Here are few things that I always try to grab it with a positive attitude:
Starting with the Macro factor a student from the financial market must be aware of the world economy as a whole and inherent knowledge about the Indian economy. Any measures in relation with the Govt. Budgetary View full article »
The post is about entrepreneurship in India where I have tried to put the views.
From the last couple of years Baba Ramdev, Kishore Biyani, Vijay Mallya and Govt. Of India has been making the news and there is lot more things common between them.
Lets begin with Baba Ramdev who became a household name by selling the benefits of yoga to the masses. He claimed that even diseases like cancer could be cured through yoga. Those who have seen his yoga View full article »
I do not know why but somebody wanted me to define some basics on Yield spreads, that whether Yield spreads can judge the risk environment in an economy ?
Yield spreads are good tools to judge the risk environment in an economy a lower yield spread means that the issuer of debt is in a situation to demand loans at a lower spread above the yield of government security which in turn shows the presence of ample liquidity.
As far as economic growth is concerned a lower yield spread indicates greater amount of liquidity available for growth View full article »
To start with yesterday western markets tumbled and today morning Asia trading in the red. The ghost of greek debt default could wreak $1-trillion damage on euro-zone.
Stocks down, gold down, oil down, copper down, EU periphery debt down. The day is shaping up to be the worst for risk thus far in 2012.
The deal is turning on the screws, my last post on where ISDA Under criticism on GREECE indicates that Investors are under pressure to sign up to the deal, which will see them lose almost three-quarters of the value of their bonds.
Greece wants creditors who hold 90% or more of the debt to agree. If take-up falls below that but exceeds 75%, it is expected to force losses on those who do not willingly sign up, known as collective action clauses (CACs). View full article »
On my way from Mumbai to Bhopal last saturday was fortunate enough to watch the movie Other People’s Money . As I was more curious to know about the heated debate in US whether Private Equity to be termed as Hero or Villan. Those of you who has seen the Wall street series and remember Gordon Gekko,a character resembling popular culture for unrestrained greed (with the signature line, “Greed, for lack of a better word, is good”), often in fields outside corporate finance.
Let us try to understand Private Equity (PE) :
Private equity generally make investments in the operating companies through a variety of loosely affiliate investment strategies leveraged buyout, venture capital and growth capital.Typically, a private equity firm will raise pools of capital, or private equity funds that supply the equity contributions for these transactions.
They have been always in news as people see them as , private equity and job destruction aren’t the source of our employment woes. Rather, it is the clampdown on innovation. Some of the research claims that Private equity ownership resulted in both more rapid job destruction and faster job creation than other forms of ownership.
View full article »
1) Paris Pasu http://wp.me/pc3rd-f
2) RPL METHODOLOGY TO LURE THE RETAIL INVESTOR http://wp.me/pc3rd-i
3) HDFC all set to buy CBOP http://wp.me/pc3rd-k
4) Typical spinoff situation http://wp.me/pc3rd-l
5) MUTUAL FUNDS SURVEY BY BUSINESSWORLD http://wp.me/pc3rd-m
6) INDIA : THE EMERGING GIANT a book by Arvind Panagariya’s http://wp.me/pc3rd-n
7) Process of passing the Budget http://wp.me/pc3rd-o
8) THE ECONOMIC SURVEY 2007-08 http://wp.me/pc3rd-p
9) Things Which appears First to me http://wp.me/pc3rd-q
10) ICICI overseas losses mount to $264m credit exposure…http://wp.me/pc3rd-v
11) CRITIQUE FOR THE BUDGET 2008-09 http://wp.me/pc3rd-z
12) WHAT TO READ IN AN OFFER DOCUMENT ?? http://wp.me/pc3rd-A
13) Sensex down 27.5% ..just in 2 months time frame http://wp.me/pc3rd-B
14) YET AGAIN! FED CUT RATE BY 0.75%, Mayhem in markets http://wp.me/pc3rd-C
15) CAT Bonds and CAT Swaps http://wp.me/pc3rd-D
Today the financial media reported that Facebook Raises $1.5 Billion, Valuing Social-Network Site at $50 Billion. Already many articles and critics have provided there views on the way and practices followed to value this giant of social network, one of my fav http://aswathdamodaran.blogspot.com/2011/01/facebook-valuation.html
I would just like to quote the 10-year-old dot-com bubble, where every company wanted to have its last name “inc” “.com” and so on and then when the bubble busted all the IT stocks went for a toss.
The first shots through this bubble came from the companies themselves: many reported huge losses and some folded outright within months of their offering. Siliconaires were moving out of $4 million estates and back to the room above their parents’ garage. In the year 1999, there were 457 IPOs, most of which were internet and technology related. Of those 457 IPOs, 117 doubled in price on the first day of trading. In 2001 the number of IPOs dwindled to 76, and none of them doubled on the first day of trading.
