Tarun Kataria to head HSBC’s India CIB operations

The Economic Times reports that Tarun Kataria, a managing director at HSBC in Hong Kong, will move to India for heading the Indian corporate and investment banking, and capital markets operations of HSBC. Mr. Kataria is an MBA in finance from the Wharton School, and had earlier worked for Merrill Lynch and Chase Manhattan in the United States.

HSBC forms life insurance JV with Canara Bank and Oriental Bank of Commerce

British banking giant HSBC has formed a life insurance JV with Bangalore-based Canara Bank and New Delhi-based Oriental Bank of Commerce.

Canara Bank will hold 51% stake in the venture with HSBC taking 26% and Oriental Bank of Commerce settling with 23%. The business has been capitalized with a corpus of Rs. 2 bn ($44.97 mn).

HSBC joins a league of global firms such as New York Life, Prudential and Allianz in setting up an insurance venture in India which has a population of 1.1 bn people, and an insurance market that has doubled to more than $20 bn dollars in annual premiums since it was thrown open to foreign investment in 2000.

Read The Economic Times article.

Syndicate Bank to raise Rs. 240 crores in Tier-II bonds

Syndicate Bank is raising funds to the tune of Rs. 240 crores from the bond markets by issuing upper-tier bonds with a 15-year maturity. It will have the right to call back the bonds after 10 years.

Syndicate Bank will exhaust its capacity to raise Tier-II bonds this fiscal if it raises Rs. 240 crores. The bank is eligible to raise upto Rs. 150 crores through hybrid perpetual bonds which qualify for Tier-I capital. The bank’s Rs. 240 crore-issue includes a Rs. 140 crore-green shoe option. The bank has fixed the coupon at 9.3% for the first 10-year period. After the 10-year period, if the bank decides against exercising the call option, it will step up the coupon by another 50 basis points (bps).

The bond issue proceeds would help Syndicate Bank fund its business growth and augment long-term resources. After the fund-raising, the bank’s capital adequacy ratio, currently at 11.34% will increase by 20-30 bps. The issue is being managed by AK Capital Services, Citibank, Darashaw, HSBC, IDFC, Standard Chartered Bank and UTI Bank. Syndicate Bank, with government holding of 66.5%, will also have the option of going public with a follow-on offer next year. It can offload government stake by another 14.5%.

Read The Economic Times article.

Tata Consultancy Services to raise funds to hedge forex risk

The Times of India reports that Tata Consultancy Services is planning to raise funds reportedly of around $200 mn to manage risks on its foreign exchange exposure. TCS earns nearly all its income in foreign exchange and volatile exchange rates impact its margins. J P Morgan will be managing the transaction. Citigroup, ABN-AMRO, Standard Chartered and HSBC are in touch with TCS on the same. The exercise is part of TCS’ treasury management as it includes significant forex component. The possibilities include of either going in for a forward contract or a mix of forward contract and options.

SBI to raise $700 mn from markets overseas by March 2007

The State Bank of India will raise $700 mn by March through placing long- and medium-term bonds overseas. The bank may also go for a follow-on public offer in 2007-08. The borrowing is part of the $2 bn medium term note programme of SBI. It has hired Barclays and Citigroup to sell dollar-denominated bonds. Deutsche Bank and HSBC will also manage the sale. The four banks will also arrange a sale of five-year notes. The bank is raising funds to meet new Central bank rules on capital levels and meet demand for loans. The Reserve Bank of India (RBI) on 21 July permitted banks to increase capital by selling debt overseas. SBI last month increased $300 mn of bonds it sold in December to $500 mn.

Read the Business Standard article.

Reliance Communications raises India’s largest FCCB issue worth $1bn

Reliance Communications (RCL) has raised $1 bn through foreign currency convertible bonds (FCCBs). This is the largest-ever FCCB issue from India and was oversubscribed 3-4 times by investors from Asia, Europe and the US. The bonds have a maturity of 5 years and would be convertible to equity shares at a 30% premium to the then prevailing market price.

The proceeds from the issue will be utilized to part-finance the company’s $2.5-bn expansion programme. The company has announced the expansion of coverage to 15,000-20,000 new towns and was proposed to be funded through a mix of internal accruals and debt.

JP Morgan and HSBC advised the firm on this FCCB issue. This is the second FCCB offering by RCL within a year. In March 2006, RCL had completed an FCCB issue to raise $500 mn. In December 2006, RCL raised $1 bn in debt from international markets. The five-year unsecured loan was facilitated by ABN-AMRO, Standard Chartered and Citibank.

Read the article in The Economic Times.

Reliance Comm dials banks for Hutch deal

Anil Ambani is leaving no stone unturned to acquire the prized 67% stake of Hutchinson Whampoa in Hutch-Essar. As of latest reports, Reliance Communications has tied exclusivity agreements with a number of foreign banks, presumably, Citibank, HSBC, ABN-AMRO and UBS. This means that not only will these banks provide the necessary debt for the transaction, but the agreements will also prevent them from working with any other prospective or existing bidder. This agreement with the said four banks is crucial, as all have expertise in multi-billion dollar cross-border acquisition financing and their experience would have been of enormous use to rivals. RCL is already in talks with private equity funds such as Kohlberg Kravis Roberts & Co (KKR), Blackstone and Texas Pacific Group for equity financing.

For more, read the following articles The Economic Times, The Financial Express and Business Standard.