Amid reports the government deferring clearance to Warburg Pincus' purchase of Future Capital, the Kishor Biyani-led company is hiving off its units
New Delhi: Kishore Biyani led Future Capital Holdings Ltd, on Tuesday said it sold its subsidiary Myra Mall Management Company to Providence Educational Academy for Rs97.7 crore, reports PTI.
The company sold 10 lakh fully paid-up equity shares of Rs10 to Jaydev Mody owned Providence Educational Academy, Future Capital said in a filing on the BSE.
Consequently, Myra Mall has ceased to be a subsidiary company of Future Holding Ltd from 9th July, it added.
The sale comes amid reports the government deferred the clearance of Warburg Pincus' purchase of Future Capital, citing that Future Capital must first exit from its wholly-owned real estate subsidiary.
As per the existing regulations foreign investment in real estate is not allowed. However, foreign investors can invest in construction projects subject to strict option such as a three-year lock-in, minimum capitalisation of $5 million for joint venture (JV) and $10 million for wholly-owned subsidiaries, and development of at least 10 hectares of land.
Last month, Future Group agreed to selling 53.67% stake in Future Capital Holdings to US-based private equity Warburg Pincus to raise an estimated Rs560 crore.
As per the share purchase agreement, Warburg Pincus would inject another Rs100 crore into Future Capital Holdings (FCH) and also make an open offer under the takeover code of market regulator SEBI.
Kishore 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 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.
Future Capital ended Tuesday marginally down at Rs152 on the BSE, while the benchmark Sensex closed 1.3% up at 17,618.
The proposed law will give statutory powers to CBI specifically to look into corruption cases and prosecute offenders all over the country without the consent of the state governments
New Delhi: Taking a step forward in its fight against corruption, the Indian government is considering a recommendation to give more powers to the Central Bureau of Investigation (CBI) by enacting a law which will empower it to probe graft cases nationwide without the consent of the state governments, reports PTI.
If it comes into being, the proposed law will give statutory powers to the investigation agency specifically to look into corruption cases and prosecute offenders all over the country, highly placed official sources said.
As per the proposal, which is at a nascent stage, the law will be enacted close on the lines of the National Investigation Agency Act, 2008.
Sources said the Ministry of Personnel, Public Grievances and Pensions will soon hold a meeting with Ministry of Law and Justice and certain officials of the CBI to devise a road map for the legislation.
"The government is considering a proposal for giving statutory powers to CBI. Its main thrust is to minimize overlapping powers of state and central government investigating agencies," a senior Department of Personnel and Training (DoPT) official said.
However, the official said "no decision" has been taken by the Ministry on it as yet.
At present, the Central Bureau of Investigation functions under the Delhi Special Police Establishment (DSPE) Act. As per the Act, CBI requires consent from the state governments to probe and prosecute an official working under their control.
The proposal was also discussed by a Parliamentary Standing Committee which had in May this year recommended a legislation giving statutory powers to CBI for the purpose terming it as a "dire need".
Regulators in developed countries are proactively taking measures to protect their investors while our regulators are oblivious to the real problems investors face
The Securities Exchange Commission (SEC), America's financial watchdog is soon coming out with a report which will outline the steps taken by retail investors before they hire financial advisors and products. The SEC is mandated to do this under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted by president Barack Obama on 21 July 2010. It is one of the most sweeping reforms the US has undertaken since the Great Depression. Section 917 of the Dodd-Frank Act directs the SEC to conduct a study of retail investors' financial literacy and submit its findings to Congress by 21 July 2012.
Unfortunately, there is no such sweeping legislation nor is there any serious intent on part of Securities Exchange Board of India (SEBI) to do the same for Indian citizens. The Swarup Committee Report had highlighted the decline of retail investors in India. Moneylife had also submitted a position paper on it. The government and regulators have been lukewarm to it. The regulators continue to come with a patchwork of measures to combat poor financial literacy and mis-selling-which has seen a fall in investor population in India.
Mis-selling continues to occur everyday; complaining to the regulators is cumbersome and thankless while SEBI pays only a lip-service to financial literacy. The government is coming out with half-baked idea such as the Rajiv Gandhi Equity Scheme, which it thinks will be able to increase financial penetration, even if financially illiterate consumers do not know the meaning of 'share' or 'equity'.
The spirit amongst Indian mutual funds is also missing while the American corporates are serious about improving financial literacy. In May, The Vanguard Group, a pioneer in index funds, had rolled out a product called My Classroom Economy, which helps teachers to instruct children money management. Similarly, according to Bloomberg, Allianz Life Awarded $475,000 to local organizations to promote financial literacy in the Minneapolis-St Paul area in the US. We haven't seen this sort of serious initiative from the corporates in India yet, while they have continued to take advantage of bull markets from time to time.
The Indian government isn't interested in being proactive and pro-consumer, and neither are our regulators. On the other hand, the American government seems to have learnt from the lessons of the 2008 sub-prime crisis and immediately swung into action by passing the Dodd-Frank Legislation to protect retail investors and improve awareness and literacy. President Obama hosted the Summit on Financial Capability and Empowerment, in May earlier this year, at which it announced public-private partnerships designed to promote financial education. One of the most notable parts of the legislation is that children and consumers must possess financial education before they can take out school loans and before consumers can sign mortgages, and allow parents to establish retirement savings accounts for their children when they are born.
And it is just not America that is being proactive. Even United Kingdom's watchdog, the Financial Services Authority (FSA) is being transformed in order to protect consumers. Most of the power currently held by the FSA will be taken over by the Bank of England, with a Prudential Regulatory Authority established to oversee corporates and their ethical decision making while the Financial Policy Committee will be set up for consumer protection.