This time the social networking sites are making the Buzz and all are lined up to get into the public domain, be it LinkedIn, Twitter, Zyenga and Facebook itself. On the other side Apple is sitting on a cash !! ( which raises the different question how much cash is more than enough ?? )
For the time being fingers crossed and Goldman Sachs will show that they have the best sales team in this world !!
The mother of all social networking Face book was started by Mr. Zuckerberg while at Harvard in 2004. Zuckerberg dropped out of college to build the company, which now has more than 500 million users.
Mr. Zuckerberg, who still owns 24 percent of Facebook, has turned down several offers to sell his company, including $1 billion from Yahoo in 2006. At the $50 billion valuation at which Goldman is investing, Mr. Zuckerberg’s stake is worth about $12 billion.
Goldman valued the company at $ 50 billion dollar invested $ 450 million through private placement.
One of the reason for this private placement shenanigans is that that they can play with “low float” stock dynamics to boost the initial valuation. Basically, it is easier to sell 1% of a company for less than $500 million than sell the whole thing for $50 billion. Look at how well VM Ware did when most of the shares were locked up in EMC and the employee required holding period. By keeping a very low float Goldman only needs a fraction of its clients to establish the $50 billion valuation. Then, when the stake trades up to $65 billion because the market is so thin and Goldman does the IPO at a $60 billion valuation everyone wins.
The reason for the lockup period is to take advantage of the same loopholes that private equity and hedge funds use to avoid registering their holding companies as mutual funds and avoid registering their investments as securities.
I dare to write on this topic as it is the most intense and debatable topic in the financial markets over the years.
As recently the author of “Fooled by Randomness” and “The Black Swan” Nassim Taleb became the anti-theorist in finance arguing that the Nobel committee should be sued for awarding Harry Markowitz, Bill Sharpe and Merton Miller http://www.bloomberg.com/news/2010-10-08/taleb-says-crisis-makes-nobel-panel-liable-for-legitimizing-economists.html
But the Guru of Corporate finance Aswath Damodaran did a posting replying to him on the market efficiency models. http://aswathdamodaran.blogspot.com/2010/10/nassim-taleb-and-nobel-committee.html
The most efficient market model is distinctive provided by Eugene Fama he defines:
A market is efficient with respect to a particular set of information if it is impossible to make abnormal profits (other by chance) by using this set of information on to formulate buying and selling decisions.
All the government policies encourages the establishment of efficient markets in the world but certainly the developed market came in to question mark in the last 2 years crisis and catastrophe lead to contagion.
According to Eugene Fama:
An investor in the efficient market should expect to make only normal profits by earning a normal rate of return on the investments.
Weak form of efficient market: If it is impossible to make abnormal profits (other by chance) by using past prices to formulate buying and selling decisions.
Semi strong form of efficient market: If it is impossible to make abnormal profits (other by chance) by using publically available information to formulate buying and selling decisions
Strong form of efficient market: If it is impossible to make abnormal profits (other by chance) by using any information whatsoever to make buying and selling decisions.
India being emerges as one of the big market for (M&A) Mergers and acquisitions, in the last decade. The market for M&A is expected to grow at a very rapid pace and sooner we may see many hostile bids by the Indian companies, as they are very uncommon in India. Hostile takeovers must be recognized as manifestations of a market for corporate control. Advanced economies regulate M&A activities only from competition angle.
Few of the cases which I can recall for hostile take over in India are Abishek Dalmia on Gesco and Arun Bajoria on Bombay Dying. Both were medium-sized barons outnumber their bigger peers, and follow quite different paths when it comes to running their businesses – owning substantial stakes in their business and thus less vulnerable to takeover.
The latest one in the last year Corporate India witnessed its own bidding battle between Bharati Shipyard Limited and its rival ABG Shipyard Limited to acquire Great Offshore Limited.
The advisory committee has recommended that the existing provision of a compulsory 20% tender offer after crossing 15% be replaced by a 100% offer on crossing 25%. In this process the takeovers are likely to become expensive and genuine acquirer would be at advantage as it would be difficult to manipulate the price of Target Company.
Before implementing the trigger point,the Committee observed that in the UK, the first trigger point is at 30 %. Initial trigger points in other jurisdictions such as Singapore, Hong Kong, EU and South Africa were also found to be in the range of 30 % to 35 %. These trigger levels were set primarily based on the level at which a potential acquirer can exercise de facto positive control over a company, viz. the level at which the potential acquirer is likely to be able to get a majority of votes cast in a general meeting of shareholders.