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FIIs pouring in Moneyhttps://goo.gl/r600b9FIIs are having a ball in IndiaIndian stock markets are on a roll. Defying gravity, the Bombay Stock Exchange’s Sensex closed at 19939 and the National stock Exchange’s Nifty closed at 6050. At these levels these two key market indices are slightly lower than their all-time peaks and near about at the same levels of 31 January, 2013. The main reason behind this bull run is the foreign investment coming in hoards.Since the beginning of 2013, Foreign institutional Investors (FII) have pumped a whopping Rs 65, 309 crore in Indian equity shares, and no one is complaining. There are several reasons for the FII’s euphoria, though many may call it an ‘irrational exuberance’ considering the challenges India faces in the future.The significant and consistent fall in borrowing cost abroad, a result of monetary easing and lowering of interest rates by the central banks in America, Europe, Japan and Australia, has stoked the inflows in the emerging markets. The European Central Bank reduced interest rates to a record low last week to boost borrowing and investment. The US Federal reserve has just reiterated its commitment that it will keep buying $85 billion of Treasury bonds a month to stimulate US economy. Japan and Australia too have lowered interest rates. With foreign funds seeking investment opportunities, India was the biggest beneficiary as the largest chunk came here.The reasons are familiar. Among the top ten Asian markets, in the last 40 days only Tokio NIKKEI gave higher return (18 per cent) than the NSE Nifty at 6.40 per cent and BSE Sensex at 5.97 per cent. Return from all other stock markets was lower than India with Shanghai being at the bottom at 0.53 per cent. Going forward, market analysts expect that India will continue to perform better than its peers in the middle & near term and will continue to attract foreign funds more than others. The result of FIIs buying quality Indian stocks is that the FII ownership in top 500 Indian companies has hit an all-time high of 21.2 per cent, said a study by Citigroup.Surely, the Finance Minister P Chidambaram’s recent road shows in the US and in Canada to woo investors have also reassured them on India’s commitment to economic reform that began towards the end of last year. It is expected that the reform measures taken by the government will start showing positive results from the first half of 2013-14 and will pick up further momentum in the second half. Prediction of normal monsoon resulting in decent agricultural growth has also added to the optimism. This only shows that the ‘India story’ is still alive despite an unusually poor economic growth in 2012-13. The economy is also getting support from the drop in international prices of crude oil, gold and coal, the three together form a large part of India’s import basket.While the domestic investors are yet to join the FII party, it is recommended they exercise caution and be very selective in their investment. We must remember that money flowing-in in stocks is ‘hot money’ that can start flowing out quickly any day if India’s economic conditions worsen or other countries offer higher returns. The government’s efforts to put the economy back on the track can also get derailed if some structural issues are not tackled. After reviving the process of economic reform in the last quarter of 2012, the government should continue to undertake bigger reforms even if there are stiff oppositions. Such acts will help boost business confidence in the country and may also help get more foreign direct investments. Of course, the compulsions of coalition politics may restrain or slow down the reform process to the dismay of foreign investors. With the general elections due in the middle of 2014, the possibility of an even weaker government at the Centre is a cause of worry.
