All Finance Matters

IPO Markets Hit 5 Year Low In 2008

2008-12-25T19:48:00.000-08:00

Money raised through public offers in India has hit a new five-year low this year. This year saw companies raising Rs 16,927 crore through initial public offers (IPOs) and follow-on public offers (FPOs), a decline of 63% compared with Rs 45,137 crore that was raised last year, says research firm Prime Database. The last time Indian companies raised less than Rs 20,000 crore in a single year was in 2003 when firms mopped up Rs 2,179 crore through 14 issues.

Following the poor show of public offers and low-investor sentiment in the stock market, several Indian companies have withdrawn their plans to raise funds through new public issues.

The only significant factor in 2008, was the issue of Reliance Power, the largest ever IPO in India, which raised Rs 10,123 crore. This single IPO accounted for 60% of the year’s total fund mobilisation through public offers. As per the data compiled by Prime Database, there were only two issues of over Rs 1,000 crore each compared with six in 2007. In 2008, 22 of 38 issues raised less than Rs 100 crore, with 14 raising less than Rs 50 crore.

There was a significant decline in also the number of public issues this year. As against 106 public equity issues in the previous year, 2008 recorded only 38 issues, a drop of 64%.

This was partly due to the response from the public to the issues of the year, unlike 2007. Only six of the 37 IPOs received oversubscription of more than 10 times, compared with 50 out of 101 IPOs in 2007. Moreover, as many as 14 issues barely managed to get a one-time subscription. Worse, three IPOs had to be cancelled because of lack of response, including the Rs 5,436 crore issue of Emaar MGF and the Rs 564 crore issue of Wockhardt Hospitals.

Courtersy : Economic Times and Prime Database

Satyam-Maytas "unfair" deal off

2008-12-18T22:16:00.000-08:00

Financial crisis call for desperate actions. India's fourth largest IT services firm Satyam Computer was trying to acquire 100% stake in Hyderabad-based Maytas Properties for $1.3 billion and was going to pick up a 51% in public listed firm Maytas Infra for $300 million. The total deal value was pegged at $1.6 billion (Rs 8,000 crore). The smart move by Satyam owners (hold just 8% ) to get the cash move into their pockets and in the process make Maytas come out of the trouble times.

"Nobody can take shareholders for a ride" that’s the message that’s gone out loud and clear to the owners , promoters of Satyam Computers.

I fail to understand what are the Independent Directors doing ? They are on the board on the company to take care of the interests of the company but it seems they failed in their duties to voice concerns over the unfair deal.

Also a larger question about the corporate governance of Satyam ( it received award in September 2008 for good corporate governance ).

Where do Satyam go from here ? they may buy back the shares and it is difficult for the company to come out of this bad image it created for itself

American Jobs Vanish

2008-12-06T05:04:00.000-08:00

An alarming half-million American jobs vanished virtually in a flash last month, the worst mass layoffs in more than a third of a century, as economic carnage spread ever faster and the nation hurtled toward what could be the hardest hard times since the Great Depression.

Employment shrank in virtually every part of the economy — factories, construction companies, financial firms, accounting and bookkeeping, architectural and engineering firms, hotels and motels, food services, retailers, temporary help, transportation, publishing, janitorial and building maintenance, and even waste management. The few fields spared included education, health care and government.

How will this effect India ? Most of the companies which were in list of companies which are in serious down sizing have their offices in India and China. There will be collateral damage and IT & ITES will be worst hit. Many professionals may lose jobs in the next couple of months the effect will be more on non billable employees initially.

Detroit Three publish rescue plans

2008-12-02T21:37:00.000-08:00

The so-called Detroit Three,Chrysler, Ford and General Motors have all submitted their proposals to Congress for multi-billion dollar loans that could decide the survival of the companies.US Carmakers have asked for a combined total of $34bn. General Motors asked Congress for a loan of $12bn , with an additional $6bn if necessary, to help it survive.Ford meanwhile requested a $9bn bridging loan, which it hopes it will not need.Chrysler sought $7bn to survive the dramatic slump in sales that has decimated its cash reserves.

Reducing costs, reducing debt levels and investing in greener technologies form the centre-piece of each proposal. The chief executives of Ford and GM have even offered to work for $1 a year if Congress approves the emergency aid.Sales at all three of the carmakers have plunged as US consumers tighten their belts in the face of the severe economic downturn.

Analysts feel its a tough task.

Photo courtersy : http://www.thetorquereport.com/american_cars/

US Recession Began in 2007

2008-12-01T21:26:00.000-08:00

Its official now, the Business Cycle Dating Committee of the National Bureau of Economic Research met on 28th November 2008 determined that a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.

The committee views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment. This series reached a peak in December 2007 and has declined every month since then.

Complete text is posted at http://oxdown.firedoglake.com/diary/2133

Post Crisis

2008-12-01T01:56:00.000-08:00

I was reading through the speech given by John Lipsky, First Deputy Managing Director, International Monetary Fund what could be the world economy post crisis and how one can find their answers.read him here

"Growth prospects for emerging economies also have been undermined by the latest developments. Still, the new IMF forecast anticipates that activity in emerging economies will expand by 5 percent in 2009, although with considerable regional variation. Thus, it is expected that emerging economies will account for 100 percent of global growth next year. It is also true, however, that even this newly reduced forecast can't be taken for granted, as the downside risks to growth, even for the emerging economies, remain significant. Thus, actions to be taken by emerging economy authorities to bolster confidence in the appropriateness of their policies, as well as efforts by the international community to provide necessary financial support in this moment of crisis, will be critical in order to attain the hoped-for revival of global growth by 2010".

