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Tag: investment

What Is In The Store For The Indian Markets in 2019?

Posted on by Imarticus Learning

In 2019, the current Prime Minister of India, Mr Narendra Modi is scheduled to submit his application and woo a billion individuals of India for a second run as the ruling government. While pole predictions are on the way and experts predict that Modi will undoubtedly succeed in his attempt, there is another major event in global history which is scheduled to happen.

In Mid 2018, the World Bank is set to release a global list of nations GDP from across the world. While this seems uninteresting at first sight, experts predict that India is set to overcome and become the 5th largest nation in the world surpassing the UK.

While this might seem to be a rare coincidence, we can confidently say that political parties will not let go of this opportunity to show off their might and skills. But since the results are yet to be announced, experts are predicting the outcome based on previous data.

According to the latest estimates by the World Bank, the GDP or Gross Domestic Product of India was 15 billion USD bigger than the French economy in 2017. As of now, India is only behind, United States of America (USA), China, Japan, Germany and United Kingdom (UK) in terms of its economy, but this year this might change for the better.

While both China and the USA are multi-trillion dollar economies, the India of today is only a 2.6 trillion USD economy. Right after the recession and depression of 2010 to 2017, the UK has only seen a 2 per cent growth in its economy, while India has seen a staggering 7.5 per cent. If the economy of India continues to grow at the same rate even this year, the predictions will come true, and India will surpass UK in its overall GDP.

Although the ruling party might contest a narrative around this news, but the fact still remains that the living standards of the UK are too high for the average Indian to catch. As of 2017, the average income of a UK resident was $42,515 whereas that of her Indian counterparts was only $1,964.

While India may surely surpass the UK in the race for becoming the 5th largest economy in the world, it will take her some years to overtake that of Germany. As of now, Germany is the fourth largest economy in the world, with the World Bank pegging her at 4.7 trillion US Dollars.

Another announcement that is scheduled to take place is that of India becoming the fastest growing economy in the world this year. With a projected growth of more than 7.3 per cent over the past couple of years and a GDP growth of 7.6 per cent in the first quarter of 2018 to 2019.

As per the statistics available with the Central Statistics Office(CSO), the average per capita of Indians have increased from Rs. 86,647/- in 2014-15 to Rs 112,835/- in 2017-18, recording a 30.2 percent growth from 2014-15 to 2017-18.

With all this being said, we can confidently predict that this will be a year of growth for India as a country of billions.

Round Up of Global & India M.A. in 2018

Posted on by Imarticus Learning

 
2018 was a very eventful year for businesses across the globe and especially in India with mergers happening throughout the year and big names joining hands. The most significant of the many mergers and acquisitions that took place in India of 2018 have been processed for a long time and finally, in 2018 the deal was sealed and the mergers made official.
With that being said, in this article, we will take a closer look at all the mergers that took place and also talk about the most significant ones of the year. Let’s begin!
Flipkart and Walmart
We have all heard of Flipkart in India. Since its inception in 2007, Flipkart has become a household name for consumers across the nation for its deals, huge savings and especially Big Billion Day.
For the past couple of years, Flipkart had been struggling to keep their feet in the market after e-Commerce giant Amazon decided to step into the game and thus in 2018, Flipkart joined hands with one of the largest retailers in the world, Walmart. The deal between the giants was announced in May 2018, where Walmart will purchase a 77 per cent stake in the company. The deal which was finalized in August 2018 also included 2 billion USD in fresh funding to help Flipkart in its goal to become the biggest eCommerce retailer in India, surpassing Amazon.
Vodafone and Idea
In 2018 the Indian subsidiary of Vodafone Telecommunications Limited and Idea Telecommunications finally received a go-ahead on their merger from the National Company Law Tribunal or NCLT. The deal which was in works since last year finally was made public in August 2018, making it the biggest network with a subscriber base of 430 million. Companies representatives mentioned that this was a strategic move to fend off competitors like Airtel and Reliance Jio by holding a market stake of 37 per cent in the Indian Telecommunications space.
ONGC and HPCL
India is a country which is heavily dependent on Petroleum and natural gas produce. Both ONGC and HPCL are household names in the country and are the major suppliers of oil and natural gas to a country of millions. In January 2018, ONGC which is a partly owned Government organization announced its acquisition of 51 per cent stake in HPCL in an attempt to help the government meet its disinvestment target for 2017-2018.
ONGC shelled around 5.2 billion USD in its move to acquire a majority stake in the state-backed refinery, which was primarily funded by loans by debtors.
Tata Steel and Bhushan Steel
In May 2018, the steel conglomerate Tata submitted a winning bid of 4.2 billion USD to buy a 71 per cent stake in its bankrupt competitor Bhushan Steel. The announcement which got the approval of NCLT is a move to improve Tata’s domestic capacity and make inroads into the automotive steel, which was till now dominated by Bhushan Steel.
Conclusion
India is a fast-growing economy and thus the biggest mergers and acquisitions of 2018 have had a severe impact of growth on the economy of the country. Now in 2018, we are to see what new mergers and acquisitions take place.

