Citigroup Inc. the largest U.S. bank by assets, raised $500 million to invest in roads, ports and utilities in India, the world's second-fastest growing economy.
Citigroup agreed to start a $5 billion Indian infrastructure fund with Blackstone Group LP and two Indian finance companies in February 2007. The fund-raising is the first phase, Sanjay Nayar, chief executive officer of the bank's Indian unit, told reporters in Mumbai today.
Citigroup and Blackstone aim to tap the $1 trillion Asia's third-largest economy proposes spending on roads, railways and airports within the next 10 years.
The New York-based bank has no plans to shut or sell its consumer finance division in India, Nayar told reporters. The unit fired 400 employees and is seeking to sell almost $1 billion from its loan portfolio, the Economic Times newspaper reported on May 2.
``We are not exiting,'' Nayar said, without elaborating. ``We are changing segments a little bit.''
Citigroup operates 39 branches in 27 cities in India.
Thursday, May 15, 2008
ICICI Seeks $3 Billion for India Private Equity, Property Funds
ICICI Bank Ltd. India's second biggest lender, plans to raise as much as $3 billion for two funds as it competes with Morgan Stanley and Deutsche Bank AG to invest in the world's second-fastest growing major economy.
ICICI Venture Fund Management Ltd. will tap investors for a $1.5 billion private equity fund starting next week, and may raise an equal amount for a real estate fund, Chief Executive Officer Renuka Ramnath said in an interview in Mumbai. The division currently manages about $2.5 billion in assets.
ICICI joins Blackstone Group LP and local rivals including Kotak Mahindra Bank Ltd. in seeking investment opportunities in India, where private equity funds invested seven times as much as in China in the first quarter. India's economy has grown an average 8.7 percent annually since 2003.
``India's attraction continues to be growth,'' said Ramnath, 47. ``We want to focus on opportunities in the knowledge sector and domestic consumption-led areas of retail, services, education in the private equity fund.''
Private equity funds invested $4 billion in Indian companies through the quarter ended March, 67 percent more than a year earlier, New Delhi-based advisory firm IndusView Advisors Pvt. said last month. That compared with the 76 percent drop to $570 million for China, the firm said.
Morgan Stanley, the second-biggest U.S. securities firm, last month said it planned to start operating a private equity unit in India this month. Kotak Mahindra, the former partner of Goldman Sachs Group Inc. in India, plans to raise about $1.2 billion for two funds.
The record economic growth and a shortage of homes that led to a four-year rally in property prices helped attract Warburg Pincus LLC and Blackstone, which have bought stakes in Indian real-estate developers in recent months. The world's second-most populous nation will face a deficit of 26.5 million houses by 2012, the government estimates.
Deutsche Bank's RREEF Unit, the world's largest alternative investment manager, plans to invest more than $1 billion over three years in India's real estate and infrastructure assets, Kurt Roeloffs, the division's regional chief executive officer, said last month.
ICICI's proposed $1.1 billion real estate fund, which may be expanded to $1.5 billion, will invest in residential and commercial projects in a dozen cities including the capital, New Delhi, and the commercial hub of Mumbai, Ramnath said. Most of the funds will be raised from investors in the U.S., Europe, Japan, Canada and the Middle East, she said.
ICICI Bank sold $5 billion of shares and borrowed about $10 billion in 2007 to bolster its capital and make more loans.
ICICI Venture Fund Management Ltd. will tap investors for a $1.5 billion private equity fund starting next week, and may raise an equal amount for a real estate fund, Chief Executive Officer Renuka Ramnath said in an interview in Mumbai. The division currently manages about $2.5 billion in assets.
ICICI joins Blackstone Group LP and local rivals including Kotak Mahindra Bank Ltd. in seeking investment opportunities in India, where private equity funds invested seven times as much as in China in the first quarter. India's economy has grown an average 8.7 percent annually since 2003.
``India's attraction continues to be growth,'' said Ramnath, 47. ``We want to focus on opportunities in the knowledge sector and domestic consumption-led areas of retail, services, education in the private equity fund.''
Private equity funds invested $4 billion in Indian companies through the quarter ended March, 67 percent more than a year earlier, New Delhi-based advisory firm IndusView Advisors Pvt. said last month. That compared with the 76 percent drop to $570 million for China, the firm said.
Morgan Stanley, the second-biggest U.S. securities firm, last month said it planned to start operating a private equity unit in India this month. Kotak Mahindra, the former partner of Goldman Sachs Group Inc. in India, plans to raise about $1.2 billion for two funds.
