Baring PE Asia raising India-dedicated credit fund

Mumbai: Baring Private Equity Asia (BPEA) is raising a new India-dedicated credit fund of Rs500 crore with a greenshoe option of Rs250 crore, two people familiar with the plans said on condition of anonymity.
The private equity firm had recently set up its lending business in India.
A greenshoe option allows a firm to retain the extra money in case it receives more investment than originally planned.
According to the people cited above, the first close of the new fund is expected in the March quarter, following which it will start investing money from the new fund.
BPEA is also planning to raise a new offshore credit fund of around $500 million which will co-invest with the India fund apart from making independent investments of its own, the persons cited above added.
BPEA declined to comment.
BPEA is one of the largest and most established independent alternative asset management firms in Asia, with total investments and committed capital of over $10 billion. The firm has been investing in Asia since it was formed in 1997 and has over 100 institutional investors which includes sovereign wealth funds, pension funds, endowments, foundations, insurance firms and family offices.
Last year, BPEA acquired Fund I, a dedicated credit fund of Religare Global Asset Management’s, and hired the entire team managing it. In November, it also appointed Kanchan Jain, CEO and principal managing partner, Religare Credit Advisors LLP, to head its credit business in India.
Fund I has made 21 private debt investments till date with a total transaction value of $160 million. The BPEA Credit team will continue to manage Fund I throughout its remaining life, according to the people cited above.
The entry of BPEA into credit business marks the growing interest of global and domestic PE funds into the private debt business keen to tap the lending space between conventional bank funding and debt capital markets.
One of the early movers to the structured credit business in India, global PE giant KKR & Co. in its recent report titled Outlook for 2017: Paradigm Shift said, “As we look ahead towards 2017’s investment opportunities, we are most excited by what we see in private credit. Despite the threat of future regulatory changes, the illiquidity premium still feels appealing, a feature we do not expect to shift in the near to medium term.”
In India, KKR India Alternative Credit Opportunities Fund (with a corpus of Rs1,500 crore), the first alternative investment fund raised by KKR India in 2013, has seen an average internal rate of return (IRR) of approximately 18%, Mint had earlier reported.
KKR has invested close to $3.5 billion through structured financing in about 62 companies in India, including GMR Holdings Pvt. Ltd, Avantha Group and Apollo Hospitals Enterprise Ltd. It is also in the process of raising its second credit fund worth Rs1,500 crore. Others who have ventured into structured credit business in India include AION Capital Partners (a joint venture between Apollo Global Management Llc and domestic private equity firm ICICI Venture) which has raised $825 million in committed capital.
In India, BPEA has so far been focused on buyout opportunities.
In 2015, it acquired a controlling stake in CMS Info Systems Ltd, one of India’s largest cash-management companies, from Blackstone group for $301 million.
In 2013, it acquired a majority stake in software and IT services company Hexaware Technologies for Rs1,687 crore in one of the biggest transactions in India’s information technology (IT) sector in recent years.
Till recently, the PE fund was also among the top contenders to acquire ICICI Home Finance Company; the talks, however, were not successful.

