Naresh Goyal Resigns from Jet Board, Delhivery and Bigbasket Enter the Unicorn Club, British Parliament Rejects Theresa May's Brexit Deal et al.

Naresh Goyal, wife Anita resign from Jet board. Mindtree management open for negotiations with L&T. RBI to issue guidelines for Fintech companies, proposes “regulatory sandbox”. Delhivery raises $400m from SoftBank, Carlyle and Fosun, enters unicorn club. Bigbasket enters the unicorn club with the completion of latest funding round. Significant changes expected to the Draft E-Commerce Policy as e-retailers pushback against issues of data localization and ownership. US bond yield curve has inverted - canary in the coal mine? British Parliament rejects Theresa May’s Brexit deal once again.

 

Moving on to the top Business stories of the week. 

 

ECONOMY 

US bond yield curve has inverted - canary in the coal mine?

 

Flipped Over: The yield on the US 10-year Treasury note on Friday dipped below the 3-month yield. It was the first time since mid-2007 that the yield curve — which plots bond yields from shortest maturity to highest and is considered a barometer of economic sentiment — inverted.

Time to Worry: The inversion has got investors across the globe worrying, wondering if this could mean the slowdown of the US economy.

Read more on the inverted yield curve and what it means here.

Again?: Global stocks are tumbling as bond markets in the US are flashing an inverted yield curve, considered a harbinger of a looming recession. 

No Worries: While the possibility of a recession in the US is worrisome for the global economy, economists and analysts say Indian stock investors need not worry much. Find out why.

 

REGULATIONS

RBI to issue guidelines for Fintech companies, proposes “regulatory sandbox”. Significant changes expected to the Draft E-Commerce Policy as e-retailers pushback against issues of data localization and ownership.
 

New Rules: RBI is set to issue guidelines for fintech companies to test their new products on a small group of users before scaling up. According to the RBI the “regulatory sandbox” will help fintech companies launch innovative products at a lower cost and in less time.

Trial Version: The sandbox will enable fintech companies to conduct live or virtual testing of their new products and services. The limited launch will also enable them to test the viability of the product without a wider and expensive rollout.

According to NITI Aayog, India is one of the fastest growing fintech markets globally, and industry research has projected that $1tr, or 60% of retail and SME credit, will be digitally disbursed by 2029.

We Told You So: “Digital lending, payments, cryptocurrencies, and the underlying blockchain are all nascent industries with the potential to permanently alter our financial ecosystem. However, considering their technological backbone, the regulator would always play catch-up to understand their ever-changing nuances to figure safeguards. The solution to this quandary may be to consider a regulatory sandbox, rather than blanket bans and restrictions. ”Read our article to know how a regulatory sandbox could be the answer to the government’s quandary with technology. 

 

Road Blocked Ahead: Following protests by online retailers against various provisions of the draft e-commerce policy, significant changes are expected to be made to the final policy which would be formulated following the upcoming Lok Sabha elections.
 

The news comes following the end of consultations held by the Department for Promotion of Industry and Internal Trade with stakeholders on the policy. 
 

Let’s Talk: E-Retailers have demanded more clarity on e-commerce norms, trademark rights, and the extent to which their services will come under the policy scanner. 
 

Up Close: Discussions on the policy have primarily focused on the need for a pushback against issues of data ownership and data localisation, which is likely to impact smaller businesses more than the big technology firms like Flipkart or Amazon.
 

Here is a rundown of the 42-page document. 

 

COMPANIES 

 

Naresh Goyal, wife Anita resign from Jet board. Mindtree management open for negotiations with L&T.


End of an Era: Founder Naresh Goyal and his wife Anita have stepped down from the board of Jet, notified the debt-ridden airline. 
 

The notification also stated that the airline will get an immediate funding support of INR1,500cr by lenders by way of issue of appropriate debt instrument against security of its assets.

Jet's stock surged c. 15% before closing at INR261.
 

Flying Away: Saddled with debt worth more than $1bn, Jet is struggling to stay afloat. However, this time around, Etihad is neither in a position nor in a mood to repeat history by injecting more cash into Jet or helping Goyal as it did earlier. Read this to know why.

 

Sign of Peace: Mindtree management has expressed willingness to negotiate L&T’s open offer to buy 66% of the IT firm.

In the Middle: The management has suggested that a middle ground could be explored through mutual discussions between the two parties to protect the interests of all stakeholders.  

The news is rather significant as it somewhat underlines signals a change in Mindtree's stance towards L&T’s takeover bid.

Another Offer: Two weeks ahead of L&T’s deal with V.G. Siddhartha, a global PE firm was very close to finalizing a deal with him, one that was acceptable to Mindtree promoters.

Can't-Wait: However, Siddhartha was forced to sell his stake to L&T because of a liquidity squeeze triggered by defaults in payments by IL&FS.


Read more on the matter here.

Still Unsure:  While the Mindtree acquisition could be oF great value to L&T, some experts are still sceptical of the logic behind L&T’s move. Find out why.

 

UNICORN 

Delhivery raises $400m from SoftBank, Carlyle and Fosun, enters unicorn club. Bigbasket enters the unicorn club with the completion of latest funding round.

Joining the Club: Logistics startup, Delhivery has raised $413m in its latest round of equity financing led by SoftBank’s Vision Fund, and existing investors private equity firm Carlyle Group and Chinese conglomerate Fosun, marking its entry into the unicorn club. 
 

The financing round is likely to value the company at about $1.5bn, post-money, giving SoftBank around 25% stake in the firm. 
 

The proceeds from the funding round is likely to be used to scale warehousing and freight operations, invest in building large multi-tenant fulfilment centres, integrated with parcel and freight transportation networks.

New Record: Grocery delivery platform Bigbasket has completed its Series F funding at an estimated valuation of $2.3bn, marking its entry into the unicorn club.

The company has raised a total of $150m from new and existing backers in this round, including Mirae who put in around $60m. Alibaba injected around $50m, and $40m came from CDC.

 

BREXIT 


British Parliament rejects Theresa May’s Brexit deal once again. EU gives Britain 11 days to come up with a fresh plan.
 

The British Parliament on Friday voted 344-286 against Theresa May’s Brexit deal. 
 

Ultimatum: The EU has given the British government 11 days to come up with a fresh Brexit plan to avoid crashing out of the bloc with a deal on 12 April.

Lineup:

  • 1 April: MPs hold another set of votes on various Brexit options to see if they can agree on a way forward
  • 3 April: Potentially another round of so-called "indicative votes"
  • 10 April: Emergency summit of EU leaders to consider any UK request for further extension
  • 12 April: Brexit day, if UK does not seek/EU does not grant further delay
  • 23-26 May: European Parliamentary elections

 

What's Next for Brexit: Here are some important questions around the Brexit deal and the potential next steps answered.