Just after successful completion of record $5 billion public offer, ICICI Bank has received a jolt for capital raising plans of its newly created insurance and AMC subsidiary, ICICI Financial Services.

Citing cap of 26% on foreign holding in insurance company, the government failed to give ICICI permission to make a placement of 5.9% stake of subsidiary to a clutch of investors. The bank initially was expected to raise Rs.2650 crore from this stake sale.

Now the bank has to terminate the purchase offers it entered into. This may not not only delay the plans of global investment banks but also pose problem for ICICI Bank in boosting capital strength and in expanding its operations.

This move may also set a precedence in fund raising plans for other insurance joint ventures in the country thus putting a break on the industry’s tremendous growth potential.

The Mint carries an article on the response received by Gold ETF launched by Benchmark and UTI Mutual Fund. It mentions that consumers inspite of numerous benefits that gold ETF are still not comfortable with the idea of paper gold.

Not all investors share his enthusiasm on the yellow metal. This is because when Indians buy gold, they want gold, not paper. For Indians, used to actually stashing away gold and gold jewellery as a form of savings.

The article also mentions the negative returns of the two gold ETFs since their launch.

The first impression that a reader gets after reading an article is that gold ETF are not that rewarding for the investors and have failed to give returns. But it fails to mention that fall in gold prices are the prime reason for negative returns and it has nothing specific to do with gold in paper form.

It was only because of popularity and demand of paper gold, that Kotak MF has launched its own Gold ETF and Escorts is planning to launch its soon.

With a week left for the opening of ICICI Bank FPO, the parent has changed the name of its subsidiary ICICI Holdings to ‘ICICI Financial Services’ giving more clarity to the nature of business being carried out by the subsidiary which is life insurance, general insurance and asset management.

ICICI Bank has also made a private placement of 5.9% stake for Rs. 2,650 crores to PE investors among GIC, Temasek Goldman Sachs, Swiss Re, Nomura and others subject to Govt. approval. This values ICICI Financial Services at an astronomical Rs. 44,600 crores or $11 billion, which is more than what the market had expected. 

With India having a rich tradition of respect and care for the elders, there is little need to diligently plan for the retirement. It is generally presumed that the extended family would take care of the financial responsibility for the older generation. But now with globalization (new opportunities around the world) and breaking apart of the joint family system, suddenly older Indians have become more responsible for their individual retirement security.

The main criterions to bear in mind while planning for the twilight phase of one’s life are security and stability of returns, liquidity, capital preservation and lower risks. One needs to plan for every need and contingency. Liquidity assumes great significance. With no salary or business income to fall back upon, the portfolio should be designed in such a manner that it provides a cushion for the regular expenses. Bank saving accounts give a nominal interest of 3.5% but they offer great liquidity as money can be withdrawn at any time.

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India Infoline has done a deal which is often unheard of in Indian corporate boardrooms. The result was everyone to see as the stock rocketed to its lifetime high of Rs. 669.00 up over 49% of its previous close (since the stock is in F&O, there are no circuit filters attached). Its FY07 results were also above street expectations, as revenue rose 95% to Rs 425 crore, and net profit up 54% to Rs 75.66 crore. The market share on the NSE was 2.4% through its online broking site 5paisa.com.

In a major blow to French investment bank CLSA, India’s largest foreign broking house, four of its top management team comprising of Director-Sales Asia region, India Head, head research operations and charge of sales in India, have quit and joined India Infoline. 2 officials receive warrants worth Rs. 110 crore each while other 2 get Rs. 88 crores warrants each, along with a combined sign-on bonus of Rs 44 crore. The company also approved raising Rs. 484 crores, and thus the 4 ex-CLSA official would hold 17% post-diluted equity.

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Investors across that country now have another investment option where they can buy Exchange Traded Funds of Gold currently being managed by UTI Mutual Fund and Benchmark Mutual Fund in an innovative, cost-efficient and secure way. The returns generated correspond to the domestic price movement of physical gold.

Gold as an investment class has certain advantages as it is less volatile as compared to equity, its value remains stable over a period of time and act as a hedge against inflation. Though it has a low return potential, still liquidity is high, has a low holding cost and diversifies investment.

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