Budget 2017 gets a thumbs up from Moody's, Fitch

New Delhi: Finance minister Arun Jaitley’s fourth budget has emphasized fiscal prudence while pushing for higher public investment—a “credit positive” for India’s sovereign ratings, Moody’s Investors Service said on Friday.
Rating company Fitch also reacted positively to the continued commitment to fiscal consolidation and a broad reform agenda displayed in the 2017-18 budget presented on Wednesday.
“We view the (budget) speech as consistent with the government’s commitment to gradual fiscal consolidation and balanced growth, a credit positive for the sovereign ratings,” Moody’s Investors Service said in a report.
Jaitley chose to only marginally deviate from the fiscal consolidation road map by targeting a fiscal deficit equivalent to 3.2% of gross domestic product (GDP); he aims to bring it down to 3% in 2018-19.
The initial road map required the finance minister to contain fiscal deficit at 3% of GDP in 2017-18 from 3.5% in 2016-17.
“The revised fiscal consolidation path is not materially different from the previous road map and our projections. We expect the government will meet its deficit targets, based on achievable budget assumptions and demonstrated commitment to fiscal prudence. However, given significant spending commitments and structural hurdles to rapid increases in revenue collection, there will be limited room for slippage,” the Moody’s report said.
The credit assessor also favoured the recommendations of a panel led by former revenue secretary N. K. Singh that reviewed the Fiscal Responsibility and Budget Management (FRBM) Act.
The panel favoured making the debt-to-gross domestic product (GDP) ratio the new metric. It suggested targeting a debt-to-GDP ratio of 60% by 2023—40% of GDP for the central government and 20% for the states.
To achieve these targets, the panel has recommended a fiscal deficit of 3% of GDP for the next three years. But it included an escape clause for deviations up to 0.5% of GDP, based on triggers including far-reaching structural reforms in the economy with unanticipated fiscal implications, acts of war and farm distress.
“We consider the committee’s targets to be achievable. They imply gradual medium-term fiscal consolidation, driven largely by higher nominal GDP growth and bolstered by improvements in government revenue collection. High and sustainable nominal GDP growth will depend on the recovery of the private investment cycle, which will in turn be contingent upon the successful implementation of current and future reforms,” Moody’s said.
The report also said the government’s revenue projections are realistic though it cautioned the divestment targets appear ambitious. “The administration has budgeted gross tax revenue to rise by 12.2% year-on-year. This implies a tax buoyancy of about 1.04, which we consider to be realistic,” it said.
The divestment target set by the government for 2017-18 is Rs72,500 crore, as against a budgeted target of Rs56,500 crore for 2016-17, which was revised down to Rs 45,500 crore. “A shortfall in disinvestment receipts could pressure the government to cut back in other areas of spending, including capital expenditure,” it said.
The report also cautioned the government risks a slippage in expenditure projections because of uncertainty over compensation to be paid to states for potential shortfalls in revenue after the goods and services tax (GST) comes in, and outgo on account of 7th Pay Commission suggestions.
Moody’s said the states’ fiscal deficit targets may be missed because of uncertainty surrounding the final impact of demonetization and the impending GST on their revenues.
Fitch said: “The government’s fiscal deficit to 3.0% of GDP has been pushed back by another year, but the general goal of addressing relatively weak public finances over the medium term is still in place.”

IndiaPost becomes 3rd entity to receive licence to start payment bank operations

New Delhi: IndiaPost has become the third entity to receive a final license last week from the Central Bank to start its payment bank operations. Country’s largest telcom service provider Bharti Airtel and digital payments firm Paytm are the other two to have received the license while only Airtel has started operations so far.
The government has also appointed AP Singh has interim MD and CEO of the India Post Payment Bank. A 1986 Indian Postal Service Officer he was earlier Joint Secretary in the department of disinvestment, ministry of Finance and Deputy Director General incharge of financial inclusion and payments systems at Unique Identification Authority of India (UIDAI). Singh was one part of the founding team that launched Aadhaar and was stationed at the department of Post prior to UIDAI.
As per the initial road map, each post office in the country will offer the post bank services. The department of post has an existing network of around 1,55,000 post offices currently. ET had reported earlier that IndiaPost plans to open 650 new branches for the payment bank. The branches will be co-located with the existing post offices. The idea is that the 650 branches will be in located in postal district headquarters and all the branches under that particular head post office will be enabled by the payment bank services. This will cover the entire network of 155,000 post offices in the country.
Earlier this month, Airtel Payments Bank launched nationwide operations, offering 7.25% interest on savings bank balances, which is more than the maximum 7% paid by SBI on its fixed deposits. Bharti and Kotak Mahindra, which holds a 20% stake in the payments bank, would invest Rs 3,000 crore in the venture.
Payments banks can accept deposits from individuals and small businesses of up to Rs 1 lakh per account. And RBI had set a condition that formal license has to be obtained before 31 March.
Alibaba backed Paytm also said early in January that it has received the final license from RBI and the company hopes to launch operations in February with the first branch coming up in Noida, Uttar Pradesh.
While operation of Payment Banks such as Paytm are likely to be focused on technology based differentiation, IndiaPost is banking on its huge reach especially in the rural areas to be successful.

