India's Wholesale and Retail Inflation Eases, Theresa May's Brexit Deal Turned Down, Facebook Makes India a Separate Region et al.

India’s wholesale inflation eases to 8-month low and retail inflation falls to an 18-month low in Dec. Theresa May's Brexit Deal Turned Down. Angel Tax Out. Facebook makes India a separate region. Naresh Goyal-Etihad and Jet saga et al. 

 

Now here's the Breakdown:

 

India's Wholesale and Retail Inflation Eases, Theresa May's Brexit Deal Turned Down, Facebook Makes India a Separate Region et al.

 

ECONOMY

India’s wholesale inflation eases to 8-month low and retail inflation falls to an 18-month low in December. RBI Governor in his maiden speech focusses on the need to maintain macroeconomic and financial stability; says inflation remains a worry.

 

In Data We Trust: Wholesale prices in India eased to 3.80% in December vs. 4.64% in November and retail inflation fell to an 18-month low of 2.19% in the same month vs. 2.33% in the previous month on back of cheaper food and fuel prices.

 

The Bigger Picture: With wholesale and retail inflation easing, analysts expect the RBI to assume a softer stance in the next monetary policy meeting.

 

Charts showing the evolution of India’s Wholesale Price and Consumer Inflation Index over L1Y here and here respectively.

 

A Fine Balance: In his maiden speech after taking over as the RBI Governor, Shaktikanta Das at the Vibrant Gujarat Summit focused on the need to preserve domestic macroeconomic and financial stability while pushing for sustainable growth, especially in light of a possible global economy meltdown.

 

Growth OK, Inflation a Worry: Das said that with inflation being highly volatile across groups - fuel, food and the rest, a potential policy rate cut will have to be carefully weighed in.

 

Up Close: He also stressed on the need to maintain the asset quality of banks and uphold corporate governance with focus on transparency and accountability.

 

STARTUP

Govt simplifies process to avail angel tax exemption. Sachin Bansal invests $21m in Ola. Softbank to buy over 40% stake in FirstCry and 38% stake in Delhivery

 

The What?: Government has simplified the process to avail angel tax exemption for start-ups.

 

What’s the Process?: A startup recognised by the Department of Industrial Policy and Promotion is eligible to seek exemption if:  

 

i) The aggregate amount of paid up share capital and share premium after the proposed issue of shares does not exceed INR10cr
ii) The investor should have filed income tax returns of at least INR50L for the year preceding the investment year
iii) Additionally, the investor's net worth should exceed INR2cr or the amount invested (whichever is higher)

 

The notification covers all past and future investments, and applies to startups incorporated before April 2016 as well.

 

Straight From the Horse’s Mouth: See DIPP’s twitter thread on the issue here.

 

Jackpot: As per an Economic Times report, Flipkart co-founder Sachin Bansal has invested c. $21m in SoftBank-backed ride hailing company Ola, valuing the firm at $5.7bn.

 

According to the same report, Bansal has purchased 70,588 ‘Series J’ preference shares at a value of INR21,250 per share. The investment is said to be part of a larger $100m investment that Bansal has committed to Ola.

 

Follow Up: The development comes shortly after Ola raised $74m from existing investor Steadview Capital, making it the second-highest-valued startup in India, after Paytm.

 

SoftBank, SoftBank, SoftBank: SoftBank is set to invest $400m in BrainBees Solutions, which owns and operates FirstCry for a 40% stake in the online store for kids and baby products. The fresh funding is expected to assist FirstCry strengthen its online as well as offline presence against competitors such as Amazon and Flipkart.

 

SoftBank also sought to acquire 38% stake in logistics company Delhivery. The company has previously raised c. $250m from private equity firms Carlyle and Multiples Alternate Asset Management, Tiger Global, Fosun International, venture capital firm Nexus Venture Partners and Times Internet.

 

The Process: Softbank will make the acquisition through a Cayman Islands-based holding company called SVF Doorbell (Cayman) Ltd. It will buy 22.44% primary equity in the company and subsequently add more through buying stakes in Delhivery.

 

M&A

Newmont Mining to buy Goldcorp in a $10bn deal.

