Canara Robeco launches new gold savings fund

The new gold savings fund scheme would invest predominantly in units of Canara Robeco gold ETFs

Mumbai: Canara Robeco Asset Management Co Ltd (CRAMC), the investment managers of Canara Robeco Mutual Fund, on Monday launched a fund-of-fund scheme called Canara Robeco gold savings fund, where the customers can invest in gold, reports PTI.

The new fund is an open-ended fund-of-fund scheme, which will invest predominantly in units of Canara Robeco gold exchange traded funds (ETFs), the CRAMC said in a release.

"Given the current global uncertainties, gold is fast becoming an alternate asset with increasing demand from several central bankers and investors globally. In the domestic market too, rising investment demand, increased risk aversion and high inflationary conditions favour Gold as a good investment option for the next few years," Canara AMC investment head Ritesh Jain said.

The minimum investment in the scheme would be Rs5,000 and it is open for subscription till 18th June.

Canara Robeco is a joint venture between state-run Canara Bank and the Holland-based Robeco, which is an asset management specialist.

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Warburg Pincus buys Future Capital Holdings stake for Rs560 crore

US-based private equity Warburg Pincus, which bought 53.7% stake in Future Capital Holdings at Rs162 per share, would inject additional Rs100 crore and make an open offer for the company

 

Mumbai: Kishore Biyani-led Future Group, which has a debt of over Rs5,000 crore, on Monday said it is selling 53.67% stake in Future Capital Holdings to US-based private equity Warburg Pincus to raise around Rs560 crore, reports PTI.

 

As per the share purchase agreement, Warburg Pincus would inject additional Rs100 crore into Future Capital Holdings (FCH) and also make an open offer under the takeover code of Securities and Exchange Board of India (SEBI).

"This transaction is in line with our stated intention to exit from non-core businesses of Pantaloon Retail and is aimed at deleveraging and further strengthening the balance sheet of the company," said Kishore Biyani, founder and chief executive, Future Group.

Biyani-led Future Group, whose core retail business formats include Big Bazaar, Food Bazaar, e-zone and Pantaloon, has a debt of over Rs5,000 crore.

 

Pantaloon Retail holds 55% stake in Future Capital. Earlier this year, Pantaloon Retail had formed a high powered 'review committee' with the mandate to consider various options for realignment and divestments.

 

"As part of the transaction, Pantaloon Retail India and its wholly-owned subsidiary Future Value Retail Ltd will sell its stake in FCH at a price of Rs162 per share to Cloverdell Investment Ltd, an affiliate entity of Warburg Pincus," the Group said in a statement after signing of the agreement.

 

The share price of Rs162 per share is at a premium of 14% over the prevailing market price.

 

It further said that V Vaidyanathan, vice chairman and managing director, would continue to head the company. Further Vishal Mahadevia, managing director, Warburg Pincus would be inducted to the Board of Directors of FCH.

 

As per the SEBI norms, Warburg Pincus will have to make an open offer of 26% to the shareholders of Future Capital Holdings. Open offer provides an opportunity to the existing investors to exit the company.

 

The board of FCH also approved a preferential allotment of shares to Warburg Pincus worth Rs100 crore.

 

"We welcome the investment of Rs100 crore of incremental Tier-I capital into the company. The company is poised to grow in the MSME space," Vaidyanathan said.

Morgan Stanley acted as the lead financial advisor to Pantaloon Retail and Future Value Retail. Enam Securities acted as the co-advisor to Future Group.

 

For the fiscal ended March 2012, Future Capital Holdings reported a net profit of Rs105.8 crore, a jump of 115% from Rs49.1 crore in the year ago period. Its asset base stands at Rs4,700 crore.

 

The company, formed in 2007, provides consumer and mortgage loans. Its asset quality has improved during the last fiscal with the gross non-performing asset ratio dropping to 0.08% from 0.25% a year ago.

 

Warburg Pincus manages assets worth about $40 billion globally and has also invested in Indian companies across sectors.

 

At 3.17pm, FCH was trading 4.4% higher at Rs143 and Pantaloon Retail was 7.3% up at Rs148.95 on the BSE. In the intra-day trade, FCH shares jumped 9.45% to a high of Rs149.95.

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Gokarn hints at rate cuts in next RBI policy review

According to the RBI deputy governor, rising food inflation and depreciating rupee are the conflicting factors the central bank would consider while deciding on policy rates on 18 June

Mumbai: With the economic growth slipping to nine-year low levels, Reserve Bank of India (RBI) deputy governor, Subir Gokarn on Monday said below trend growth and falling crude oil prices offer the central bank a window to ease policy stance, reports PTI.

"(For one,) the growth is somewhat lower than expectations and that may have positive, moderating impact on core inflation. Two, oil prices have come off somewhat more than expected. Those are the two factors that suggest more room (for monetary policy)," Gokarn told reporters on the sidelines of an event.

The economic growth for the three months to March stood at 5.3%, its lowest in nine years, leading to calls for some urgent measures to get it back to track and achieve the targeted 7.3%.

For the financial year 2011-12, GDP growth came down to 6.5%, lower than the 6.7% recorded during the peak of the post-Lehman credit crisis and 8.4% in FY11.

One of factors being blamed for the dip in growth is the Reserve Bank's rate stance, which resulted in elevated interest rates for nearly 20 months as headline inflation continued to remain uncomfortable.

Preliminary indicators on the growth front, coupled with a fall in inflation, led the RBI to announce a surprising 0.50% cut in its key rates in its annual policy announcement in April.

In the announcement, RBI had made it clear that its room for further cuts was very limited given the high current account and fiscal deficits. The mid-quarter policy announcement is scheduled for 18th June.

Gokarn, however, pointed out that rising food inflation and depreciating rupee are the conflicting factors the RBI would consider while deciding on policy rates.

"... some factors suggest room, some factors suggest that inflationary pressure may still remain. I think we'll have to take a balanced view of these factors," he said.

Gokarn also said there has been a slight fall in the rupee price of crude, which came down to below $100 a barrel for the first time in eight months, as the rate of its fall is more than the depreciation of the rupee.

The rupee has lost over 20% in the past 12 months due to factors like widening current account deficit and concerns over the rising fiscal deficit, which have led to a fall in fund flows into the country.

On liquidity, Gokarn said the situation is "comfortable" right now going by the bank borrowings. "If we do see stress re-emerging, particularly with persistence, we clearly have the option of doing more open market operations (OMOs)," Gokarn said.

The liquidity deficit has been above the RBI's comfort mark for the past many months, forcing the central bank to infuse money into the system through bond buybacks also called as open market operations. It has infused over Rs1.25 lakh crore into the system since last November through OMOs.

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