Sebi Mulling Relaxed Norms For REITs, InvITs, Startups Listing

New Delhi: To make domestic capital markets more attractive, regulator Sebi has lined up wide-ranging relaxations to its norms for REITs and InvITs and an easier set of listing rules for startups.

Several attempts are being made to garner due attention from business houses in the country but all the efforts failed leading to Sebi reconsidering the proposal to give further relaxations.

The Securities and Exchange Board of India (Sebi) will consider these regulations in its board meeting next month, according to sources.

A consultation process is already underway for making the InvITs(Infrastructure Investment Trusts), REITs (Real Estate Investment Trusts) Regulations and to review the framework for

Institutional Trading Platform (ITP) for startups.

Sebi had notified the REIT and InvIT Regulations in 2014, allowing setting up and listing of such Trusts, which are very popular in some advanced markets. However, no single Trust has been set up as yet as investors wanted further measures, including tax breaks, to make these instruments more attractive.

While the government provided for certain tax benefits in the Budget this year, Sebi has now decided to further relax the rules.

Sebi's board is expected to consider an easier set of norms on REITs and InvITs. It may allow the REITs and InvITs to have up to five sponsors, as against the current norm for maximum three.

Under the proposal for REITs, Sebi would allow up to 20 per cent investment by such trusts in under-construction projects, up from a maximum of 10 per cent allowed currently.

Besides, relaxations would be made to provisions relating to compliance of minimum public holding norms, as also for investments by the associate entities of the trustees.

Sebi also proposed to rationalise the requirements under the Related Party Transactions, under which approval of 60 per cent unitholders apart from related parties, is required for passing a related party transaction.

Further, approval is required of 75 per cent unitholders, apart from related parties, for passing special resolutions such as change in investment manager, investment strategy and delisting of units.

Under the proposal for InvITs, Sebi may allow such trusts to invest in two-level SPV (special purpose vehicle).

The regulator plans to remove the restriction on the SPV to invest in other SPVs, thus allowing InvIT to invest in a holding company which subsequently holds stake in SPVs.

Currently, InvIT holds a controlling stake in SPVs that do not invest in other SPVs.

Besides, it is proposed to reduce the mandatory sponsor holding in InvIT to 10 per cent of the total units of such units on a post-issue basis for a period of three years, from the current requirement of 25 per cent.

The current requirement may limit monetisation for sponsors and reduce release of capital for them. Further, in certain circumstances, it may lead to sponsors putting money out of their own pocket in the InvIT to maintain the required 25 per cent stake.

Regarding startups, Sebi plans changes to the framework of Institutional Trading Platform (ITP), which has not seen much traction even though it was put in place in august 2015. Not a single startup has been listed on this platform till date.

The valuation concern has also discouraged startups for listing on the platform.

The rules were brought in to encourage Indian startups and entrepreneurs to remain within the country rather than go overseas for raising funds.

Sebi would consider an easier framework that allows more investor categories, relaxed shareholding norms and reduced trading lot amount.

Stay Away From Welspun India, Warn Analysts After 48% Fall In 4 Days

Welspun India shares were locked down in lower circuit for the fourth straight session on Thursday. Shares of one of the world's largest textile manufacturers have shed nearly 50 per cent of their value since Monday, leading to a market cap erosion of over Rs 4,500 crore.

Welspun India shares have crashed, following Target Corp's decision last week to cancel its contract with the company over the substitution of Egyptian cotton with non-Egyptian cotton in bedsheets and pillowcases sold between August 2014 and July 2016.

On Wednesday, Bed Bath & Beyond Inc became the fourth company to initiate review of Welspun India's bedding products. Wal-Mart and JC Penny have earlier initiated review of Welspun's products.
NDTV Profit spoke to three analysts to know if investors should buy Welspun India following the sharp selloff this week.

Gaurang Shah of Geojit BNP Paribas said investors should not buy Welspun India, unless somebody is a "great fan" of the company.

"There is too much news flows and the management's clarification is not helping. More cancellation of contracts is possible," Mr Shah said.

Technical analyst Sarvendra Srivastava also advised investors to stay away from Welspun India.

"When there is a corporate governance issue or when a company's trust is at stake, this market penalizes the stock... Welspun India is coming down on its own weight," he added.

Market analyst Sharmila Joshi said there are concerns that other textile manufactures may also get impacted because of the controversy around Welspun India.

"Either it's a deliberate mistake or some slip up of gigantic proportions... Investors should wait for clarity before buying this stock," she added.

Welspun India shares were down 10 per cent at Rs 53.55 as of 09.45 a.m., underperforming the 0.3 per cent gain in the broader Nifty.

visit site

Rupee Slumps To 67.21 Against Dollar

Mumbai : The rupee depreciated by 16 paise to trade at fresh three-week low of 67.21 against the dollar at the forex market today following increased demand for the American currency from importers and banks.

The dollar firmed up against some global currencies on US interest rate hike hopes this year after the Federal Reserve Vice Chairman Stanley Fischer said country's economy was picking up, which weighed on the rupee, forex dealers said. However, a higher opening of the domestic equity markets capped the rupee's losses, they added. The local currency on Friday tumbled by 24 paise to close at three-week low of 67.05 against dollar on sustained demand for the US currency from banks and importers amid rise in crude oil prices. 

Meanwhile, the benchmark BSE Sensex recovered 57.53 points or 0.20 per cent to 28,134.53 in early trade.