He ends his speech by saying that IMF stands ready to use its financial resources and expertise to help pave the way toward a more resilient post-crisis global economy.

Photo courtesy : imf.org

complete text at http://www.imf.org/external/np/speeches/2008/111708.htm

Financial Crisis in India

2008-11-15T07:08:00.000-08:00

The storm of financial crisis hits India, for nearly a decade, companies in India have had a strong run of growth, pulled along by fast economic expansion and blessed with low inflation. World now is very different from what it used to be for the 10 years. There are some collateral damages which can happen.

There may be sharp decline in consumer spending on houses, cars and other consumer durables, following the sharp decline in lending to households, will cause a recession in the construction industry and also in production of consumer durables.

Most of the loans on houses will default on their payments and consumer loans, especially as house values will fall below the loan values.

Non Performing Assets (NPA's ) in the banking sector will increase as there will more write-off of bad housing loans and personal loans. These losses to the banks will push financial institutions into bankruptcy or forced mergers with stronger banks.

Then there will be retrenchment of lending even the smallest term loans, which banks and other institutions lend to each other for their working capital.

Largest Micro Finance Deal

2008-11-12T20:19:00.000-08:00

In the largest microfinance deal in the world, Hyderabad based SKS Microfinance has raised Rs 366 crore or $75 million from private equity investors. This is fourth round of fund raising by SKS. Sandstone Capital, an India focused hedge fund with $1 billion capital under management, has led the deal, while the other investors in this round include SVB India Capital and Kismet Capital.

SKS has raised funds from Sequoia Capital, Vinod Khosla, Odyssey Capital, Silicon Valley Bank and others. Talking about the exit route to the investors, Akula said its likely to be through an IPO. But they have other options like mergers and acquisitions on the table. Also the investors are likely to get a return of 20%, CEO SKS Microfinance Vikram Akula said.

SKS Microfinance was started in 1998 and now has more than 3.3 million clients across the country. It plans to reach 8 million clients till March 2011. SKS Microfinance claims it has the lowest interest rates offered by MFIs across the country, which range between 25-30%. SKS added 400,000 new clients last month and and is now looking to further expand. The total equity capital of the comapny is now $135 million, and with this investment capital adequacy ratio has gone up from 17% to 30%.

Photo from: eweek.com

News from: VC Circle

G20 leaders to meet on Financial Crisis

2008-11-11T20:02:00.000-08:00

G 20 leaders will be meeting next weekend's at a summit (emergency) on how to reshape the global financial system and give greater importance to developing nations. A showdown appears to be brewing about whether broader groupings like the G20 should supplant the elite, rich-country G7 as the main forum governing the world economy.

France, which holds the rotating European Union presidency, is leading a drive for tough new regulations and oversight in financial markets.Many countries want to beef up the IMF and some want to give it a regulatory surveillance role.The United States, Britain, Canada and Australia are worried that too much regulation could restrain a free-market system and dim the prospects for economic growth.

There have also been questions as to how far such a summit would go since the host President is already on his way out, as he will handover power to Obama and aides close to Obama have disclosed that Obama would not be attending the controversial meeting.

Deal Failures: The Second Wave

2008-11-10T02:28:00.000-08:00

In the past few weeks, the next generation of M&A failures has begun to take shape.

The first wave of failures consisted of the stream of private equity and strategic deals negotiated before August 2007. This next wave of failure comprises the deals negotiated after that time, deals largely struck in the spring and summer of 2008. This second wave of deals was negotiated with relatively full knowledge of the difficulties in the market and the problems with the pre-August 2007 private equity deal structure, particularly its optionality in the reverse termination form.

Nonetheless, like this first stream, many of these transactions are foundering on their termination mechanisms and the continued buyer optionality that buyers have been able to negotiate. Importantly, the troubles with JDA Software’s proposed deal for i2 Technologies that emerged Wednesday represents the second attempted renegotiation of a strategic deal with private-equity-like reverse termination fee provisions.

Steven M. Davidoff complete write up at :

http://dealbook.blogs.nytimes.com/2008/11/06/deal-failures-the-second-wave/

India's share in global M&A less than 1%

2008-11-07T08:19:00.000-08:00

The merger and acquisition (M&A) spree of corporate India seems to have hit a low, as India's share in the global M&A tally, which touched a whopping $3 trillion, is less than even one per cent.

Till September this year, corporate India has announced merger and acquisition deals worth $26.43 billion, which is around 0.8 per cent of the total global M&A kitty.

Commenting on the current market situation, KPMG Executive Director (Corporate Finance Group) Gaurav Khungar said: "The environment is plagued with conservatism and a wait-and-watch approach with absence of decision making or aggression... And questions on prospective bankruptcy risks are abound."

Khungar further said beyond the economic factors that have contributed to lack of credit for M&A or business operations, all economic advise in the media is providing guidance to companies to hold on to their cash positions.

Another report from global consultancy major Grant Thornton showed the total number of M&A deals during the first nine months of 2008 stands at 381, with an announced value of $26.43 billion. In the corresponding period a year ago there were around 527 deals amounting to $49.33 billion.

Market experts said that the crisis in financial markets is acting as a dampener for M&A deals. Although, valuations of companies have gone down, banks are cutting down their exposure to funding deals.

Courtesy : www.business-standard.com

Time to Buy ? May be Yes

2008-11-06T20:32:00.000-08:00

Cisco Systems Inc. Chief Executive John Chambers said it was a good time to acquire small companies, although an uncertain economy meant it was important to maintain a strong cash position.

