor for the strategic sale of IDBI Bank, in which the central government and LIC together own more than 94 per cent.


LIC, currently having management control, has a 49.24 per cent stake, while the government holds 45.48 per cent in the bank. Non-promoter shareholding stands at 5.29 per cent.


The exact quantum of stake dilution would be decided later.


The government in June invited bids from reputed professional consulting firms / investment bankers / merchant bankers / financial institutions / banks, for facilitating/assisting DIPAM in the process of strategic disinvestment of IDBI Bank Ltd. along with transfer of management control, till completion of the transaction. The last date for bid submission was July 13, which was later extended till July 22.


The Transaction Advisor would be required to advise and assist the government on modalities of disinvestment and the timing; recommend the need for other intermediaries required for the process of sale/disinvestment and also help in identification and selection of the same with proper Terms of Reference; preparation of all documents like Preliminary Information Memorandum (PIM), organise roadshows, suggest measures to fetch optimum value.


The advisor would also be supporting IDBI Bank in setting up of the e-data room and assisting in the smooth conduct of the due diligence process, will help position the divestment of GoI equity in IDBI Bank to organize roadshows and to generate interest among the prospective buyers.


The Cabinet in May had approved the strategic sale of the entire stake of the government and Life Insurance Corporation (LIC) in IDBI Bank Ltd.


In response to queries received from potential transaction advisors in IDBI Bank, the DIPAM had last month clarified that since LIC’s stake would be sold along with that of the government’s, a single transaction advisor would manage the entire share sale process.


The quantum of stake dilution would be declared before RFP (Request for Proposal) stage of the transaction.


Finance Minister Nirmala Sitharaman in her Budget for 2021-22 had said the process of privatisation of IDBI Bank would be completed in the current fiscal. The government aims to mop up Rs 1.75 lakh crore in the current fiscal from minority stake sale and privatisation.


Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling government stake in public sector banks and financial institutions while Rs 75,000 crore would come as CPSE disinvestment receipts.


So far in the current fiscal the government has mobilised Rs 7,648 crore as disinvestment receipts.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

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