In a landmark deal, global retail giant Wal-Mart has bought out 77% stake in Flipkart for a consideration of $16 billion giving Flipkart an enterprise valuation of $21 billion. Flipkart’s largest shareholder, Softbank of Japan, will sell its entire 23% stake and Naspers will also sell its entire stake in Flipkart to Wal-Mart. Other early buyers into Flipkart like Accel Partners, Tencent and Tiger Global will retail a small stake in Flipkart. While Sachin Bansal will sell his 5.5% stake for around $1.1 billion to Wal-Mart, the other founder Binny Bansal will continue to be involved as the co-CEO of the new entity.
The Indian Rupee tumbled to a new low of Rs.67.48/$ before settling at 67.27/$ towards the end of trading on Wednesday. Surging crude prices and sustained capital outflows continue to be the main worries. There was visible dollar buying pressure from importers and banks and the forex traders are now expecting the RBI to intervene only around the 68/$ mark. However, there was some selling of dollars by state owned banks on behalf of the RBI, which enabled the INR to gain some ground in the latter half. The trigger came from Trump’s decision to abdicate the Iran Nuclear Deal.
Even as Trump has withdrawn the US from the Iran Nuclear deal, the door is now open for the US to again impose sanctions on Iran. However, Indian downstream oil companies which are heavily importing oil from Iran do not appear to be overly perturbed. Most refiners are in no hurry to search for alternatives since most of the Western nations have reiterated their commitment to do business with Iran. IOCL intends to buy nearly 180,000 barrels of crude from Iran daily and they do not foresee any changes to this arrangement. India is Iran’s second largest oil customer after China.
Airtel is planning a mega IPO of its Africa operations in an effort to reduce its overall debt by nearly $4.6 billion. Apart from an IPO of its African operations, Bharti Airtel will also be looking to sell some of its towers business. It may be recollected that Bharti Airtel had bought out Zain of Africa in 2007, which was then considered the world’s fastest growing telecom market. Despite hurdles, Bharti has managed to get good yields from its Africa business as was evident from its recent quarters. The debt reduction will bring the net debt of Bharti Airtel down to around $10 billion.
The all important state of Karnataka goes to polls on 12th May. The Karnataka elections could be a high-stakes election for the Congress and the BJP. For the Congress, Karnataka remains the last major state that it is holding on to and it would be keen to beat anti-incumbency to retail power in Karnataka. Additionally, a resounding victory for the Congress will consolidate its position as the fulcrum of a united opposition against the BJP in the 2019 elections. For the BJP, Karnataka is significant due to its chequered record when it gained power in 2008. Karnataka is the only state where the BJP has a significant presence and it would want to use it as the gateway to the South. Above all, a victory for the BJP will be seen as an affirmation of the reforms process initiated by Mr. Narendra Mod.
The fracas over the Binani Cements acquisition continues after the original highest bidder, Dalmia Bharat, has alleged that Ultratech was ineligible to bid for Binani Cements. Dalmia Bharat’s contention is that since Binani Cements was a defaulter under the IBC, any out-of-court agreement between the Binani promoters and Ultratech was void ab initio. Binani Cements is keen on the Ultratech since the offer is nearly Rs.1000 crore higher than what Dalmia Bharat was offering. In fact, Ultratech’s revised offer stands at Rs.7900 crore against Dalmia Bharat’s revised offer at just Rs.6700 crore.
