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Theresa May's Brexit Deal Turned Down, Etihad Airways to Invest in Jet at a 50% Discounted Rate, German Economy Slumps et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Jan 16, 2019 2:56 PM 4 min read
Editorial

British Parliament rejects Theresa May’s proposed Brexit Deal. No-confidence motion tabled. Etihad offers to invest in Jet Airways, but conditions apply. German economy slumps.

 

Now to Today's Top Business News Stories in Our End Of Day Wrap Up:

 

Theresa May's Brexit Deal Turned Down, Etihad Airways to Invest in Jet at a 50% Discounted Rate, German Economy Slumps et al.

BREXIT

British Parliament rejects Theresa May’s proposed Brexit Deal; no-confidence motion tabled.
 

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.

 

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.

 
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.

 

INSURANCE

Indiabulls receives preliminary approval to run life insurance.

 

The What: As per a Hindu BusinessLine report, insurance regulator IRDAI has approved Indiabulls’s foray into life insurance. The regulator had earlier asked the company to inject c. INR1,200cr as investments to provide sufficient cushion for the life insurance business amid the recent NBFC sell-off following the implosion of IL&FS.

 

Theresa May's Brexit Deal Turned Down, Etihad Airways to Invest in Jet at a 50% Discounted Rate, German Economy Slumps et al.

 

STARTUP

AI-based education platform Leverage Edu raises $1m from Blume Ventures and DSG Partners. Instamojo raises $7m in latest funding round.

 
Leverage Edu: An AI-enabled education platform, Leverage Edu aids students with higher education and career growth plans. This is the second round of financing post a seed round raised late last year.
 

Instamojo: Bengaluru based payments and e-commerce startup Instamojo has raised $7.75m in Series B funding from investors including Gunosy Capital, AnyPay, Kalaari Capital. The proceeds from the funding will be used to develop Instamojo’s mobile application and expand existing business. 

 

ECOMMERCE

Flipkart invests INR1,431cr in India wholesale arm. Amazon stalls investment worth $1bn in India business in face of regulatory hurdles.

 
Fresh Funds Coming In: According to an Economic Times report, Flipkart India, the wholesale arm of the Walmart-owned e-commerce marketplace in India, has received INR1,431cr from its parent entity Flipkart Private Limited.

 
Perspective: The likes of Amazon and Flipkart usually purchase goods in bulk from manufacturers and sell them to preferred sellers, often ones in which they or another group company have some equity participation.
 

Background: This model has recently come under scrutiny when the government released the new FDI guidelines for ecommerce sector, disallowing platforms from selling products from vendors in which they directly or indirectly have any stake. However, an exemption for private labels was quickly granted. 
 

Stiff Rules: In light of the severe regulatory guidelines, Amazon has stalled investment worth c. $1bn in its India business until the 2019 General Elections.
 

Zoom Out: Meanwhile, the retail giants are counting on a likely extension of the February 1 deadline set by the Department of Industrial Policy and Promotion (DIPP) to overhaul their business models and operations to comply with the new guidelines. While Amazon has asked for time until June 1, Flipkart has requested for six months.

 

EUROPE

Germany’s economy slumped to the lowest in five years last year.


Free Fall: Germany's economy grew by 1.5% in 2018 - its slowest rate since 2013 vs 2.2% in 2017 on back of a weaker global economy and troubles in the car industry caused by low sales amid confusion over new emission standards.
 

Chart: View Germany’s GDP evolution since 2008 here

 

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