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Indian economy on a recovery pathhttps://goo.gl/r600b9The government is bullish but one should be cautiously optimistic.Good news is flowing in from the Centre. The Prime Minister’s Economic Advisory Council (EAC) has just projected that in the current financial year (2013-14) Indian economy will bounce back from the low it reached in the last financial year. EAC has projected the GDP in 2013-14 will be 6.4 per cent as against the estimated 5.0 per cent in the last financial year. The government’s forecast follows International Monetary Fund’s report last week which also projected better growth prospects for the country.It is expected that the reform measures taken by the government in the second half of 2012, will start showing positive results from the first half of 2013-14 and will pick up further momentum in the second half. Normal monsoon predictions resulting in decent agricultural growth and the resumption of iron ore mining will also add to the economy’s well-being.This only shows that the ‘India story’ is still alive despite an unusually bad year in 2012-13. In fact, according a study by a Mumbai-based bank, in the last 12 months Indian stock market provided the highest return among the BRICS (Brazil, Russia, India, China and South Africa) countries. The economy is also getting support from the drop in international prices of crude oil, gold and coal, the three together form a large part of India’s import basket.Surely, with early signs of recovery, the optimism is back. But it can be short lived if things do not pan out the way they are projected. Moreover, not all are equally positive as the sharp drop in venture capital funding activities in India in the quarter that ended on 31 March 2013 was a disappointing news. According to VCC Edge the private equity (PE) investments in the first quarter of 2013 were pegged at $1.8 billion spread across 123 deals, significantly lower than $2.4 billion spread across 186 deals during the same period in 2012.After ruling high in the last financial year, inflation has softened in the recent months. This, in turn, has created a clamour for a reduction in interest rates by the RBI. If the central bank listen to the plea, interest rates could come down between 50-100 bps in the near future. If that will spur growth is debatable, but the cost of money will come down. There are also concerns if the government’s fiscal deficit targets would be met, and, more so, in view of the lack of robust growth in tax revenue.On the foreign trade front too things are bleak as demand contraction in Europe and USA has curtailed exports. Imports, on the other hand, driven mainly by crude oil, fertiliser and gold, continued to remain high, creating a widening gap in current account deficit. Sensing the uncertain time ahead, the foreign institutional investors (FII) have started pulling out their money. FII’s invested a net amount of Rs 138, 586 crore in Indian equity shares in the financial year 2012-13, but in the first 17 days of April 2013, they have net sold Rs 666 crore worth of equity.The government’s efforts to put the economy back on the track can also get derailed if some structural issues are not tackled. After reviving the process of economic reform in the last quarter of 2012, the government should continue to undertake bigger reforms even if there are stiff oppositions. Such acts will help boost business confidence in the country and may also help get more foreign direct investments. Of course, the compulsions of coalition politics may restrain or slow down the reform process to the dismay of pro-reform lobbyists. With the general elections due in the middle of 2014, some expect it to take place around November this year, it is likely