Future Venture Files DRHP With SEBI: Plans To Raise Rs. 3736 Crore Through IPO

Future Ventures India Ltd (FVIL), the venture capital arm of Kishore Biyani's Future Group, has finally filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for an Rs.3736 crore initial public offering (IPO).

The IPO comprises a net issue to the public of 266 crore equity shares and a reservation of up to 5 crore shares for employees and 2.5 crore shares for the shareholders of Pantaloon Retail. The net issue would constitute 66.52 per cent of the post issue paid up capital of the company.

FVIL was incorporated in 1996 and is promoted by Pantaloon Retail (India) Ltd, the flagship company of the Future Group, Future Capital Holdings Ltd, Future Capital Investment Pvt Ltd, Pantaloon Future Ventures Ltd, which is a wholly owned subsidiary of PRIL, and Kishore Biyani.

Future Ventures was acquired and its name changed from Subhikshith Finance and Investments Ltd in July 2007, after which Pantaloon invested Rs. 325 crore in it. It now has a 28.4% stake in discount retail chain, Sankalp Retail Value Stores Pvt. Ltd, which runs Dollarstores International, and a 6.5% share in women’s wear retailer Biba International Ltd and one more retailer.

The announcement comes barely three weeks after the listing of Future Capital Holdings (FCH), the financial arm of Kishore Biyani's Future Group. The issue was subscribed 133 times.

The book running lead managers (BRLMs) are JM Financial Consultants, Enam Securities, Kotak Mahindra Capital Company, ICICI Securities, and Edelweiss Capital Ltd.

Sebi nod for Indiabulls' MF business

Indiabulls Financial Services has got the regulatory approval from the Securities and Exchange Board of India (Sebi) to set up an asset management company. The new company, which will undertake the mutual fund business, will be a subsidiary of Indiabulls Financial Services, said market sources. When contacted Indiabulls spokesperson confirmed that the company has received Sebi approval for starting a mutual fund business.

As of now 33 fund houses are present in the Indian MF space. Additionally, a handful of firms, foreign as well as domestic, are in different stages of seeking regulatory approvals for launching their AMC businesses, mainly lured by the tremendous growth opportunity they see in this business. Going by assets under management (AUM), in the last one year to January, the industry has grown by a whopping 61.6% to Rs 5.48 lakh crore from Rs 3.37 lakh crore as of January 2007.

Along with the growth in AUM, valuation of fund houses has also shot up. Of late, two deals in the asset management space has pushed the valuations of fund houses to a new peak.

Reliance Globalcom launched

Plans $2 bn upgradation, mulls initial float.

Reliance Communications (RCom) has consolidated its global businesses into a newly-formed subsidiary, Reliance Globalcom, and will invest over $2 billion by the financial year 2009 for upgradation and expansion.

The company, which will be headquartered in London, would also go in for an initial public offering in the “near future”, Punit Garg, president of Reliance Globalcom said today.

Reliance Globalcom will become the holding company for the global operations of Reliance Communications (which offers voice services like Reliance India Call, Reliance Global Call, Reliance Netcall and Reliance Passport), the submarine cable subsidiary Flag Telecom and the recently acquired US-based Yipes Enterprise Service (an Ethernet technology major).

“Reliance Globalcom will bring a diverse portfolio of global communications business services like the global voice, managed network, carrier Ethernet and fibre capacity into a single group,” Garg said.

“Apart from this enabling us to reach the customer faster, it will also help us increase our global footprint and emerge as one of the top telecom companies in the world.”

About $2 billion will be spent by 2009 for managed services network, infrastructure upgradation and capacity expansion of Flag. “Of this around $1.5 billion has already been committed and the remaining 0.5 billion would be infused next year,” Garg said.

With the consolidation of its global business, the company will have an annualised start-up revenue of $1.32 billion and EBIDTA of $334 million, he said.

The company will target the global telecom arena that has an annual addressable revenue potential of $285 billion.

RCom has also changed the name of its subsidiary Yipes Enterprise Services to Reliance Globalcom Services and that of Flag Telecom to Reliance Flag. Both the companies will function as subsidiaries of Reliance Globalcom.

