Ujjivan expects to start small finance banking operations in 2017

Ujjivan Financial Services will launch its initial public offer on 28 April to raise about Rs358.16 crore

Microfinance lender Ujjivan Financial Services Ltd will launch its initial public offer (IPO) on 28 April and expects to start its small finance bank (SFB) in the first quarter of calendar year 2017, the top management of the company said on Thursday.

“The Reserve Bank of India (RBI) has given a timeline till April 2017 for launching the operations. We are confident that we will be able to do a soft launch of the small finance bank business by in the first quarter of next calendar year,” chief financial officer Sudha Suresh told reporters at a press meet in Mumbai.

The company’s significant scale, a geographically well-diversified business, senior management team with banking experience and robust risk management practices will help it in successfully building its small finance banking business, added Suresh.

Through its IPO, Ujjivan plans to raise Rs.358.16 crore. The company has fixed a price band of Rs.207-210 per share. The offer closes on 2 May.

The offer will also see several private equity investors in the company pare their stakes to ensure the company’s compliance with RBI’s norms of foreign ownership for SFBs, which require foreign ownership to be capped at 49%.

Investors selling their shares through the IPO include World Bank arm IFC, impact investment funds Elevar and India Financial Inclusion Fund, Dutch development finance institution FMO, Sarva Capital, Women’s World Banking Capital Partners, Wolfensohn Capital Partners and Mauritius Unitus Corp.

In February, Ujjivan raised fresh capital to the tune of Rs.292 crore in a so-called pre-IPO round. The pre-IPO round and IPO will help the company bring down its foreign shareholding to within 49%, the company said.

“After the pre-IPO round our foreign shareholding stands at around 77% and post the IPO the foreign shareholding will reduce to around 44-45%,” said Sudha Suresh. As of 31 March 2015, foreign investors owned 88.69% stake in Ujjivan.

Ujjivan is the second of 10 SFB licensees to start selling shares to the public. Earlier this month, the public offer of Chennai-based microfinance lender Equitas Holdings Ltd that sought to raise Rs.2,176 crore was subscribed almost 17 times.

On Thursday, Equitas’ shares listed on the stock exchanges with a 33.6% premium over its IPO price of Rs.110 per share.

SFBs will offer basic banking services, accept deposits and lend to unserved sections, including small business units, small and marginal farmers, micro and small industries, and entities in the unorganized sector.

For the nine months ended December 2015, Ujjivan reported a profit of Rs.122.3 crore on revenue of Rs.729.6 crore.

As of 31 December, the company served over 2.77 million active customers through 470 branches across 209 districts. Ujjivan’s assets under management stood at Rs.4,589 crore. The company is present in 24 states.

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Druva gets strategic investment from NTT Finance, expands in Japan

Druva is trying to tap into the growing Asia Pacific market for security

Druva Inc., a start-up that helps enterprises protect and manage their data across devices, said it received a strategic investment from NTT Finance, the financial arm of Japanese telecommunications company Nippon Telegraph and Telephone Corporation, to strengthen its presence in Japan.

Druva is trying to tap into the growing Asia Pacific market for security software. Last year, it entered Japan by localising its products in partnership with NTT Neomeit and NetOne Systems.

“We see our Japanese market expansion as a way to sustain the continued doubling of our global business each year with the Japanese growth significantly in excess of this,” Jaspreet Singh, chief executive officer of Druva, said in an email.

“We believe Druva will simplify and strengthen Japanese companies’ information security and compliance efforts, and that’s why we are investing in the company,” said Masayuki Utada, senior executive manager, International Business Unit, NTT Finance, in a statement.

Enterprises deal with vast amounts of data spread across multiple devices. For companies, it is crucial that all this data is continuously backed up, and is compliant with data governance policies. Druva has two products that deal with this—inSync, which helps companies protect data in end-user devices such as laptops or mobile phones, and Phoenix, which helps companies remotely backup and archive their server data.

However, when Jaspreet Singh, Milind Borate and Ramani Kothandaraman started Druva in 2008, they set out to build a very different product - one that dealt with disaster recovery software. On realising that it was very difficult for Indian companies to sell such a product, they shifted to data protection.

Druva serves over 4,000 enterprise customers with 65% of them in the Americas, 25% in Europe and the Middle East and 10% in the Asia Pacific region.

The Sunnyvale, California-based company has all its engineering team in its Pune office in India, with the sales, marketing, product and finance teams in the US.

Druva was identified as one of the top 30 product companies in the country according to the iSPIxB2B index by software products think-tank iSpirt, which tracks the software products industry.

It has so far raised $67 million from investors including Sequoia Capital, Tenaya Capital and Nexus Venture Partners, and counts iSpirt co-founder Sharad Sharma as an angel investor.