"Cash is king and queen and the royal family," he told Reuters in an interview on Wednesday, but added that the network equipment maker will use cash to acquire more shares and invest in small companies once the outlook on the economy becomes more clear.

"It is perfect now to be acquiring small companies because small companies have no exit strategy, the IPO market is dead, and the price of these small companies is very attractive at the present time and probably will remain so," he said.

http://www.reuters.com/article/smallBusinessNews/idUSTRE4A53IZ20081106

Who runs finance at Asia’s companies?

2008-11-05T20:53:00.000-08:00

Who runs finance at Asia’s companies? CFO Asia after 10 years have passed since they launched CFO Asia, thought it was time to ask. They conducted a reader survey that drew 327 responses. The survey shows that the region’s finance chiefs are predominantly accountants, but that over a third have MBAs. About 40 percent hope someday to move out of finance, either running their own business or else serving as boss of another company.

They are a hard-working group. The average CFO clocks 54 hours a week, and nearly two-thirds don’t use up their vacation days each year. But job satisfaction is high and most would choose a career in finance if they could do it all again.

As for the finance function, it has made dramatic progress over the past five years. Finance employees spend more time on strategic activities today and are far more involved in what their business colleagues would consider “value-added” work, such as analyzing channel profitability or helping with pricing decisions.

survey at: http://www.cfoasia.com/images/pic_0811/10th_survey.pdf

Fundraising Slowdown Likely Till 2009

2008-10-31T20:57:00.000-07:00

Investors have seen all asset classes suffer during the recent market turmoil, and the long-term outlook remains highly uncertain. In order to assess the impact on institutions’ private equity programs, and their future intentions for the asset class, Preqin’s LP Survey team has undertaken a survey of current LP opinion and sentiment.

Preqin’s LP Survey team polled 100 investors during September and October 2008, covering a representative sample of small, medium and large institutions globally. 51 institutions were from North America, 43 from Europe (of which 13 UK, 12 Scandinavia and 18 mainland Europe), and 6 were from the rest of the world. 31 were public pension plans, 20 fund of funds, 15 endowments and the remaining 34 were spread across asset managers, insurance companies, family offices, private sector pension plans, investment companies, banks and sovereign wealth funds.

Detailed report: http://www.preqin.com/listResearch.aspx

Microfinance in India

2008-10-15T21:02:00.000-07:00

Its almost 25 years since Microfinance taken birth in India and the concept started by Professor Mohammad Yunus (Grameen Bank) in Bangladesh. The Microfinance field has since spread with adaptation and evolution of ideas to various countries and context.With a large portion of the world’s poor, India is likely to have a large potential demand for microfinance. For this reason, It makes sense to consider the changing face of microfinance in India, in order to shed light on comparable changes in the field all over the world. With all the excitement about the prospects of the field to contribute to poverty alleviation and the integration of the world’s poor into the rapidly evolving global market system, the Consultative Group to Assist the Poorestthe Consultative Group to Assist the Poorest (CGAP) estimates that microfinance probably reaches fewer than 5% of its potential clients.

India is home to a growing and innovative sector microfinance.

Microcredit organization can be a burgeoning field that combines the best in economic strategy with human policy making. Microcredit programs, and other developmental economic initiatives, represent a new way of forging international relations through humanitarian and financially viable aid. It is the branch of microfinance that involves lending small amounts of money to very poor people. The borrowers, often women, use this money to start a business or improve upon an existing one. The money is often used to buy goods that the women can later resell at a profit. These small loans give women the capital they need to create sustainable businesses enabling them to support themselves and their families.

Mirocredit requires specialized financial knowledge as well as a unique combination of skills, such as knowledge of social science, local languages and customs.

I feel microcredit is a very critical part of helping communities grow and achieve sustainability.

Micorfinance is here to stay as it is yet to reach millions of poor .

Photo from: World Bank

Is the worst over?

2008-10-14T22:48:00.000-07:00

Markets around the world doing Bungee Jumping, there are still uncertainties in the financial markets and global economies which are unlike what most people have seen in the last decade or so, and it is extremely difficult to predict whether market conditions are heading south or northward simply because the world is very different from what it used to be 10 years ago.

No expert is expert enough to say worst is over with the currrent crisis which is kind of one year and half old and people slowly get used to the bungee jumping by the markets and there will be less panic.Many experts whom i talk to and tell them that worst is over they tell me

"if you thought worst is over think again" we have to see this week and may be there will be some clarity.

US Financial Crises -Lessons

2008-10-14T22:31:00.000-07:00

I repeat what i wrote on September 18th and even this day it is relevent

The current market jitters are centred on disturbances in the world's credit markets. Worries about the viability of sub-prime mortgage lending have spread around the financial system, and the central banks have been forced to pump in billions of dollars to oil the wheels of lending.

But what happened in previous financial crises, and what are the lessons for today?

There have been a growing number of financial crises in the world, according to the International Monetary Fund (IMF).

Among the key lessons of previous major financial crises are:

Globalisation has increased the frequency and spread of financial crises, but not necessarily their severity

Early intervention by central banks is more effective in limiting their spread than later moves

It is difficult to tell at the time whether a financial crisis will have broader economic consequences

Regulators often cannot keep up with the pace of financial innovation that may trigger a crisis.

Why Mergers Fail

2008-09-24T22:50:00.000-07:00

It's no secret that plenty of mergers don't work. Research shows that 70-80% of mergers fail.Those who advocate mergers will argue that the merger will cut costs or boost revenues by more than enough to justify the price premium. It can sound so simple: just combine computer systems, merge a few departments, use sheer size to force down the price of supplies and the merged giant should be more profitable than its parts. In theory, 1+1 = 3 sounds great, but in practice, things can go awry.