India’s Top Boutique Investment Banks

Posted on by Imarticus Learning

Boutique investment banks are a recent phenomenon and emerged more as an answer to the market-demands by startups and smaller enterprises. By small we mean deals less than Rs 200 Cr that large investment firms like JM Financial, JP Morgan, Goldman Sachs or Morgan Stanley find enviable.

Boutique Services:

Most large banks have large boards and payouts that make them cater to markets with large value and commissions of 0.5 to 2 % on value as their retainers. Small enterprises needing 10 to 100 Cr formed an encashable niche market for boutique investment firms who offered them the services the big banking investment firms refused.
A boutique investment firm will happily offer the same and maybe better services in the fields of fund-raising, bank debt, private equity, managing IPOs and advising on acquisitions, mergers and everything in between. From among the dozen or so firms that have grown overnight literally, we formed a watch-list.

Our Watch-List:

Our favourites on the watch-and-learn list are:
CV Subramanyam founded Veda Corp in 2003. Veda struck its first deal in 2004. They convinced Carlyle to partially buyout Newgen, a technology company for 10 million dollars. Since then there has been no looking back. They have done around 70 deals with a total business of 1.5 billion dollars. Veda is not very big and has a team size of 20 persons and offices in Bangalore, Hyderabad, Mumbai, and Chennai. They focus on South India where conservatism prevails, and businesses prefer to raise their funds in debt form rather than trade in equity.
Ripple Wave founders Mehul Savla and Vipul Shah started off in 2008. By May 2010 they had struck their first big deal. With over Rs 650Cr in just 3 business deals and a team of 4, this boutique investment service is going great guns.
MAPE started in 2001 by Jacob Mathews saw success in the same year. They have done business worth a whopping 3.5 billion dollars over 90 or so deals with a perhaps larger team size of 90.
The year 2008 saw Cogence Advisors founded by Rishi Sahai. Two months later they struck their debut deal. With a team size of 6, they have achieved 650 million dollars business over just 12 deals.
Equirius Capital also founded in 2008 by Ajay Garg had to wait till 2008 for their first successful deal closure. They have a volume of Rs 6,300 Cr in business over 52 deals and a team size of 20.
P2P set up its offices in India under Francois Montrelay. Their first deal came through in a few months in 2008 itself. Their business volume is over 100 million dollars and is single-handedly managed by Montrelay himself.
Conclusion:
Looking at our watch list, we find that if the big investors don’t wake up, they’ll find themselves edged out of the lower end (and small financing markets) by such boutique firms who are lean enough to make high profits on smaller deals. Money earns more money they say!
 
Reference:
economictimes.indiatimes.com/articleshow/30183390.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
https://www.businesstoday.in/magazine/cover-story/boutique-investment-banks/story/185848.html

The NBFC Fiasco in India and AI Linkage with the Sector

Posted on by Imarticus Learning

 
The Non-Banking Financial Companies (NBFC) sector in India, which is also called the shadow banking system, provides financial services similar to commercial banks, but they do so outside the typical banking regulations. 
The trouble began with defaults by Infrastructure Leasing and Financial Services Ltd (IL&FS) since the end of August 2018. IL&FS which is classified by RBI as core Investment Company had a total consolidated debt nearing INR 1 lakh crore. Since the firm started missing its debt obligations, its ratings got abruptly downgraded from high investment grade (AAplus and AIplus) by rating agencies such as ICRA, CARE, etc. to junk status which indicates imminent or actual default status. This has stoked a fear of liquidity crunch in many of the banks, corporate and mutual funds that had stakes in IL&FS debt instruments.
The shadow banking sector is now comprised of over 11,400 firms. They have a consolidated balance sheet worth USD 304 billion or INR 22.1 trillion and are not as strictly regulated as banks. Since the biggest lenders to NBFC, the banks, have slowed down their lending to work through the USD 150 Billion in stressed assets, the NBFC has been attracting new investors. 
Their lending pace has far exceeded the banks, and several of their cream firms have received top credit ratings including IL&FS. The ratings are now in question, and the growing concern is that many of these firms may have taken excessive credit risk by lending to individuals who have little means of paying back. There are also speculations surrounding lax regulation which might have turned these firms into money laundering portals.

How Can AI Make A Difference?

The financial sector is one of the largest beneficiaries of the developments in Artificial Intelligence and Machine Learning. NBFCs are increasingly developing and utilizing state-of-the-art technology to automate their processes of lending. Everything from loan origination, customer-onboarding and loan disbursement can now be driven by AI and Big Data technology. One of the major challenges has always been tapping into unbanked sections of the economy that have no credit data or history. Once considered unsafe, they now have the potential for huge business growth.
Technology now drives the credit underwriting process which previously required a small army of people to go through the paperwork. Advancements in AI have led to algorithms for alternate credit scores that utilise customer data from social media, mobile apps data and online behavioural patterns to gain an insight into them. This offers a reliable method for psychometric scores and predictive analysis for default. AI can also help extensively in fraud detection and loan disbursements to newer segments of customers.  The role of AI can extend far beyond into the macrocosm and help in predicting potential financial crashes. Our ability to spot trouble at a distance is only as good as our ability to interpret existing data. 
Recent advances in technology have armed the industry with tools that can gather and analyse vast amounts of data in real time to help make important decisions. Keeping that in mind, the promise of AI and data analysis to prevent any future financial crisis is compelling.