Reliance Group and Dassault's joint venture gets CCI approval

New Delhi: The Competition Commission of India (CCI) on Friday approved a joint venture between Anil Ambani-led Reliance Group and French aircraft manufacturer, Dassault Aviation SA.
The fair trade regulator announced its approval in a posting on the microblogging site Twitter. “CCI approves setting up of a joint venture between Reliance Aerostructure Limited and Dassault Aviation,” the commission said.
The joint venture, Dassault Reliance Aerospace Pvt. Ltd, between Reliance Aerostructure and Dassault was announced in October.
In September, India inked a deal to buy 36 Rafale aircraft from Dassault for Rs59,000 crore. The agreement has a 50% offset clause. Of this Rs24,500 crore, 74% will have to come from India in goods and services, which could mean a boost for the government’s efforts to promote the local manufacture of defence equipment.
A filing with the CCI stated that Reliance Aero will hold a 51% stake in the joint venture and the remaining 49% will be held by Dassault.
CCI’s approval fulfils the regulatory requirements needed by the companies to proceed with the deal. The agreement has a 50% offset clause.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.

ONGC to invest Rs78,000 crore in KG basin, signs deal with Andhra Pradesh

New Delhi: State-owned explorer Oil and Natural Gas Corp. Ltd (ONGC) said on Saturday it will invest Rs78,000 crore in the Krishna Godavari basin for producing hydrocarbons and has signed an agreement with the Andhra Pradesh government for smooth execution of the projects.
ONGC has been pursuing exploration in the basin and had last March announced a $5 billion (Rs34,000 crore) investment over the next three years in two of its fields there after the central government earlier that month announced a liberal pricing formula for natural gas from deep sea blocks.
The investment figure announced on Saturday is for the entire basin. The agreement with Andhra Pradesh to “take forward all critical exploration and production activities in the state” was signed on the sidelines of the Partnership Summit, 2017 jointly organized by the state government and industry chamber Confederation of Indian Industry (CII) in Visakhapatnam on Friday.
ONGC sees Andhra Pradesh as a hydrocarbon rich state. “ONGC is very aggressively pursuing to put the huge gas reserves it has discovered in KG basin, to production. It plans to invest about Rs10,000 crore for exploration and production activities in onland blocks and about Rs68,000 crore in offshore assets in the KG Basin,” said a company statement.
As per the deal, the state government will assist ONGC in taking over land and in obtaining other statutory clearances. The state has offered ‘single window service’ through office of the Commissioner of Industries.
All state-owned oil and gas companies together have planned an investment of Rs1.43 trillion in Andhra Pradesh, the statement said quoting oil minister Dharmendra Pradhan who was present on the occasion. “These Investments would start from 2017-18 and will be completed by 2021-22,” it said quoting Pradhan.
Andhra Pradesh will extend full cooperation in making the country self-sufficient in energy and the present agreement is the first step in that direction, the statement said quoting chief minister N. Chandrababu Naidu, who was also present on the occasion.

Microsoft brings together start-ups to offer solutions for smart cities

Hyderabad: As part of its CityNext initiative, software major Microsoft has partnered the Telangana government and organised a Smart City Start-ups conclave in Hyderabad on Tuesday.
Microsoft CityNext is a people-first initiative to enable residents and city leaders to use technology to build a foundation for sustainable growth and prosperity. Microsoft has identified more than 40 solution areas across eight city domains, which include energy and water, buildings; infrastructure and planning, tansportation, public safety and justice, tourism, recreation and culture, education, health and social services and government administration, which help address 90 per cent of the challenges facing cities today.
"Around 21 startups, a combination of Microsoft Ventures' core portfolio and extended portfolio, participated in this bold step that the new Telangana state has taken, and launched a dialogue to quickly put smart city solutions on the ground,\" Ravi Narayan, director, Microsoft Ventures India, told Business Standard.
India's urban population is projected to grow from 340 million in 2008 to 590 million in 2030, according to a 2010 McKinsey and Microsoft study. By 2050, nearly 70 per cent of the global population will live in cities. Through its CityNext initiative, Microsoft India integrates information technology and human engagement to address infrastructural challenges and create new opportunities for economic growth and improved competitiveness overall.
"We are not going to leave this initiative at the networking level. We will help facilitate a consortium of startups to go through the tendering process (for smart cities), when called for,\" Narayan added.
"Developing smart cities is important to drive the state’s growth. With this focus, we are pleased to partner with Microsoft India to leverage its technology offerings and expertise to help transform Telangana into a sustainable and competitive state that cares for its citizens," said Telangana IT minister KT Rama Rao.
"Over the course of the next few months, we look forward to working with Microsoft and various startup partners, on solutions across areas that will help us keep the citizen at the centre of our development and fulfil our smart city vision," said Jayesh Ranjan, IT secretary, Telangana government.

