AngelList Launches India-Dedicated Fund, Former IL&FS Vice Chairman Hari Sankaran Arrested, SC Strikes Down RBI's Feb 12 Circular on Bad Loans as 'Unconstitutional' et al.

AngelList launches India-dedicated fund. SFIO arrests former IL&FS Vice Chairman Hari Sankaran. Supreme Court strikes down RBI’s Feb 12 Circular on bad loans as ‘unconstitutional’. Facebook deletes hundreds of spam pages across its platforms, including those operated by Congress.

 

Moving on to the top Business stories of the day. 

 

STARTUP 

 

AngelList launches India-dedicated fund.

 

From the Valley: AngelList, a Silicon Valley based online crowdfunding platform has launched an India-dedicated fund named The Collective.

 

‘The Collective’ will deploy funds of about INR1cr each across 60-80 companies annually, along with giving access to quick capital to its Syndicate leads. 

 

Well Known: Backers of the fund include Flipkart co-founder Binny Bansal, Avnish Bajaj (Matrix Partners India), Tarun Davda, Vikram Vaidyanathan, Navroz Udwadia (Falcon Edge Capital), Rahul Mehta (DST Global) and funds like Kalaari Capital, FJ Labs, and Beenext among others.

 

Angel Relief: The Collective’s launch comes at a time when founders of early stage startups have raised concerns over angel tax demands by authorities. Since ‘The Collective’ is a category 1 alternative investment fund, investments made by it are exempt from angel tax scrutiny as per SEBI rules.

 

Some History: Earlier this month, equity crowdfunding platforms including AngelList and LetsVenture had registered themselves as Alternate Investment Funds (AIF), following notices from SEBI that accused them of acting like unauthorized stock exchanges.

 

The startups listed on crowdsourcing platforms used to source money from hundreds of angel investors without going public, which was a point of concern for SEBI.

 

The Law: According to Indian Companies Act, a company cannot allot shares to more than 200 people in a financial year through private placements. If the number crosses 200, it is deemed as a public offer and should be governed by SEBI’s fund raising norms.

 

ELECTIONS 

Facebook deletes hundreds of spam pages across its platforms, including those operated by Congress.

 

CCleaner: Facebook has taken down over 103 pages, groups and accounts across its messaging platforms and Instagram – those that were allegedly working to spread misleading content or spam ahead of the General Elections in India.

 

Spam Content: The social media giant said that it had removed several accounts which it traced back to employees of the Pakistani military’s public-relations wing and others linked to the Congress party. 

 

According to Facebook, the accounts engaged in “coordinated inauthentic behavior” that used fake accounts to run pages related to topics such as the Pakistani military, the Indian government, and Kashmir.

 

So Many: Facebook has also removed 687 pages and accounts linked to the opposition Indian National Congress party.

 

Fake News: Congress was prompt to clear the air, addressing the issue through its official Twitter account commenting that no official pages run by the party or its volunteers had been taken down. View tweet here.

 

COMPANIES 

SFIO arrests former IL&FS Vice Chairman Hari Sankaran. Supreme Court strikes down RBI’s Feb 12 Circular on bad loans as ‘unconstitutional’.

 

Serious Arrest: The Serious Fraud Investigation Office (SFIO) has arrested former Infrastructure Leasing & Financial Services (IL&FS) Vice Chairman Hari Sankaran in connection with the ongoing investigations into the IL&FS scam. This is the first major arrest by the SFIO in relation with the case.

 

A special sessions court in Mumbai remanded Sankaran to SFIO custody till Thursday. 

 

Price of Power: According to SFIO, Sankaran had abused his power as vice chairman for granting loans to IL&FS subsidiaries, which were not credit-worthy or were declared as non-performing assets (NPAs). This resulted in wrongful losses to the company and its creditors.

 

Knee Deep: IL&FS had borrowings of more than INR17,000cr from debt instruments and bank loans. Provident funds, pension funds, gratuity funds, mutual funds, public and private sector banks, are among those who have invested in these debt instruments.

 

Watch this video for a deep dive into the matter.

 

Ultra-Denial: The Supreme Court has rejected RBI’s February 12 circular on the resolution of stressed assets and declared it unconstitutional and ultra vires (when a body or an individual is acting beyond its legal power or authority).

 

Flashback: RBI on February 12, 2018 had issued a circular saying that lenders have to provide for resolution plan within 180 days in case of large account of INR2,000cr and above. It said that if a resolution was not found by August 27, NPA accounts should be sent to bankruptcy courts.

 

The Supreme Court, in its previous hearing in September last year, had stayed the circular.

 

MERGERS 

 

Post-merger Bank of Baroda will take 12 months to stabilize. Will act as a net creator of jobs, says CEO.

 

Third Place: Bank of Baroda (BoB) became India’s third largest lender in India, after its merger with Vijaya Bank and Dena Bank. The consolidated entity has deposits worth INR8.75tr and advances of INR6.25tr.

 

On Air: BoB CEO, PS Jayakumar, in an interview with Livemint noted that the consolidated entity of BoB along with Dena Bank and Vijaya Bank would take at least 12 months to stabilize.

 

Read the full excerpts from his interview here.

 

Again: In another interview with Times of India, Jayakumar commented that the new merged entity will act as a net job creator as it looks to rationalize its operations by expanding into newer regions.

 

MARKETS 

 

CMIE data shows decline in investments across major sectors.

 

Flying Low: Data released by the Centre for Monitoring Indian Economy (CMIE) shows subdued economic activity in India for the January-March period, with overall investment in new projects on the decline and private sector projects stalling.

 

These include:

 

  • Investments in new private sector projects that fell 25% in the March quarter vs previous quarter, and 34% vs last year.
  • Investments in construction and real estate is especially stark, falling by nearly 80% compared to the December quarter and the same period last year.
  • Investments in Manufacturing has also fallen by 54% compared to the December quarter and 46% over the previous year.

 

Exceptions Count: Investment in new public sector projects increased in the March quarter, rising by 5.25% vs December 2018 quarter.
 

Culprits: The prolonged effects of NPAs, power sector distress, and election-induced policy uncertainty could be the factors curtailing investment activity in the Indian economy.


Real Truth: Traditionally, investors in developed markets have chased assets in developing economies such as India for higher returns. And while there have been provisions for Indian investors to invest in assets of developed markets, hardly has anyone taken advantage of those opportunities.


But as it turns out, Indian investors would have been better off investing in US stocks in the past decade. Find out why.

 

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