that the government will take some radical steps to boost business confidence. It may also resort to large spendings in welfare measures and big projects that can boost rural demand. But the possibility of an even weaker government in the next parliament is a cause of worry.Another structural issue that needs to be tackled is the over-leveraging of Indian companies, particularly the big groups, and their increasing inability to service debt. According to a study by Equitymaster.com, 177 non-financial Indian companies have raised their capital expenditure five times to Rs 10, 892 crore in the last seven years, hoping to cash in from the bullish growth prospects. Funded mainly with borrowed money, these companies are now finding it difficult to service debts as new assets are grossly underutilized due to lack of demand. Consequently, banks are now sitting on NPA levels larger than last year.In all, its an uncertain stretch of an otherwise certain highway to progress. The optimistic shall be appropriately rewarded !
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Fintech – Opportunitieshttps://goo.gl/r600b9Fіnаnсіаl tесhnоlоgу, аlѕо knоwn аѕ FіnTесh, is a lіnе оf buѕіnеѕѕ bаѕеd оn uѕіng ѕоftwаrе tо рrоvіdе fіnаnсіаl ѕеrvісеѕ. Financial tесhnоlоgу соmраnіеѕ are gеnеrаllу startups founded wіth the purpose of dіѕruрtіng incumbent fіnаnсіаl ѕуѕtеmѕ аnd соrроrаtіоnѕ that rely lеѕѕ оn ѕоftwаrе.‘Fіntесh’ іѕ a рhrаѕе іnсrеаѕіnglу bаndеd аbоut іn the media аnd in tесhnоlоgу circles. Yеt despite bеіng in vogue, іt’ѕ a tеrm mаnу – including tесh ѕаvvу аnd сluеd up еntrерrеnеurѕ – don’t quite have a handle on.Indееd, іt’ѕ a frеѕh еnоugh tеrm tо not yet feature in thе оnlіnе vеrѕіоn оf the Oxfоrd dісtіоnаrу.It’ѕ іmроrtаnсе, hоwеvеr, cannot bе dеnіеd. Onе thing іt іѕ сеrtаіnlу not іѕ a buzzwоrd. Fіntесh іѕ an аrеа that іѕ radically сhаngіng hоw wе lіvе аѕ ѕосіеtу and how wе dо buѕіnеѕѕ рrоfеѕѕіоnаllу.What іѕ fіntесh?Aѕ a dеfіnіtіоn, Fіntесh іѕ uѕuаllу аррlіеd tо thе ѕеgmеnt оf the tесhnоlоgу startup ѕсеnе thаt іѕ disrupting sectors ѕuсh аѕ mоbіlе рауmеntѕ, money trаnѕfеrѕ, loans, fundraising and еvеn аѕѕеt mаnаgеmеnt.Rеdсlауѕ: Redclays Capital is a Venture Capital firm fосuѕ іn еmеrgіng соmраnіеѕ wіth a fаѕt grоwth роtеntіаl, іnvеѕtіng frоm еаrlу stage tо grоwth expansion.Cоmbіnіng fіntесh аnd Rеdсlауѕ, wе gеt Fіntесh Rеdсlауѕ саріtаl whісh means more focus to invest from rеdсlау capitals for , fintech ѕtаrtuрs from Bangalore, other major cities in IndiaWhу fіntесh matters tо the buѕіnеѕѕ worldThе rіѕе of fintech hаѕ fоrеvеr сhаngеd the way соmраnіеѕ dо business. Thе trаdіtіоnаl mоdеl оf a nеw buѕіnеѕѕ turnіng dіrесtlу tо іtѕ lосаl hіgh street bаnk аnd/оr a соnvеntіоnаl іnvеѕtоr іѕ nо longer the оnlу game in town. Fintech start up Indіа has rеаllу hеlреd a lоt of entrepreneurs tо grоw thеіr fіnаnсе.From сrоwd ѕоurсіng tо mоbіlе рауmеntѕ, thеrе hаѕ nеvеr bееn аѕ muсh сhоісе tо еntrерrеnеurѕ as thеrе is рrеѕеntlу. It’ѕ nеvеr been cheaper tо not оnlу ѕеt-uр уоur buѕіnеѕѕ, but аlѕо to еxраnd іt.Redclays Capital is already made a investment in Crоwdfunding startup Crowdnext Bangalore , fоr еxаmрlе, allows реорlе wіth bіg іdеаѕ tо gеt fundіng quickly аnd еаѕіlу frоm anywhere іn the wоrld frоm people thеу hаvе nеvеr mеt. Instead of months оf investor talks, еntrерrеnеurѕ саn – thаnkѕ to the ѕhор-wіndоw thаt іѕ the іntеrnеt – pitch dіrесtlу tо the wоrld. Thоѕе wіth the magic tоuсh саn ѕее the fundѕ rоll іn within a matter of wееkѕ rather thаn mоnthѕ.Trаnѕfеrrіng mоnеу асrоѕѕ bоrdеrѕ, a bаnе of еntrерrеnеur’ѕ lives since time іmmеmоrіаl, is another аrеа thаt іѕ bеіng reworked аnd rеfrаmеd bу innovators. Trаnѕfеr Wіѕе hаѕ turnеd the trаdіtіоnаl (аnd expensive) banking ѕоlutіоn to ѕеndіng mоnеу асrоѕѕ borders оn its hеаd and еnаblеѕ small fіrmѕ аnd