Historical trends show that roughly two thirds of big mergers will disappoint on their own terms, which means they will lose value on the stock market. The motivations that drive mergers can be flawed and efficiencies from economies of scale may prove elusive. In many cases, the problems associated with trying to make merged companies work are all too concrete.

A merger may often have more to do with glory-seeking than business strategy. The executive ego, which is boosted by buying the competition, is a major force in M&A, especially when combined with the influences from the bankers, lawyers and other assorted advisers who can earn big fees from clients engaged in mergers. Most CEOs get to where they are because they want to be the biggest and the best, and many top executives get a big bonus for merger deals, no matter what happens to the share price later.

On the other side of the coin, mergers can be driven by generalized fear. Globalization, the arrival of new technological developments or a fast-changing economic landscape that makes the outlook uncertain are all factors that can create a strong incentive for defensive mergers. Sometimes the management team feels they have no choice and must acquire a rival before being acquired. The idea is that only big players will survive a more competitive world.

courtersy: investopedia

IPO- Is the Party over ?

2008-09-24T03:11:00.000-07:00

The gloom that has descended on stock markets worldwide in the wake of a financial turmoil in the US.Is the IPO party over? For now, that appears to be the case. About 30 IPOs, aiming to raise some $9 billion, have been withdrawn from markets around the world in the last few months most of them in the US and Hong Kong. Unfortunately, things aren't likely to improve in the near-term as the pipeline of companies waiting to go public remain backed up. With the future direction of their IPO market held in the balance, we only hope that things may become better some day in near future

US Financial Crises -Lessons

2008-09-18T05:40:00.000-07:00

After the bailout of American International Group (AIG) on the heels of Fannie Mae, Freddie Mac and Bear Stearns, many Americans are no doubt wondering why the government appears to be coming to the aid of fat cats who mismanaged large corporations. Some economists ask a related question of whether it would be better to let these companies fail to send a message to future managers that they had better be prudent.

But what happened in previous financial crises, and what are the lessons for today?

There have been a growing number of financial crises in the world, according to the International Monetary Fund (IMF).

Among the key lessons of previous major financial crises are:

Globalisation has increased the frequency and spread of financial crises, but not necessarily their severity

Early intervention by central banks is more effective in limiting their spread than later moves

It is difficult to tell at the time whether a financial crisis will have broader economic consequences

Regulators often cannot keep up with the pace of financial innovation that may trigger a crisis.

CHEAPER CRUDE OIL

2008-09-14T06:24:00.000-07:00

The basket of crude oil that Indian refiners buy fell below $100 per barrel , the latest day for which data are available, nearly five months after it first breached the three-digit mark.This will allow the country’s oil marketing companies to make profits on a third of their petrol sales, for the first time in 13 months.More importantly, the oil ministry is considering a proposal to reduce diesel prices if the crude oil prices fall below $85 per barrel to control the 13-year high inflation with an eye on elections, said two senior officials in the petroleum ministry.Diesel is used largely by the transport sector and high diesel prices have a cascading effect on general price levels as 78 per cent of goods are transported by road.

courtesy:Business Standard

Doing Business Index: India slips behind Pak

2008-09-10T07:09:00.000-07:00

India slipped two notches to 122nd rank, below neighbours including Nepal, Bangladesh and Pakistan in the 'Doing Business Report 2009' prepared jointly by the International Finance Corporation and the World Bank.

The report which ranks the country on the basis of ease of doing business has placed Nepal above India at 121st position, Bangladesh at 110th place and Pakistan at 77th place in the overall ranking.

The 2008 report had ranked India at 120th position, while Pakistan was at 74th place.

Singapore retained the first place in ranking, which covered 181 countries of the world that provides quantitative measure of regulation for starting a business, getting credit, paying taxes, enforcing contracts and closing a business reports Financial Express today .

Photo courtesy : worldbank.org

Future Ventures IPO Cleared

2008-09-08T06:13:00.000-07:00

Future Ventures will be the second Indian fund to be listed in stock markets, after IL&FS Investment Managers. Future Ventures India, the venture capital arm of the Future Group, has recieved the approval of market regulator Securities and Exchange Board of India (SEBI), for an initial public offering (IPO). Interestingly, SEBI has cleared the IPO with certain riders, when contacted officals from Future Group who confirmed the development. The market regulator has said that Future Ventures, which is modelled on the basis of a venture fund, has to invest the amount raised in three years and if not, it should be returned to the investors. Also if the firm decides to pick up a stake larger than 20%, then it has to seek shareholder approval. SEBI is looking to list the fund in a seperate segment, although details are not known repots vccirle.com.

Infosys-Axon Deal !

2008-09-06T23:44:00.001-07:00

Hailed as the largest outbound deal by Indian IT Company Infosys-Axon, some market analysts believe it will have no major financial impact on the company. Agreed it’s a strategic buy in the SAP space, but any sharp appreciation in the rupee against various currencies and a prolonged recession in major user economies may be a difficult path choosen by Infosys.

Infosys announced acquiring UK-based Axon Group in a 407-million pound (Rs 3,310 crore) all-cash deal after market hours Monday. The deal is expected to be consummated by November 2008, with the payment being made in December, and would add to its earnings from January 2009,

There is a mixed reaction for the deal in the market and most of them are worried as investing in a company that draws majority if its earnings from the US where slow down is the buzz word. Analysts feel that is not a very good buy.

