Key benchmark indices edged higher in early trade triggered by firm Asian stocks. Index heavyweight and cigarette maker ITC edged higher. The S&P BSE Sensex was up 97.90 points or 0.53%, off about 50 points from the day's low and up close to 15 points from the day's high. The market breadth, indicating the overall health of the market, was strong. Asian stocks rose for a second day on Monday after a slump in US home sales eased speculation the Federal Reserve will reduce economic stimulus next month.
ONGC fell despite ONGC Videsh (OVL) signed definitive agreements on 24th August 2013 with Anadarko Mombique Area 1 Limitada (Anadarko) to acquire a direct 10% participating interest (Interest) in the Rovuma Area 1 Offshore Block in Mozambique (Area 1) for $ 2640 million. Hexaware Technologies rose as Baring Private Equity Asia will buy a controlling stake in the company.
The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment from the near month August 2013 series to September 2013 series. The near month August 2013 derivatives contract expire on Thursday, 29 August 2013.
At 9:30 IST, the S&P BSE Sensex was up 97.90 points or 0.53% to 18.617.34. The index rose 150.22 points at the day's high of 18,669.66 in early trade. The index gained 83.12 points at the day's low of 18,602.56 in early trade.
The CNX Nifty was up 28.85 points or 0.48% to 5,498.60. The index hit a high of 5,516 in intraday trade. The index hit a low of 5,496.20 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE, 624 shares rose and 206 shares fell. A total of 47 shares were unchanged.
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Among the 30-share Sensex pack, 13 stocks rose and rest of them fell. L&T (up 2.06%), Wipro (up 1.97%) and Coal India (up 1.93%), edged higher.
ONGC fell 0.78%. The company said ONGC Videsh (OVL) has signed definitive agreements on 24th August 2013 with Anadarko Mombique Area 1 Limitada (Anadarko) to acquire a direct 10% participating interest (Interest) in the Rovuma Area 1 Offshore Block in Mozambique (Area 1) for $ 2640 million.
The acquisition is subject to the approvals of the Governments of Mozambique and India, relevant regulatory approvals, pre-emption rights and other customary conditions. The transaction is subject to usual closing conditions and has long stop date of 28 February 2014.
The acquisition of an additional 10% Interest in Area 1 follows company's earlier announcement of a joint acquisition, with Oil India (OIL), of an indirect 10% interest in Area 1, from Videocon Mauritius Energy. BPRL Ventures Mozambique B.V. (BPRL), another Indian PSU already holds a 10% interest in Area 1. Area 1 covers approximately 2.6 million acres in the deep-water Rovuma Basin offshore Mozambique and represents the largest gas discovery in offshore East Africa with estimated recoverable resources of 35 to 65 trillion cubic feet. The partners in Area 1 include Anadarko, operator of the project, ENH, Mitsui, BPRL, Videocon and PTTEP. Area 1 has the potential to become one of the world's largest LNG producing hubs. The Area 1 LNG project is strategically located to supply LNG to India at a competitive price. Participation of Indian PSUs in the project will facilitate access of LNG to the growing Indian gas market. Indian PSUs would need to devote significant funding and technical resources to the development of the project, which will also enhance the strong links between Mozambique and India.
The acquisition of an interest in Area 1 would mark OVL's entry into this emerging world-class offshore gas basin with significant future upside potential, and is consistent with OVL's quest of adding high quality international assets to its existing E&P portfolio. The acquisition would increase OVL's reserve and resource base significantly. The project would also be an important milestone in reaching OVL's long-term production targets of 20 MMTOE by FY'18 and 60 MMTOE by FY'30.
We are very pleased to have agreed with Anadarko the terms to acquire a direct 10% Interest in Area 1 to add to the 10% interest OVL has agreed to jointly acquire with OIL recently. As a result of both transactions, OVL will own a significant interest in this strategic project in Mozambique. Area 1 has potential to become one of the world's largest LNG projects and today's acquisition marks a further significant step by OVL/ONGC group towards the energy security of our country. OVL is delighted to partner with Anadarko and other project participants to develop this world-class asset, said Mr Sudhir Vasudeva, Chairman, OVL.
