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HCL closer to buy Axon
SEC extends ban on short-selling
Satyam eyes global acquisitions
Global Turmoil |
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FIIs to re-enter only after elections: Citi report
Liquidity Crunch: Banks vie for bulk deposits
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HCL closer to buy Axon
London/New Delhi, October 2 Noting that the HCL offer is at a premium of 8.3 per cent to Infosys' bid, worth £407.1 million, Axon said in a regulatory filing here that its board "has withdrawn its recommendation of the Infosys offer and intends unanimously to recommend the HCL offer when it is made". When contacted, an Infosys spokesperson in India told PTI that the company was evaluating its options and would announce any further move at an appropriate time. HCL officials said that they were confident of winning over the support of Axon board for its offer. India's second largest IT firm Infosys had announced on August 25 a recommended cash offer of 600 pence per share for Axon Group. Axon had subsequently posted the scheme documents regarding Infosys offer to its shareholders on September 20. However, HCL Tech announced on September 26 its intention to counter the bid from its bigger Indian rival Infosys with a cash offer of 650 pence per share for Axon. Axon had entered into an implementation agreement with Infosys, under which it undertook that, in the event of a competing proposal being received from a third party, the board would not vary or amend its recommendation of the Infosys offer for a period of 60 hours from the time Infosys was notified of the competing proposal. "The 60-hour period during which Axon is prevented from varying or amending its recommendation has now elapsed," Axon said today. "Axon and HCL have enjoyed a long standing relationship. The Board is pleased that HCL has recognised the quality of the Axon business and has announced its intention to make an offer," the UK firm said. "The HCL offer values Axon's existing issued and to be issued (fully diluted) share capital at approximately £441 million," it noted. Announcing its intention to recommend an HCL offer when it was made, Axon said that "a further announcement will be made when appropriate". In case Axon's shareholders decide to go with HCL's offer, Infosys stands to be paid one per cent of the deal amount as inducement. After HCL offer, Infosys had said on September 26 that it was considering its position and had urged "Axon shareholders to take no action at this time". Infosys had previously said that it expected the transfer of ownership of Axon to be completed by November 2008, subject to the scheme of arrangement becoming effective. Axon provides consultancy services to multinational organisations that have chosen SAP as their strategic enterprise platform and has about 2,000 employees. Founded in 1994, today Axon has offices in the United Kingdom, North America, Malaysia and Australia. For the year ended 31 December 2007, Axon reported profit after taxation of £20.2 million on revenue of £204.5 million. — PTI
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SEC extends ban on short-selling
New York, October 2 The current ban would expire on the third business day after enactment of the legislation. However, the order would expire in no case later than October 17, SEC said in a statement on Wednesday. In September, the American regulator had taken a temporary emergency action to prohibit short-selling in financial companies to protect the integrity and quality of the securities market as well as strengthen investor confidence. "We have carefully re-evaluated the current state of the markets and we remain concerned about the potential of sudden and excessive fluctuations of securities prices generally and disruption in the functioning of the securities markets that could threaten fair and orderly markets," SEC said in the latest statement. This order would be extended beyond its currently scheduled expiration, to allow time for completion of work on the anticipated passage of legislation, it added. Short-selling means borrowing a security from a broker and selling it with the understanding it must be bought back and returned to the broker. Investors use this to make profit from falling price of the stock. Last month, in a move to stregthen investor confidence, the market regulators in the UK and the US had halted short-selling in 799 financial stocks with effect from September 19. — PTI
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Satyam eyes global acquisitions
New Delhi, October 2 Sensing opportunities arising out of the financial crisis triggered by fall of major banks and mortgage giants in the US, Satyam's founder and chairman B Ramalinga Raju told PTI in an interview that it is possible to raise $4-5 billion as war-chest for acquisitions that strategically fit India's fourth largest IT entity. Raju said the company had a billion-dollar cash surplus and funds were not any issue when any potential acquisition opportunities came around. "The acquisition could be even in billions of dollars". Asked if its next bid could be a billion-dollar deal as it could easily muster around Rs 15,000-20,000 crore by leveraging its Rs 4,000-crore cash pile, Raju said, "That is a possibility". On whether it has asked its advisors and bankers to hunt for potential targets given cheaper acquisition opportunities in the backdrop of falling market valuations across the world markets, he said, "We have accelerated the process... the valuations have become more attractive than what they used to be". Loaded with reserves and surplus of over Rs 7,000 crore at the end of last fiscal, the company's guidance (target) is to reach about Rs 11,000 crore ($2.6-2.7 billion) of revenue in the current fiscal. It had recently acquired an entity for $280 million. — PTI |