Photo courtesy : Nasdaq

Banks Ready For New IPO Payment Facilty

2008-09-04T22:23:00.000-07:00

The Hindu Business Line reports that eleven banks participated in the mock test carried out by the Bombay StockExchange (BSE) for the new IPO payment facility recently permitted by SEBI. The first IPO in which the facility will be used is that of 20 Microns, which opens on Monday.

This facility, called the Application Supported by Blocked Amounts (ASBA), allows banks to block IPO application money in the applicant’s bank account till the time of allotment of shares. Only that amount proportionate to the share allotment will be transferred from the account.

The markets regulator has said that ASBA will be operationalised from Monday. . This coincides with the opening of the IPO of 20 Microns, the first issue in which the ASBA process will be used by investors.

Interface tested

“BSE has successfully tested its interface with 11 banks for participation in the ASBA (Application Supported by Blocked Amounts) process,” said a BSE news release.

The exchange is in the process of testing the interface with other banks that have evinced interest in participating in the ASBA process, BSE said. Using this interface, the banks participating in the IPO process would be able to upload the bids with respect to their customers, into the electronic book of the BSE.

Corporate Fundraising Tips

2008-09-03T06:29:00.000-07:00

Raising funds within a corporate setting takes creativity and good time management skills. With a little bit of planning and teamwork, however, your office can raise a large amount of money for purposes such as charitable donations or community resources. Regardless of the purpose behind the fundraising, there are a number of common principles that can be employed in order to maximize results and get the most out of the fundraising experience.

Decide What You Need

One of the first and most basic principles associated with corporate fundraising is to realize how much money or resources you intend to raise and work with that goal in mind. A solidified, concrete goal with which to work impacts the process of fundraising by allowing for accurate goal-setting. This will also assist in organizing the fundraising event and compiling the various resources needed to begin the fundraising.

By discovering and deciding on the fundraising goals, you can also begin to plan the basics. Watch out for any hidden costs associated with the fundraising process, as these can take away from your goal and can impact the amount of funds it may take to set up the fundraising venture in the first place. Hidden costs such as shopping for prizes or setup materials can impact the overall experience of fundraising.

Take Time to Prepare

Taking adequate time to prepare the fundraising event is critical. Select your fundraising program as early as possible to give a lot of time between the start date of the event and the present date. You will need ample time to collect materials, assemble a team of assistants, and advertise your fundraiser. Promote the fundraiser with posters and advertisements in schools, church groups, community centers, and other public places for the best turnout.

Stay Motivated

As the fundraising event continues on, it is important to keep your team motivated and excited. A lack of motivation can hamper the fundraising results and negatively impact your company's image. Instead, offer incentives along the way and organize your event properly so as to give sufficient time for breaks and time off. If the fundraiser is stretched out over several days and involves order taking, substitute workers frequently to avoid fatigue. Set a limit of ten to twelve days on order taking for the best results.

Communicate Clearly

Communication is of significant importance. It is vital that communication is accurate and timely, especially between fundraisers and potential clients. If people do not have a clear idea as to where their money or donation is going, they are not as likely to give a generous donation. Having clear and concise information to communicate with the client can make the fundraising process easy and exciting. It's also a great way to provide a good reputation for your company.

Have a Variety of Options

If you are selling items or auctioning off various goods in your fundraiser, make sure you have a wide variety of items. Dollhouses, rocking horses, and toys make great fundraisers for family friendly events, while other fundraisers may feature the auctioning of time-saving products or even vehicles.

Source:http://ezinearticles.com/?expert=veronica_scott

Trial Run : IPO

2008-08-24T06:32:00.000-07:00

The dream of many entrepreneurs is going public one day. I'll provide a look at the realities of an IPO. I'll start with a basic overview of an IPO, and then explain how to prepare for one, public relations do's and don'ts, and life as a public company. It's an enormous topic, but my plan is to provide you with general understanding.

Timing and responsibilities Your board of directors, together with the underwriters (investment bankers), will determine the timing of an IPO. Expect a 14- to 18-week process, but bear in mind that market conditions may expand or compress this range. To have the best shot at controlling timing and minimizing market risk, be both prepared and highly flexible. Your chief executive officer and chief financial officer won't get much work done outside of the time-consuming IPO process.

Choosing an underwriter The main issue here is to be sure your underwriter is committed to your offering. Here's what to ask: Is it already representing competitive offerings or offerings in the same time frame which may be a distraction? Has it had any "cratered" deals (deals that were not successfully marketed)? You'll pick at least two underwriters with expertise in your industry. And you'll want them to hold the stock after the offering. Look at the history of the underwriters. Do they often sell off their shares at the first opportunity? If so, be warned.

The organizational meeting The key company executives, attorneys, and accountants, plus the investment bankers from the underwriting firm and their attorneys, will attend the organizational meeting. They form what is known as the IPO working group. The timeline, number of shares to sell in the offering, legal and accounting issues, due diligence, publicity, and the road show will all be discussed in this meeting.

Determining the stock price and number of shares The underwriters will determine the valuation of your company, and you'll work with them to set the price of your stock from there. Setting the valuation is no trivial exercise. Market conditions, comparable companies, past and projected financial performance, market position of your products or services, new products in development, and management team will all be considered. The more data you provide to the underwriters, the more likely they'll set a valuation you're happy with. From the valuation, a range for the share price will be set, but it won't be solidified until shortly before the offering.

Prospectus The prospectus plus additional public information about the company that is considered material. It is filed with the SEBI. The prospectus is the IPO marketing document. It explains the offering, the business, the products, the risks involved, the use of proceeds, who the executives are, and their view of the financial condition and results of operations, the financials—in essence the most accurate and complete picture of the company. The summary section is the most important part of the prospectus, because it's the only section everyone reads. The summary will either boost or dash confidence, so you'll likely write it last, once the entire prospectus is done.