Reliance Globalcom will have a presence in over 50 countries, including the top 20 financial centres in the world, among them New York, London, Tokyo, Paris, Chicago, Toronto and Frankfurt.

Last week, another telecom major Videsh Sanchar Nigam Ltd (VSNL) re-christened the company as Tata Communications and integrated VSNL, VSNL International, Teleglobe, Tata Indicom Enterprise Business Unit and Cipris brands under the new name.

Broking firms see 400% leap in online trading value

The number of investors opting for online trading has gone up manifold, according to the recently published 'India’s Leading Equity Broking Houses, 2008' by Dun & Bradstreet (D&B). The publication says that less than 10% of the 191 broking firms surveyed reported huge growth in opening of e-broking accounts and some firms saw a surge in value of up to 400% in e-broking during 2007.

According to the report, number of e-broking accounts registered in 2007 have grown exponentionally. Indiabulls Securities Ltd added 4,51,611 accounts while a relatively new firm in the industry, Reliance Money added 2,15,678 accounts during the same time period. Motilal Oswal Securities Ltd managed to add 19,065 accounts while Unicon Financial Intermediates Pvt Ltd could increase their e-broking accounts by 13,787.

Manoj Vaish, president and CEO-India, D&B Information Services India, said, “A new class of tech-savvy investors is increasing in India and also the maturity level of these investors is reaching new heights. e-broking also makes a good business sense as the manpower cost gets reduced and also the reach is amazing. The broking firms can get away from expansion cost and the risk management system is quite robust when technology is used. I see the trend in the e-broking increasing in the years to come and as of now I don’t see any major roadblocks in the way."

According to market watchers, the rise in the value of on line transactions is also because of sustained bull run witnessed in 2007, when the 30-share Sensex of the Bombay Stock Exchange (BSE) gained from 13,842 points to 20,207 points, a gain of 6,365 points (up 47%).

e-broking is contributing a sizeable portion to the trading volumes and also to the revenue generated for leading stock broking firms. Some examples of the percentage contribution to trading volumes contributed by e-broking are 91% in case of Reliance Money, 62% for India Bulls, 20% each for ASL Capital and Shreyas Stock, 19% Angel Broking, and 15% Farsight Capital.

In respect of revenues generated from e-broking, India Bulls (63%), Reliance Money (54%), Unicon Financial (30%) and Shreyas Stock (20%) reported higher shares in 2007. Ashika reported 98% growth in e-broking business in the first 10 months of 2007.

Another significant trend is the growth in international business of broking firms. Firms that reported presence of offices outside India include Reliance Money, Motilal Oswal, Karvy Stock Broking, JRG securities, Vogue and Bonaza Portfolio.

Brokers seek securities tax rationalisation

Broking firms want the securities transaction tax (STT) to be rationalized, in Budget 2008. STT is being levied at the rate of 0.125 per cent for capital market transactions and 0.017 per cent in the derivatives segment.

Under the current tax structure, buyers and sellers have to shell out Rs 100 each on delivery-based trades worth Rs 1 lakh, while the seller has to pay Rs 20 on non-delivery trades amounting to Rs 1 lakh.

The government gets monthly revenues of Rs 200 crore on an average. Almost 65 per cent comes from non-delivery based transactions, according to brokers.

Brokers maintain that cost of transaction has to go down, which would lead to an increase in volumes. Currently, the trading cost in India is among the highest in the world.

There should also be clarity on how the stock market gains are taxed. Nilesh Shah, CEO, Ambit Capital, said, “We need clarity on whether stock market gains will be taxed as capital gains (short term and long term capital gains) or business income. Since there is a lot of confusion, the finance minister should address the issue.”

The applicability of STT on arbitrage trades is unclear, either. These trades, which constitute a very large component of daily volumes and provide liquidity to the markets, carry the same STT rates as client trades.

There is a lack of clarity regarding STT credit between the arbitrageur and brokerage houses. There is also confusion regarding the applicability collection of service tax from sub-brokers. Under current regulations, the registered sub-brokers do not collect brokerage fees from investors.

However, this is a mandatory requirement for registering under the service tax regime. The anomaly needs to be addressed, said Asit C Mehta in a pre-budget note.