SEBI directs merchant bankers to disclose track record of public issues

 

SEBI on Tuesday directed merchant bankers to disclose the track record of the performance of the public issues managed by them. The move will enable investors to take well-informed investment decision, the regulator added

Mumbai: With a view to enable investors to take well-informed investment decisions, the Securities and Exchange of India (SEBI) on Tuesday directed merchant bankers to disclose the track record of the performance of the public issues managed by them, reports PTI.

In a circular, SEBI of India said the decision has been taken after consultation with merchant banks.

“...it has now been decided in consultation with the merchant bankers that they shall disclose the track record of the performance of the public issues managed by them,” it said.

SEBI further added: “The track record shall be disclosed for a period of three financial years from the date of listing for each public issue managed by the merchant banker”.

It also said that the track record will have to be disclosed on the website of the merchant banker and a reference to this effect shall be made in the offer documents of public issues managed in the future.

“In case more than one merchant banker is associated with a public issue, all merchant bankers who have signed the due diligence certificate, as disclosed in the offer document, shall disclose the track record,” SEBI said.

According to the regulator, it is necessary for investors to evaluate the post-issue performance of the issuer in terms of disclosures made in the offer documents.

“This will also enable them to understand the level of due diligence exercised by the merchant bankers,” SEBI said.

It said the new rule will come into force with immediate effect.

 

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Govt notifies 100% FDI in single-brand retail

Single-brand retailing would cover products which are branded during manufacturing and the foreign investor should be owner of the brand. However, in respect of proposals involving FDI beyond 51%, mandatory sourcing of at least 30% would have to be done from the domestic small and cottage industries

New Delhi: Notwithstanding its inability to open multi-brand retail for foreign investment, the government on Tuesday notified 100% foreign direct investment (FDI) in single-brand retail, paving way for global chains like Adidas, Louis Vuitton and Gucci to have full ownership of their India operations, reports PTI.

“Foreign Direct Investment (FDI), up to 100%, under the government approval route, would be permitted in single brand product retail trading,” a press note by the Department of Industrial Policy and Promotion (DIPP) said.

However, in respect of proposals involving FDI beyond 51%, mandatory sourcing of at least 30% would have to be done from the domestic small and cottage industries which have a maximum investment in plant and machinery of $1 million (about Rs5 crore).

“FDI in single-brand has led to emergence of some global majors in Indian market... This will provide stimulus to domestic manufacturing value addition and help in technical upgradation of our small industry,” commerce and industry minister Anand Sharma said.

The decision to increase FDI in single-brand retail was taken by the Cabinet on 24th November along with opening the gates for overseas investment in multi-brand retail.

However, the government was forced to put on hold FDI in multi-brand retail by several political parties, including UPA ally Trinamool Congress.

At present, for single-brand retailers, 51% FDI is permitted. Removal of investment cap would help global fashion brands especially from Italy and France to strengthen their interest in the growing Indian market.

Many big names have already set up their operations in the country by partnering with Indian partners. The new policy would allow them to buy out the domestic partners.

The government said the move which comes into effect immediately would enhance competitiveness of Indian enterprises through access to global design, technologies and management practices.

According to the riders, however, the products by the global chains should be of ‘single brand’ only and be sold under the same brand internationally.

Single-brand retailing would cover products which are branded during manufacturing and the foreign investor should be owner of the brand.

Though 51% FDI in single-brand was allowed in February 2006, not much investment has come in the sector.

During last three-and-half years, FDI worth only Rs196 crore was received in the sector.

Experts hailed the decision and said that the move would make India a retail destination and help in enhancing foreign investments.

“It is an excellent move which would help in bringing more FDI into the country,” KPMG executive director Krishan Malhotra said.

“The decision would help in bringing latest products and technologies. It would also provide more choices to consumers,” PricewaterhouseCoopers associate director Goldie Dhama said.

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IDFC, L&T Infra drop interest rates for tranche2 —IFCI is good bet

IDFC and L&T Infra have dropped interest rates for tranche2 bonds to 8.7% as against 9% which they offered till December 2011. IFCI which offers 9.09% and 9.16% for 10 and 15 years consequently emerges as a good bet, but the subscription closes 16 January 2012

Those who missed IDFC or L&T Infrastructure Finance Company (L&T Infra) tranche1 last month will be disappointed to know that interest rates for tranche2 have marginally dropped from 9% to 8.7% for 10-year bonds; they open for subscription on 10th and 11th January, respectively. The good news is that IFCI bonds are still available in the market till 16 January 2012 and it offers 9.09% and 9.16% respectively for 10 and 15 years. These bonds can be invested for Rs20,000 towards tax savings under Section 80CCF, which is over and above the Rs1 lakh towards 80C.

Several such bonds come in market during the tax saving season. Bonds of REC, IFCI, PTC India Financial Services and SREI Infrastructure Finance are currently open in the market. IFCI bonds have rating of A+ by Care and LA by ICRA. IFCI and REC have high safety as they are owned by the government.  L&T has AA+ rating from Care and ICRA. IDFC, which has a better rating, has AAA rating by ICRA and Fitch.

Even though these bonds appear in a demat account, there are restrictions for selling it in the secondary market within the lock-in period of five years. Issuer of the bonds may offer buyback facility after five years.

Tax savings bonds have struggled this year with IDFC mopping only Rs538 crore with an approval for Rs5,000 crores; L&T Infra got Rs530 crore with an approval for Rs1,100 crore. It may be due to competition from tax-free bonds recently issued by NHAI and PFC; these do not qualify for upfront tax savings, but the interest generated is tax-free as against the 80CCF infrastructure bonds whose interest is taxable.

NHAI and PFC tax-free bonds were offered for 8.2%-8.3% per annum (p.a.) interest for 10 and 15-year bonds respectively. These will more than double your money in 10 years and the icing on the cake is tax-free interest. High net individuals (HNI) and institutional investors quota was over-subscribed as the genuine need for generated interest to be tax-free. PFC tax-free bond is open till 16th January.

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COMMENTS

krishan taneja

6 years ago

Mr Raj Pradhan in his article has stated that QUOTE IFCI and REC have high safety as they are owned by the government UNQUOTE My observation is about IFCI. The writer of this article doesn't even know that IFCI itself has all along been saying that it is not REPEAT not owned by Government. It is on record of having stated this in many Courts, including High Courts and Supreme Court as well as Parliamentary Panels. If it were a Govt organisation, then it would have been under RTI. IFCI has lost the case in the Court of Justice Muralidharan of Delhi High Court, who also imposed on IFCI a penalty of Rs.10,000. Now, IFCI has preferred to file an appeal before a Double Member Bench of Delhi High Court itself, saying that it does come under the purview of RTI as it is not a government company. The court date is in January 2012 itself. If you don't believe this, ask IFCI itself.
Regards.

REPLY

raj

In Reply to krishan taneja 6 years ago

Thanks for the correction.

The government established The Industrial Finance Corporation of India (IFCI) on July 1, 1948, as the first Development Financial Institution in the country to cater to the long-term finance needs of the industrial sector.

The government has plans to bring IFCI Ltd back under its direct control by converting its loans into equity, but it has not happened so far.

I have specified the ratings of IFCI, L&T infra and IDFC in the article. While IFCI rating is lower than IDFC and L&T Infra; its rating of A+ by Care and LA by ICRA is decent.

The interest rate is higher than offered by others. If someone feels it is worth taking little risk for Rs20,000 investment in IFCI, go ahead. If want more safety, IDFC is better choice. There is no 100% safety in any investment.

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