The market may open higher, with the indices set to extend prior two day gains aided by firm Asian stocks. Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could gain 20 points at the opening bell. 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.
From a recent low of 17,905.91 on 21 August 2013, the Sensex has gained 613.53 points or 3.42% in two trading sessions to settle at 18,519.44 on 23 August 2013. 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.
Among major corporate news, ITC 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.
Hexaware Technologies 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).
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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 turns 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 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.
Comments from Finance Minister P. Chidambaram and Reserve Bank of India Governor D. Subbarao on Thursday, 22 August 2013, in separate news conferences that India doesn't plan to introduce capital controls helped soothe investors' nerves as equities rose for the second day in a row on Friday, 23 August 2013 and as the battered rupee also recovered. The S&P BSE Sensex surged 206.50 points or 1.13% to 18,519.44 on that day, its highest closing level since 16 August 2013.
Foreign institutional investors (FIIs) sold shares worth a net Rs 148.57 crore on Friday, 23 August 2013, as per provisional data from the stock exchanges.
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, Indonesia, Japan, Taiwan and South Korea were up by 0.02% to 0.89%
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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