MC Insider: Mutual fund CEO wanted, IPO buzz, airline troubles, friction in sarkari hiring, banking blues and more

© Shubhashish MC Insider: Mutual fund CEO wanted, IPO buzz, airline troubles, friction in sarkari hiring, banking blues and more

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[title]CEO SHORTAGE[/title]

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[body]Lots of juicy stuff so let’s get right to it. This large mutual fund housed under a banking behemoth will announce a new CEO in the next few weeks. Succession planning in this group has been a vexing issue, to put it mildly. The race for the bank’s top job was won by an insider but the search for the mutual fund division’s bossman is turning out to be agonising wait. A few weeks ago, we tattled that the first choice of CEO was someone who is well networked media savvy and a shah of Twitter. Well, turns out that Esops worth Rs 100 crore were not good enough for him. The second choice—CEO of an insurance firm—also now backed out. Ouch! Hurts when no one wants a seemingly plum offer. The choice now is between moving further down the headhunter list (next in line is the CEO of a mid-sized MF) and picking an insider. Tick-tock, tick-tock …

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[title]AIRLINE DOWN?[/title]

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[body]You all know about this flashy overseas airline that made a well, flashy entry into India. There was a time when not a day would go by without its flamboyant owner making tall claims about revolutionising Indian aviation. Sceptics did warn—”Easy there, Indian aviation ain’t so easy.” Their warnings were warranted because just before it ended India, it ended a JV in another foreign market. Turns out they were prescient too because the airline has long struggled in India. The airline has been a lightning rod for a litany of problems such as soaring losses, frequent high-level exits and legal cases. The owner no longer comes to India for fear of getting arrested. Now, its time in India could well be up. A higher-up in the government let slip that the airline could soon be shutting shop. In an eery coincidence, the JV the airline formed in the overseas market after the collapse of the first ended last week.

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[title]DEAL BALM[/title]

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[body]We were the first to flag of the impending sale of a big chunk of shares in a bourse by the government’s favourite” knight in shining armour”. That trade took place recently, but we are told the merchant bankers might have found the going tough on this deal. Why? That’s because the norms bar participation by trading members who would have otherwise been first-choice buyers. But that’s not the end of the deal pipeline. The next chunk of shares in the IPO-bound entity may be sold by a top PSU lender. The timing of the sale depends on which quarter gives this lender more pain.

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[title]BANKING BLUES[/title]

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[body]If you’ve had a bad week, think about this NBFC group that has a sizeable stake in one of the crisis-ridden private sector banks. Forget any appreciation, it is losing sleep over the fate of its investment. To think it was once keen to acquire a majority stake in the lender. It must silently be thanking the banking regulator, which forced it to drop the plan. Now it wants to recoup its original investment. It is in constant touch with the bank’s management (or whatever is left of it) and is even offering help with daily operations so that the bank doesn’t sink further. But the bank’s bigger shareholders, the old-timers, aren’t keen on any help. Why? They fear loss of control. We heard that this simmering friction led to heated arguments. The only hope we hear for the struggling bank is a swift merger with a stronger, deep-pocketed candidate.

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[title]INSIDERS VS OUTSIDERS[/title]

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[body]The government’s new recruitment mantra of tapping candidates from the private sector for senior posts of “Joint Secretary” in various departments has noble intentions indeed. After all, no harm in milking private sector expertise, right? But on the flip side, the strategy has led to some unpleasant side effects and has led to friction between the “insiders and the “outsiders”. Sample this case for instance. Recently, at a ministry located at Raisina Hill, there was a heated argument between one such lateral entry candidate and a staff member who is lower down the rung. An internal probe found that the “outsider” used to routinely throw cuss words as well as files at his junior! And this is not the first such case over the last few months. The “insiders” are fed up of being perceived as “kamchor” while the “outsiders” fret that the “neither do the babus work, nor do they allow us to work!”

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[title]COSTLY WORDS[/title]

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[body]Word travels and in this unfortunate sarkari case, the gup-shup travelled quicker than light. Here’s what happened. During chai pe charcha, a senior officer at a crucial post committed a cardinal sin in government circles. He passed some unsavoury remarks about his minister. And this happened during his visit to a campus known for its intellectuals. The ill-timed jibes reached the minister’s ears who was livid and proceeded to sideline the officer from any important deliberations. So much so that instructions have been passed to skip this officer and send all files directly to the higher-ups. But Mr Big Mouth has issued a diktat to his juniors that all files need to be sent to him first! Spare a thought for the poor, sandwiched juniors who are in a complete fix.

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[title]WHAT’S IN A NAME?[/title]

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[body]What remedy do you have when your firm’s name reminds everyone of a global pandemic? Well, guess you got to grin and bear it. Hailing from the state famous for its snack made of fermented chickpea batter, this drugmaker recently picked up stake in a neighbourhood API player. The firm has ambitious growth plans and is keen to raise funds. We just learnt that the private equity fund which has been on board for a few years is also keen to cash out. Clearly, there seems to be no end to the flurry of deals in the pharma space.

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[title]HEALING TOUCH[/title]

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[body]Over the past few years, this pharma player seems to have lagged its peers and some would say has ceded ground to them. There was chatter in the street regarding the ROI for one of its verticals which never really got rosy valuations. But we hear the firm is keen to get its mojo back and has a blueprint in mind to unlock value in the same vertical. So will a strategic partner come on board? Well if that’s the case, then folks tracking the drugmaker believe that could be the much-needed trigger for a re-rating.

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[title]MOVING ON, OR NOT![/title]

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[body]Corporate executives are moving jobs in full force. You heard about most of them at Moneycontrol. Examples: Axis Bank’s Pralay Mondal joining CSB Bank, Ex-ICICI Bank executive Murali Ramakrishnan joining South Indian Bank, former EY Partner Charanjit Singh Attra joining SBI as its new CFO. Add one more to the list. Another EY partner is tipped to join a mid-cap pharma player at a senior position. We have also heard whispers regarding a senior partner at an advisory firm considering a move to head a boutique investment banking outfit. In this case though, truth be told, these rumours have surfaced earlier as well. Last we heard his current employers are keen to retain him to keep the practice ‘healthy’.

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[title]HEDGING BETS[/title]

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[body]No one loves a comeback story like Dalal Street. Add a dash of controversy, sprinkle some mischief by ex-promoters, throw in a probe by regulators and voila, you have a plot thicker than a East Delhi butter chicken. Well, there’s a twist in the tale. A credible white knight has made an appearance. All these scenes are playing out at a firm that has been taken over by a southern conglomerate that boasts a record of turning around companies. We hear an overseas hedge fund close to the new promoters has bought a solid chunk of shares recently, betting on a quicker than expected revival. The new buyers have smartly ring-fenced themselves from the liabilities of past promoters in the deal fineprint. Now that’s smart for starters and no wonder investors are excited.

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[title]OVER TO REGULATOR[/title]

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[body]This leading fund which backs an Asian healthcare major had announced record profits earlier in the year on the back of higher divestment gains. It hasn’t been very active in India when compared to its global peers, but market buzz is that it is mulling an exit from an investment company and may sell its stake which it picked up in the last decade. Meanwhile, the investment company in question is in wait and watch mode. It holds a sizeable stake in a bank and the lock-in period has ended. Now all eyes are on the regulator to show the path ahead.

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