The record economic growth and a shortage of homes that led to a four-year rally in property prices helped attract Warburg Pincus LLC and Blackstone, which have bought stakes in Indian real-estate developers in recent months. The world's second-most populous nation will face a deficit of 26.5 million houses by 2012, the government estimates.
Deutsche Bank's RREEF Unit, the world's largest alternative investment manager, plans to invest more than $1 billion over three years in India's real estate and infrastructure assets, Kurt Roeloffs, the division's regional chief executive officer, said last month.
ICICI's proposed $1.1 billion real estate fund, which may be expanded to $1.5 billion, will invest in residential and commercial projects in a dozen cities including the capital, New Delhi, and the commercial hub of Mumbai, Ramnath said. Most of the funds will be raised from investors in the U.S., Europe, Japan, Canada and the Middle East, she said.
ICICI Bank sold $5 billion of shares and borrowed about $10 billion in 2007 to bolster its capital and make more loans.
European Expansion Accelerates More Than Forecast
European economic growth accelerated more than economists forecast in the first three months of 2008 as stronger expansions in Germany and France masked slowdowns in Spain and Italy.
Gross domestic product in the euro area increased 0.7 percent from the previous three months, when it rose 0.4 percent, the European Union's statistics office in Luxembourg said today. The pace exceeded the 0.5 percent median of 32 estimates in a Bloomberg News survey and the 0.1 percent growth rate in the U.S.
Growth quickened to the fastest pace in 12 years in Germany and was higher than analysts expected in France, providing strength at the core of the euro-area economy as Spain suffered its weakest expansion in almost eight years. That justifies the decision of the European Central Bank to hold off cutting interest rates for now as it tries to conquer inflation.
``After the strong data in the first quarter there is definitely no room for the ECB to cut rates,'' said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt.
The ECB has signaled no rush to cut rates having kept its benchmark at a six-year high of 4 percent since June even as the U.S. Federal Reserve and Bank of England lowered borrowing costs. Figures published today showed euro-area inflation eased to 3.3 percent in April from a 16-year high of 3.6 percent in March, still well above the ECB's 2 percent ceiling.
Five Times
Germany's 1.5 percent growth was five times the pace of the prior quarter and signals that it so far has weathered the U.S.- led global slowdown as it benefits from demand in emerging markets and companies streamlining production following the 2001 slump. Hochtief AG, Germany's largest construction company, said today that first-quarter profit more than tripled.
Economists at Commerzbank revised up their forecast for growth in Germany to 2.4 percent this year from 1.8 percent, paving the way for Europe's largest economy to enjoy only its third soft-landing since 1960. Evidence suggests German growth in the first quarter was boosted by a milder-than-usual winter and has since slowed.
At the same time, Spain is mimicking the U.S. as a credit shortage exacerbates a housing slump, while forecasts from the International Monetary Fund show Italy faces the bleakest economic outlook of the entire continent. Grupo Ferrovial SA, the Spanish builder, yesterday said first-quarter profit slumped 83 percent as revenue at its construction arm faltered.
Greater Pinch
The divergence marks a difference from the last slowdown in 2001, which was driven by contractions in the French and German economies, which together account for almost half of the region's gross domestic product. They may not prove invulnerable for much longer as more recent data suggest Europe is feeling a greater pinch from a strong euro, tighter credit, record food and oil prices and slowing export orders.
Confidence in the euro region among executives and consumers declined to the lowest in two and a half years last month, while industrial production fell in March for the first time in four months. Paris-based Pernod Ricard SA, the world's second-largest liquor company, said revenue in the quarter through March was little changed as U.S. consumers cut spending and the dollar weakened.
``The euro-zone economy is already slowing down and the economic powerhouse, Germany, is about to follow,'' said Carsten Brzeski, an economist at ING Groep NV in Brussels. ``With a further deterioration of the economic outlook, we still expect the ECB to shift its focus from inflation towards low growth and cut interest rates in the second half of the year.''
`Only Gradually'
ECB President Jean-Claude Trichet said last week inflation will remain ``high'' for some time and moderate ``only gradually.''
Germany's first-quarter expansion was more than twice what economists had forecast and was led by companies stepping up spending on machinery and construction. In France, the economy grew 0.6 percent, double the prior quarter's growth and stronger than the 0.4 percent predicted by economists.
Spain's economy grew 0.3 percent from the previous three months, the slowest since the third quarter of 2000 and less than half the 0.8 percent pace of the previous three months. After home sales fell by a quarter in the year to February as mortgage costs rose, banks tightened credit for potential buyers and unemployment surged.
