Zurich Insurance Group is in advanced talks to buy up to 51% in the general insurance arm of Kotak group. The early stage valuation of the general insurance business has bene pegged at around $800 million and Zurich is OK with either a 49% stake or a 51% majority stake. The deal is likely to cost Zurich about $400 million. There is no official word still from either side. Currently, there are 30 companies in the general insurance business in India with annual premium collections of $26.7 billion in FY22 and growing at 11%.
In another feather to his cap, RBI Governor Shaktikanta Das was chosen for the Governor of the Year Award 2023. Earlier, Dr Raghuram Rajan had received this aware in 2015. The organizers underlined that the RBI governor was being honoured for cementing critical reforms and overseeing payment innovations of a global scale. The Awards Committee also noted that Das had steered the RBI through the devastating impact of COVID, runaway inflation, Ukraine war, fears of economic slowdown and bankruptcy of IL&FS.
WPI inflation for May 2023 came in sharply in the negative at -3.48%, It is not just a 3 year low but the last time the WPI inflation was decisively below these levels was in the year 2015. All the items in the WPI basket including agricultural products, mining products, food products, energy and manufactured products experienced negative WPI inflation in May 2023 on yoy basis and also on an MOM basis. In May 2022, WPI inflation had peaked at a high of 16.63% and has fallen a full 2,011 basis points from that level.
The late monsoons and sluggish progress imply that that sowing of kharif crops like paddy, pulses and oilseeds would be again delayed this year. The monsoons are likely to gather pace only after the severe cyclonic storm “Biparjoy” abates around the middle of June. Delayed onset of monsoons in Gujarat and Maharashtra will delay the sowing of groundnut, soyabean and tur. Earlier, SKYMET predicted shortfall in rains this year while the IMD had predicted normal rainfall. This is likely to impact food inflation this year.
Bain Capital will sell its stake in Axis Bank worth $267 million via block deals. The price range indicated for the block deal is between Rs966 and Rs977.70; which is at a discount to the market price. Bain Capital holds 1.3% stake in Axis Bank and it will exit a little over half its holdings in Axis Bank. It may be recollected that in the March 2023 quarter, Axis Bank had reported net loss of Rs5,728 crore, but that was due to the cost of Citibank consumer banking integration. Like the other banks, Axis Bank had grown NII and NIMs.
Central Bank of India and a few lessors filed new applications in Go First’s insolvency plea with the NCLT. These applications, along with other previous applications, will be heard by NCLT on June 15th. Central Bank is one of the largest creditors of Go First and is part of the COC. They also want the removal of the interim resolution professional. Some of the lessors had filed with the NCLT to exempt them from the moratorium since they had already terminated their leases with Go First prior to the moratorium order.
SEBI is unlikely to grant relief to mutual funds when it comes to shareholding in the merged HDFC entity. Currently, there are 60 funds where exposure is likely to exceed the 10% cap. While there will be no exemption, it will be treated as a passive breach. That means; funds will be forced to pare their stake in the merged entity to bring down their holding to under 10%. Funds will have 30 days to rebalance their portfolios, which can be extended to 60 days. Beyond that, funds will face regulatory action for breach.
As was expected, the US Federal Reserve kept the interest rates unchanged in its June meeting. This is the first rate pause since March 2022 when the Fed first started hiking rates. The argument for a pause was further supported by consumer inflation falling 90 bps on Tuesday to 4.0%. However, the Fed dot plot has hinted at 2 more rate hikes in the current calendar year. Rates are currently in the range of 5.00% to 5.25% and are likely to touch 5.50% to 5.75% by year-end. FOMC has pencilled in 100 bps rate cut in year 2024.