Caution: Above all, in spite taking all precautions two major IPOs, Emmar MGF and Wockhardt Hospitals withdrawn their IPOs, when they failed to manage the required amount of subscription from investors. After the poor performance of Reliance Power IPO (Initial Public Offering), investors have started avoiding IPOs.

Inputs also from: Christine Comaford CEO of business accelerator Mighty Ventures, is the author of the best-selling book Rules for Renegades.

IPO Trends favor India and China

2008-08-13T06:35:00.000-07:00

Attorneys who assist clients in the process of preparing an IPO generally believe that 2009 will result in a stronger market than 2008. A recent survey has revealed the current reluctance is tied to general economic conditions. Companies which have filed to go public are waiting up to six months for the launch event compared to an average of three months a year ago.

The survey also found that companies based in China and India are increasingly seen as potential opportunities for new IPO launches and to encourage these firms to seek capital in the US, attorneys believe the Sarbanes-Oxley legislation may be relaxed for foreign firms.

Here’s a breakout by industry for expected IPOs in the next several months:

Alternative energy

Biotechnology/Health

Technology

Traditional energy

As you prepare to prospect for new business in 2009, keep these trends in mind.

[Sources: Gaven Anderson release 8.5.2008; Ernst & Young release 8.5.2008]

Sebi reduces IPO listing time to 7 days

2008-08-09T23:18:00.001-07:00

Sebi will reduce IPO listing time from 21 to 7 days but it may happen in next in 6 months time .

Primary market reforms are on top of the agenda of India’s capital market regulator SEBI. SEBI wants to kick off the exercise by cutting down the time between a company’s public issue and the listing of its stock from 21 to seven days. SEBI also wants to iron out glitches in SEBI’s investigation and legal wings and make sure that involved parties are heard before any judgment is passed. The market is not in the best of health.

Isn’t it an ideal time for reforms as nobody will accuse SEBI of spoiling the party.

India Inc. feels the Inflation Heat

2008-08-09T00:15:00.000-07:00

As India Inc witnesses a slowdown in the earnings growth rate, India’s top 25 business houses also mirror the trend. Financial Express study of these large industrial houses, with diversified business presence, shows that the net earnings growth rate is low at 7.3% in the first quarter of FY09, as compared to double digit growth rates recorded in previous quarters. However, the revenues kept growing at a rapid clip, where the companies in reckoning recorded a 35.5% growth in the period under consideration.
In absolute terms, the total net profit of the 25 largest business houses has increased to Rs 15,878 crore in April-June’08 from Rs 14,799 crore in April-June’07. Clearly, there has been volume growth, but rising input costs and higher interest rates have been taking their toll.
On the other hand , the total sales of the 25 houses also increased by 35.5% to Rs 1,55,160 crore in April-June’08 , against Rs 1,14,541 crore in April-June’07. Analysts attribute the lower growth in earnings to lower trading income and income from non-core sources like the stock market and the foreign exchange market. Since the rupee and the stock markets have been volatile, especially in the first quarter of FY09, the total other income of the above number of houses decreased by 1.6% to Rs 3,515 crore in April-June’08 from the level of Rs 3,571 crore in April-June’07.
Subsequently, the net profit margin, which is expressed as the PAT to sales ratio, which measures the rupee net profit made from a hundred rupee sales, has dipped from 12.92% in April-June’07 to 10.23% in April-June’08.
Individually, among the top 25, the ratios increased significantly from April-June’07 to April-June’08 in the case of Tata (14.82% to 15.41%), Munjal (Hero) ( 7.14% to 8.98 ), Murugappa (2.47% to 5.56 %) and Torrent (6.34% to 7.50%).
Among the 25 business houses, the ratios decreased significantly from April-June’07 to April-June’08 in the case of Mukesh Ambani (12.30% to 9.89%), OP Jindal (14.34% to 8.85%) and Anil Ambani (25.66% to 14.87%).
On the net profit level, significant growth of over 25% in the first quarter of the current fiscal, over the same period of the previous year was witnessed amongst eight industrial houses. These include the Tata gruop, the Ruchi Soya group, the Essar, the Munjal or the Hero group, Ispat-MPK, Murugappa, Torrent and Kalyani. While Mukesh Ambani’s Reliance group topped the list with... sales of Rs 41,596 crore in April-June’08, the Kirloskars group were at the bottom of the list with collective revenues worth Rs 1,264 crore

R-Money to "export" currencies Rs 10,000 Crore

2008-08-09T00:11:00.000-07:00

Anil Ambani group's Reliance Money is eyeing to "export" currencies worth about Rs 10,000 crore in the current fiscal a four-fold jump from previous year's figure as part of its money changing and transfer business. Reliance Money, the brokerage and financial products distribution unit of ADAG's financial services arm Reliance Capital, is looking for a significant growth in its money changing and transfer business, the company CEO Sudip Bandyopadhyay said in Kolkata. He said the company exported currencies worth Rs 2,500 crore in the last fiscal and is targetting Rs 10,000 crore in current financial year. The size of the Indian export currency market was around Rs 40,000-50,000 crore to and was growing further due to increased tourist inflows and trade activity, he said. When Indian rupee became fully convertible, then currency movements would increase and the market would grow exponentially, he added. On money transfer, he said, Reliance Money was the largest partner of Western Union. The target was to transact Rs 2 lakh per month by the end of the year, he said. Meanwhile, Reliance Money had floated a company in the Gulf, Riyada Reliance Money, with a view to sell global products to foreign clients. He said the company would seek membership of Saudi Arabia's Takaful stock exchange to conduct business there.Bandyopadhyay added that the Riyadh-based firm would make an issue to raise Rs 240 crore by way of off-loading 74 per cent stake to institutional investors on private placement basis. To further expand its international presence, the company is also eyeing to acquire an entity in the Middle East, the Reliance Money CEO said

