HSBC expects to complete the acquisition through its Indian subsidiary by the first half of 2011. RBS’s retail and commercial banking businesses in India currently have 1.1 million customers served by over 1,800 staff through 31 branches
The Hongkong and Shanghai Banking Corporation (HSBC) today announced it will acquire the Indian business of Royal Bank of Scotland (RBS) worth $1.8 billion, a move that will help the British giant gain greater exposure in the country, reports PTI.
RBS’ retail and commercial banking businesses in India currently have 1.1 million customer relationships served by over 1,800 staff through 31 branches.
HSBC expects to complete the acquisition through its Indian subsidiary by the first half of 2011.
"The total consideration will comprise a premium of up to $95 million over the tangible net asset value of the businesses being acquired at the closing of the transaction, less an adjustment equal to 90% of any credit losses incurred on the unsecured lending portfolio in the two years subsequent to deal completion," HSBC said in a statement in New Delhi.
This is the third major transaction for HSBC in India. In June 2008, HSBC entered into a joint venture insurance company with Canara Bank and Oriental Bank of Commerce, gaining access to a distribution network of 5,000 branches and 50 million customers. In September of the same year, HSBC acquired IL&FS Investsmart, now HSBC InvestDirect, a major retail brokerage with more than 130,000 customers and outlets across 52 cities.
HSBC Group chief executive and chairman of The Hongkong and Shanghai Banking Corporation Limited, said: "The main focus of our strategy is on emerging markets and this acquisition is our third transaction in one of the world's largest and fastest growing developing markets in the last two years."
India was the second fastest growing economy in the world by gross domestic product (GDP) last year and is set for another strong year with forecast GDP growth of 8.5% in 2010. According to the International Monetary Fund (IMF), it is expected to be the world's third largest economy, based on purchasing power parity, by 2012.
RCom's acquisition of Digicable marks a significant step in India's scattered cable TV industry and signals the beginning of large-scale corporatisation as well as consolidation in the industry
Reliance Communications Ltd (RCom) has bought cable TV service provider Digicable to create Reliance DigiCom, that would integrate RCom's direct-to-home, Internet protocol TV (IPTV) and retain broadband operations with Digicable. According to analysts, this marks a significant step in India's scattered cable TV industry and signals the beginning of large-scale corporatisation as well as consolidation in the industry.
"Entry of large corporates and TRAI recommendation on increase in foreign direct investment (FDI) for multi-services operators (MSOs) going for digitisation would be incrementally positive for the sector as global distribution players start to relook at their Indian strategy," said IDFC Securities Ltd in a research note.
Digicable, set up by industry veteran Jagjit Singh Kolhi, has dominance in Punjab and a relevant presence in Rajasthan, Madhya Pradesh, Chhattisgarh, Maharashtra, Andhra Pradesh and West Bengal and has operations in Uttar Pradesh, Delhi, Haryana and Uttarakhand. Digicable has established infrastructure in these States with 73 analogue and about 30 digital head-ends, which is more than any other player in the cable industry. It also has over 28,000km of fibre network in place.
Commenting on the deal, Anil Ambani, chairman, RCom said, "With this game-changing move, we hope to lead the next revolution in digital home entertainment in India, by offering a world-class TV experience and ultra high-speed broadband capability to a billion people. The new company, Reliance DigiCom, will fuel our '4-screen strategy' to own mobile, cinema, TV and computer screens, that are rapidly becoming an integral part of our customers' daily lives, leading to world-class convergence of information, communication and entertainment solutions and services."
As per a study known as 'TAM Annual Universe Update-2010', done by Television Audience Measurement Group, TAM, along with its parent companies-AC Nielsen and Kantar Media Research/IMRB-the estimated total number of TV households in India is about 13.5 crore, out of which 80% of TV households in India now have a cable and satellite (C&S) connection.
However, the Indian cable industry has been characterised by fragmentation, dominance of unorganised players, poor yields and huge under-reporting. Despite being the world's second largest C&S home market in the world, the industry earns a total revenue of $4.8 billion (about Rs21,600 crore). In contrast, Comcast, the world's largest cable operator, generates revenues of $33 billion (about Rs1.5 lakh crore) from its just 2.4 crore subscribers. The average revenue per user (ARPU) in India is also less than Rs200 compared with Rs3,000 to Rs3,600 in the US and UK and Rs675 to Rs900 in Asian markets.
More importantly, with TV distribution dominated by analogue and addressability a concern on the cable platform, about 80% of the collection at the consumer end goes unreported in the hands of the unorganised last-mile operators.
According to reports, currently, there are over 7,000 MSOs and more than 50,000 last-mile operators or local cable operators (LCOs) in the TV cable industry. In addition, digitisation has been a failure so far with digital cable reaching just 40 lakh homes, as of date. The top five players in India account for less than 30% of the paying subscriber base, while the DTH industry has six players in the race, as against a monopoly or duopoly in the rest of the world.
The IDFC report says that as per current estimates, it is building in $1.5 billion being spent by the cable industry over the next five years in digitising 3.8 crore incremental cable homes. "Our belief is that that incremental capital would largely go into digitisation, entry of Reliance ADAG can further speed up the pace of digitisation. It will also ensure increased capital infusion in the sector, which is competing with the heavily-funded DTH industry," the report said.
While funded DTH players have invested Rs11,000 crore so far, cable players too are now equipped to seed set-top-boxes (STBs) after the recent fund raise and would look to lock in customers given the threat from DTH. Digicable has so far spent $140 million, invested by Ashmore, a London-based private equity fund, to acquire 80 lakh customer touch-points and has been scouting for capital to seed STBs and thereby secure its existing subscriber base.
"We also expect Reliance ADAG, besides DEN Networks and Hathway, to consolidate the market, as smaller LCOs and MSOs find it difficult to compete on the digital platform. Also entry of a large corporate can also result in favourable changes in the regulatory framework and likelihood of mandated digital rollout," the IDFC report added.
Within days of government-owned State Bank of India extending its 8% teaser rate home loans till September, private sector giant HDFC today said that it would offer 8.25% initial interest rate till 31st August
Mortgage leader HDFC today announced a new concessional rate home loan scheme, where it will charge a low 8.25% interest from borrowers in the first year, reports PTI.
Within days of government-owned State Bank of India (SBI) extending its 8% teaser rate home loans till September, private sector giant HDFC today said that it would offer 8.25 per cent initial interest rate till 31st August.
The 8.25% rate would be charged till 31 March, 2011, and would increase to 9.25% for the next one year, that is till 31 March, 2012.
Pursuant to that the prevailing floating rate would be applicable for the balance term of the loan tenure, HDFC said.