Reliance may be looking at an overseas listing of Jio Platforms, the digital arm of the Reliance group. In the last one month, Reliance has sold close to 17.2% stake in Jio Platforms to Facebook, Silver Lakes, Vista Equity, General Atlantic and KKR for $10.2 billion. The global IPO offering is likely to happen within the next couple of years. The size of the issue and the exchange of listing are yet to be finalized. Jio Platforms is a combination of all the digital properties and wireless business of the RIL group. Jio now holds the keys to India’s digital gateway and could find better valuations in global markets.
The Supreme Court directed the government of India and the RBI to formally file their response to the petition challenging charging of interest on loans during the EMI moratorium period. The court has asked them to file their counter affidavits within a week. The petitioner has contended that despite being a moratorium, interest is being accrued and has to be repaid after the forbearance period. The petitioner has argued that it would end up being an added burden instead of a relief in the midst of the COVID-19 pandemic. The government may eventually take a political decision on this subject.
The demand pick-up and the supply cuts may finally ensure that oil demand and supply get relatively balanced in the month of June 2020. Russia confirmed that all the signatories to the supply cut agreement had cut output in May to the agreed levels. The gasoline demand has started picking up across the world as vehicles and factories get back into action and that is likely to erase the surplus of around 12 million barrels by end of June. This will also substantially erase the storage concerns and help support crude prices. Crude has already doubled since the lows of April 20.
On a day when nearly 15 crore shares of Bharti Airtel changed hands, the major buyer was once again SocGen. It may be recollected that even when Glaxo sold Rs.25,000 crore worth of Hindustan Unilever shares earlier this month, the major buyer was SocGen. Out of the 15 crore shares sold by Bharti Telecom, SocGen picked up close to 3.53 crore shares. Bharti Airtel shares have rallied nearly 50% in the last 2 months on improved market share and ARPU metrics. The sale of shares will enable Bharti Telecom (the holding company) to pare its overall debt of Rs.8500 crore.
Kotak Mahindra Bank will shortly launch a qualified institutional placement (QIP) of Rs.7500 crore in order to dilute the promoter’s shareholding and comply with the RBI norms. It may be recollected that the promoters had taken RBI to court over the mandatory reduction of stake subsequent to which Kotak Bank was given more time to reduce promoter stake. This had also led to Kotak withdrawing the case filed in courts. The floor price for the QIP would be around Rs.1147 based on the SEBI formula for QIP pricing. The bank may offer a discount of 5% at its discretion. The final value of the QIP will depend on the price that is fixed. Kotak Bank will sell a total of 6.5 crore shares and this is expected to bring down Uday Kotak’s stake in the bank from 29.92% to 26%. The 6 month deadline expires on Aug 18, 2020.
Government of India will be borrowing nearly Rs.80,000 crore via 84-day cash management bills (CMB). These are short term treasury bills to fill up temporary liquidity mismatches. The CMB is an off balance sheet item and hence does not show up in the total borrowings of the government. It will be useful in reducing the excess system liquidity in the market to the tune of Rs.7.30 trillion. Government has already increased its annual borrowing target from Rs.7.80 trillion to Rs.12 trillion. This is an indication that despite the WMA, liquidity with government will not be enough due to COVID-19 outflows.