іndіvіduаlѕ tо trаnѕfеr money far сhеареr than was рrеvіоuѕlу possible.The аbоvе are juѕt a соuрlе оf the many wауѕ in whісh fintech has mаdе it еаѕіеr tо dо business and lоwеr соѕtѕ. Fіntесh fіrmѕ can pass оn hugе ѕаvіngѕ аѕ thеу are fаr mоrе аgіlе than trаdіtіоnаl banks, nоt hаvіng the ѕаmе оvеrhеаdѕ аnd соmmіtmеnt bаnkѕ аrе blessed (аnd burdened) wіth. Thеіr rеlаtіvе lасk оf ѕіzе also аllоwѕ them tо іnnоvаtе and аdарt іn a wау bіggеr corporations саn оnlу drеаm of.Hоw fintech сhаngеd the сuѕtоmеrThe rіѕе of the Smаrtрhоnе has mаѕѕіvеlу сhаngеd the bеhаvіоr оf соnѕumеrѕ. Thanks tо the ‘аlwауѕ оnlіnе’ сulturе wе lіvе іn tоdау – аnd the рrоlіfеrаtіоn of ѕеrvісеѕ аnd apps thаt fееd it – реорlе can nоt оnlу ассеѕѕ іnfоrmаtіоn аnd dаtа thеу hаd never previously been able tо, thеу саn do ѕо whilst wаіtіng fоr a buѕ.Whеthеr it’s checking their оnlіnе ассоunt оr setting up an online investment роrtfоlіо, people nоw еxресt to handle financial affairs as easily аnd соnvеnіеntlу аѕ they dо thеіr email оr Fасеbооk раgе. It’ѕ a hugе орроrtunіtу fоr buѕіnеѕѕеѕ аnd soon nо еntеrрrіѕе wіll ѕuссееd and flоurіѕh without thе right fintech ѕеrvісеѕ in place.At іѕtlе, for іnѕtаnсе, we іdеntіfіеd thаt 20 mіllіоn ѕmаll businesses іn Eurоре dо nоt take ассерt сrеdіt or dеbіt card рауmеntѕ. With thе knоwlеdgе thаt every buѕіnеѕѕ that dоеѕn’t ассерt card-payments mіѕѕеѕ оut оn ѕаlеѕ, іt should be оf concern to аll оf uѕ thаt ѕо mаnу оf thеm асrоѕѕ Eurоре dо nоt. Especially given that thеѕе ѕmаll buѕіnеѕѕеѕ are іn a very real ѕеnѕе thе есоnоmіс hеаrtbеаt of the соntіnеnt.Wе found thаt the primary bаrrіеr tо еntrу into рrосеѕѕіng саrd рауmеntѕ wаѕ соѕt. Bу turning a dеvісе mіllіоnѕ оf реорlе аlrеаdу оwnеd – a mobile рhоnе – into a роіnt of ѕаlеѕ system wе wеrе аblе tо offer millions of businesses and individuals the сhаnсе tо take payments juѕt like thе lаrgеr соrроrаtіоnѕ thеу соmреtе with. It аlѕо рrоvіdеѕ a unіԛuе іnѕіght into thеіr customers through sophisticated analytics tools рrеvіоuѕlу аvаіlаblе only to lаrgеr buѕіnеѕѕеѕ.In thіѕ way fіntесh is a great lеvеlеr. Cuѕtоmеrѕ, hоwеvеr unfаіrlу, expect the ѕаmе rаngе оf ѕеrvісеѕ from a ѕmаll firm as they dо a lаrgеr оnе, аnd tесhnоlоgу аllоwѕ Dаvіd tо соmреtе wіth Gоlіаth on a fаr mоrе еvеn fооtіng.Fintech hаѕ оnlу just got startedThe rise оf fintech has ореnеd up a world of possibilities. Buѕіnеѕѕеѕ can оffеr mоrе ѕеrvісеѕ thаn еvеr аnd fоr a frасtіоn of the price оf what it would hаvе соѕt before.Entrерrеnеurѕ nееd tо vіеw kееріng uр tо date wіth fіntесh dеvеlорmеntѕ аѕ a vіtаl part оf thеіr dаіlу lіfе. Being aware оf the latest opportunities and dеvеlорmеntѕ within the field wіll оnlу іmрrоvе уоur buѕіnеѕѕ and hеlр уоu ѕtау аt thе fоrеfrоnt оf уоur market.Agility аnd аdарtаbіlіtуThe rеѕроnѕе tо FinTechs wіll differ for each organization, аѕ thеу may buіld a ѕоlutіоn internally, асԛuіrе a FіnTесh, оr іndееd partner wіth оnе. And, whіlе uѕurріng the threat оf FinTech by buуіng оr mеrgіng wіth one mау rеlіеvе the іmmеdіаtе рrеѕѕurе оn the bаnk, it is nоnеthеlеѕѕ vital to еffесtіvеlу incorporate the іnnоvаtіvе іnfluеnсе of thе FіnTесh іntо thе acquiring оrgаnіzаtіоn.“FіnTесhѕ focus оn being rеlеvаnt. They are agile, quick to аdарt tо сhаngеѕ and are able to seize орроrtunіtіеѕ, ” nоtеѕ Thibault Villet, Cо-Fоundеr and Chіеf Executive Offісеr, Mеі.соm. “While banks are heavily rеgulаtеd аnd соnѕіdеr rіѕkѕ bеfоrе аnуthіng еlѕе, FіnTесhѕ put сuѕtоmеr needs fіrѕt, ” hе аddѕ.Embrасіng сhаngеGіvеn their аgіlіtу аnd hіghlу іnnоvаtіvе сараbіlіtіеѕ, trаdіtіоnаl financial Inѕtіtutіоnѕ саn lеаrn from FinTechs. Indееd, thеу саn іnсоrроrаtе innovative methods in order to ѕtау rеlеvаnt tо thеіr customers аnd соmреtіtіvе against players – bоth lеgасу organizations and new еntrаntѕ – іn a fast-changing environment.
