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Will NSE IPO hit the market in 2017?

Exchange’s pending co-location issue with Sebi has caused uncertainty

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Securities and Exchange Board of India (Sebi) Chairman Ajay Tyagi on Monday said the National Stock Exchange (NSE) may have to refile the offer document for its much-awaited initial public offer (IPO), which could potentially raise more than Rs 10,000 crore from investors.

NSE, the country’s largest stock exchange, filed its prospectus for Sebi approval in December 2016. Following which, the exchange has gone through a lot of material changes that need to be updated in the offer document. For one, it has appointed Vikram Limaye, MD & CEO of IDFC, as the next chief. More importantly, the financial numbers for a company going public cannot be more than two quarters old. Now, the IPO hinges on what happens to the ‘unfair access’ controversy at its co-location facility.

Both Sebi and NSE have maintained that the IPO cannot proceed unless the co-location (co-lo) issue is put to rest. Given the stage at which the case is, experts say that it could take up to six months for the co-lo controversy to settle.

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NSE, on its part, is trying to settle the case through the consent route to avoid lengthy proceedings. Tyagi recently said it is “too early to comment if the NSE issue can be settled through the consent mechanism”. The Sebi chief added that NSE and 14 key managerial personnel of the exchange have replied to Sebi’s show cause notices, which are “under examination”. The regulator will take a view only after it has studied the replies.

Under the consent mechanism, an alleged wrongdoer settles the matter with Sebi without admitting or denying guilt. The regulator may levy a penalty on the wrongdoer, impose a market ban, or opt for both. In the past, a lot of companies, including Reliance Infrastructure, Suzlon, RBL Bank, and JP Morgan, have used the consent route to settle outstanding matters with…. read more…

CDSL IPO opens for subscription. Should you apply?

CDSL is the second largest depository in terms of market share

 CDSL IPO opens for subscription. Should you apply?

The initial public offer (IPO) of BSE-promoted Central Depository Services Limited (CDSL) opened today for subscription. The company is planning to raise up to Rs 524 crore through this maiden offer.

CDSL acts as a repository of over 325,000 e-insurance accounts, reports suggest, which hold more than 66,000 insurance policies in electronic form. It also offers other online services such as e-voting, e-Locker, National Academy Depository, electronic access to security information & execution of secured transactions, drafting & preparation of wills for succession, mobile applications and transactions using secured texting.

So, should you subscribe to the offer? Here’s what leading brokerages and research houses suggest:

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CDSL is the second largest depository in terms of market share and has been growing at decent compounded annual growth rate (CAGR) of 23%/14% in 3/5 years (and revenues grew by 13%/18%). Further, the key positive about the company is that it has controlled operating expenses in last 3 years which has led to significant margin expansion of 1150 bps since FY15 to 54% in FY17.

At the upper band of INR149, the offer is available at 18.2x FY17 EPS which we believe is attractive considering – 1) strong parentage and entry barrier 2) stable earnings growth 3) strong margins and 4) decent ROE of 16%. Hence we recommend to SUBSCRIBE for long-term investment….(read more…)

Srei-promoted Bharat Roads look to raise Rs 1,200 cr via IPO in July

The public issue consists of up to 29,300,000 equity shares of face value of Rs 10 each

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Srei Infrastructure Finance-promoted Bharat Road Network (BRNL) is looking to raise Rs 1,200 via an initial public offering (IPO) in mid-July. “We got approval in May and by mid-July we should be able to bring the IPO,” Bajrang Kumar Choudhary, managing director, BRNL, told Business Standard.

The public issue consists of up to 29.3 million equity shares of face value of Rs 10 each. According to market sources, the issue size is estimated at Rs 1,200 crore.

Inga Capital Private, Investec Capital Services (India) Private and Srei Capital Markets are the book-running lead managers to the issue.

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The proceeds from the IPO would be utilised more in terms of growth consolidation, both organic and inorganic. We are looking at quite a few opportunities, assets in the BOT (build-operate-transfer) mode but have not zeroed in on anything,” Choudhary said.

The firm is focused on development, implementation, operation and maintenance of roads and highway projects. It is involved in development, operation and maintenance of national and state highways in several states, including Uttar Pradesh, Kerala, Haryana, Madhya Pradesh, Maharashtra and Odisha, through partnerships with experienced EPC (engineering-procurement-construction) players.

BRNL’s project portfolio consists of six BOT projects. Of these, two are operational under final commercial operation, three projects are operational under provisional COD (commercial operation declaration) and one is under construction.

The company performs a range of project management functions, including design, engineering, EPC management and quality control. It also provides project advisory activities, including project management consultancy, conceptualisation, commissioning, operation and management of the (read more…)

CDSL to launch Rs 524-cr IPO on June 19

Promoter BSE to offer 26% stake to comply with Sebi requirements

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Central Depository Services India (CDSL) will launch its much-awaited initial public offering (IPO) on June 19. Promoter BSE will sell 26 per cent stake in the depository via the IPO to comply with the shareholding requirement imposed by markets regulator Securities and Exchange Board of India (Sebi).

The exchange currently holds 50.05 per cent stake in CDSL. To meet Sebi norms, it had to bring down its holding to 24 per cent by March 31, 2017. Sebi, however, has extended the deadline till June 30. CDSL’s Rs 524-crore IPO will close on June 21 and the listing will take place before June 30.

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The IPO entirely comprises of secondary share sale of 35.2 million shares which are being offered in the price band of Rs 145-149 per share. Besides the BSE, State Bank of India, Bank of Baroda and Calcutta Stock Exchange will be offering their 4.57 per cent, 2.08 per cent and 0.96 per cent stake, respectively, in the IPO.