New Norms for VC's

2008-08-06T23:44:00.000-07:00

Government is likely to revisit norms for venture capital funds and talks have been held with the market regulator SEBI in this regard.Norms governing domestic and foreign venture capital (VC) funds in India are set for an overhaul. The new guidelines, being drafted by the finance ministry and the capital market regulator SEBI, may not allow VCs to invest in listed companies and restrict them only to startups. The guidelines will also seek to remove the differences in the treatment of foreign and domestic VC funds. One of the aspects being reviewed is the minimum capital required for VCs to set up shop in India. Currently, domestic VCs need to have a minimum capital of Rs 5 crore to operate, while foreign VCs don’t have any such requirement. The new guidelines will attempt to provide a level playing field for domestic and foreign funds. The government is studying norms in other countries, where mere commitments to provide capital to a VC fund would be sufficient. VCs, who are currently exempt from SEBI’s takeover code or lock-in period for shares held would be allowed to enjoy this exemption only if they invested in “genuine new ventures.” The government feels that VCs should provide capital to new ventures and not invest in established listed companies. Speaking earlier at the launch of the Venture Capital Association of India, joint secretary in the finance ministry KP Krishnan said, “It is time to revisit the regulatory regime of venture funds. Now, they are not required to register with the regulator. It is important for us to know how many of them operate in India as well as the volume of business that they do.” On another count, while domestic VCs can get a tax exemption only if they invest in high-risk areas like biotechnology or nanotechnology, foreign VCs escape taxes altogether as they normally operate from offices established abroad. Most foreign VCs do not have to pay any tax, as they have no permanent establishment in India. The differences in tax treatment between domestic and foreign VCs is also under review, the official said. The government is also understood to be looking at redefining the investments that are more risky instead of categorising certain sectors such as biotechnology as risky. The government’s intention is to have a new classification of risky areas of funding irrespective of the sectors.

Making an IPO

2008-08-05T21:39:00.000-07:00

With IPO being the buzzword in the industry sector, following the seven steps would ensure a smooth climb up the IPO ladder when an Initial Public Offering (IPO) comes in for funding ambitious, gigantic projects. .However, going for an IPO is definitely not easy. An industry expert cautions,
"The right recipe is to go step by step with each step dependent on the other. If you miss out one step the whole structure will crumble."

Making an IPO involves immense research, planning and strategising. One must bear in mind that here the ownership and management of the organisation is not just focused on a particular person(s), but instead distributed and diluted on a larger scale and hence the stakes are automatically higher. So, an error even on a miniscule level can have drastic repercussions.

1. Choosing the Perfect Time

Before even plunging into the intricacies of the pre-IPO arrangements, choosing the ideal time to go public is of core importance. The timing of going public is very crucial in the pre-IPO process. One should look into many aspects before the plunge—like looking into the prevailing market sentiment. In the 1980's and early 1990's when branding and marketing were non-existent, liquidity in the market, behaviour of the secondary market and merchant bankers' advice were instrumental in deciding the right time for the IPO.

2. Choosing the Right

TeamForming the right team is essential before going for an IPO. Apart from the Chief Executive Officer (CEO) or the Chairman, the main members are the Chief Financial Officer (CFO), Chief Operating Officer (COO), the Company Secretary, the auditors, professional merchant bankers, and the Chief Information Officer (CIO) in the current age of information and legal advisors. It is very important for the board of directors involved in the venture to have a progressive outlook. Only an intelligent team can contribute to the success of the venture. Zeroing in on the right CFO is crucial. Experts in the field opine that the CFO should be a veteran with not just a sound financial knowledge of the market and the trend of IPO. The CFO required when the company is at its growth stage is different from the CFO needed for an IPO, where he should have good networking and market contacts. A merchant banker works out the logistics of the company, but it is the CFO who actually markets the IPO. Team building and the professional team that you bring in is very important. You should be very careful not only about land and equipment but also while deploying money and manpower. Apart from the CFO and the Company Secretary, choosing appropriate auditors makes a world of difference. Unlike other members of the team, the auditor has the additional job of assessing whether the entire accounting system is in order, is transparent and analysing whether the numbers and projections as shown in the Excel sheet are realistic and practical. If you have a good auditor, half your battle is won. In fact, one should employ auditors at least one or two years before the IPO is launched.When the company goes public, it must make a note of disclosures about the company operations and past records. It can't afford to make any observations which are incorrect or not backed by strong evidence. You should have a team who can strategise and can plan the inflow and outflow of resources and money.

3. Definite Goals and Purposes

A company should be focused and clear about the purpose of the IPO. Usually, the purpose behind making an IPO is to accumulate funds and finances for expansion and investments and above all woo the investors and consolidate as a brand. This requires a purely corporate structure. Currently, there are stringent SEBI guidelines to be followed before any company goes public. Keeping this in mind, the valuations which the company wishes to command will depend on the future goals and projects of the company, and the management team. Unless the management is fully sure of the ultimate goals, the company will not be able to come up with a high valuation for the proposed issue of shares.