Druva competes with large enterprises such as EMC Corp., Symantec Corp., and Hewlett Packard Enterprise.

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Future Generali joins hand with 10 banks for micro insurance push

Future Generali India Insurance Company joins hands with 10 cooperative banks in Maharashtra to grow rural business. 
The tie-ups will help the insurer expand its market in the state as the company looks to grow bancassurance business by 50% this fiscal. 

"We have always been focusing on tying up with cooperative and rural banks to provide micro insurance and rural insurance to the wider section of the society," said Anurag Sinha, head of bancassurance. 

The insurer, a joint venture between retail giant Future Group and Italy's Generali, has tied up with banks such as Warana Sahakari Bank, Sangali District Central Cooperative Bank, Kolhapur District Central Cooperative Bank operating in the Kolhapur and Sangli districts. 

"These tie-ups are vital to provide financial access to rural households, thus ensuring better standards of living. We expect rural and micro insurance to grow by 30% by end of 2016-17," said KG Krishnamoorthy Rao, managing director and chief executive of Future Generali India Insurance Company. 

The company is also doing business with banks like Ashta Peoples Cooperative Bank, Kumbhi Kasari Cooperative Bank and Yashwant Sahakari Cooperative Bank in the region.

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Mudra Bank invests Rs.50 crore in Janalakshmi Financial Services

Mudra Bank invested Rs50 cr in Janalakshmi Financial Services through a securitization deal facilitated by IFMR Capital

Mudra Bank, a refinance bank for microfinance and non-banking financial companies, has invested Rs.50 crore in Janalakshmi Financial Services Pvt. Ltd through a securitization deal facilitated by IFMR Capital. This is Mudra Bank’s first capital market transaction.

Mudra, or the Micro Units Development & Refinance Agency, is a government initiative to provide cheap loans to companies that finance micro and small companies. IFMR Capital, in a statement on Wednesday, said it had exclusively structured and arranged a securitization transaction where MUDRA would investRs.50 crore in the A (-) rated senior tranche of securitized loan portfolio of Janalakshmi.

Securitization allows companies to provide part of their loan books and its receivables as a guarantee to financial institutions. In this short-term transaction, the tenure is 1.5 years. IFMR Capital also participated as an investor through its investment in the subordinated j tranche, it said. The Economic Times reported that IFMR has put in Rs.1.63 crore.

“Structured financing has a greater impact in enabling financial institutions to access funds from capital market at a lesser cost, without a charge on their limited capital. We hope to participate in more such transactions,” said Jiji Mammen, chief executive, Mudra Bank.

IFMR has structured 18 securitization and assignment transactions so far for Janalakshmi to raise around Rs.2,000 crore. “With this transaction, Mudra plays a facilitating role in ensuring that NBFCs providing microfinance and small business finance are able to access domestic capital in an efficient manner,” said Kshama Fernandes, CEO of IFMR Capital.

Small finance bank licensee Janalakshmi Financial said on Monday it has raised $150 million (around Rs.1,000 crore) in a round of primary funding led by global private equity firm TPG.

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JP Morgan to invest Rs200 crore for Bengaluru villa project

With this investment, project developer Assetz Property Group has raised about $250 million for its residential projects so far

JP Morgan Asset Management Co. Ltd is set to invest about Rs.200 crore in Singapore-headquartered Assetz Property Group to help the developer buy a 20-acre land parcel in north Bengaluru to build a villa project, said two people familiar with the development.

The deal will be signed this week, they said.

The proposed project, for which the land is being bought, is a villa and row-house development near Yelahanka and will be launched early next year.

“The capital will be given in the form of equity by JP Morgan. The project is yet to be named but it will be launched as soon as the approvals come in,” said one of the two people mentioned above, who did not wish to be named.

Assetz declined to comment and a JP Morgan spokesperson didn’t respond to an email.

With this transaction, Assetz, which has a number of premium residential and commercial office projects in southern India, has raised about $250 million for its residential projects so far.

In the past, it raised around $116 million from private equity (PE) and venture capital firm Equis Funds Group Pte Ltd for its mid-market housing vertical. It has also raised money from property consultancy Jones Lang LaSalle’s real estate investment arm Segregated Funds Group, Avenue Real Estate Fund and Amplus Capital Advisors Pvt. Ltd.

In March, the company announced the launch of its township brand Assetz Lifestyle, under which it will build a range of mid-market housing projects. Over the next 10 years, it plans to build around 10,000 homes along the growth corridors of Bengaluru and expects to generate about Rs.5,000 crore in revenue from this business.

Assetz also recently ventured into the warehousing and logistics sector and is developing an 88-acre logistics park in Bengaluru. It plans to raise about Rs.400 crore for this business. 