The offering will comprise of 33.65 per cent of paid-up equity share capital of CDSL. At the top-end of the price band, CDSL will be valued at around Rs 1,550 crore. After BSE, CDSL is the second market infrastructure institution (MII) to go public. Just like the BSE, CDSL, too, will be listed only on the National Stock Exchange (NSE).

For the year FY17, CDSL had reported net profit of Rs 85.8 crore on revenues of Rs 1,86.9 crore. (read more…)

Reliance General Insurance IPO by FY18-end

Reliance Capital to dilute 10% stake

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The Anil Ambani-controlled Reliance Capital will float an iniitial public offering (IPO) of equity for its general insurance arm and list on the stock exchange. This could give the company a valuation of Rs 6,000 crore.
Reliance General Insurance is targeting an IPO by the end of this financial year. It might also look for a strategic partner.
Fully owned by Reliance Capital, it is planning to dilute 10 per cent of its shareholding in 2017-18. In the next three years, to dilute 25 per cent.
Rakesh Jain, executive director and chief executive, said listing would enable individual investors to participate in a high growth and new wealth creation opportunity. The company has not ruled out the possibility of stake sale and thereby getting a strategic partner but gave no time line for this.

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In the general insurance business, ICICI Lombard and government-owned New India Assurance and General Insurance Corporation are planning to get listed in the near future. ICICI Prudential Life Insurance is the only one in that segment which has listed till now.
With 40 per cent growth in premiums earned in FY17, Reliance General Insurance got Rs 4,007 crore on this count, from Rs 2,792 crore in FY16.
Profit before tax rose 32 per cent to Rs 130 crore in FY17. The investment portfolio at end-March was Rs 6,724 crore, up 25 per cent. Assets under management grew 25 per cent to Rs 6,700 crore.
He said the company is well positioned to capitalise on opportunities across retail, corporate and government supported consumer segments.
“The listing will enable retail investors to participate in this high growth and new wealth creation opportunity,” he said in a statement. (read more…)

PNB Housing hits new high; stock zooms 100% against IPO price

The stock hit high of Rs 1,559, more than doubled against its issue price of Rs 775 per share.

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Business News : PNB Housing Finance rallied 6% to Rs 1,559, extending its previous day’s 6% surge on the BSE, after the Reserve Bank of India (RBI) lowered risk weights assigned to home loans lent on or after June 7.
The stock is trading at its highest level since its listing on November 7, 2016. It has more than doubled against its initial public offer (IPO) price of Rs 775 per share.

PNB Housing Finance, promoted by Punjab National Bank, had raised Rs 3,000 crore through IPO. The issue was oversubscribed 29.55 times at a price band of Rs 750-775 per share.

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“The RBI has liberalized risk weights for individual home loans above Rs 30 lakh on prospective basis. This is expected to particularly benefit housing finance companies (HFCs) traditionally operating in the larger ticket size segment being focused on metros and urban areas,” said Amar Ambani, Head of Research, IIFL Wealth Management.

Some of the beneficiaries would be Housing Development Corporation (HDFC), PNB Housing Finance, Indiabulls Housing and LIC Housing Finance, the brokerage firm said in policy review.

The central bank also lowered the standard asset provision on incremental home loans to 0.25% from 0.4% which will benefit the entire sector, it added.

HDFC (Rs 1,634) and LIC Housing Finance (Rs 749) too hit their respective all-time highs on BSE in intra-day trade today.

Reliance Nippon Life AMC plans IPO in FY18; eyes valuation of Rs 20,000 cr

RNLAM, which manages assets worth nearly Rs 3.6 lakh cr, had registered a profit of Rs 581 cr

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Business News : Reliance Nippon Life Asset Management (RNLAM), the asset management arm of Anil Ambani-promoted Reliance Capital, plans to come up with an initial public offering (IPO) — the first by a major asset manager in the country — before March 2018.
Promoters Reliance Capital and Japan’s Nippon Life could tender their shares in the offering. Sources said the asset manager was eyeing valuations of around Rs 20,000 crore. According to industry players, an asset manager is valued at 5 per cent of its assets or 30 times its profit.

For the financial year 2016-17, RNLAM, which manages assets worth nearly Rs 3.6 lakh crore, had registered a profit of Rs 581 crore.

The IPO comes at a time when the domestic mutual fund (MF) industry is witnessing healthy growth in investor flows and assets under management (AUM). The proposed move will also help create positive sentiment towards the Anil Ambani group, which has been saddled with huge debt obligation. Shares of Reliance Capital ended four per cent higher on Wednesday before the announcement.

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Currently, Reliance Capital and Nippon Life hold 51 per cent and 44.57 per cent in RNLAM. The deal will be structured in the way that Reliance Capital’s shareholding doesn’t fall below that of Nippon, said a source.

“The board of directors has given its approval for the plan to list the equity shares of the company, subject to necessary regulatory and corporate approvals,” the company said in a release on Wednesday.

“(The IPO) is an opportunity for retail investors to participate as equity shareholders in the asset management company. Along with further consolidations happening in the economy, we would like to be ready to take advantage of suitable acquisitions,” said Sundeep Sikka, executive director & chief executive officer, RNLAM.

In the past 10 years, RNLAM, asset manager to Reliance Mutual Fund, has seen its AUM grow from Rs 51,084 crore to Rs 358,059 crore. About Rs 2.1 lakh crore of these assets are under Reliance MF, while the rest are across pension funds, managed accounts, alternative investments and offshore funds. RNLAM has seen its profits grow from Rs 72 crore in FY07 to Rs 581 crore in FY17, making it the second most profitable asset manager after HDFC MF (read more…)