8 july 20000
hindujas, bajaj auto and s kumars in
line to join insurance bandwagon
mumbai: with the insurance regulatory and development authority (irda) only weeks
away from accepting the first applications from prospective promoters for the insurance
business, more private companies are joining the bandwagon.
the hinduja group is venturing into all three forms of insurance -- life, general and
re-insurance. the group is said to be in the process of wrapping up deals with two-three
different collaborators specialising in each of the three sectors. it is expected that the
foreign partners, indusind bank ltd, the bank promoted by the group, will hold up to 20
per cent stake and the balance will be held by the group, subject the rbi guidelines.
cash-rich bajaj auto is said to be planning
to enter the non-life insurance sector through a possible tieup with a foreign partner.
although, bajaj auto has enough funds to set up an insurance company on its own and meet
the growing capital requirements, it will require a foreign partner for the expertise. it
is not yet clear whether the firm has decided on offering an equity stake to the foreign
textile company, s kumars, which has recently
entered into the internet arena, is looking at a three-way partnership and is reported to
be in talks with jammu and kashmir bank as the second partner with a foreign insurance
firm joining as the third partner.
almost all companies who have announced their intentions to get into insurance business
have announced a tie-up or an intention to tie up with a foreign partner. the only
exclusions to this are the reliance group (non-life and life insurance ) and kotak
mahindra financial consultants (non-life insurance business). both these companies plan to
set up 100 per cent subsidiaries.
among the prospective entrants, interest is keener in the life insurance segment as this
is the business which has been driving premium growth world-wide. industry watchers expect
a dozen players in life and a half of that in non-life when licences are finally issued.
merger encounters new twist
mumbai: the complicated merger between standard chartered
bank and grindlays, has taken a new twist with the national housing bank (nhb) filing a
petition in the supreme court asking for the rs 907 crore it had paid to anz grindlays
following an arbitration award in 1997.
according to the national housing bank,
since post-acquisition grindlays will cease to exist in india, it should pay up the money
now. the petition will come up for hearing when the apex court opens after the summer
the amount became a bone of contention
between the two financial institutions, after the harshad mehta scam broke out in 1992.
currently an appeal lies in the supreme court against a verdict passed by the arbitration
bench awarding grindlays the right to get the stated amount from nhb.
grindlays had, however, given an undertaking that in case the supreme court judgment
goes in favour of the nhb, it will return the money along with 18 per cent annual
interest. the indian subsidiary of anz banking group has already repatriated the money to
7 july 2000
call stays in range, as securities
mumbai: inter-bank money market rates stayed within the seven per cent range, while
security prices took a hit due to the volatility in the foreign exchange markets.
overnight rates ruled around seven per cent as easy liquidity conditions continued.
call rates are expected to stay at the
current levels for today also. while the central bank did not receive any bids for its
repo or reverse repo auctions, the prices of government securities fell due to the
volatility in the foreign exchange market by five paise in the short-end and up to 12
paise in the medium-to- long-term maturities.
the expected lull in forex market would keep
most bankers on the sidelines. the market continues to anticipate rbi to announce an
auction following the rs 3,000-crore private placement of the 11-year security. most
expect the bond auction to be announced for the longer tenor of above 10 years.
6 july 2000
standard life pays record price for
hdfc mutual fund
mumbai; in what is a record-setting deal for any mutual fund, standard life of the
uk has paid rs 50 crore to housing development and finance corporation (hdfc) as an
advance towards exercise of its option to buy up to 26 per cent stake in hdfc asset
management company. the company is yet to receive a single rupee in terms of assets under
management. hdfc currently holds 100 per cent of the rs 20 crore paid-up equity capital of
the option given to standard life investments, the investment arm of standard life
assurance company, is exercisable within one year of the mutual fund launching its
operations. the valuation of the stake will be decided at the time of exercise of the
option and fipb approval too will be sought then.
hdfc, which has received all approvals to set up a mutual fund venture, is all set to
float its three maiden schemes by the end of this month.
hdfc is planning to utilise its 46,000-strong fixed deposit agent network, its 72 branch
offices and the 119-strong branch network of hdfc bank to market the mutual funds schemes.
the company has already held 37 workshops nationally between march and may this year for
its top performing fixed deposit agents to educate them about the concept of mutual funds.
hdfc amc plans to launch three schemes: an income fund, a balanced fund and an equity fund
in the last week of july, and is aiming to mop up rs 400 crore through these schemes.