PE funding in the real estate sector has remained robust despite the slowdown that has continued for more than two years. Real estate-focused funds invested about $410 million in residential, office and retail projects between January and March this year, compared with about $680 million in the corresponding period last year, according to VCCEdge, which tracks investments, and Mint research.

Equity financing by PE funds is a rarity these days, as most investors are busy offering debt to developers to help them refinance old loans and construct projects.

“Some investors are willing to give equity capital but to only a select few developers with good pedigree, high corporate governance standards and good project portfolio. Equity for land acquisition makes sense because it’s early stage investing, which involves risk and also promises a better upside,” said Chintan Patel, partner, transactions and restructuring, real estate and hospitality, KPMG India.

Patel added that equity financing would make a cautious return once there was enough downside protection for investors.

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Mondelez,maker of Cadbury chocolates & Oreo, launches Bournvita biscuits

Expanding its biscuit footprint from cream to cookies, Mondelez India, the maker of Cadbury chocolates, on Tuesday launched its second brand in the category in the form of Cadbury Bournvita biscuits.

Expanding its biscuit footprint from cream to cookies, Mondelez India, the maker of Cadbury chocolates, on Tuesday launched its second brand in the category in the form of Cadbury Bournvita biscuits.

The Bournvita cookies will be the company’s second offering in the biscuits segment after Oreo, which was launched in India in 2011. Introduced as the morning biscuit, the Bournvita cookies are loaded with the signature taste of the malted beverage Bournvita and other essential vitamins and nutrients. “If you go to the average Indian household in the morning, there will be some sort of milk and biscuits for breakfast. When it was introduced, Bournvita’s task was to enhance the morning beverage experience.

Similarly, the task for Bournvita biscuits will be to enhance the morning biscuit experience,” said Chandramouli Venkatesan, managing director, Mondelez India Foods.

Following extensive consumer insights and research, the company – which operates in the chocolate, beverages, biscuits and gums & candy segments – aims to reach out to anyone who is a biscuit consumer in the Indian market.

Chella Pandyan, associate director, marketing, biscuits India and kids fuel AP, Mondelez India, says India is a large and exciting biscuit market for the company. “Mornings are the biggest biscuit occasion in India. That is where we are anchoring our product,” Pandyan added. The biscuits will be available in two packs – Rs10 and Rs25 – and are expected to hit all major urban and rural retailers in May. They will also be available exclusively through a pre-launch on online marketplace Snapdeal soon.

Corporate debt worth $178 bn at default risk: BNP Paribas

A whopping 16.1 per cent or $178 billion worth of corporate credit in India is at risk of default, making the domestic banking system the worst in Asia in terms of bad loans, says a report.

A whopping 16.1 per cent or $178 billion worth of corporate credit in India is at risk of default, making the domestic banking system the worst in Asia in terms of bad loans, says a report.

According to the report by French financial services major BNP Paribas, of the total bank credit of USD 1,109 billion in the country, corporate debt worth USD 178 billion, 16.1 per cent of the total bank credit, stands the risk of default.

India is followed by Indonesia and China with 7.2 per cent and 6.6 per cent of respective total bank credit at the risk of default.

While in Indonesia, USD 22 billion of its total bank credit of USD 305 billion is at potential risk of default, China stares at USD 1,050 billion of potential bad loans. The Chinese banking system is worth USD 15,884 billion.

The brokerage did not specify the time-frame of the report which is based on an analysis of 738 listed companies in Asia which have a combined gross debt of USD 1.7 trillion.

“Mounting corporate debt is one of the biggest problems for Asian economies,” the report said.

“Our country-wise analysis highlights the following percentages of bank loans at risk: 6.6 per cent in China, 16.1 per cent in India, 5.8 per cent in Korea, 2.4 per cent in Thailand and 7.2 per cent in Indonesia,” it said.

As per BNP Paribas, policymakers in every country are trying to tackle the debt problem in different ways. “China’s solution seems to be a debt-to-equity swap. This was tried in China in the late 1990s,” the report said.

“The present instance, however, could be different…the government may not assume a significant part of the debt, as it did in the last instance,” it added.

India’s approach is more direct as the “Reserve Bank’s asset quality review is forcing banks to acknowledge and write off stressed assets leading to severe short-term pain, particularly for PSU banks, but also potential long-term gain once bad loans are fully recognised,” the report noted.

Last December, RBI conducted an asset quality review under which it identified 150 top corporate accounts which are stressed.

Following this, the regulator asked banks to make provisions for all these 150 accounts by December and March quarters and get the entire books cleaned up by March next.

This had all the banks, including the private sector ones, reporting massive spikes in bad loans and adding a whopping Rs 1 trillion in fresh slippages between the September and December quarters.

Already, total NPAs and stressed assets have touched 13 per cent of the system and are set to rise again in the March quarter.

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