QIP Season & More

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QIPs are all the rage

As ICICI Bank became the latest trend setter with an issue of Rs. 14,000 Crore, QIP or Qualified Institutional Placement seems to be the look of this financial crisis season. You could almost say, if you didn’t even raise money through QIP, are you even a company preparing for the future?

Leading from the front: Considering capital circulation is the main business of banks, taking a cue from RBI financial institutions are the ones looking to shore up their coffers the QIP route. As per a CNBC TV18 report, six banks have already raised Rs. 52,000 Crore equity capital with an almost equal amount lined up to be raised. While Kotak was one of the front runners, some of the other big fund raisers have been HDFC at Rs. 14,000 Crores, Yes Bank through the FPO at Rs. 15,000 Crores and Axis Bank at Rs. 10,000 Crores.

Not just finance: Listed companies in other sectors are also seeing QIP as a good means to beef up their beleaguered books. Today, domestic carrier Indigo announced plans to raise Rs. 4,000 Crores through QIP. Earlier this month, Naukri parent company Info Edge joined the fray with a Rs. 1875 Crore QIP. Even a player in a so-called beneficiary sector of healthcare, Alembic pharma enhanced it’s war chest with a tiny Rs. 750 Crore QIP. Some factors that seem to be fuelling this trend are cheap capital, punters looking for good deals and companies preparing for what lies ahead.

Agriculture Infrastructure Fund launched

Although rural areas and agriculture have been a quasi saving grace in this crisis, realizing the need for financial support the Rs. 1 Lakh Crore Agriculture Infrastructure Fund was launched by PM Modi. As a combo deal, he also announced the sixth installment through a transfer of Rs. 17,100 Crores as part of the PM Kisan Samman Nidhi yojna to 8.55 Crore farmer families.

What will this fund do? Part of the Rs. 20 Lakh Crore stimulus, the fund intends to offer a financing facility for work in the post harvest management and farm asset development space. This intended to be driven through agri-entrepreneurs, startups, agri-tech players and farmer groups. The fund will be for 10 years till 2029 and capital will be provided through multiple lending institutions. There are added sweeteners of a 3% interest rate subvention and credit guarantee of upto Rs. 2 Crores.

Why am I reading about it here? One, agriculture remains the backbone of our country and has also been a possible silver lining with murmurs of a rural revival. Two, this fund forms 5% of the ambitious stimulus package announced by FM Sitharaman in stuttering installments and as aware scribers we should know what the money is up to. Three, atleast on paper worthy efforts of uplifting the sector are being encouraged which can only help economic growth.

The world rallies around Lebanon

The blast in the Beirut port on 4th August, which had reverberations for 10 kilometres and left more than 150 dead, was the last straw in a country under distress. Lebanese government, which has faced many a protest for it’s exacerbation of economic, financial political and health crises finally collapsed leaving no one at the helm. The world is finally trying to pitch whatever resources it can garner to help Lebanon struggle up on it’s feet again.

How’s the world helping? In some ways the world seems to be competing for a good cause this time with almost every country announcing their aid efforts for Lebanon. French president Emaneul Macaron held a donor conference which raised $298 million pledge to the cause.Most importantly, Macaron promised that the aid will go directly on-ground bypassing layers of corrupt officials. While the UN is doing it’s bit, countries ranging from India to Morocco, Belgium, Canada, Israel and Armenia have all announced their contribution to the effort.

Flashback: The economic crisis in the country culminated in The Great Lebanese Ponzi scheme. In short, in 1997 the government linked the Lira to USD and kept the rate fixed at 1507 lira to a dollar. Over the years of devaluation of the currency, most Lebanese were convinced to continue keeping their money in bank accounts with the lure of high interest rate at 15%. The government mismanaged and kept borrowing from the private banks, which lent the money from public deposits. In September last year things started adding up and people were unable to withdraw their own money. In March 2020, Lebanon defaulted on some of it’s debt and talks for a $10 billion loan from IMF also broke down in May this year.

IN SNIPPETS

Atmanirbhar App Innovation challenge: In it’s atmanirbhar obsession, last month the government launched a contest to bring out the best in the space of apps. From the 6940 applications, the results have now been announced in nine categories. In the social category, the choice was obvious with a tik tok wannabe Chingari, which yesterday announced a successful $1.3 million fund raise.    

Aramco hasn’t given up the Reliance dream yet: Although the market temporarily punished Mukesh Ambani’s statement of the talks of Relamco hitting pause, yesterday Saudi Aramco made a statement that they were still actively working on infusing $15 Billion more. Considering how much RIL has already raised for Jio, Mukesh bhai has been pretty chill.

Equity mutual fund numbers reversed: Call it profit booking or call it the fear of a possible bubble in light of economic weakness, July 2020 saw a net outflow from equity mutual funds after 4 years. That too to the tune of a massive Rs. 2480 Crores as compared to a paltry net inflow of about Rs. 241 Crore last month. Although international funds saw their tiny net inflow double from what it was in June 2020.

Mcdonalds wrangles on the exit package with ousted CEO: In an era of companies suing former employees (hint: google and uber against anthony levandowski) comes another one of Mcdonalds suing ousted CEO Steve Easterbrook. While he was fired in November, the current legal battle is about the $40 million exit package. Bone of contention? Extent of his sexual relationships with employees.

New claustrophobic wave in Hong Kong: You know it’s a sign of changing times when voices of dissent are clamped down upon. Jimmy Lai, media tycoon and publisher of Apple Daily is an outspoken critic of Beijing. On Monday, he was arrested on the charges of “collusion with a foreign country”.

MARKET PULSE

Markets were fairly optimistic for the main indices to end with a sliver of green, although Midcap and Small Cap indices performed better with 1.42% and 1.47% gains respectively. The sectors in the spotlight were defence manufacturers with the prospect of Make in India and some pharma stocks on the back of good Q1 results.

Gold continues to keep climbing up, up and beyond!

WILD CARD

While we are aware of the economic troubles mounting due to the coronavirus and the lockdown, it is also reversing quite a bit of progress on the poverty and resultantly child labour front globally. Children from economically challenged families who had made it to school are finding it difficult to continue with the digital school front. When family members lose their jobs, the same children find themselves entering the labour market much sooner.

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