Personal finance Monday

DSP BlackRock MF unveils FMP-12M-Series 11; L&T Mutual Funds introduces 91 days scheme; DSP BlackRock MF floats FMP-3M-Series 26; Shekhawati Poly-Yarn enters capital market;  Trade in sugar futures restarts on 27th December

DSP BlackRock MF unveils FMP-12M-Series 11

DSP BlackRock Mutual Fund has launched DSP BlackRock FMP-12M-Series 11, a close-ended income scheme.

The primary investment objective of the schemes is to seek capital appreciation by investing in debt and money market securities. It is envisaged that the scheme will invest only in such securities which mature on or before the date of maturity of the schemes. The schemes may also use fixed income derivatives for hedging and portfolio balancing. The tenor of the schemes is 12 months. The schemes offer growth and dividend (payout) option.

The new issue opens on 27th December and closes on 28th December. The minimum investment amount is Rs10,000.

CRISIL Short Term Bond Fund Index is the benchmark index. The schemes will be managed by Dhawal Dalal.

L&T Mutual Funds introduces 91 days scheme

L&T Mutual Fund has launched L&T FMP-II (December91D B), a close-ended income scheme.

The investment objective of the scheme would be to achieve growth of capital through investments made in debt/fixed income securities maturing on or before the maturity of the scheme.

The scheme offers growth and dividend (payout) option. The tenor of the scheme is 91 days. The exit load will be nil. The minimum investment amount is Rs5,000. The new issue opens on 27th December and closes on 28th December.

CRISIL Liquid Fund Index is the benchmark index. Bekxy Kuriakose is the fund manager.

DSP BlackRock MF floats FMP-3M-Series 26

DSP BlackRock Mutual Fund has launched DSP BlackRock FMP-3M-Series 26, a close-ended income scheme.

The primary investment objective of the schemes is to seek capital appreciation by investing in a portfolio of debt and money market securities. The scheme will invest only in such securities which mature on or before the date of maturity of the Schemes. The schemes may also use fixed income derivatives for hedging and portfolio balancing.

The tenor of the schemes is three months. The schemes offer growth and dividend (payout) option.The new issue closes on 27th December. The minimum investment amount is Rs10,000.CRISIL Liquid Fund Index is the benchmark index. The schemes will be managed by Dhawal Dalal.

Shekhawati Poly-Yarn enters capital market

Shekhawati Poly-Yarn is entering the capital market with its initial public offer (IPO) of 12 million equity shares on 27th December. The firm intends to raise Rs36 crore through IPO at the set price of Rs30 per share.

This issue is likely to represent 54.54% of the totally diluted post issue capital to be raised by the firm through the sale of its common shares.

The firm is involved in producing both texturised as well as twisted yarn. It intends to start the production of knitted fabric from texturised yarn. It has also stated that the revenue generated from the sale of shares would be utilised for purchasing 30 new twisting machines as well as for setting up 30 knitting machines, purchasing a corporate office at a projected cost of Rs3.25 crore and also for fulfilling the working capital requirements of the company.

This expansion is likely to increase the capacity for twisting yarn with a potential of 4,620 MTPA, yarn knitting with a capacity of 1,980 MTPA and 20 machines for texturing yarn with a potential of 27,400 MTPA.

This expansion is likely to increase the capacity for twisting yarn to 4,620 MTPA, yarn knitting to 1,980 MTPA and by adding 20 texturing machines; production of the same would rise to 27,400 MTPA.

Trade in sugar futures restarts on 27th December

Futures trading in sugar resumes on 27th December after a gap of one-and-a-half years, with the country's top two national exchanges-the Multi Commodity Exchange and the National Commodities and Derivatives Exchange-launching new contracts.

The government had banned sugar futures trading on 27 May 2009, to control rising prices of the sweetener. The ban was valid till 30 September 2010, following which it was allowed to lapse by the regulator, the Forward Markets Commission (FMC).

However, despite lifting the ban, FMC did not permit immediate relaunch of sugar futures trading, as it was waiting for realistic estimates of production in the 2010-11 sugar year (October-September).

"We will offer contracts for six months from January to June, 2011," an MCX spokesperson said, adding that delivery would be linked to the Delhi, Uttar Pradesh and West Bengal markets.

In a circular, NCDEX said three futures contracts for sugar trading would be available for January, February and March 2011.

"The correlation between the futures contract prices and spot market prices is high. As the exchanges enable a transparent interplay of demand and supply forces, leading to efficient price discovery, the domestic sugar industry will definitely benefit from the re-introduction of sugar futures," MCX deputy managing director PK Singhal said.

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The Year That Was: Record $6.5 billion in exits for private equity

A record $6.5 billion exit, with latest being Reckitt Benckiser Group acquiring Paras Pharmaceuticals, was the highlight of the private equity scene in 2010. Longer term, there are demands for transparency and stringent due diligence

 In a business that typically takes five to seven years for investors (Limited Partners or LP) to reap returns on their investments, 2010 turned out to be a record year for private equity (PE) exits.

The latest PE exit was Actis and Sequoia Capital selling their share (totalling over $500 million) in Paras Pharmaceuticals along with the share of the company's founder Girish Patel and his family, to Reckitt Benckiser Group for about $726 million.

