Troubled and cash strapped High Mark has been offered Rs30 per share by Italian credit information agency CRIF, an existing shareholder. CRIF is headed in India by old hand Larry Howell. In his previous inning, Howell successfully brought together TransUnion, which he was heading at that time, and CIBIL, India's first credit bureau
Italy-based credit services provider CRIF is trying to buy a controlling stake in High Mark Credit Information Services Pvt Ltd and given the present situation at the Indian bureau, it may well succeed. According to sources, Larry Howell, chairman of CRIF International Advisory Board is leading the negotiations with investors and promoters of High Mark. Howell represents CRIF as director at High Mark. CRIF SpA already has 9.09% stake in High Mark.
Howell was also instrumental in bringing together TransUnion and Credit Information Bureau (India) (CIBIL), India’s first credit bureau. Howell was president of TransUnion International for Asia and Europe, where he oversaw credit operations in several markets, including India, Italy, Thailand, Mainland China, Russia and Hong Kong, before joining CRIF.
According to sources, CRIF has offered to buy 26% stake in High Mark at Rs30 per share or about 3.4 million euro. The offer is valid only till 31st December. Among the investors are stock speculator Rakesh Jhunjhunwala (4.55%) and financial services company, Edelweiss (9.09%), apart from a host of banks and a few financial services companies. They have subscribed their shares at Rs12.25 apiece. In addition, CRIF said it would not block the initial public offering (IPO) of High Mark, if other shareholders also agree either to guarantee a loan, make a direct loan or invest similar amounts that of CRIF (Rs30 per share or 3.5 million euro), in case the Indian credit bureau needs funding.
As pointed out in our earlier stories, High Mark is in dire need of funds to remain operational. Bereft of a management team, which left the Bureau over differences with chairman Prof Anil Pandya and the unequal distribution of employee stock ownership plan (ESOP), High Mark is in a particularly tough spot because it does not have money to run the operations beyond two months.
According to sources, the company has almost run through the Rs43 crore it raised and is about to cease operations in a couple of months, unless it finds a new investor. Prof Pandya, in an email told Moneylife that “High mark is raising funds to maintain its momentum in the market."
Earlier, when High Mark tried to raise funds through a rights issue, several of its existing investors refused to participate. Sources say that some of these investors are miffed at the changes at the top, such as Sidhharth Das who was the chief operating officer and Kiran Moras who was the architect of the system.
CRIF’s offer to High Mark shareholders suggests a change of name to High Mark CRIF India, from High Mark. According to the terms of the offer, the board of High Mark would appoint a management committee of three people. The chief executive (CEO) of High Mark would report to this committee headed by a representative of CRIF.
In addition, post takeover, the executive chairman of High Mark, Anil Pandya, will become non-executive chairman, 60 days after hiring a new CEO.
While the present board at High Mark was generous in doling out ESOPs and paid trips abroad to its directors, the same may not be possible post the takeover. Howell in his offer has categorically ruled out granting any ESOPs and foreign travel expenses to directors of High Mark, except for the non-executive chairman. CRIF’s offer, after being accepted by High Mark shareholders and the board will have to be acceptable to the Reserve Bank of India as well.
As reported earlier by Moneylife, four independent directors, Dipankar Basu (1.63 lakh), Vepa Kamesam (1.63 lakh), Rajiv Johri (6.53 lakh) and Shyam Sunder Suri (6.53 lakh) and its chairman Prof Anil Pandya (3.27 lakh), together hold 70% of ESOPs in High Mark. (http://www.moneylife.in/article/high-mark-credit-four-directors-and-chairman-bagged-70-of-the-esops/30316.html). It was not clear to the employees what exactly they have contributed after getting the licence from RBI.
Read the previous two articles on High Mark here: High Mark Credit: Four directors and chairman bagged 70% of the ESOPs and Is High Mark Credit Info about to cease operations?
In the first leg, the Nifty may hit 5,750
The domestic market settled lower for the second day in a row on weak global cues which led to an across-the-board sell-off. The over 1% decline in the market indices confirms a downtrend. In the first leg, the Nifty may hit 5,750. The National Stock Exchange (NSE) registered a volume of 71.64 crore shares and advance-decline ratio of a poor 347:1103.
The market opened on a subdued note on concerns about the US budget deal. However, optimism expressed by House Speaker John Boehner of finding a solution to avert higher taxes and spending cuts pushed the US markets higher overnight. On the other hand, markets in Asia were down in morning trade on US uncertainties.
