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Heard on the Street
Clearwater seen taking control of Sayaji
In a first-of-its-kind instance, a private equity firm could end up taking control of the company in which it has been a minority shareholder until now.
US-based Clearwater Capital Partners made an open offer to buy an additional 20% in Indore-based Sayaji Hotels at Rs 110 apiece. Clearwater currently holds a 8.48% equity stake in the Dhanani-controlled hotel chain, and also 75 foreign currency convertible bonds that will mature in August this year.
The private equity player has the option to convert the bonds into 46,68,000 equity shares at Rs 75 each, which will increase its stake to 32.87% on the fully-diluted equity base. The promoter stake will come down to 41%, from 52%. Sebi regulations require an investor to make an open offer for an additional 20% stake when his holding exceeds 15%.
Clearwater said it intended to convert the bonds into shares and has made the open offer ahead of the conversion. Grapevine is that Clearwater had asked the promoters to buy it out after differences of opinion, which the latter refused. This provoked the open offer, say some brokers. If the open offer succeeds, the PE fund will have a majority stake in the company.
When contacted, an official of Sayaji Hotels said there was no difference of opinion between the management and Clearwater, and that the open offer was in line with the regulatory requirement. Trading in Sayaji Hotel shares was frozen at the upper end of the 5% circuit filter at Rs 112, after there were only buyers for the stock.
Sebi deals another blow to MFs’ profitability
Capital market regulator Sebi is learnt to have dealt another blow to fund houses, asking them to pay upfront commission to distributors from their own profits and not from expense pool.
In an email communication, Sebi has directed fund houses not to charge upfront commission to the overall 2.5% expense charges, which until recently were split in equal proportion to meet asset management charges and expenses, including upfront commission, transfer agent charges and marketing expenses.
The Sebi order will be effective from April 1. According to industry sources, the above order will put fund houses that pay higher upfront commission in deep trouble. Fund houses like ‘Cutie Eye’, ‘Icy Icy Mutual’, ‘Reliable Mutual’ and ‘Jammy Mutual Fund’, which are said to pay upfront commission between 100 and 200 basis points to push their schemes, will now have to pay upfront commission from their own pockets.
The other alternative for fund houses will be to force distributors to collect upfront commission from investors, which looks near to impossible. The Sebi diktat, if followed to the word, will hit the profitability of most fund houses.
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Src: ET and Moneycontrol and DP blog