Wednesday, 3rd February 2021

In a significant decision, the Supreme Court has ordered Franklin Templeton to disburse Rs.9,122 crore to unitholders of the six schemes where redemptions were shut down in April 2020, within 3 weeks. The bench has entrusted SBI MF to disburse the monies to unitholders while allowing the litigating parties to approach the court if they had financial difficulties. It may be recollected that last month the outcome of the unit-holder poll showed that more than 95% of the unit holders had opted to wind up the six schemes. As reported on 20-Nov, the cash balance in 4 cash-positive schemes stands at Rs7,226 crore.  

There is finally some good news on the export front as per the initial data released by the government on trade data for January 2021. Merchandise Exports for the month of January have grown at 5.7% led by healthcare and engineering goods to $27.24 billion. The trade deficit for January has apparently narrowed to $14.75 billion from a peak level of $15.3 billion in January 2020. Merchandise Imports were also higher by 2% at $42 billion. From a trade sector perspective, the total trade measured by the sum of exports and imports, getting back to $70 billion is a good signal. Among the various heads of exports, Pharma and engineering recorded growth of 16.4%. In addition, oil meals, iron ore, rice, tobacco, fruits and carpets recorded healthy export growth. Imports of gold in Jan-21 surged by 155% to $2.45 bn.

Ahead of the proposed Brookefield REITS IPO, the issuer has managed to raise a sum of Rs.1,710 crore from a total of 39 anchor investors. The REIT is a pass-through structure wherein an investor with a large portfolio of commercial real estate properties can consolidate these into a REIT and issue units to unitholders. The REITs are also tax-efficient and give an opportunity to participate in commercial properties in an electronic form. The domestic anchor investors included HDFC AMC, SBI Life, TATA AIG, HDFC Life, Kotak AMC and Bajaj Holdings. Global anchor investors included Schroeder and Prusik.

Four companies; IRFC, Continuum Green Energy, IRB Infra and ReNew Power will raise close to $2 billion from the global market via overseas bond sales in the coming week. The appetite among global investor groups will be critical as the Budget has announced 9.5% fiscal deficit for current fiscal and 6.8% for next fiscal. This could weigh on future inflation expectations and rising yields have always been negative for bond prices. IRFC plans to raise $750 million via 10-year and 30-year bonds. The mark-up over LIBOR is expected at 170-230 bps. Continuum will raise $560 million, ReNew $460 million and IRB $300 million.

Tata Consumer Products will acquire Kottaram Agro Foods, based out of Bengaluru for a consideration of Rs.156 crore. Kottaram Agro is primarily engaged in the business of healthy breakfast cereals and millet based snacks. TCPL will acquire 100% of the paid capital of Kottaram Agro Foods. The whole idea of the deal is to empower Tata Consumer to participate in multiple consumption occasions. TCPL had been looking at an opportunity to expand laterally into “On the Table” and “On the Go” categories to expand the quality of its customer engagement. The transaction is expected to be completed in Q4.

The Future Retail – Reliance Deal may be running into more trouble as the Delhi High Court supported the contention of Amazon and has asked Future Group to put the deal on hold and maintain status quo. This could be a temporary setback for Future Group, which was counting on the Reliance deal to tide over its debt problems. Amazon has stuck to its stand that the Future group violated the terms of its deal with Future Coupons by selling assets. Amazon had written to SEBI also to hold the deal, but SEBI had gone ahead and approved the deal with the Caveat that Future group will have to disclose this dispute in all its communication. The status quo imposed by the Delhi High Court clearly indicates that the Singapore tribunal order was enforceable. This deal could decide who dominates Indian retail space.

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