Japan based Nippon Life Insurance Company today signed a Memorandum of Understanding (MoU) to acquire 26 percent stake in Reliance Capital Asset Management (RCAM). The deal is the largest FDI in the mutual fund space.
Nippon Life will invest Rs. 1,450 crore to acquire 26 percent stake in RCAM. The transaction pegs the total valuation of RCAM at approximately Rs. 5,600 crore.
“We are delighted to have Nippon as our strategic partners in the mutual fund business. They are already our partners in the life insurance business. The mutual fund partnership cements and strengthens the relationship between Reliance Group and Nippon Life further and takes it to a new level,” said Anil D. Ambani in a statement.
Reliance Mutual Fund manages Rs. 82,305.80 crore as on December 2011. Nippon Life manages Rs. 30 lakh crore. Nippon has already picked 26% stake in Reliance Life Insurance for Rs. 3,062 crore, valuing the company at Rs. 11,500 crore.
Yoshinobu Tsutsui, President, Nippon Life said “We are delighted to partner with Reliance Capital Asset Management – a leading company in India with highly talented executives, strong investment capability and nationwide distribution network. This investment is our second capital alliance with Reliance Group following the investment in Reliance Life last year. Through this investment, we believe that we can strengthen our business relationship with Reliance Group which has high reputation and reliability in India.”
Earlier, hedge fund Eton Park Capital Management had bought 5% stake in Reliance Capital for Rs. 501 crore.
Sunday, January 22, 2012
Monday, January 9, 2012
Volatility Carry Forward from 2011 to 2012
Negatives
˜* Global Uncertainty: Europe continues to grapple with its debt crisis.
˜˜* Slowing Slowing domestic domestic economy economy..
*˜ Indian government policy logjam.
*˜ Rupee depreciation concerns mounting.
*˜ High Fiscal & Current Account deficit.
*˜ Volatility.
*˜ Plu g g unging invest e t estment cyc e cycle re a s emains t e the b ggest biggest negative d e driver.
Positives :
*˜ Moderating Inflation.
*˜ Attractive Valuations.
*˜ Sentiments - High investor fear.
*˜ China’s economy facing a ‘Hard‘ landing – positive for India but negative for global growth.
*˜˜ AnAn increasing increasing chance chance of of deep deep interest interest rate rate cuts cuts inin 2012 2012..
*˜ Highly favorable base effect.
*˜ Eventual recovery in some areas of infrastructure construction – are turning favorable and may provide some tailwind to the economy and to the market in the second half.
Positives building up :
Debt Markets :
•Increased Limit for investment in Bond Market
•Possible early growth support from RBI
•Rapid and long Term easing of Monetary Cycle
•Liquidity measures like OMO and Borrowing against excess SLR
•Imposing fines on institutions aiding shorts on currency
Equity Markets :
•Permission for QFI’s to invest directly in equity markets
•Downtrend in inflation
•Base effect in Inflation, IIP, order book earnings in 2H2012
Policy :
•Clear signals from FM on prioritizing of growth recovery
•Dissolution of SUUTI
•Second push to retail FDI, new bills in power and Pension funds etc
•Government’s efforts for revival of reforms and remove policy paralysis
˜* Global Uncertainty: Europe continues to grapple with its debt crisis.
˜˜* Slowing Slowing domestic domestic economy economy..
*˜ Indian government policy logjam.
*˜ Rupee depreciation concerns mounting.
*˜ High Fiscal & Current Account deficit.
*˜ Volatility.
*˜ Plu g g unging invest e t estment cyc e cycle re a s emains t e the b ggest biggest negative d e driver.
Positives :
*˜ Moderating Inflation.
*˜ Attractive Valuations.
*˜ Sentiments - High investor fear.
*˜ China’s economy facing a ‘Hard‘ landing – positive for India but negative for global growth.
*˜˜ AnAn increasing increasing chance chance of of deep deep interest interest rate rate cuts cuts inin 2012 2012..
*˜ Highly favorable base effect.
*˜ Eventual recovery in some areas of infrastructure construction – are turning favorable and may provide some tailwind to the economy and to the market in the second half.