Wipro Ventures to invest in early-stage venture capital funds in US

Bengaluru: Wipro Ltd's corporate venture arm Wipro Ventures plans to invest in early-stage venture capital (VC) funds based in the US even as it buys minority stakes in early-to-mid-stage start-ups to help fill gaps in its own range of offerings.
Wipro's $100 million corporate venture arm, overseen by Rishad Premji, son of chairman Azim Premji, has minority stakes in four US-based start-ups; India's third-largest software services firm has until now shied away from investing in VC funds.
The company's change of heart comes a week after Wipro's rival Infosys Ltd made its first investment in an early-stage focused venture fund, Palo Alto-based Vertex Ventures.
"This is inevitable," said an executive familiar with the matter. "As we try to broaden our reach in the start-up ecosystem, it's impossible for any one individual or team to evaluate the most promising start-ups. So it's only logical that we also look to invest/partner with some early-stage venture capital funds," added this person, who asked not to be named as he is not authorized to speak with the media.
The executive declined to disclose details, including whether Wipro Ventures is in talks with any VC funds, saying: "As part of our mandate we constantly evaluate and engage with VCs. We could soon invest in a US-based VC fund unless of course there is a compelling proposition to partner with some other country-focused VC."
A spokesman for Wipro confirmed the development. "In addition to our direct investment activities, it is part of our charter to invest in early-stage funds that focus on specific technology areas or geographies."
Some experts say this is a logical move for the corporate venture arms of technology firms.
"There are many ways to approach this. Having your own ventures team is important but adding a mix gives you the opportunity to try different approaches and gives you broader exposure to new investment hypothesis," said Ray Wang, founder of Constellation Research, a technology research and advisory firm.
Until now, Wipro has focused only on start-ups in the US though its management has said in the past that its investments will not be limited to one country. Since May 2013—even before Wipro formally set up a corporate venture arm late last year—Wipro has made five investments in start-ups. It sold its stake in one, US-based machine-learning start-up Axeda, to a Nasdaq-listed firm PTC Inc.
Wipro has spent $30 million to buy a stake in Opera Solutions, a New-Jersey based data analytics company, and invested $5 million in Drivestream Inc., a Virginia, US-based cloud solutions start-up.
During the April-June period this year, Wipro also made undisclosed investments in San Francisco-based artificial intelligence start-up Vicarious and California-based early-stage big data start-up Talena Inc.
Both Infosys and Wipro know the significance of start-ups in reviving the fortunes of legacy software firms.
Over the past few years, the traditional approach followed by the large companies in India's $146 billion outsourcing industry has come under pressure. This is primarily because information technology (IT) maintenance work is becoming commoditized, as new technology offerings such as automating a lot of tasks and cloud computing offer a cheaper and more efficient alternative to the historical model of using an army of engineers to oversee technology work.
To retain their dominance in the outsourcing space, IT vendors are picking stakes in small start-ups focused on disruptive technologies, including artificial intelligence and cloud computing, which they can then take to their clients.
Infosys has set up the Infosys Innovation Fund, with capital of $500 million, to back start-ups and has so far spent $18.4 million in picking up stakes in three start-ups, It is managed by CEO Vishal Sikka's former SAP AG colleague Yusuf Bashir.
Bashir does not have any prior VC expertise, and at SAP AG, he helped then chief technology officer Sikka develop and launch new products. Bashir works along with a team of eight executives—none of them have worked in venture funds in the past—based out of US, Israel and Bengaluru. Infosys has also reserved half of its $500 million fund to back start-ups in India.
Wipro Ventures' $100 million fund is jointly managed by Venu Pemmaraju, formerly a senior investment manager at Intel Capital, and Wipro executive Biplab Adhya. Both Pemmaraju and Adhya are based out of California, report to Rishad Premji, and work with Wipro's chief technology officer K.R. Sanjiv, who is based in Bengaluru.