While Italy doesn't report GDP data until May 23, economists say it may already have slipped into a recession. The IMF predicted growth of just 0.3 percent this year compared with its 1.4 percent forecast for the euro area.
From a year earlier, the overall euro-area economy grew 2.2 percent in the first quarter, according to today's report. The figures are the first estimate and the statistics office didn't publish a breakdown of the data.
Gross domestic product in the euro area increased 0.7 percent from the previous three months, when it rose 0.4 percent, the European Union's statistics office in Luxembourg said today. The pace exceeded the 0.5 percent median of 32 estimates in a Bloomberg News survey and the 0.1 percent growth rate in the U.S.
Growth quickened to the fastest pace in 12 years in Germany and was higher than analysts expected in France, providing strength at the core of the euro-area economy as Spain suffered its weakest expansion in almost eight years. That justifies the decision of the European Central Bank to hold off cutting interest rates for now as it tries to conquer inflation.
``After the strong data in the first quarter there is definitely no room for the ECB to cut rates,'' said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt.
The ECB has signaled no rush to cut rates having kept its benchmark at a six-year high of 4 percent since June even as the U.S. Federal Reserve and Bank of England lowered borrowing costs. Figures published today showed euro-area inflation eased to 3.3 percent in April from a 16-year high of 3.6 percent in March, still well above the ECB's 2 percent ceiling.
Five Times
Germany's 1.5 percent growth was five times the pace of the prior quarter and signals that it so far has weathered the U.S.- led global slowdown as it benefits from demand in emerging markets and companies streamlining production following the 2001 slump. Hochtief AG, Germany's largest construction company, said today that first-quarter profit more than tripled.
Economists at Commerzbank revised up their forecast for growth in Germany to 2.4 percent this year from 1.8 percent, paving the way for Europe's largest economy to enjoy only its third soft-landing since 1960. Evidence suggests German growth in the first quarter was boosted by a milder-than-usual winter and has since slowed.
At the same time, Spain is mimicking the U.S. as a credit shortage exacerbates a housing slump, while forecasts from the International Monetary Fund show Italy faces the bleakest economic outlook of the entire continent. Grupo Ferrovial SA, the Spanish builder, yesterday said first-quarter profit slumped 83 percent as revenue at its construction arm faltered.
Greater Pinch
The divergence marks a difference from the last slowdown in 2001, which was driven by contractions in the French and German economies, which together account for almost half of the region's gross domestic product. They may not prove invulnerable for much longer as more recent data suggest Europe is feeling a greater pinch from a strong euro, tighter credit, record food and oil prices and slowing export orders.
Confidence in the euro region among executives and consumers declined to the lowest in two and a half years last month, while industrial production fell in March for the first time in four months. Paris-based Pernod Ricard SA, the world's second-largest liquor company, said revenue in the quarter through March was little changed as U.S. consumers cut spending and the dollar weakened.
``The euro-zone economy is already slowing down and the economic powerhouse, Germany, is about to follow,'' said Carsten Brzeski, an economist at ING Groep NV in Brussels. ``With a further deterioration of the economic outlook, we still expect the ECB to shift its focus from inflation towards low growth and cut interest rates in the second half of the year.''
`Only Gradually'
ECB President Jean-Claude Trichet said last week inflation will remain ``high'' for some time and moderate ``only gradually.''
Germany's first-quarter expansion was more than twice what economists had forecast and was led by companies stepping up spending on machinery and construction. In France, the economy grew 0.6 percent, double the prior quarter's growth and stronger than the 0.4 percent predicted by economists.
Spain's economy grew 0.3 percent from the previous three months, the slowest since the third quarter of 2000 and less than half the 0.8 percent pace of the previous three months. After home sales fell by a quarter in the year to February as mortgage costs rose, banks tightened credit for potential buyers and unemployment surged.
While Italy doesn't report GDP data until May 23, economists say it may already have slipped into a recession. The IMF predicted growth of just 0.3 percent this year compared with its 1.4 percent forecast for the euro area.
From a year earlier, the overall euro-area economy grew 2.2 percent in the first quarter, according to today's report. The figures are the first estimate and the statistics office didn't publish a breakdown of the data.
`BRIC' Nations Summit Seeks to Turn Economic Might Into Clout
First came the booming economies. Then came the rush of investors. Now the so-called BRIC nations -- Brazil, Russia, India and China -- are talking about forming a political alliance.