Back home, the Nifty opened 28 points lower at 5,888 and the Sensex resumed trade at 19,395, 59 points down from its previous close. The opening figures on the benchmarks were their intraday highs. Lack of any domestic triggers kept the indices sideways in subsequent trade.
The market extended its losses on across-the-board selling pressure, pushing the benchmarks further southwards in the post-noon session. A weak opening of the key European indices also dented sentiments.
The benchmarks fell to their intraday lows towards the end of trade with the Nifty going down to 5,842 and the Sensex retracting to 19,221. The market closed near the lows on the absence of any local cues and weak global markets. The Nifty finished 69 points (1.16%) down at 5,848 and the Sensex settled 212 points (1.09%) lower at 19,242.
Both, the BSE Mid-cap index and the BSE Small-cap index declined 1.47% each today.
All sectoral indices settled in the negative. The losers were led by BSE Realty (down 3.51%); BSE Metal (down 1.80%); BSE Healthcare (down 1.70%); BSE Capital Goods (down 1.66%) and BSE Power (down 1.63%).
Only two of the 30 stocks on the Sensex closed in the positive; they were TCS (up 0.78%) and ITC (up 0.03%). The top losers were Jindal Steel & Power (down 3.52%); Sterlite Industries (down 3.23%); Bharti Airtel (down 3.08%); Hindalco Industries (down 2.68%) and Sun Pharmaceutical Industries (down 2.68%).
The top two A Group gainers on the BSE were—Container Corporation of India (down 2.86%) and Glenmark Pharmaceuticals down 2.46%.
The top two A Group losers on the BSE were—Jet Airways India (down 7.03%) and Adani Power (down 6.65%).
The top two B Group gainers on the BSE were—Alchemist Realty (up 20%) and Peacock Industries (up 19.88%).
The top two B Group losers on the BSE were—Trio Mercantile Trading (down19.66%) and Minaxi Textiles (down 14.63%).
Out of the 50 stocks listed on the Nifty, only two stocks settled in the positive. The gainers were ITC (up 0.82%) and TCS (up 0.48%). The key losers were Jaiprakash Associates (down 4.44%); Jindal Steel & Power (down 3.95%); IDFC (down 3.59%); Sesa Goa (down 3.14%) and Hindalco Ind (down 3.09%).
Markets across Asia settled lower on concerns about budget deal logjam in the US. A Sydney-based analyst was quoted saying “If they go off the fiscal cliff, the US economy could go into a recession. At stake is the US economy and by implications the global economy.”
The Shanghai Composite declined 0.69%; the Hang Seng lost 0.68%; the Jakarta Composite shed 0.11%; the KLSE Composite dropped 0.70%; the Nikkei 225 contracted by 0.99%; the Straits Times fell 0.38%; the Seoul Composite skidded 0.95% and the Taiwan Weighted tanked 0.99%.
At the time of writing, the key European markets were down between 0.67% and 0.89% and the US stock futures were trading sharply lower, indicating a lower opening of US stocks later in the day.
Back home, inflows by foreign institutional investors (FIIs) on Thursday were almost offset by outflows from domestic institutional investors (DIIs). While FIIs pumped in Rs466.75 crore, DIIs pulled out Rs444.01 crore.
Hinduja Group firm Gulf Oil today said it has completed its acquisition of US-based Houghton International for $1.045 billion (about over Rs5,747 crore) after conclusion of necessary regulatory approvals. The acquisition of this speciality chemical maker would make Gulf Oil the world's 9th largest lubricant company, without affecting its financials as the purchase has been made through "a step-down subsidiary structure" in the US and UK. Gulf Oil spurted 2.24% to settle at Rs82 on the NSE.
Hyderabad-based IL&FS Engineering and Construction Company has received a letter of award for the execution of an engineering procurement and construction contract at Dighi Port in Maharashtra. The contract is valued at Rs 168 crore and involves the construction of a multipurpose berth, development of a backup area including the construction of utilities. The stock gained 1.47% to close at Rs58.85 on the NSE.
The huge natural gas discovery in a Mozambique block where Bharat Petroleum Corp (BPCL) and Videocon Industries are partners, will be turned into LNG plant to be jointly built with neighbouring gas field operator Eni SpA of Italy. BPCL declined 1.24% at Rs345.55 while Videocon fell 1.35% to settle at Rs215.05 on the NSE.
While the Union Budget 2012-13 granted external commercial borrowings (ECB) for low-cost affordable housing projects, the Reserve Bank of India (RBI) has taken a good 10 months to come out with the notification
Which projects will be eligible?