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Parliament Rejects Theresa May’s Brexit Deal, Google Launches YouTube Music in India, HDFC Bank Crosses INR6tr Market Cap, Embassy Group to launch REIT et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Mar 13, 2019 2:22 PM 5 min read
Editorial

 

Parliament rejects Theresa May’s Brexit deal once again. Disney finalizes March 20 as date for acquisition of Fox. Google launches YouTube Music, YouTube Music Premium, and YouTube Premium in India. In a first, HDFC Bank crosses INR6tr market Cap. HSBC values Zomato at $3.6bn, ahead of Swiggy. Embassy Group to launch REIT to raise INR4,750cr.

 

Moving on to the top Business stories of the week. 

 

INSOLVENCY

DoT mulls over bailout package for BSNL. NCLAT warns RCom lenders with insolvency threat. Patanjali increases bid for Ruchi Soya.

Helping Hand: Department of Telecommunications is considering a bailout package worth over INR13,000cr for debt ridden BSNL.

What’s The Plan?: The proposal includes a INR6,365cr voluntary retirement package and 4G spectrum allotment through INR6,767cr equity infusion and monetization of real estate assets.

BSNL’s total loss in FY19 is likely to be INR7,000cr, including INR4,000cr operational loss due to depreciation, while its current debt stands at INR13,000cr.
 

Get in Line: NCLAT has warned lenders of RCom that failure to release tax refunds to clear the company’s dues may force the court to send the operator back into insolvency proceedings. 

Pushing too Far: The warning comes on back of RCom’s request that INR260cr of tax refunds held in a trust fund by lenders be released on behalf of the telco to pay Swedish telecom gear maker Ericsson. 

Sweetening the Deal: Patanjali has raised its offer for edible oil manufacturer Ruchi Soya to INR4,350cr from an earlier proposed INR4,100cr. As earlier offered, it will also infuse INR1,700cr into the company.

The revised offer will mean the lenders will have to write off 60% of their dues.

Earlier: Adani Wilmar was declared the highest bidder, but Patanjali objected. Adani had reportedly offered INR4,300cr in August last year, but withdrew this January, citing delay in the resolution process.

 

GLOBAL

Parliament rejects Theresa May’s Brexit deal once again. EU shifting stance on China.

No Go: British Parliament has rejected Prime Minister Theresa May's Brexit deal for a second time. The House of Commons voted against the deal by 391 votes to 242.

What Now: MPs will now get a vote on whether the UK should leave the EU without a deal and, if that fails, on whether Brexit should be delayed.

All in Vain: The PM had made a last-minute plea to MPs to back her deal after she had secured legal assurances from the EU.

Changing Views: The European Union plans on recalibrating ties with China, promising to address growing threats to trade, economic growth and security posed by Beijing’s global assertiveness.

Vary of Competition: The EU’s executive arm has labeled Beijing an economic competitor in critical fields such as the development of 5G networks and a systemic rival politically. This marks a sharp shift from attitudes just two years ago, when China was seen as a potential partner in maintaining global rules and institutions.

Reasons: The change in attitude comes on the back of its failure to open its markets, its use of subsidies to create corporate champions, its actions in the South China Sea and its push for dominance in technology and telecommunications sectors.

 

INVESTMENTS

OYO invests INR1,400cr in India and South Asia businesses, launches millennial-focused new brand, Collection O. Embassy Group to launch REIT to raise INR4,750cr.

Hospitality firm OYO has committed over INR1,400cr for its India and South Asia businesses.
 

Need to Grow: The infusion would be used to facilitate expansion plans, improve customer experience and ensure increase in continued asset owner success.

yOung Ones: OYO also announced a new category called Collection O, which will focus on millennials and young travelers and will be added to its existing portfolio of budget and mid-segment hotels.

Going Desi: Global investment giant Blackstone and Bangalore-based real estate developer Embassy to launch India’s first real estate investment trust (REIT) next week to raise about INR4,750cr

The REIT, which includes Embassy Group properties, will offer as many as 158.6 million units at c. INR300 apiece.

Bonus: REITs offer a unique 'financial markets' avenue to gain exposure to real estate rather than requiring investors to buy physical assets. Click here to understand all about the new way to invest in real estate in India.

 

MEDIA

Disney finalizes March 20 as date for acquisition of Fox. Google launches YouTube Music, YouTube Music Premium, and YouTube Premium in India.

Mouse Owns Fox: Disney has set March 20 as the closing date for its acquisition of 21st Century Fox.

Whatever it Takes: Disney had initially agreed to acquire Fox for $52.4bn. However, a counter-offer from Comcast prompted it to increase its bid to $71.3bn.

As part of the deal, Disney will buy Fox’s film and television studios, giving it control of the “Avatar” franchise and the film rights to a number of Marvel characters, including the Fantastic Four, the X-Men and Deadpool. It will allow Disney to double its stake in Hulu, to 60%, up from 30%


No Happy Ending: However, the deal is also expected to lead to more than 4,000 layoffs.

Another One: Google launched its YouTube Music, YouTube Music Premium, and YouTube Premium in India.

Following Suit: The news comes shortly after the launch of Spotify in India.

The ad-supported version of YouTube Music will be free, YouTube Music Premium will cost users INR99 per month, and YouTube Premium will cost INR129 per month. Subscription to YouTube Premium also unlocks features like the ability to play videos in the background while running other apps, offline downloads, access to YouTube Originals, and YouTube Music Premium.

Long Road: In India, the YouTube services will compete against other streaming platforms including Amazon Music, Apple Music, JioSaavn, Gaana and Spotify.

 

MARKETS

In a first, HDFC Bank crosses INR6tr market cap. HSBC values Zomato at $3.6bn, ahead of Swiggy.

Finally There: HDFC Bank crossed INR6tr market capitalization for the first time on Wednesday, making it the third firm in the country to achieve the milestone.

In Good Company: Tata Consultancy Services and Reliance Industries are the other two companies that have crossed the mark.

The firm's stock touched a fresh record high of INR2,233 on the BSE, up 2.87% from its previous close. The scrip closed at INR2,229 on the BSE, up 2.67%.
 

Better This Time: HSBC Global Research has valued Zomato at $3.6bn, which is around 70% higher than the valuation ascribed to the firm when it raised capital recently. 

Advantage: The jump in valuation pushes Zomato ahead of its rival Swiggy that was valued at $3.3bn post a $1bn funding announced in December. 

Bitter Memories: Interestingly, HSBC, in 2016, had almost halved Zomato’s $1bn paper valuation to $550m, raising concerns at the time over its business model and its strategy to expand globally. 

HSBC states change in business focus as the reason for increase in valuation.

 

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