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Reliance Nippon Life hits 52-week high in weak market; surges 12%



Stock markets. Photo: iStock
Shares of Reliance Nippon Life Asset Management (RNAM), popularly known as Reliance Mutual Fund (MF), hit a 52-week high of Rs 260, up 12 per cent in the intra-day trade on the BSE on Tuesday in an otherwise weak market.

In the past three months, the stock of Reliance Nippon Life has outperformed the market by surging 38 per cent after Nippon Life Insurance on May 23, 2019 signed binding definitive agreement with Reliance Capital (Rcap) to increase stake in RNAM up to 75 per cent. In comparison, the S&P BSE Sensex has gained just1 per cent during the same period.

Japan’s Nippon Life had launched an open offer to acquire 14.6 per cent public shareholding of RNAM at a price of Rs 230 per share. Nippon Life currently holds 42.88 per cent stake, while Rcap holds 32.12 per cent stake in the asset manager. The Japanese firm has announced that it plans to hike its stake to 75 per cent.

Depending upon how much shares it is able to garner through the open offer, it will buy the remaining from Rcap, as part of an agreement inked between the two joint venture partners.

The open offer closed on August 5, 2019 and the company has fixed August 21 as last date for communication of rejection/ acceptance and completion of payment or refund of equity shares.

Analysts at HDFC Securities have ‘neutral’ rating on RNAM as the brokerage firm is concerned about the loss of investor confidence which debt schemes face given significant write-downs/offs on exposures to stressed corporates.

“Additionally, given the current inter-promoter deal structure, we believe an offer-for-sale (OFS) by Rcap is imminent. Lastly, the macro environment remains challenging and thus despite our positive bias towards Nippon Life as sole promoter, increased credibility to raise HNI/institutional capital,” the brokerage firm said in Q1FY20 result review.

“Management indicated that they plan to leverage Nippon’s Life’s global network to shore up offshore assets under management (AUM). Recent announcement of a fund-of-fund in tech space in collaboration with few Japanese partners highlights the potential to shore up offshore AUM in future,” analysts at JM Financial said in a company update.

RNAM remains confident about the recovery of exposures of ADAG group on the back of shareholder agreement to repay any outstanding amount on ICDs out of proceeds of share sale, it added.

At 12:52 pm, the stock was up 4 per cent at Rs 241, as compared to a 0.47 per cent decline in the S&P BSE Sensex. A combined 1.3 million shares changed hands on the counter on the BSE and NSE till the time of writing this report.

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Market Updates

Sitharaman’s sops for NBFCs may perk up lending, ease liquidity stress



Illustration by Binay Sinha

To further ease the liquidity stress in the non-banking sector and nudge them to revive their lending activities, Finance Minister (FM) Nirmala Sitharaman on Friday announced a slew of measures for non-banking financial companies (NBFCs) and housing finance companies (HFCs). The government hopes this will result in more credit support for purchase of houses, vehicles, and consumption goods.

The government has provided additional support of Rs 20,000 crore to the stressed housing finance companies from National Housing Bank (NHB). With this, the additional liquidity support for the HFCs from NHB has gone up to Rs 30,000 crore.

In the Union Budget last month, the FM had encouraged public sector banks (PSBs) to buy high-quality pooled assets of NBFCs up to Rs 1 trillion for which the government would provide a one-time six-month partial credit guarantee for the first loss of up to 10 per cent.

The Reserve Bank of India (RBI) had also chipped in by tweaking banks’ bond-holding norms. This will allow banks to borrow an additional Rs 1.34 trillion exclusively for buying such pooled assets and giving loans to NBFCs. The FM on Friday said this partial credit guarantee scheme will be monitored at the highest level in each bank. Through this, it is expected that many of the assets will get quickly pooled and NBFCs will receive the necessary liquidity. “NHB has already settled some of the issues. NBFCs are receiving money from the banks and are moving towards funding,” said Sitharaman.

Sanjaya Gupta, managing director, PNB Housing Finance, said “This will support growth and ease the liquidity crunch. HFCs will now get an additional Rs 20,000 crore from NHB. The initiatives have potential to kick start the real estate sector.”

The government has also permitted NBFCs to use Aadhaar-authenticated bank KYC to avoid repeating the same process when a customer approaches it for credit. This has been a long-standing demand. The necessary changes in the Aadhaar regulations and Prevention of Money Laundering Act rules will be made, the FM said.

“This will streamline the process and also reduce frauds,” said Raman Aggarwal, chairman, Finance Industry Development Council.

The government has also asked PSBs and NBFCs to fast-track their collaboration to provide credit to micro, small and medium enterprises, small traders, self-help groups, and micro finance industry client borrowers.

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Market Updates

PACL Case: Sebi panel invites expression of interest for 28,974 properties




A committee headed by Justice R M Lodha has invited expression of interest (EoI) from prospective buyers for a total of 28,974 properties belonging to PACL Group.

Market regulator Sebi had set up a committee headed by former Chief Justice of India R M Lodha following a Supreme Court order to refund money to investors in the matter of PACL Group.

As per the notice issued by Sebi, the committee has divided the total 28,974 properties belonging to PACL group in four zones — east, west, north and south — with maximum properties being located in the southern zone.

Regarding PACL properties, the apex court’s order dated July 30 observed “we also leave it open to the committee to receive any further offers and to explore them after duly publishing a further notice on the website,” the notice said.

In pursuance of apex court’s order, the committee “invites Expression of Interest from prospective buyers clearly indicating therein, list of properties in each zone, its circle rate, the offer amount and other relevant details,” the Friday notice said.

“The proposal should be for properties in each zone aggregating in value not less than Rs 1,000 crore,” the notice added.

The notice further said that the last date of receipt of proposals is September 9.

PACL, also known as Pearl Group, had raised Rs 60,000 crore from public in the name of agriculture and real estate businesses and was found by Sebi to have collected these funds through illegal collective investment schemes over 18 years.

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Improved market access for domestic retail investors with Aadhaar-based kYC



Markets, Investors, Indices, Stocks

The government will allow Aadhaar-based KYC for domestic retail investors, and necessary amendments to the rules under the Prevention of Money Laundering Act will be issued.

Announcing a slew of measures to boost the economy, the government said the Depository Receipt Scheme 2014 is expected to be operationalised soon by Sebi. “This will give Indian companies increased access to foreign funds through American Depository Receipt (ADR)/ Global Depository Receipt (GDR),” she said.

In order to improve market access for the domestic retail investors, Aadhaar-based KYC will be permitted for opening of demat account and making investment in mutual funds. In this regard, necessary notification for amendments in PMLA rules would be issued.

Besides, steps would be taken with regard to offshore rupee market.

“To bring offshore rupee market to domestic stock exchanges and permit trading of USD-INR derivatives in GIFT IFSC, Ministry of Finance is working with RBI to introduce this measure shortly,” the government said.

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