MC Insider: Mutual fund buyout buzz, cement deals, story behind tax raids, hype master and more

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© Shubhashish MC Insider: Mutual fund buyout buzz, cement deals, story behind tax raids, hype master and more

MUTUAL BENEFITS

Last-minute finishing touches are being given, we’re told, to this likely acquisition of a mid-sized fund house by a foreign fund house. Buzz is the acquisition is slated to be formally announced by mid-October, barring the slip between the cup and the lip, which can always happen. But let’s not forget, this mid-sized fund house was also said to be a potential target of a bulge-bracket private equity firm that has been in the fray for several months.  Interested parties were waiting for the board meeting at the Securities and Exchange Board of India (SEBI) last month where it was rumoured that the regulator might finally allow VC firms to own mutual fund houses in India. But SEBI did not take any such decision. The proposed acquisition is now said to be inching to its conclusion. Investors in this mid-sized fund house may just as well want some rejuvenation. Its equity schemes have not really done well when compared to its competition in the recent past, after its super successful, but low key, head of equities had quit. This fund manager of vintage had turned around the fund house’s fortunes after it had acquired an international fund house in around 2011. After the star fund manager quit, the fund’s equity funds haven’t quite matched up to the competition. The problem is: the potential foreign fund house acquirer isn’t all that impressive either. This foreign fund house has been around for nearly two decades in India, but its performance has been on the fringes. The size of its own largest equity scheme (also nearly two decades old) is under Rs 1,000 crore; a dismal showing by any standard. A merger may be what the sponsor firms desire, but let’s hope for the investors’ sake, the performance also picks up eventually.

BACKROOM LIAISON

The ambitious and well-networked son-in-law of a chief minister is trying to maintain a good relationship with the BJP in New Delhi. Rarely seen in public, the son-in-law is suave and had a good rapport with the late Arun Jaitely. He visits the national capital often and meets the bigwigs secretly. These visits must be seen in the context of his father in law’s not so good terms with the BJP. But the son-in-law is a practical person and believes that managing Delhi is very important even though the ideology is different. His reach out has not gone down well with the CM’s son and some party veterans.

CEMENTING RELATONSHIPS

Back in July, JSE Cement raised up to Rs 1,500 crore from PE firms Apollo Global Management and Synergy Metals Investments. The debt resolution process of Andhra Cements is also underway. Whispers on D-street indicate that another deal is on the cards in the cement space and this one could potentially be a merger between two players. If talks fructify, the merged entity may emerge as a force to reckon with in terms of combined capacity. Any guesses folks?

MASTER OF HYPE

This D2C startup is riding the hype train like no one else. It says it wants to be a $10 billion company by 2023, but its FY20 and 21 revenue are about Rs 50 crore, far less than what it claims. The company’s customer acquisition cost seems to be through the roof, and it is buying companies at distress prices, building hype of content to commerce channel. Rivals are amused that top investors are failing to see that the substance doesn’t quite match the hype. Welcome to the epic boom market, we say.

HOUSEKEEPING TROUBLES

A regulator is someone who monitors the regulated entities and intervenes when necessary to set things right. What if the regulators themselves have housekeeping woes? Who is going to solve it? As you read this, one major financial sector regulator is having a tough time managing the wage negotiation of its employees. The wage settlement that happens once in five years is already overdue. Recently a team of trade union office bearers that reached the Mumbai headquarters of the said regulator had to go back empty-handed with no consensus in sight on the wage settlement issue. The top management has now promised to intervene and resolve the deadlock. Can they? Let’s see.

WHATSAPP SUPPORT

You know the war for tech talent has reached newer heights when founders turn a WhatsApp group into a support group to deal with a dropout of employees, salary hikes and churn. “WhatsApp groups have turned into support groups,” pointed out this Bengaluru-based founder of an early-stage company. In this group, the founders and talent acquisition heads share stories about hiring, which now more or less resemble horror stories. “I have a friend who leads talent acquisition at a unicorn. He has more (horror) stories about hiring than any of us, despite having a looser wallet than most of us. Because it is no longer about the money,” said the Bengaluru-based founder. The fact that even unicorns are struggling to find talent despite having deep pockets is surely a balm for these early-stage founders, who are struggling to hire good executives.

DIVIDE AND GAIN

Last week, during the Opposition’s protests against Yogi Adityanath-led Uttar Pradesh government over Lakhimpur Kheri violence, Congress general secretary Priyanka Gandhi was allowed to travel before being detained in Sitapur while the former chief minister and Samajwadi Party leader Akhilesh Yadav was not allowed to move beyond Lucknow. For the next two days, Priyanka remained the focus with visuals of her sweeping the floors in the detention room and a video urging Prime Minister Narendra Modi to take action against the guilty streaming on social media and other channels even as other Opposition leaders were also detained and prevented from travelling to the spot, about a two-hour drive from Lucknow. We hear the BJP, and the Yogi Adityanath administration, in particular, were okay with Priyanka Gandhi, and the Congress, stealing the limelight without much focus on Samajwadi Party, the main opposition party in the state going to polls in a few months. Some leaders within the BJP believed that if Priyanka and the Congress stayed in the limelight, the Opposition might as well get divided to the benefit of the ruling BJP. Others believe that the Sikh farmers in the Terai region, comprising Lakhimpur Kheri and Pilibhit districts, will anyway not vote for BJP and hence let the Congress reap the political dividends and not the Samajwadi Party. In the 2017 polls in UP, the SP-Congress alliance failed miserably. SP won only 47 of the 177 seats it contested while the Congress won seven of the 21 seats it contested.

RAID WARNINGS

The IT raids on just ousted Karnataka chief minister BS Yediyurappa has sent shockwaves across the party. His PA Umesh is in the dock for acting as a middleman in irrigation contracts worth over Rs 25,000 crore the last two years. Several big contractors close to BSY have also been raided. BJP insiders blame his ambitious son BY Vijayendra for the downfall of the father. Some believe these raids are just warning shots to keep him in check. It is no secret that Vijayendra has been demanding a ministerial berth in the Bommai government. These IT raids seem to have put a break to his ambitions. Almost 80, BSY has no place to go.

SURPRISE TROUBLE SHOOTER

The Yogi Adityanath government was credited for ensuring that the farmer’s anger did not spill over after the Lakhimpur Kheri violence even as a mammoth 25,000 strong crowd had assembled at the spot within 24 hours. How so? We hear senior officials of the UP government struck a compromise formula with Bharatiya Kisan Union (BKU) leader Rakesh Tikait in convincing the agitating farmers to cremate the dead. Tikait met officials at around 1.30 am on October 4, which continued until 2 pm. Tikait insisted that no opposition leader should be allowed to meet the families of the dead until then. A deal was struck. The government announced a compensation amount of Rs 45 lakh to the family of the deceased, Rs 10 lakh to the injured and a promise of a government job, among other promises. Soon the crowd was dispersed and the situation was brought under control. Tikait, insiders say, played a trouble-shooter.

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