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Private Equity, Public Exits https://goo.gl/r600b9Bullish stock markets make exits easier for PEsWhen the Private Equity (PE) funds invest in companies, they always have an exit plan generally 5 to 7 years after the entry. But the actual exit and the return on investment depend on a variety of factors like performance of the invested company, the overall situation of the economy and, above all, the state of the IPO (Initial Public Offer) market.In India, the present market conditions appear to be conducive for exit as stock indices at the Bombay stock Exchange (BSE) and National Stock Exchanges have shot through the roof. According to a report in Business Standard, four PE investors are soon going to exit Justdial Ltd which has planned for a Rs 950 crore IPO. With market sentiments looking up, PE funds expect the IPO market will continue to be strong, offering opportunity to exit. In Justdial, PE funds together had invested $57 million which will fetch a return of 8 to 12 times at the proposed IPO price.While the future look good, the overall size of IPOs that were floated by the PE-backed companies has fallen by 70 per cent in the last three years. According to the data from VCCEdge, the year 2010 witnessed 28 PE-backed IPOs worth $2.6 billion. In 2011 the figure dropped to $1.3 from 20 IPOs and 2012 it dropped further to $778 million from only five offers, wrote Business Standard. Whereas in 2013, till date, five IPOs have been floated by PE-backed companies raising about $126 million. The E industry analysts also believe that in 2013 a large number of PE-to-PE deal (or secondary transactions) where one PE investor sells holdings to another.Meanwhile, on the brighter side, India remains to a be hot destination for funds. Apart from equity investments from FIIs, they have together pumped in a whopping Rs 65, 309 crore in Indian equity market since the beginning of 2013, the country is also attracting large amount o foreign direct ivestments. Baring Private Equity, for example, has just announced that it will pick up a 14 per cent stake in Lafarge India, the Indian venture of Lafarge SA, the France-based cement manufacturer, by investing $260 million or Rs 1430 crore. This is the largest ever PE investment in India’s cement sector, whose fortune is closely linked to the economic prosperity of the country.Surely, many believe that the Indian economy has bottomed out as the government expects a GDP growth rate between 5.5-6 per cent in the current financial year, up from 5% the previous year. Latest low inflation figures also has raised that the central bank will cut interest rates further, lowering the cost of fund for the industry. The Finance Minister P Chidambaram’s recent road shows in the US and in Canada to woo investors have also reassured them on India’s commitment to economic reform that began towards the end of last year. It is expected that the reform measures taken by the government will start showing positive results from the first half of 2013-14 and will pick up further momentum in the second half. Prediction of normal monsoon resulting in decent agricultural growth has also added to the optimism. This only shows that the ‘India story’ is still alive despite an unusually poor economic growth in 2012-13. The economy is also getting support from the drop in international prices of crude oil, gold and coal, the three together form a large part of India’s import basket.
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Midget Domestic, Giant Global ? https://goo.gl/r600b9Sometime back I was going through an article in BusinessToday which focused on the year 2012 and what investors can expect out of India. It clearly stated many challenges that India will face as a hangover from 2011 and 2010, but it also stated that ‘foreign institutional investor inflows have a huge influence on our markets. For instance, in 2007, FIIs pumped in $16 billion and the market rose 44%. This was followed by a 45% drop in 2008 when FIIs took out $12 billion. In 2009, the Sensex rose 85% amid FII inflows of $19 billion. It rose 25% in 2010 when FIIs invested $30 billion.’So the big question here is whether the foreign investors will return in 2012?Another is, can the domestic investor make up for it?The Indian market is nascent and immature, when compared to the developed market. But the outlook will change in the coming year when the full potential of Private Equity industry will be accomplished by embarking on a restricting of bond market and leveraged buyout transactions (LBO), which is still in a very nascent stage in India.When you compare the domestic investor with the global investor, there are a lot of constraints the former faces. The factor driving behind the domestic fund is the difficulty in return of capital as redemptions are done only through profits and buyback of shares by a company is restricted to a maximum of 25% of its paid up capital. Winding up domestic fund is exceedingly time consuming and cumbersome. And Debt Market is too high compared to the US & European market.The bulk of new capital is available from Global investors, which made more investment flow using various fund raising strategies like LBO, Bond Market structuring and Private Placements.Positively, if there is a dip in investor interest from the Global Player, it will only remain for a short term. There is a huge surge in Indian fund houses to setup modules in Mauritius and Singapore to attract global investors and working with fund raising strategies like credit swap and overseas listing.I believe the global investors will definitely find India more attractive if the policies are tweaked and inflation has a formal support; there are improvised systems in place for food item and raw material supply for the industry.But for now, yes, the domestic investor needs to look up to see the global investor.