disinvestment ministry moots strategic sale of 32.61 per cent stake in hoc
new delhi: according to a report in the business
standard, the department of disinvestment has proposed the sale of 32.61 per cent
government stake in hindustan organic chemicals ltd. (hoc) to a strategic partner along
with the transfer of management control. the proposal calls for the government to retain a
26 per cent holding in the company, following the sale. the government, currently, holds
58.61 per cent equity in the company after it recently divested 20 per cent stake in
favour of mutual funds and the uti.
the proposal is soon to be considered by the
core group of secretaries on disinvestment, after which it will be referred to the cabinet
committee on disinvestment for ratification. the cabinet committee had, in its last
meeting, accorded an "in principle" approval for the sale of government equity
in hoc and had asked the department to come up with a specific proposal.
the disinvestment commission had classified
hoc as a non-core company and said that the strategic sale would enable it to acquire new
technologies and funds necessary for expansion.
hoc was set up in 1960 to manufacture
chemicals for dyes and dye intermediates, drugs and pharmaceuticals, rubber, chemicals,
laminates and solvent industries. the company has two units, one at rasayani in
maharashtra and the other at kochi, kerala. hoc also has a wholly-owned subsidiary,
hindustan fluorocarbons ltd., at hyderabad.
5 july 2000
arbitration award may hit grindlays-stanchart merger
mumbai: in a move that may put a spoke in the
stanchart-grindlays merger, the reserve bank of india has demanded comfort letter from
standard chartered bank on honouring the anz grindlays undertaking given to court on
the rs 907-crore arbitration award against national housing bank. this letter is being
sought as a precondition to clearing the stancharts acquisition of gindlays
operations in india.
although stanchart has assured rbi that
post acquisition, the two entities will continue to function for at least a year and no
decision will be taken in regard to the staff without the central banks nod, the rbi
has asked for the blueprint for the staff redeployment policy post acquisition.
stanchart, which needs the clearance of close
to a dozen central banks on its $1.3 billion acquisition of grindlays business in west
asia and south asia, may find the central banks of bangladesh, sri lanka and nepal
unwilling to give the green signal till the indian central bank clears the deal.
according to sources, rbi is acting cautious
on the hrd front and it does not want to be dragged into any litigation. stanchart trade
unions in madras have made the rbi a party to a case challenging the voluntary retirement
scheme introduced by the bank a year ago.
4 july 2000
government to allow allotment of
shares in lieu of cash to foreign companies
new delhi: departing from its earlier stand that ruled for many years, the
government is said to be allowing the induction of foreign equity in indian joint ventures
in the form of man-years of work done by the foreign company for the joint venture. this
would mean that indian companies would now be able to allot shares to their foreign
partners for the services rendered by the partners for the joint venture.
till now, the government had permitted the adjustment of foreign equity against technical
knowhow, royalty and capital goods but this would be the first time when business granted
would be considered in lieu of foreign capital.
the landmark decision has been taken in the case of jason geosystems bv of the
netherlands, which is to get the equivalent of 90 man years of work in its joint venture,
itti, in india. this would constitute a 6.9 per cent of the total paid-up capital of the
company at a price of rs. 114 per share.
itti is bringing in jason geosystems to carry on the business of development of software
for use in various areas of activities, such as finance, financial services,
manufacturing, distribution and transportation.
while the fipb which approved the application was of the view that the mode of payment was
a matter to be settled between the partners, the department of economic affairs had
strongly opposed the move and recommended that such an induction should be rejected, or
least the opinion of sebi and rbi should be sought in the matter.
stanchart said to be bidding for hong kong
business of chase manhattan
london: soon after spending nearly $1.3 billion to
acquire the grindlays banking operations from the anz group, standard chartered, now
indias largest foreign bank, is said to be in a billion dollar bidding war to buy
chase manhattans retail banking business in hong kong. the british bank, which aims
be a powerful player in asia and the emerging markets, has bid around $1.6 billion to buy
chases hong kong branch network and its mortgage, consumer credit and personal loan
businesses. stanchart is already the second biggest bank in hong kong and hopes to become
even bigger with this prospective acquisition.
stanchart joins four other powerful rivals
including citibank, singapore development bank, hong kongs bank of east asia and the
singapore overseas bank, in the bidding process.
to fund its buying spree, stanchart has
raised more than 600 million from the international capital markets in recent months. it
is also hoping to bolster its cash pile by selling a british-based subsidiary company
chartered trust for around 600 million.
chartered trust, a profit making concern, is
the groups british consumer finance and contract hire business. however, stanchart
chief executive, mr. rana talwar, is of the opinion that it is peripheral to the
banks main interests in asia and the emerging markets.
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