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Global Turmoil
Mumbai, October 2 The High-Level Coordination Committee on Financial Markets (HLCCFM) chaired by RBI Governor D Subbarao "reviewed...the preparedness of all regulators to act in a coordinated and timely manner to deal with the emerging market situation in order to ensure continued smooth functioning of the markets", said a central bank release. The HLCCFM, which met yesterday in the backdrop of global financial turmoil, was attended by finance secretary Arun Ramanathan, economic affairs secretary Ashok Chawala, SEBI chairman C.B. Bhave, PFRDA chairman D Swarup and IRDA Member C R Muralidharan. Among other things, the high-level committee also discussed the recent developments in the domestic financial markets in the wake of the global financial markets. The Bombay Stock Exchange benchmark index, which touched a high of about 21,200 in January, slipped to less than 13,000 earlier in the week. The trading on bourses on certain days was also marked by excessive volatility. The meeting also assumes significance in the wake of the recent remarks of Prime Minister Manmohan Singh that India is not immune from what happens outside the world and the priority of the UPA Government would be to insulate the country to the maximum possible extent from the ill effects of international financial market. — PTI
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FIIs to re-enter only after elections: Citi report
New Delhi, October 2 A recent research note put out by Citigroup Inc says that asset prices are likely to tumble further until the US risks stabilise. Despite the fact that the US is in the centre of crisis, every time the crisis escalates, capital leaves emerging Asia. Economists say this is a clear indication of further correction in the stock market and real estate markets in the months to come. However, some say that growth engine will be on track after a couple of months when the crisis subsides. Others say that lagged effect of the US crisis is still to be felt. India is definitely facing a crunch of liquidity and it can be seen that RBI and the finance ministry have taken into consideration the situation and are using ammunition to fight the situation by releasing more liquidity into the system. But the question on everyone’s mind is when will the staggering stock markets regain its vibrancy? Much of it depends on whether India will once again become a favoured foreign capital destination. As regards the capital inflows, Citigroup report says that India is definitely a more preferred investment destination than China because of better functioning stock markets, clear policy guidelines etc. The report says that much of the capital will wait to see which way the political situation shapes up in the country since elections are round the corner. Once the elections take place in the middle of next year, there is definite outcome that the capital will start flowing. However, there is a word of caution from stock market players like First Global’s Shankar Sharma, who, says that the outcome of elections should be certain if there is a coalition with either the Congress or the BJP, but if there is no clear majority, then the capital will not flow given the uncertainties of the future. After the elections, there is also likely to be an inevitable revival of the rupee, though oil will continue to play truant at $100-level, putting pressure on the foreign exchange payments, and the deficit in turn. The report further says that the overvalued Indian market has undergone correction and the stocks are now cheaper. This will also attract foreign investors to park their funds in the Indian stock markets. |
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Liquidity Crunch: Banks vie for bulk deposits
Chandigarh, October 2 It is learnt that the banks are offering 11.25-12.25 per cent higher value rate of interest (finer rate of interest) on bulk deposits for short-term deposits, though the card rate for these deposits is between 10-10.25 per cent for a year. With heavy borrowings by the corporates in this quarter to meet their tax liability; rising inflation; and, the frequent hike in cash reserve ratio (CRR) led to a liquidity crunch for the banks. The fact that most of the leading banks have been restricting their exposure to non-productive finance like real-estate sector, also speaks of the credit squeeze being witnessed by the banks. In order to show a perfect balance of its asset-liabilities in the just ended second quarter, banks have been on a ‘bulk deposit collection’ spree. A severe competition has been witnessed as banks vied with each other to get bulk deposits from cash-rich government boards and corporations. Sources in the banking sector informed TNS that other than HDFC Bank, ICICI Bank, IDBI Bank, various public sector banks like Oriental Bank of Commerce, Canara Bank, Allahabad Bank, Bank of Maharashtra and State Bank of Patiala, have been aggressively pursuing with the government organisations to attract bulk deposits from various municipal corporations, state government departments, educational and health institutions and various boards and corporations. Some banks are offering interest rate as high as 12.25 per cent (as in the case of a Rs 100-crore deposit by Hafed). On their part, the government departments, boards and corporations and private institutions are looking at making a quick buck through these ‘incentives’ offered by the banks. RBI has now cautioned banks against relying on these bulk deposits as it could lead to a funding crisis, as in the case of USA. They have asked the banks to focus more on core deposits. |
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