The four largest emerging economies are sending their foreign ministers to Yekaterinburg, Russia, to meet on May 16 for the first time outside the venue of the United Nations. On the agenda are such non-economic issues as weapons proliferation, counter-terrorism, energy and climate change.
The term BRIC was coined by Jim O'Neill, London-based chief global economist at Goldman Sachs Group Inc., in 2001. Last year the combined gross domestic product of the four nations made up 12 percent of global GDP, up from 8 percent in 2000, according to the International Monetary Fund. In the past two years stocks in the BRIC nations have risen 70 percent, versus the 42 percent increase of emerging markets overall.
``It's really a group that first existed as a concept in the minds of analysts and subsequently came to exist as a practice between the countries,'' Brazilian Foreign Minister Celso Amorim said in a May 8 Bloomberg Television interview in Brasilia. ``The meeting is recognition of the fact that we are four big economies with a large influence in the world.''
President Nicolas Sarkozy of France has recommended adding at least China, India and Brazil -- as well as Mexico and South Africa -- to the Group of Eight leading industrialized countries rather than inviting them as guests to summits. Russia is already a G-8 member.
Beating Germany
China, the world's most populous country, is expected to overtake Germany as the third-largest economy this year, the IMF says. India is the world's largest democracy. With 10 straight years of economic growth, Russia is the world's biggest energy exporter, while Brazil is the No. 2 food producer after the U.S.
As a whole, the BRIC economies may surpass those of the G-7 countries -- the G-8 minus Russia -- by 2035, O'Neill said in a Goldman report last November. In a May 12 interview, he said that including the countries in the G-8 would be ``a recognition of the modern reality.''
O'Neill, 51, who gives talks to multinational companies on investing in emerging markets, said the invention of the term BRIC and its subsequent popularity have ``transformed my life.'' Five years ago he had never been to most of the BRIC countries, he said. Now he travels to all of them once or twice a year.
The BRIC ministers have already met at the UN General Assembly in 2006 and 2007. Chinese Foreign Minister Yang Jiechi is holding talks with Russian counterpart Sergei Lavrov and Pranab Mukherjee of India before the arrival of Brazil's Amorim.
Iran Pressure
Russia and China, both permanent members of the UN Security Council, have played key roles in pressing on Iran to rein in its nuclear program. China also has been influential in the six- party talks aimed at persuading North Korea to abandon its nuclear weapons program. Kim Jong Il's regime began disabling its plutonium-producing nuclear reactor at Yongbyon under the supervision of U.S. inspectors in November.
``Besides the economic front, the BRIC group could prove to be a growing counterweight to U.S. hegemony in global affairs,'' Win Thin, an analyst at New-York-based bank Brown Brothers Harriman & Co., wrote in a May 12 e-mail.
Russia wants BRIC to become a ``notable factor in multilateral diplomacy,'' to help strengthen ``multi-polarity,'' acting Russian Foreign Ministry spokesman Boris Malakhov said in a statement. He said Moscow saw the talks as a way to bring the four countries closer together on the world stage.
Dialogue
``Through this informal arrangement, the four nations will understand each others' policies, discuss common factors and issues and leverage their positions through dialogue,'' said Sujit Dutta, a strategic analyst at Institute of Defense Studies and Analyses, a New Delhi-based research institution. ``With this forum they will try to raise their global profile.''
O'Neill himself said there are limitations to the BRIC concept. For example, Brazil -- the world's biggest producer and exporter of coffee, sugar and orange juice -- may not be the only Latin American country that belongs in the grouping. Mexico could also be a contender, along with South Korea, he said.
Lately, China and India have taken measures to cool inflation spurred by higher energy and food prices as a weak economy in the U.S. hampered exports. Russian growth could slow from 8.1 percent, the Finance Ministry has said. The Brazilian economy may expand 4.6 percent this year, down from 4.7 percent according to a central bank survey published in April.
Though BRIC investments have done well in recent years, they are looking less solid lately. Since Dec. 31, the MSCI Emerging Markets BRIC Index has fallen 5.3 percent -- more than the 3.1 percent decline in MSCI's Emerging Markets Index.
The four largest emerging economies are sending their foreign ministers to Yekaterinburg, Russia, to meet on May 16 for the first time outside the venue of the United Nations. On the agenda are such non-economic issues as weapons proliferation, counter-terrorism, energy and climate change.
