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Tesla Mistakes, Dividends, Listing Risks, More IPOs, Rumours, Deal Buzz, and More

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Tesla Here… Wait…

A document from the Karnataka chief minister’s office released over the weekend sent journalists in a tizzy. A line in the document listing highlights of the Union Budget mentioned Tesla will set up a manufacturing unit in Karnataka. Turns out it was a false alarm, yet again! Officials close to the CM clarified later to a few journalists that it was more of a political statement and nothing has been signed yet. What’s more puzzling is how a mention of Tesla made it to highlights of Budget document when the Budget itself didn’t say anything about Tesla making in India. This is the second time the CM’s office has backpedaled on Tesla’s plans in the state. A tweet claiming Tesla would set up an R&D center last month was posted and deleted within an hour, leaving top bureaucrats to field angry calls from Tesla. Officials were on the phone yet again last night, telling journalists it was all a misunderstanding. While the carmaker has registered its office in Bengaluru, talks are still on between the two parties, even as states such as Tamil and Maharashtra are very much in the race to woo Tesla. As one veteran journalist quipped to MC Insider, “All that Karnataka government and Tesla have done is have a coffee. At this rate, the company will set up elsewhere.” Or is this a hint from the CM that an announcement is imminent? Well, it’s not over till it’s over!

Bullish On Alibaug
We always knew that the crème da la crème of tinsel town had an affinity for Alibaug. But now we hear that stock market heavyweights are also making a beeline to lap up the sun and sand in this coastal town near Mumbai. One of these market big wigs has struck a realty deal and picked up a sea-facing bungalow in the town for Rs 50 crore. Another market veteran who was recently depicted in a smash hit OTT series is also spending a lot of time in the popular weekend getaway, of late. So what explains the bullishness? Improving infra in the coastal hotspot and better ferry services are two factors that seem to have contributed to the rising interest.

Rocky Road To Listing
Institutional investors, HNIs, and funds have been busy striking off-market deals of unlisted shares of this near-monopoly entity, ahead of its eagerly-awaited IPO. Many market players are bullish on this entity due to its fundamentals and growth prospects, but the wait for a big-bang listing may be getting longer than expected. A recent order by a high court based on a PIL case revealed that the crucial permission from the regulator for the IPO had not been “sought or granted”. A little birdie told us that unless all the legal hurdles related to a pending probe are cleared at judicial forums or settled, the IPO is unlikely to take off. Remember we told you about how officials with the regulator want to tread cautiously, as an earlier approval for an IPO in the same segment was followed by enforcement agencies probing irregularities. Interestingly, in a bid to create a more competitive landscape, the regulator recently floated a discussion paper proposing liberalized ownership norms for market infrastructure institutions. These are early days, but could this move possibly impact the ‘monopoly premium’ of the said entity? Well…

Buzzy Family
We hear a prominent business group located in the north is awaiting legal approvals for its next big inorganic bet in the consumer segment. The promoters of this group already hold a stake in the target entity (which has a meaty market share in its business segments) and are keen to take control via the preferential issue route. That’s not all. We also hear there’s a tie-up cooking in the QSR segment between this promoter family and a top international food brand. Indeed, this is one busy family office!

More IPOs
It’s the season for IPOs across all sectors in India Inc. Be it tech or specialty chemicals or the consumer segment. In fact, the market is so tempting that listing work has picked up the pace even in the beaten-down sectors like travel and tourism which were hit hard by COVID-19. Take, for instance, this entity, backed by a conglomerate that has been waiting to soar on Dalal Street since mid-2019 but had put its plans on hold due to market conditions. We hear it may file its papers with Sebi within a month.

Dividend Pull
Budget 2021 was big on the privatization of Sarkari companies. Meanwhile, many smart investors have shifted to cash-rich PSUs, in some cases expecting dividend announcements. Take for instance this PSU behemoth which is likely to see an asset sale concluded soon. Plus, it is also armed with treasury shares. That’s what we hear will fund the anticipated dividend. And who knows… others may follow suit. Keep a keen eye out on this space, folks.

Booster Dose
A recent deal struck in the financial services space, seen as an ambitious step towards diversification, has caught the attention of India Inc. A similar attempt was made many years back by a brotherly duo from the healthcare space, which didn’t go according to plan. But the acquirer in this deal is cash-rich and has the advantage of learning from the mistakes made by peers in a segment, which is crawling back to recovery post-COVID-19. One always looks at inspiration in the industry before taking a big leap. In this case, we hear the acquirer is impressed with the firm set up in the same segment by one of the scions of a veteran industrialist who is known to be outspoken and doesn’t pull any punches when it comes to remarks on national issues.

Debt Calls
Moving onto the banking. The chairman of a top bank recently told a group of prominent clients to mop up any debt funds they require soonest. Why you may wonder? The second of the coming financial year could see a significant upward revision in interest rates was the big call taken at that meeting. And that won’t be very good news for the equity market either.

Post-Retirement Moves
It is not uncommon that PSU bank chiefs get plum assignments after retirement. The managing director of a PSU bank, who will soon hang up his boots there, is being considered for the top job at a prominent industry lobby, we hear. This person has over three decades of experience across major PSU banks, is a troubleshooter and a consensus man, and is known to be in the good books of the government. The existing CEO of this industry body may get another equally important assignment soon. While discussions on these appointments are progressing, a final decision is pending. Watch this space for updates.

Vaccine Wait
The announcement by VK Paul, NITI Aayog member and the head of the national expert group on vaccine administration, that the government would soon consider allowing the use of corporate social responsibility, or CSR, funds for vaccinating employees, has raised the hopes of the private sector that are looking to inoculate their employees fast and get back to normalcy fast. There is enough evidence that vaccines prevent severe COVID-19. Even vaccine companies are waiting eagerly, as it opens up new markets where they can price the vaccine higher than what they are offering to the government. But there is a section within the government that’s not keen on allowing the opening up of the private market anytime soon, as they fear the supplies meant for government vaccination program may get diverted. An executive of a vaccine company said the fears of diversion are unfounded as there isn’t any supply crunch in the market, as the government is buying far fewer vaccines than their manufacturing capacity.

Budget Fall Out

With the government citing in Budget 2021 that only Ulips with annual premiums up to Rs 2.5 lakh will have tax-exemption for maturity proceeds, HNI customers of life insurers are a miffed lot. To ensure that customers eyeing high-ticket policies are not dissuaded by this move, a few private insurers are considering offering customers two policies adding up to Rs 2.5 lakh above premium. So in effect, the customer will have tax-exemption for two policies since each one will fall below Rs 2.5 lakh and the insurer can continue to get the same business.

VC Pause
A leading venture capital fund that had announced its plans to step into venture debt as a category has stalled its decision following the pandemic. According to the managers, while it is easy to raise debt given the liquidity factor, the difficult part will be disseminating it. Even though such funds allow investors to get their cash flows every quarter, in the current situation taking a plunge is being regarded as risky. When venture debts are raised, the investors are promised an ‘x’ amount of returns. But the managers have realized that currently if they will go to generate those returns the market will not be able to honor it.


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