DBS Group selling entire Indian JV!

[makapaaa]

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Coffeeshop Chit Chat - DBS Group selling entire Indian JV!</TD><TD id=msgunetc noWrap align=right> </TD></TR></TBODY></TABLE><TABLE class=msgtable cellSpacing=0 cellPadding=0 width="96%"><TBODY><TR><TD class=msg vAlign=top><TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR class=msghead><TD class=msgbfr1 width="1%"> </TD><TD><TABLE border=0 cellSpacing=0 cellPadding=0><TBODY><TR class=msghead vAlign=top><TD class=msgF width="1%" noWrap align=right>From: </TD><TD class=msgFname width="68%" noWrap>kojakbt_89 <NOBR></NOBR> </TD><TD class=msgDate width="30%" noWrap align=right>9:00 am </TD></TR><TR class=msghead><TD class=msgT height=20 width="1%" noWrap align=right>To: </TD><TD class=msgTname width="68%" noWrap>ALL <NOBR></NOBR></TD><TD class=msgNum noWrap align=right> (1 of 4) </TD></TR></TBODY></TABLE></TD></TR><TR><TD class=msgleft rowSpan=4 width="1%"> </TD><TD class=wintiny noWrap align=right>30923.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt>Mar 31, 2010

DBS Group selling entire Indian joint venture stake

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http://www.straitstimes.com/Money/Story/STIStory_508681.html
DBS Group Holdings yesterday said it had agreed to sell its entire stake in its Indian joint venture, Cholamandalam DBS Finance, ending what has proved to be a difficult time with the financial services firm.
In October 2008, Chola DBS said it was closing 75 branches - more than a quarter of its branches - owing to a sharp slowdown in demand.
In January last year, DBS said it injected 1.5 billion rupees ($46 million) into Chola DBS. This recapitalisation would help provide for ascertained and anticipated loan losses.
DBS bought a 37.48 per cent stake in the financial services company in 2005.
India's Murugappa Group holds another 37.48 per cent. The rest is owned by public shareholders.
Yesterday, DBS said that it has reached an agreement with the Murugappa Group for the latter to buy over its stake in Chola DBS.
The purchase by Murugappa Group was made at 91 rupees per share or $2.84 per share, representing a 1.2 per cent premium to Monday's closing price for the shares. The transaction is expected to be completed on or before April 12 and not expected to have any material impact on the financial performance of DBS.
DBS said yesterday it remains committed to India and wants to focus on corporate clients and the high net-worth and emerging affluent segments in India.
DBS India has expanded its branch network from two branches in 2005 to 10 branches now across the country.
DBS chief executive Piyush Gupta said in a statement yesterday that with a growing network in India and other major emerging markets in Asia, DBS is well-positioned to ride the region's growth. 'With the rising middle class and with growing intra-Asia trade flows, we're excited about the opportunities ahead,' he said.
DBS said that the bank and Murugappa Group remain open to 'future collaboration opportunities' in areas such as wealth management and the distribution of financial products.


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[makapaaa]

So why is Ho Jinx still going in?

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The Singapore government sponsored investment house Temasek Holdings is close to investing $60 million or Rs 300 crore in Hyderabad based Spandana Sphoorty Financial Ltd. But according to many other sources the deal is being closed at $400 million or Rs 2,000 crore valuation.

Spandana which is a microfinance institution would be closing a $60 million deal this week.
If the deal happens then this would be third investment by Temasek in financial services space. It had earlier invested in non banking financial services company Fullerton India and also in ICICI Bank.
Spandana, like many other Micro financing institutions like SKS Microfinance, has been aggressive on the capital-raising front. It has already raised debt to fund its growth plans. In June, it raised Rs 80 crore via non-convertible debentures. Also, it recently concluded Rs 50-crore ($12 million) loan deal with Rabo Bank which is a Dutch cooperative.
Recently it is seen that Private equity and venture capital investors are serious in investing in Microfinancing sector in India, but many say that the sector is overvalued.

 

[Einfield]

HoJinx speciality

Buy High, Sell low.

Nothing new.

 

[cooleo]

HoJinx speciality

Buy High, Sell low.

Nothing new.

Hehe not buy low sell high then can make money?

 

[SNAblog]

Rs 83 crore is approximately US$17 million

http://www.moneylife.in/article/8/4508.html

March 31, 2010 03:13 PM

DBS loses Rs83 crore in its four-year affair with Cholamandalam

The foreign entity had spent Rs213 crore in June 2006 for a 37.5% stake in the Murugappa Group’s non-banking finance company

Development Bank of Singapore (DBS) had spent Rs213 crore to buy 37.5% stake in the Murugappa Group’s non-banking finance company, Cholamandalam Investment and Finance Company Ltd, in 2005-06. Yesterday it exited from the joint venture at Rs129 crore, making a straight loss of Rs83 crore.

This is not the first time when a foreign company which has jumped into the Indian financial sector has burnt its fingers. Earlier, mutual funds companies (like Threadneedle), broking companies (James Capel, Peregrine) and banks (BNP Paribas) have entered into India and exited at a loss. Some of them like BNP Paribas find India irresistible and have come back again.

According to a news report in 2005, DBS announced that it would spend about Rs228 crore to acquire 37.5% stake in the company. It actually acquired 142,21,985 shares at Rs150 in June 2006 as per its filing to the Bombay Stock Exchange. It was a strategic stake sale for Cholamandalam as well. The Murugappa Group was planning to gradually exit the financial services business and focus on fertilisers and other manufacturing activities.

A few months ago, both DBS and Cholamandalam sold their stakes in DBS Cholamandalam Asset Management to L&T Finance for Rs45 crore. It remains to be seen whether the Murugappa Group would like to invite another foreign company into Cholamandalam Finance for another round of musical chairs.

The music starts during a market boom when foreign companies suddenly focus on India as the next hot destination. DBS partnered with Cholamandalam to grow the personal finance business, asset management business and also the banking business for which it launched 10 branches. After the collaboration, the foreign partner was expected to grow the financial services business by using its expertise in retail loans. But in a script that plays again and again, DBS on Tuesday announced that it is exiting from the joint venture with Murugappa in Cholamandalam. The reason was major delinquencies in the personal loan portfolio. In September 2008, after a huge hit to its portfolio, it had decided to stick to vehicle financing and loans against shares. In May 2009, the company was forced to create a provision of Rs200 crore against bad loans. Almost 75 branches across India were closed down and 200 employees were laid off.