4. Choosing the Right Merchant Bankers

The primary role of a merchant banker should be to act as a bridge between the organisation and the investors. Firstly, the merchant banker should have a brand image in the market. A merchant banker should have the capability and the experience to handle a large-scale IPO. And they should be able to reach a larger mass of people because investors today are just not located in the metros but also in tier-II and tier-III cities." Simultaneously, they also chalk out the risk management strategies for the company since risks and ventures are two sides of the same coin. Hence a company should choose such a merchant banker who is just not professional but who understands the logistics and mechanics of the industry. Apart from being a link between the organisation and the investors, a banker also has to generate interest and build up the confidence of the investors.

5. Capital Restructuring

Companies should decide on the ways to deploy their capital, namely capital restructuring. Companies should be clear about the debt and equity ratio. This boils down to setting the ideal Debt-Equity Ratio (DER), which can vary from 1:1 to 2:2. "You have to work out your ratio according to the cash and the growth rate, so that they can accordingly structure their profits.In capital restructuring, you have to be sure of the DER maintained, what are the facilities you are planning to set up and what is the land value you are going to purchase. The way you are going to deploy your capital is also very important. You have to be very careful while deploying the resources and forecast the profit you will incur in three-four years' time."

6. Creating Investor Interest

Confidence building and generating investor interest should be on the priority list for a company.A Company must project an image of transparency and good governance to the investors. Infosys should be the role model for all companies going in for an IPO. Many of the experts agree that IT giant Infosys is a role model because their balance sheet is very clear, they value their managers as assets and year after year they expand rapidly. A company is accountable to its investors, which is why when they go public they have to disclose company projections—past, present and future prospects. This is where the team of advisors, consultants and legal experts comes into the picture. IPO is all about building investors' confidence so we overperform to hike up investor confidence. If you raise the expectations and do not meet them, then investors will not excuse you for the next two-three years. Infosys, for instance, follows this strategy and gets higher multiples because they understate their plans.The projections given to the public should be realistic. The excel sheet might project rosy details of growth, but if they do not live up to the expectations then public confidence is sure to plummet to the lowest level.

7. Media Campaigns

A few years ago, marketing and media campaigns were considered a luxury, but today they are absolutely necessary. They contribute to the relative success of an IPO venture. The campaigns can be in the form of road shows and extensive investor meetings. They are required because the investors need to be made aware of the company and its past performances and any important projects undertaken/completed. During the campaigns, various facets related to company performance, the need to raise money and future plans are disclosed, information that investors seek. A successful media campaign ensures complete participation in the IPO by one and all. In fact, recently when a bigwig real estate company went public, a few crores went in media campaigns alone! However, there is no short cut to success. A step-by-step approach always pays in the end

2008-08-05T09:17:00.000-07:00

Economics and Politics

2008-07-30T23:03:00.000-07:00

Never before has Indian Corporate Inc. been under finer scrutiny when it comes to loyalty. When I use the term 'loyalty', I intend to focus the spotlight on the various factions that an organization is responsible towards i.e. country, organizational growth, society and in some cases, family.
An organization's loyalty towards its own growth may at times hinder with its commitment towards its root nation. Something similar happened when the owners of Ranbaxy decided to sell the company to the Japanese pharmaceutical giant, Daiichi. Very recently during the Business Standard Awards function, the chief guest of the occasion, Mr.L.K. Advani openly condemned this move by Ranbaxy terming it 'a cause for worry'. Mr Advani feels that profit making motives should never override national interests.However, this is just one side of the coin. I personally can't see anything wrong with the strategy that the Ranbaxy promoters have adopted . They feel that the only way to keep the company growing is to expose it to a much larger platform. Broader exposure is exactly what the company would gain under Daiichi which is a huge name in the international pharmaceutical market. Moreover, if Ranbaxy grows in stature, so would the Indian pharmaceutical industry. After all, the change is only being implemented at the ownership level. Its not that Daiichi would be closing down Ranbaxy's business in India, is it? Eventually, both Ranbaxy and the Indian pharmaceutical market stand to gain from this move. Wouldn't it be great if we could actually look at the larger perspective instead of unnecessarily making it an issue of national pride?Similar is the case when it comes to the RIL-RCom-MTN fiasco, though there's a twist in the tale. Here the battle is more about personal differences and bruised ego rather than national interests. Only the Ambani brothers know as to why they can't stay away from each other's business. Supposedly, Reliance Industries Limited has the right of first refusal when it comes to a sell off in the Anil Ambani led group. Hence, RIL is going all out in making sure that Reliance Communications (which used to be Mukesh Ambani's baby) isn't sold to a foreign entity.The fact however is that no one is aware of the actual reason behind this hindrance from RIL. Is it because Mr. Mukesh Ambani cannot see his start up being sold to someone outside the Ambani family? Is it because he feels no matter what, RCom should remain an Indian entity(given Reliance's national lineage)? Or is it just the case of bruised ego? The point is, what does the picture look like in terms of the larger perspective. If RCom does become a part of MTN, it would increase its foothold by an enormous proportion (courtesy MTN's international network). The deal would also mean exposure to MTN's advanced set of technologies. Ultimately, the entire deal would benefit RCom's customers and the Indian telecom sector on the whole. Of course, even the shareholders stand to gain quite immensely. If the picture looks quite rosy on the larger scale, then why this unnecessary interference?The intention behind citing these examples was not to criticize the people involved. Rather, the objective was to drive in the case of looking at the bigger picture. In this age of globalization and consolidation, the more flexible organizations are, the more they would stand to gain and subsequently help others gain as well. Corporate loyalty is a relative issue and what matters the most is how organizations and the ones in charge perform the balancing act. After all, not all targets can be hit with the same arrow!