PM Modi woos foreign investors, hopes for GST rollout in 2016

Bengaluru: Prime Minister Narendra Modi on Tuesday sounded hopeful of India successfully rolling out the new goods and services tax in 2016, while German Chancellor Angela Merkel said German companies operating in India should be treated the same way as Indian companies since it would benefit both sides. On Tuesday at the Indo-German Business Summit, India and Germany also inked five more MoUs to strengthen ties in areas such as telecommunications, solar power and defence, in addition to the 18 MoUs that were signed on Monday between the two countries.
The pacts signed included an agreement between Tata Power and Rohde & Schwarz to manufacture "software defined secure radio communications systems" for military usage and other agreements between Siemens and the Gujarat International Finance Tec (GIFT) City. During her visit to Bangalore, Merkel also encouraged Indian investors to consider investing in Germany, citing the country's business friendly regulations and abundant supply of skilled labour, among other things.
"Indian investors are certainly welcome in Germany. You as Indian companies would find excellent conditions on the ground," said Merkel addressing a packed auditorium of top executives from India's corporate sector, as well as German business delegates.
Merkel's call to boost trade ties between India and Germany comes a day after the two countries agreed to resume talks towards a free trade agreement between India and the European Union. Earlier on Tuesday, Merkel and Modi also visited German automotive engineering company Bosch's Bangalore operations.
On Tuesday, Modi stressed on the attractiveness of investments in Asia's third largest economy and said that the government was working hard to attract more foreign investments into the country, which had translated into more investor-friendly foreign direct investment (FDI) norms in sectors such as railways and defence.
Modi also emphasised the need to provide a boost to the country's technology and startup ecosystem, citing the government's ambitious plans on the Digital India and the Startup India initiatives.
"While in Bengaluru, I must say that it is the software of India that will move the hardware of the world..it makes strong business sense to be in India. It makes even greater business sense to Make in India," said Modi, addressing an audience that included the likes of Wipro's billionaire chairman Azim Premji, ICICI Bank managing director and chief executive Chanda Kocchar and Aditya Birla Group chairman Kumar Mangalam Birla among others. "India is on the threshold of a big IT revolution," added Modi. "Ours is a country of the young and it is going to remain so for many more years. Talented young Indians... are now looking to take risks and become entrepreneurs." Modi also said that India and Germany had potential to boost ties further and collaborate more.
Modi also sounded optimistic about the GST, which is currently blocked in Parliament, being rolled out in 2016.

Government of India and KFW (Federal Republic of Germany) Sign Loan Agreements Worth Euro 125 Millions for KFW Assisted Himachal and Andhra Pradesh Green Energy Corridors' Projects

New Delhi: Government of India and KFW (Federal Republic of Germany) signed here yesterday two loan agreements worth Euro 125 Millions for financing two projects under the Green Energy Projects (GEC) programme- Himachal Pradesh (Euro 57 million) and Andhra Pradesh (Euro 68 million). Loan agreements were signed by Mr. S. Selvakumar, Joint Secretary (Bilateral Cooperation), Department of Economic Affairs, Ministry of Finance on behalf of the Government of India and Mr. Roland Sillar, Member, KFW Board Management, from German side. Project agreements were also signed by Mr. S.L. Sharma, MD, HPPTCL and Mr. P. Satyamoorty, Director (Finance), Andhra Pradesh TRANSCO relating to their respective State(s)
With the Green Energy Corridors, the intra-State network will feed the renewable energy to the respective State grids and the high capacity transmission corridors and inter-State network will connect major renewable energy pockets with the national grid.
Renewable Energy is one of the key areas of Indo-German partnership mentioned in the Joint Statement of Hannover in April 2015 and with financing of the transmission infrastructure of Renewable Energy projects, the Central and State grids will be strengthened to evacuate more green energy.

India set to grow faster than other emerging markets, as per IMF

New Delhi: The International Monetary Fund (IMF) has forecasted the Indian economy to grow at 7.5 per cent in FY 2015-16, faster than every other major emerging market, mainly due to increase in investments, policy reforms and lower commodity prices. In 2015, inflation is expected to reduce further, reflecting the fall in global oil and agricultural commodities prices, which is expected to aid domestic demand as well as decrease India’s current account deficit. Prime Minister Mr Narendra Modi has outlined several business reforms aimed at attracting foreign investments such as simpler regulations, removing limits for foreign investments in certain sectors and enabling fast-track approvals for infrastructure projects. The government is taking efforts towards making the tax regime transparent and predictable.