Tokyo Stocks Open Higher On Weaker Yen

Tokyo stocks opened higher on Monday as the yen weakened further on speculation over central bank monetary policies and lifted investor sentiment.

The Japanese currency fell against the dollar for a second day after US Fed Vice Chairman Stanley Fischer signalled in a speech on Sunday that a 2016 rate hike is still under consideration.

Meanwhile, Bank of Japan Governor Haruhiko Kuroda said in an interview published Saturday in the Sankei newspaper that there is "sufficient chance" the bank will add to its massive easing at next month's policy meeting.

The benchmark Nikkei 225 index climbed 0.52 percent, or 85.41 points, to 16,631.23 in opening deals, while the broader Topix index of all first-section shares rose 0.54 percent, or 6.99 points, to 1,302.66.

The dollar was trading at 100.59 yen in early Tokyo trade, up from 100.20 yen in New York.

"We expect the US dollar to consolidate this week with a modest upside bias," Elias Haddad, a senior foreign-exchange strategist at Commonwealth Bank of Australia said, Bloomberg News reported.

"There is room for US interest rate expectations to adjust a bit higher this week," Haddad said.

Investors are also awaiting a series of US and Japanese economic data due this week for further clues on central bank policies, analysts said.

"Investors will be focused on Fed Chair Janet Yellen's speech at the Jackson Hole symposium (Friday), but we don't expect her to provide any strong steer on the timing of the next rate hike," Capital Economics said in a note to clients.

The annual gathering of US and foreign central bankers in the US state of Wyoming is closely watched for their comments on the state of the global economy and monetary policy.

Piramal Enterprises Surges 15% In Just Three Days

Shares of Piramal Enterprises surged as much as 5 per cent today to Rs 1,854, hitting fresh 52-week high after the company announced acquisition of a US-based drug manufacturing firm.

Piramal Enterprises, which will be part of NSE's Nifty Next 50 basket from September 30, has rallied 15 per cent in three days. The Nifty Next 50 rejig was announced on Friday.

In a statement to the BSE aftermarket hours yesterday, Piramal Enterprises said that its US  subsidiary has entered into an agreement to acquire 100 per cent stake in Ash Stevens in an all-cash deal for up to $53 million. 

 Ash Stevens is a focused on development and manufacturing of high potency active pharmaceutical ingredients (APIs), which are substances used in the manufacture of drugs. The US-based company primarily operates from a FDA-approved commercial manufacturing facility located in Michigan.

Ash Stevens had revenue of $18.3 million in FY15. The transaction is expected to be completed by the end of this month.

Piramal Enterprises said the acquisition will add niche potent molecule manufacturing capabilities to its pharma solutions business.

Led by billionaire Ajay Piramal, Piramal Enterprises has presence in industries like healthcare, financial services, healthcare information management, glass packaging and real estate.

Piramal Enterprises has strongly outperformed the benchmark index in the past six months, surging over 90 per cent. The company had reported robust June quarter numbers, with net profit surging 32 per cent to Rs 231 crore on strong sales growth.

At 11:40 a.m., shares of Piramal Enterprises were up 1.3 per cent at Rs 1,794 as compared to a flat Nifty50 index.

view more

Hike Messenger Raises $175 Million Led By Tencent, Foxconn

New Delhi: Messaging platform Hike Messenger on Tuesday said it has raised $175 million in a new round of funding led by Tencent Holdings and Foxconn Technology Group, valuing the company at about $1.4 billion.

Existing investors - Tiger Global, Bharti and Softbank Group - also participated in this round.
This is the fourth venture capital round and the biggest to date for Hike, a company founded by Kavin Bharti Mittal, son of Bharti Enterprises Chairman Sunil Mittal.

The company said it is looking at acquisitions in technology and people, but ruled out an IPO in near future.

The latest round of funding takes the total investment to over $250 million so far.
"We will be investing this amount in services, people, office space and some long term bets in areas of machine learning, computer vision," Kavin Mittal said at a conference.

When asked if the company plans to go for an IPO, he said "it's too soon in our journey. We are only three-and-a-half years into the business. It typically takes 6-8 years for business to reach maturity".

In January 2016, Hike had announced it has a base of 100 million users. As much as 95 per cent of Hike users are based in India and 90 per cent of them are young and below the age of 30 year.
Hike users on an average exchange 40 billion messages per month, he added.

view more

Cipla Rises 3% Despite Missing Q1 Estimates

Shares of Cipla Ltd jumped nearly 3 per cent to hit intraday high of Rs 531.10 even after the pharma company reported lower-than-expected net profit in the June quarter.

The Mumbai-based pharmaceutical company's profit numbers were impacted by the Indian government's measures to cut drug prices.

Cipla's net profit came in at Rs 365 crore, compared with expectations of Rs 376 crore. On an annual basis, Cipla's net profit declined 44 per cent. A sharp jump of 40 per cent in research and development expenses also hurt the profit numbers. 

During the quarter, Cipla's operational profit came in at Rs 611 crore as against Rs 1,035 crore during the same quarter last year.

Meanwhile, CLSA has upgraded Cipla to 'outperform' from 'underperform'. It sees favourable risk-reward ratio at current levels and expects earnings growth will be strong in FY18-19. CLSA has a target price of Rs 570 per share.

On a year on year basis, Cipla shares are down 18 per cent.

As of 10:06 a.m., shares of Cipla traded 1.11 per cent higher at Rs 521.75, outperforming the Nifty which was trading on a flat note.

view more