In an interesting political move, the ruling BJP withdrew its support to the Mehbooba Mufti led PDP party in the Jammu & Kashmir assembly. The virtual failure of the Ramzan ceasefire and the killing of noted journalist Shujaat Bhukhari may have exacerbated this decision. Ms. Mufti has already submitted her resignation to the governor and it is still unclear as to whether there will be another government or the centre will impose President’s rule in J&K. If it does, then it will be the 8th occasion when President’s rule is being imposed in the state of Jammu & Kashmir. Law and order is at an all time low in J&K.
It looks like Donald Trump may be having his way with Saudi Arabia and Russia agreeing to a sharp hike in oil production, despite the protests from Iran. Saudi Arabia and Russia are the world’s largest producers, apart from the US and this move almost looks like a syndicated oligopoly at work in the oil industry. Out of the original 1.8 million barrels per day that OPEC and Russia had cut, they now plan to restore nearly 1.5 million bpd. That is likely to create a supply glut in the market and bring prices lower. The OPEC is meeting at Vienna later this week and this could be the real debate.
After the failure of the Air India strategic sale and some random efforts at an IPO, the government may have finally decided to put off its plan to sell Air India for now. Most likely, the decision may only be taken post the election. For this year, the government will provide the required funds for its operation as it may not be too keen to antagonize the unions in an election year. The government had originally offered 76% stake in the airline but there were few takers. The government will have to reconsider the extent of stake sale as well as a game plan to leverage the real estate properties of Air India.
Kraft Heinz, owner of the Complan Brand, may be planning to sell its marquee brand in India for a consideration of $1 billion. Complan is one of the leading brands in the children’s health drink segment in India. Kraft hopes to attract local investors as well as large P/E companies who may be interested considering the marquee nature of the brand. Interesting, Glaxo is also planning to hive off its stake in Horlicks, which sounds strange in a growing market like India. Ironically, Kraft had purchased the Complan brand from Glaxo way back in 1994 and now it is coming a full circle.
Mumbai based UPL may be in advanced talks to acquire Platform Specialty Corp’s agricultural pesticides business. While Platform is backed by noted investor Bill Ackman, UPL will be putting in a bid jointly with Abu Dhabi Investment Authority (ADIA). The bid could be worth $4 billion which would be a big acquisition considering that UPL itself has a market cap of only $5 billion. The agricultural pesticides business of Platform is run under the brand name of Arysta Life Science and contributes to nearly 50% of the revenues of the Platform Group. Bill Ackman of Pershing Square is one of the major backers of the Platform group with a 14% stake. For UPL, if the deal goes through, it will mark a major leap into the big league as it will give the company the global presence and the requisite scale.
The first IPO by a company related to the Indian Railways (RITES) will be opening its IPO on 20th June 2018. The government of India will be offloading part of its stake in the company. The government will raise Rs.460 crore through the sale of 2.52 crore shares at an indicative price range of Rs.180-185. Post the IPO, the government stake in RITES will come down to 12.6%. This IPO will be important as it will set the tone for other Indian Railway related IPOs from companies like IRCON, IRFC etc. RITES Ltd. is essentially a transport and engineering consultant and its revenues arise from providing services overseas.