Index heavyweight and cigarette maker ITC rose 0.21%. The company said after market hours on Friday, 23 August 2013 that a meeting of the board of directors of the company will be held on 28 August 2013, to consider a proposal for demerger of the non-engineering business comprising Safety Matches Business and Agri (Forestry) Business of Wimco (a subsidiary of the company) into the company. ITC alongwith Russell Credit, ITC's wholly owned subsidiary, holds 98.21% of the equity share capital of Wimco.
Punjab National Bank gained 1.07% after the bank has decided to increase the interest rate on single domestic term deposit of Rs 1 crore and above up to Rs 10 crore, from 7.00% to 7.25% for maturity period of 46 days to 90 days with effect from 26 August 2013. Further, for senior citizens the additional rate of interest has been increased to 50 bps as against existing rate of 25 bps.
Hexaware Technologies rose 4.27% to Rs 125.90 as Baring Private Equity Asia will buy a controlling stake in the company. The company after market hours on Friday, 23 August 2013, announced on open offer for acquisition of up to 7.83 crore fully paid-up equity shares of the face value of Rs 2 each, representing 26% of the total share capital of Hexaware Technologies on a fully diluted basis, as of the tenth working day from the closure of the tendering period of the open offer, from the public shareholders of Hexaware Technologies by HT Global IT Solutions Holdings (the Acquirer) along with Parel Investment Holdings (PAC1) and the Baring Asia Private Equity Fund V, L.P. (PAC2, PAC1 and PAC2 collectively referred to as the PACs), in their capacity as the persons acting in concert with the Acquirer. The offer price is Rs 135 per share aggregating to Rs 1057.72 crore assuming full acceptance of the open offer.
In a separate announcement, Hexaware Technologies after market hours on Friday, 23 August 2013, said its board of directors at a meeting held on Friday, 23 August 2013, have acknowledged that Elder Infosystem Private Limited and Elder Venture LLP (both of whom were disclosed as promoters in the disclosures filed by the company with the stock exchanges) and GA Global Investments Limited have entered into a share purchase agreements with HT Global IT Solutions Holdings, a company existing under the laws of Mauritius, an affiliate of Baring Private Equity Asia (Baring Asia) for sale of shares of the company held by them.
Hexaware Technologies said that affiliates of Baring Asia have signed definitive agreements to purchase approximately 125 million Hexaware shares, from Promoter Entities, led by Atul Nishar (which hold 27.7% of currently outstanding share capital), and GA Global Investments (which holds 14.1% of currently outstanding share capital), an affiliate of General Atlantic (GA), in aggregate representing 41.8% shareholding in Hexaware. Under the terms of the Share Purchase Agreement, Baring Asia will pay the Promoter Entities and GA a price of Rs 126 or Rs 135 per share aggregating Rs 1575-1687 crore (approximately $242-260 million based on INR/USD rate of 65), with the higher price of Rs 135 per share being payable on Baring Asia reaching 50% or above aggregate shareholding in Hexaware in the transaction.
Baring Asia will make a Public Announcement for an open offer to the public shareholders of Hexaware to purchase up to an additional 26% stake at a price of Rs 135 per share aggregating Rs 1058 crore (approximately $160 million based on INR/USD rate of 65).
Atul Nishar, Chairman of Hexaware, said: Since I founded Hexaware in 1990, the company has differentiated itself by the quality of its relationships with some of the largest global corporations, with niche strength in certain key service offerings especially in Business Intelligence & Analytics, Enterprise Applications, Quality Assurance and Testing as well as the strength of the management team. Having started and personally been involved in the growth of Hexaware, it gives me great pleasure to receive a vote of confidence from an organization like Baring Asia. Hexaware will remain a public company, and the management team led by Mr. P. R. Chandrasekar will continue ensuring continuity of relationships with all stakeholders particularly our customers, employees and public shareholders. I look forward to Baring Asia taking Hexaware to new heights together with the management team.