 
It’s Raining Gold: As per a report by Reuters, Colorado-based mining company Newmont Mining is set to buy Canada-based gold production company Goldcrop in a $10bn all-stock deal to create the world’s biggest gold producer by output. The combined company is expected to produce c. 7 million ounces of gold over the next 10 years.

 

Up Close: As per the deal, Newmont will exchange Goldcorp shares at a ratio of 0.3280 and $0.02 for each Goldcrop share (17% premium to companies' 20-day VWAP share price). 

 

Perspective: The announcement comes months after Barrick Gold bought Randgold Resources in a $5.4bn deal. Read a deep dive into what could be the world’s biggest gold company deal here. Click here for the official company press release.

India's Wholesale and Retail Inflation Eases, Theresa May's Brexit Deal Turned Down, Facebook Makes India a Separate Region et al.

 

BREXIT

British Parliament rejects Theresa May’s proposed Brexit Deal; no-confidence motion tabled and survived. To lay next steps on Monday.

 

No Confidence: The British Parliament voted 433-202 against Theresa May in the Brexit deal vote on Tuesday, following which a no confidence motion was tabled by Jeremy Corbyn, the leader of the opposition Labour Party. May, however, survived the motion. 

 

What Next: Theresa May is likely to make a statement on coming Monday regarding a new approach which the lawmakers could then amend and vote on. Following this, May could reopen talks with the EU before putting a deal to Parliament for approval.

 

“No deal, no hope, no clue, no confidence”: Click here for a rather look colorful look on what the papers are saying about the historic defeat.

 

Know More Know Better: See this YouTube video to understand what can happen when UK leaves the EU.

 

AVIATION

Etihad offers to invest in Jet Airways, but at a 50% discounted rate. Chairman Naresh Goyal agrees to invest INR700cr in Jet Airways, but conditions apply.

 

T&C Applied: As per a Business Standard report, Etihad Airways has offered to buy shares of debt-laden Jet Airways at a price of INR150 apiece, c. 50% lower than the current market price (INR271.75). Etihad has also agreed to infuse $35m in the airline following due diligence. 

 

Not Interested: Qatar Airways will not buy a stake in Jet as a substantial portion of the carrier is held by Etihad Airways, whose parent, Abu Dhabi is an "enemy" of Qatar, said its CEO Akbar al-Baker. Etihad owns 24% in Jet.

 

Meanwhile: Etihad Airways CEO notes that Jet is in a precarious condition and will be unable to continue funding operations beyond this week. Read tweet here.

 

An Offer You Cannot Refuse: As per a Livemint report, Chairman Naresh Goyal is willing to inject INR700cr in beleaguered Jet Airways and pledge all his shares.

 

Please Read Terms and Conditions Carefully: The infusion however, is subject to the condition that his shareholding post the financing remains at least 25%.

 

View a neat summary of events to-date in this case here.

 

MEDIA

Netflix adds 9 million new subscribers in the last three months of 2018, driven by growth in international markets. Facebook makes India a separate region; sets up 6-member board.

 

New Subscribers: The video-streaming platform Netflix reported that it had added c. 9 million new subscribers (beating its own expectations of 7.6 million) during the last three months of 2018, a 34% rise from last year.

 

Up Close: The platform now has 139 million subscribers globally and expects to add another 8.9 million subscribers by March.

 

Who Drives the Growth: The growth in customer base is primarily credited to the growing number of international users. Netflix added 7.3 million international users in the fourth quarter, a 42% rise from a year earlier.

 

Facebook Gears Up: Ahead of general elections 2019, Facebook has created a six member board for India which would be led by Ajit Mohan, VP and MD, Facebook India. This is likely to enable more local accountability, faster and efficient decision-making, and closer connection with the headquarters.

 

On Par: The India board of Facebook will be treated as a separate region, to be treated on a par with its headquarters at Menlo Park, US. The local office will no longer be a part of Facebook’s Asia Pacific operations, and will report directly to Menlo Park.

 

Background: Facebook has recently faced severe backlash across the globe, specifically in India and US over the misuse of the social media platform in influencing masses, propagating fake news and rumors, and not being able to keep the data of its users confidential. India is the largest market for Facebook outside US and with General Elections due in May, there is heightened sensitivity around "fake news", which perhaps warrants deeper commitment from the media giant.

 

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