Some of the other big exits were ChrysCapital's stake sales in Infosys and Mahindra & Mahindra Financial Services, Sequoia's sale of holdings in Mannapuram and SKS Microfinance and ICICI Venture's holding in VA Tech Wabag and RFCL. The promoters of Patni Computer Systems along with private equity firm General Atlantic are close to selling their stake to a PE-backed suitor.

In 2010, PE deals in real estate companies totalled $1,182 million, compared to $606 million in the previous year. More than 20% of the total PE deals were in the electrical utility or power plants, including renewable energy assets. Out of the total $8.2 billion invested, $1.67 billion was in the power sector.

A consortium of global investors led by Morgan Stanley Infrastructure Partners (MSIP), General Atlantic LLC (GA), Goldman Sachs Investment Management, Norwest Venture Partners (NVP), Everstone Capital and others invested $425 million in energy firm Asian Genco Pte Ltd. GVK Energy, a subsidiary of GVK Power & Infrastructure, raised about $157 million from PE Actis and the Government of Singapore Investment Corporation (GIC). The deal comes after 3i Group invested nearly $180 million in the firm last month.

The sectors that are currently drawing significant interest from PE investors are pharmaceuticals, real estate, finance, education, cleantech, infrastructure, healthcare and some such other untapped sectors. Distribution of financial products, one of the hot areas of 2007, is all but dead. Apnapaisa.com was backed by Sequoia capital, Fundsindia.com is funded by Inventus Capital Partners and Rupeetalk which had early-stage investor Seedfund, was acquired by Noida-based financial services distribution company NetAmbit.
According to Jairaj Purandare of PricewaterhouseCoopers (PwC) India, "Private Equity investment in India between 2004 and 2009 was as high as $40 billion. It is expected to be $70 billion between 2010 to 2013, of which $10 billion will be in venture capital (VC)."

Early stage investments showed some exits this year.  Billionaire venture capitalist and co-founder of Sun Microsystems Vinod Khosla, who was one of the early investors in SKS Microfinance gained $117 million from the company's recent listing. Some other profitable investments were InMobi by Mumbai Angels, Mango Technologies by Ojas Venture Partners, Metahelix by Nadathur Holdings and Carwale by Seedfund.

PE investors around the world are closely watching the Vodafone tax case. Following the Bombay High court's directions, the Income-Tax Department has demanded Rs11,297.95 crore from Vodafone towards tax and interest for the company's overseas acquisition of Hutch. Now, a growing number of overseas PE investors are buying tax-liability insurance covers, which provide protection from uncertainty in tax laws. This trend is prevalent in the West, but is new in India.

During this year, several PE experts set up their own ventures. Former head of Citigroup Venture Capital International (CVCI) Ajay Relan raised $515 million for his initiative CX Partners. Renuka Ramnath, ex-ICICI Venture, raised $250 million for her own PE venture, Multiples Alternate Asset Management. Jayanta Banerjee, another ex-ICICI Venture director, floated a $200 million PE fund Pravi Capital.

The domestic realty PE industry went through major consolidation in 2010. Saffron Asset Advisors was acquired by IL&FS investment managers. Religare Enterprises is reported to be close to buying 85% of the Ajay Piramal Group-promoted real estate fund Indiareit Fund Advisors.

The global financial crisis has had an impact on private equity investments with demands on private equity firms (General Partners or GP) for greater transparency, stringent due diligence, sector-specific investments as well as a shortened time frame of an average five to seven years for exiting the investment.

According to Anubha Shrivastava, managing director, Asia, for CDC Group plc, "The world has changed after the crisis. Investors today are hesitant to make blind pool investments. They want industry-specific investment." This is one reason why a host of funds which have announced fund-raising plans, have not achieved a first close till now.

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CVC seeks financial details of works done by govt departments

New Delhi: As part of efforts to check corruption, the Central Vigilance Commission (CVC) has sought by early next month financial details of works carried out by different departments during the year for its scrutiny, reports PTI.

The anti-corruption watchdog has directed all central government departments and ministries to submit details of all contracts entered into and payments made to contractors and pending bills.

The Chief Technical Examination Wing of the Commission has set a deadline of 7th January for it.

The departments have been told to furnish all information related to civil and electrical works done by the ministries besides other contracts valued at Rs2 crore or above.

"A circular has been issued on 14th December to chief vigilance officers (CVOs) of all ministries. They have been told to give details of all contracts (including tenders) and civil works. Besides they have asked about financial transactions made to contractor against the work," a CVC official said.

The probity watchdog has specifically sought details of high-value projects, payment details, contractor details, third party examination report and tender documents made in the year.

It has asked for details of mandatory completion certificate, compliance report of CVC's guidelines to check corruption, guarantee bond towards security for work machinery or mobilisation advance, insurance policy for work, material equipment, men etc. and details of pre-contract negotiations among others.

"The Commission came across many irregularities in conduct of different works done by central government departments. However, we timely intimate them to follow our guidelines and check for non-adherence through technical examination," he said.

The Commission has recovered about Rs56 crore after inspecting public procurements and other works carried out by different agencies till November.

The CVC has found alleged financial and administrative irregularities in over 30 Commonwealth Games projects in the national capital and overlays deals by the Organising Committee for the mega-sporting event.

Besides, the CVC has found alleged bunglings in the allocation of 2G spectrum to certain telecom companies. The CBI is probing the matter.

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