Positives building up :
Debt Markets :
•Increased Limit for investment in Bond Market
•Possible early growth support from RBI
•Rapid and long Term easing of Monetary Cycle
•Liquidity measures like OMO and Borrowing against excess SLR
•Imposing fines on institutions aiding shorts on currency
Equity Markets :
•Permission for QFI’s to invest directly in equity markets
•Downtrend in inflation
•Base effect in Inflation, IIP, order book earnings in 2H2012
Policy :
•Clear signals from FM on prioritizing of growth recovery
•Dissolution of SUUTI
•Second push to retail FDI, new bills in power and Pension funds etc
•Government’s efforts for revival of reforms and remove policy paralysis
Wednesday, January 4, 2012
Debt Market Review
The month of November 2011 saw the liquidity in the system remain tight. The net LAF infusions by RBI (i.e. amount borrowed by banks from RBI) under its daily LAF repo auctions, over the past couple of weeks remained close to or at times above 2% (~average of Rs. 120,000 Crs) of the NDTL. (Net Demand & Time Liabilities), i.e. total liabilities of banks which may be in the form of demand or time deposits or borrowings or other miscellaneous items of liabilities.
Liquidity in the banking system is expected to tighten further next week as banks and companies will start making payments towards Oct-Dec advance corporate tax, the last date for which is Dec 15, 2011. Systemic liquidity in the banking system may tighten further if the Reserve Bank of India intervenes aggressively in the foreign exchange market to cap the rupee's fall against the dollar. In November so far, the rupee has weakened ~5% to 6% against the dollar owing to the growing concerns over the Euro-zone sovereign debt crisis and heavy dollar purchases by oil importers.
RBI has announced OMO of around Rs. 20,000 Crs and is a balancing strategy to primarily infuse liquidity and partly to support additional government borrowing. It is not going to be inflationary in our view — unless there is an excess of OMO — which we don't think will happen.
Second quarter (July - Sept 2011) GDP estimates were released on November 30, 2011. Q2 FY 12 GDP posted a growth rate of 6.9% much in line with consensus expectations of 6.9% but lower than our expectations of 7.2%. In Q1 FY 12, growth had come in at 7.7% while in Q2 of FY 11, growth was at 8.4%. On an YTD basis, growth for FY 12 is at 7.3% compared to 8.6% in the first half of FY 11.
The Q2 FY 12 growth seems to be confirming the fears of a slowdown in the economy. It was the lowest growth rate in more than two years now. On the back of glaring supply side bottlenecks, expected fiscal slippages, subdued confidence levels and weak global economic environment, we have revised our growth forecast downwards from 8.1% to 7.2% for FY 12.
Liquidity in the banking system is expected to tighten further next week as banks and companies will start making payments towards Oct-Dec advance corporate tax, the last date for which is Dec 15, 2011. Systemic liquidity in the banking system may tighten further if the Reserve Bank of India intervenes aggressively in the foreign exchange market to cap the rupee's fall against the dollar. In November so far, the rupee has weakened ~5% to 6% against the dollar owing to the growing concerns over the Euro-zone sovereign debt crisis and heavy dollar purchases by oil importers.
RBI has announced OMO of around Rs. 20,000 Crs and is a balancing strategy to primarily infuse liquidity and partly to support additional government borrowing. It is not going to be inflationary in our view — unless there is an excess of OMO — which we don't think will happen.
Second quarter (July - Sept 2011) GDP estimates were released on November 30, 2011. Q2 FY 12 GDP posted a growth rate of 6.9% much in line with consensus expectations of 6.9% but lower than our expectations of 7.2%. In Q1 FY 12, growth had come in at 7.7% while in Q2 of FY 11, growth was at 8.4%. On an YTD basis, growth for FY 12 is at 7.3% compared to 8.6% in the first half of FY 11.
The Q2 FY 12 growth seems to be confirming the fears of a slowdown in the economy. It was the lowest growth rate in more than two years now. On the back of glaring supply side bottlenecks, expected fiscal slippages, subdued confidence levels and weak global economic environment, we have revised our growth forecast downwards from 8.1% to 7.2% for FY 12.
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