India, China may see largest rise in PE investments in two years

The Global PE Barometer report revealed that 44% of the global PE investors surveyed want to either expand or invest in India, while 53% plan to do the same in China

India and China are expected to see the highest-ever rise in private equity investments from new and existing investors over the next two years, a survey by global private equity (PE) firm Coller Capital said, reports PTI.

As per the bi-annual survey of trends in private equity, investors—mainly from Europe—plan to boost their exposure to the Asia-Pacific region over the next three years.

"Of those, China and India will see by far the largest increase in PE investment from new and existing investors ...over the next two years," the Global PE Barometer report stated.

The report revealed that 44% of the global PE investors surveyed want to either expand or invest in India, while 53% plan to do the same in China.

Just 20% of the investors preferred Australia, even though most seemed to view it as the most attractive destination for buyout investments in the Asia-Pacific region.

According to an earlier industry report, investments of PE firms had risen fastest in 18 months to $2 billion in the January-March quarter this year. This was higher than their contribution of $620 million in the same period in 2009.

Despite the fall in returns over the past year, most PE investors across the globe are bullish on new investments.

Nearly two-thirds of the investors surveyed globally plan to increase their new commitments in private equity through 2010 and 2011, the survey found.

"It's natural to ask why investors are maintaining or strengthening their commitment to private equity after a big fall in returns. The simple answer is that private equity investment is a demonstrably skill-based activity for Limited Partners (LPs) and General Partners (GPs) alike, and the credit crunch and recession have been a useful—if painful—learning experience," Coller Capital CIO Jeremy Coller said.

LPs refer to a private equity investor who does not have a say in the management of the partnership, but reaps returns on his/her investment.

Among the investors surveyed, 51% made net returns of 10% or lower from their PE portfolios since they began investing in the asset class, compared to just 22% of limited partners two years earlier.

The barometer gives an overview of the plans and opinions of around 110 institutional investors in private equity (Limited Partners) across the North American, European and Asia-Pacific regions.


India Inc's advance tax payments rise sharply

The tax payments are in line with industrial production, which zoomed 17.6% in April, the first month of the current fiscal, from 1.1% in the same period a year ago

Mirroring the uptick in the economy, corporate India's advance tax payments have jumped sharply in the April-June quarter of this fiscal, reports PTI.

Giving details of the advance tax collection, an income tax official said Life Insurance Corporation of India (LIC) paid an advance tax of Rs533 crore compared to Rs469 crore in the year-ago period, representing a 13.6% rise.

Today was the last day for making advance tax payments.

General Insurance Corporation (GIC) saw a steep hike of 170.5% in its advance tax payments at Rs46 crore from Rs17 crore in the year-ago period, while the steepest was that of HDFC Asset Management Company that paid Rs60 crore compared to Rs 10crore in the comparable period. HDFC AMC's higher tax payment also reflects the growth in capital markets.

Housing lender HDFC Ltd paid an advance tax of Rs215 crore as against Rs175 crore in the April-June period last fiscal, while Yes Bank paid Rs50 crore compared to Rs27 crore.

Aditya Birla group company Hindalco paid Rs55 crore compared to Rs45 crore last year, reflecting a rise of 22.2%, while Crompton Greaves gave Rs38 crore as against Rs28 crore a year ago, a 35% increase.

However, there was no change in tax payments of fast moving consumer goods (FMCG) major Hindustan Unilever (HUL) that stood at Rs75 crore, according to the tax department official.

Higher payment of advance taxes is a result of economic recovery and rising profitability of companies, the official told PTI.

The tax payments are in line with industrial production, which zoomed by 17.6% in April, the first month of the current fiscal, from 1.1% in the same period a year ago.

The gross domestic product (GDP) during the current fiscal is estimated to rise to 8.5% from 7.4% in 2009-10.

Besides, indirect taxes, which include customs, excise and service tax, went up by 49% to about Rs35,000 crore during April-May 2010-11.

Others who paid higher advance taxes include Pharma major Glaxo SmithKline, which deposited Rs42 crore this quarter as compared to Rs39 crore a year ago, the official said.