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When Discipline pays.https://goo.gl/r600b9Last year saw Venture capital winning all the tracks in competition with the private equity. Although no records were set, it clearly indicated that India is now witnessing entrepreneurs with some great innovative ideas. The gold medal that the VCs got last year is surely in millions of dollars, a result, I believe, came through discipline.According to the Economic Times, investment in start-ups and early-stage companies totalled just $300 million in 2010. But last year, it expanded more than four-fold, making up $1.2 billion of the $9.3 billion in total risk capital. On the other hand, the proportion of growth capital investment in more mature companies fell to 61% from 83%.VC, world over is at the level which both banking and private equity crossed before. In India too it is no different. As the second fastest growing economy, India has shown a unique business culture which has shown amazing results in terms of growth for every stakeholder. This growth story will attract more number of mature VC/PE investments in coming years.Of course, it is conditional to the point that there has to be a liberal policy change in allowing investment in restricted sectors, particularly in retail market, initializing a Bond Market & LBO transaction…all leading to a mature stage in the Indian Investment Market.The Indian investment market had anticipated that the deal activity will increase reasonably in 2011 from the already better levels of 2010. While they see deal-making opportunities across all sectors, they have better pipeline and the Investors are bullish about Infrastructure, consumer products and healthcare sectors.Surely there are challenges. The main being the challenge of valuation, which is high priced relative to the other emerging markets. Large numbers in terms of funds with dry capital to be invested are chasing the same verticals and companies which drive high valuations. The other challenge is in terms of structuring of deals, and there are regulatory limitations involved in structuring of some transactions. As markets progress, I would expect to see more favorable regulations from the policy makers towards FDI.But then, I would quote from Financial Times which recently quoted a Venture capitalist – “Our greatest enemy is losing our discipline. We did that once and it took a lot of time and work to rectify it. We know the consequences of binge investing and we don’t want to go back to rehab.”Yes, it is sometimes much to the advantage of those who keep low and are disciplined. It surely does work well and in India, discipline definitely pays.
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Unilever reiterates India growth storyhttps://goo.gl/r600b9The Anglo Dutch consumer products company’s announcement this week to invest $5.4 billion in the shares of its Indian subsidiary Hindustan Unilever (HUL) once again reiterates the faith of global businesses in Indian economy and, more specifically, in the Indian middle class.Unilever’s plan to invest $5.4 billion or Rs 29, 000 crore, the largest ever share purchase offer in India by a parent company, is for buying 487 million shares of HUL at Rs 600 per share, a price 25 per cent higher than the average market price of the previous three months. The move clearly re-establishes the fact that foreign investors are still very bullish on India growth story. They also believe in the phenomenal purchasing power of the Indian middle class – a young and upwardly mobile population that is expected to touch 300 million in the next five years, according to a study by the National Council for Applied Economic Research (NCAER).HUL being the largest FMCG (fast moving consumer goods) company in the country with products ranging from shampoo to soap and toothpaste to tea, it is right at the top to cash in from the emerging middle class boom. No wonder, the Unilever CEO Paul Polman, while making the announcement, was explicit that the company’s strategy is to invest heavily in emerging markets and India is one of the most important countries in this basket. If successful, the share purchase will see Unilever’s stake in HUL going up by 22.15 per cent to 75 per cent.Surely, the stagnating growth in the developed economies, especially in the American and the European markets is making global players turn their focus on emerging markets like India and Unilever is not alone. In the last five years or so, many multinational companies like GlaxoSmithKline, Reckitt Benckiser, Cadbury, Kodak, Panasonic etc, have either increased their shareholding or have acquired 100 percent of the Indian company.Some observers, however, saw an additional reason behind Unilever’s move. They are of the view that the share purchase plan is an effort to drive the share price up as HUL’s shares, considered to be bluechips, remained subdued since the beginning of this year as investors were perturbed by the company’s increased royalty payout plan. Analysts also believe that Unilever’s plan to acquire more shares in its Indian subsidiary, though looks expensive, will ultimately pay off as HUL’s valuation is expected to rise steadily in the coming years. Moreover, higher dividend payouts will also flow in into the parent company. This is also the reason some market experts are advising shareholders to perpetually reap the benefit from the company’s upside and not to go for one time profit by selling out. Sounds a good advice as Indians should believe in country’s growth story more than the foreigners.
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