Jean Salata, Chief Executive & Founding Partner of Baring Private Equity Asia, said: Atul Nishar has created a world class company and we are excited about supporting the next phase of growth of the business. Hexaware has an experienced management team, excellent customer relationships, a consistent track record and the ability to provide diverse services on a global scale. Baring Asia is excited about the growth opportunities that Hexaware offers and we look forward to working with Sekar and his management team to develop the group further. The total potential investment of over $465 million will be the largest investment made by Baring Asia in India, and is one of the largest ever foreign investments in the IT services sector in India, a sector where India continues to have a strong global competitive advantage.
Mr. Atul Nishar will continue as non-executive chairman of Hexaware and Mr. P. R. Chandrasekar will continue as CEO of Hexaware, Hexaware and Baring Asia said in a combined statement.
This transaction is subject to customary conditions, including receipt of required regulatory approvals, including anti-trust and competition clearances from the Competition Commission of India, and is expected to close by the end of this year, a joint statement from Hexaware and Baring Asia said.
Baring Private Equity Asia is one of the largest and most established independent private equity firms in Asia and advises funds with total committed capital of over $5 billion. The firm manages a pan-Asian investment program specializing in mid-market companies requiring capital for expansion, recapitalization or acquisitions. The firm has been investing in Asia since its formation in 1997 and has over 100 employees located in offices in Hong Kong, Shanghai, Beijing, Mumbai, Singapore, Jakarta and Tokyo. Baring Asia currently has over 30 portfolio companies across Asia, which has 80,000 employees and revenues of $20 billion in 2012.
Hexaware has 8,700 employees, over 200 active customers, 8 global development centres, presence in 35 countries worldwide, and reported revenues of $364 million for the financial year ended 31 December 2012.
Neyveli Lignite Corporation fell 1.89% as the stock turned ex-dividend today, 26 August 2013, for final dividend of Rs 1.80 per share for the year ended 31 March 2013 (FY 2013).
Reliance Power rose 2.28%. The company said the company's board of directors at its meeting held on 30 July 2013, has considered and approved, the scheme of amalgamation of its step down subsidiary company Reliance Clean Power with itself. The announcement was made after market hours on Friday, 23 August 2013.
At present, the entire existing paid-up capital of the Reliance Clean Power is held by Reliance Power including through its wholly owned subsidiary, Reliance CleanGen. Pursuant to the scheme of amalgamation, no shares are proposed to be issued to the Reliance Power as the entire share capital of the Reliance Clean Power would be held by the Reliance Power on or before the effective date. Reliance Power said that it will not be filing any application with the High Court.
Asian stocks rose for a second day on Monday after a slump in US home sales eased speculation the Federal Reserve will reduce economic stimulus next month. Key benchmark indices in Singapore, Hong Kong, China, Japan, Taiwan and South Korea were up by 0.14% to 1.41% Indonesia's Jakarta Composite fell 0.11%.
US stocks rose on Friday, 23 August 2013 as investors watched Federal Reserve officials for signals on stimulus cuts after data showed home sales plunged. Data from the Commerce Department showed purchases of new US homes plunged in July by the most in more than three years and previous months were revised down, a sign that growth in the industry may be taking a pause as mortgage rates rise.
Federal Reserve officials rebuffed international calls to take the threat of fallout in emerging markets into account when tapering US monetary stimulus. The risk that the Fed's trimming of bond buying will hurt economies from India to Turkey by sparking an exodus of cash and higher borrowing costs was a dominant theme at the annual meeting of central bankers and economists in Jackson Hole, Wyoming, that ended 24 August 2013.
The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.
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