Street signs: Reliance group vs Edelweiss, NBFC bonds, and more

Reliance Group, Edelweiss rift widens 

The tension between Anil Ambani’s Reliance Group and Rashesh Shah-led Edelweiss group has taken an ugly turn. Sources say, Reliance Group has removed Edelweiss as an investment banker for the initial public offering (IPO) of Reliance General Insurance. The move comes after Reliance Group blamed “misconduct” by lenders, including Edelweiss, led to wipe out of Rs 13,000 crore worth of value of group companies. Edelweiss said its actions were within legal boundaries, and dismissed the allegations against it as “false”. Earlier, Reliance General had dropped UBS and IDBI Capital as bankers to the IPO. An Edelweiss official said it has walked out of the IPO.

Samie Modak

Trading interest in NBFC bonds

Secondary market trading in corporate bonds listed on stock exchanges is gaining traction with the National Stock Exchange (NSE) recording more than usual trades. According to market players, the reason for the spike in investors is a surge in yields on papers belonging to companies such as Dewan Housing Finance (DHFL), Reliance Home Finance (RHF) and Indiabulls Housing Finance. Yields on certain DHFL and RHF bonds quoted above 20 per cent last week. “The spike in yields suggests that the market is fearing a default. However, this is drawing some retail trading interests towards bonds. Investors need to be careful,” said a broker.

Samie Modak

Primary market pain continues

Volatility in the markets and tepid response to the initial public offering (IPO) of Chalet Hotels could queer the pitch for other companies. About half-a-dozen companies were looking to launch their IPOs this month. Investment bankers say the condition continues to be challenging for new issue launches. “The sell-off in broader markets due to troubles have dampened sentiment. Also, the investor response to the recent IPO was less than expected,” said a banker. Last week, Chalet Hotels had a lacklustre stock market debut. Its Rs 1,640-crore IPO had managed to scrape through with just 1.6 times subscription and less than 5,000 investor applications.

Sundar Sethuraman