Century Mills has also shown an upward performance by paying Rs17 crore as against Rs12 crore, while Greaves Cotton has shelled out Rs9 crore, up from Rs4 crore in the first quarter a year ago.

Balkrishna Industries has paid Rs13 crore in this quarter as against Rs7 crore in the same period a year ago.

Grindwell Norton has shelled out Rs5 crore this time as against nil payment a year ago.

The government proposes to collect Rs3.01 lakh crore as corporate tax during the current fiscal, up from Rs2.5 lakh crore in the previous fiscal.


Daily Market View: A short decline on the cards

Expect the market to take a breather after the recent run-up

The market ended in the green today amid a high degree of volatility. The Sensex ended at 17,413, up 74 points (0.4%) and Nifty shut at 5,222, up 24 points (0.4%). The benchmarks touched their intraday lows during early afternoon. A fresh bout of buying helped the market post a recovery and extend its winning steak for another day, making it five days in a row.

Asian shares were up in choppy trade on Tuesday. Key benchmark indices in Indonesia, Japan, Hong Kong, Singapore and Taiwan were up 0.08% to 0.9%. However, South Korea's Seoul Composite was down 0.03%. The Chinese market will remain closed till Wednesday (16th June), for the Dragon Boat Festival. 

The US markets were down on Monday (14th June) after Moody's Investors Service downgraded Greece's rating, fuelling concerns that Europe's debt crisis will hinder global economic recovery. The Dow ended 20.1 points lower (0.2%), at 10,190.9. The Nasdaq rose 0.3 points (0.02%) to 2,244. The S&P500 was down 1.9 points (0.18%) to 1,089.6.

Back home, the government has approved stake sale in Coal India Ltd (CIL) and Hindustan Copper Ltd (HCL) that could be worth up to $3.7 billion. In CIL, 10% stake  will be sold and 20% stake in HCL will be offloaded. The stake sales are part of a broader divestment plan by the Indian government to offload minority holdings in 60 State firms in the coming years.

The southwest monsoon was active over Orissa, Vidarbha, coastal & south interior Karnataka and Kerala during the past 24 hours. The monsoon has further advanced into some more parts of Konkan & Goa and Maharashtra.

Foreign institutional investors were net buyers on Monday, purchasing stocks worth Rs347 crore and domestic institutional investors were net sellers of Rs41 crore.

The board of Mandhana Industries (down 0.6%) has recommended a final dividend of Rs0.75 per equity share of Rs10 for the year 2009-10. Tata Consultancy Services (TCS) (down 1.9%) and Xynteo, a strategic advisory firm specialising in low-carbon growth, have announced a collaboration to jointly create solutions for a low-carbon economy. These solutions will be initially built and deployed in the Nordic market. The partnership will look at new ways to help companies increase productivity while reducing CO2 emissions along their entire value chains right through to the final consumer.

The board of Shri Lakshmi Cotsyn (down 0.5%) had decided to convert its foreign currency convertible bonds (FCCBs) into equity shares for the total principal amount of $5,00,000. But due to the volatility in the capital market and continuous decrease in the share price of the company, it was difficult to allot warrants at Rs200 per warrant. Thereafter, it was decided that the number of warrants be increased to 70 lakh to be allotted to promoters and non-promoters in the ratio of 50 lakh and 20 lakh, respectively, at a price of Rs150 each in the place of 50 lakh warrants (35 lakh to promoters and 15 lakh to non- promoters) at Rs200 each, decided on 9th April. Thus, the company will raise Rs105 crore by way of allotment of 70 lakh warrants at Rs150 each to part-finance the cost of project of technical textiles, denim and sheeting. 

Bank of India (up 1.1%) has raised Tier- II capital through issue of Upper Tier- II Capital Bonds of Rs1,000 crore on 11th June. The coupon rate is 8.48% per annum and tenure is 15 years with a call option after 10 years. Seamec (up 2.3%) has said that the vessel SEAMEC I is scheduled for statutory dry docking with effect from 14 June 2010. The expected period of dry docking would be around one month. After completion of dry docking, the vessel will be back with Dolphin Offshore, the present charterer.


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