The term BRIC was coined by Jim O'Neill, London-based chief global economist at Goldman Sachs Group Inc., in 2001. Last year the combined gross domestic product of the four nations made up 12 percent of global GDP, up from 8 percent in 2000, according to the International Monetary Fund. In the past two years stocks in the BRIC nations have risen 70 percent, versus the 42 percent increase of emerging markets overall.
``It's really a group that first existed as a concept in the minds of analysts and subsequently came to exist as a practice between the countries,'' Brazilian Foreign Minister Celso Amorim said in a May 8 Bloomberg Television interview in Brasilia. ``The meeting is recognition of the fact that we are four big economies with a large influence in the world.''
President Nicolas Sarkozy of France has recommended adding at least China, India and Brazil -- as well as Mexico and South Africa -- to the Group of Eight leading industrialized countries rather than inviting them as guests to summits. Russia is already a G-8 member.
Beating Germany
China, the world's most populous country, is expected to overtake Germany as the third-largest economy this year, the IMF says. India is the world's largest democracy. With 10 straight years of economic growth, Russia is the world's biggest energy exporter, while Brazil is the No. 2 food producer after the U.S.
As a whole, the BRIC economies may surpass those of the G-7 countries -- the G-8 minus Russia -- by 2035, O'Neill said in a Goldman report last November. In a May 12 interview, he said that including the countries in the G-8 would be ``a recognition of the modern reality.''
O'Neill, 51, who gives talks to multinational companies on investing in emerging markets, said the invention of the term BRIC and its subsequent popularity have ``transformed my life.'' Five years ago he had never been to most of the BRIC countries, he said. Now he travels to all of them once or twice a year.
The BRIC ministers have already met at the UN General Assembly in 2006 and 2007. Chinese Foreign Minister Yang Jiechi is holding talks with Russian counterpart Sergei Lavrov and Pranab Mukherjee of India before the arrival of Brazil's Amorim.
Iran Pressure
Russia and China, both permanent members of the UN Security Council, have played key roles in pressing on Iran to rein in its nuclear program. China also has been influential in the six- party talks aimed at persuading North Korea to abandon its nuclear weapons program. Kim Jong Il's regime began disabling its plutonium-producing nuclear reactor at Yongbyon under the supervision of U.S. inspectors in November.
``Besides the economic front, the BRIC group could prove to be a growing counterweight to U.S. hegemony in global affairs,'' Win Thin, an analyst at New-York-based bank Brown Brothers Harriman & Co., wrote in a May 12 e-mail.
Russia wants BRIC to become a ``notable factor in multilateral diplomacy,'' to help strengthen ``multi-polarity,'' acting Russian Foreign Ministry spokesman Boris Malakhov said in a statement. He said Moscow saw the talks as a way to bring the four countries closer together on the world stage.
Dialogue
``Through this informal arrangement, the four nations will understand each others' policies, discuss common factors and issues and leverage their positions through dialogue,'' said Sujit Dutta, a strategic analyst at Institute of Defense Studies and Analyses, a New Delhi-based research institution. ``With this forum they will try to raise their global profile.''
O'Neill himself said there are limitations to the BRIC concept. For example, Brazil -- the world's biggest producer and exporter of coffee, sugar and orange juice -- may not be the only Latin American country that belongs in the grouping. Mexico could also be a contender, along with South Korea, he said.
Lately, China and India have taken measures to cool inflation spurred by higher energy and food prices as a weak economy in the U.S. hampered exports. Russian growth could slow from 8.1 percent, the Finance Ministry has said. The Brazilian economy may expand 4.6 percent this year, down from 4.7 percent according to a central bank survey published in April.
Though BRIC investments have done well in recent years, they are looking less solid lately. Since Dec. 31, the MSCI Emerging Markets BRIC Index has fallen 5.3 percent -- more than the 3.1 percent decline in MSCI's Emerging Markets Index.
MARKET PREDICTION
GLOBAL MARKET IS IN POSITIVE MODE.. INDIA COULD FOLLOW THE TREND.
LEVEL OF NIFTY 4970-5000-5050-5130..BUY FROM LOWER SUPPORT OF 5000 IN PHARMA SECTOR AND IF MARKET DOES NOT HOLD 5100 GO SHORT IN REALTY SPACE WITH S L OF 5130.
TOTAL O I IS 74 K CR PUT CALL RATIO IS HOVERING AROUND 1.41.
HAVE A NICE TRADING DAY...
-MR. SAM
LEVEL OF NIFTY 4970-5000-5050-5130..BUY FROM LOWER SUPPORT OF 5000 IN PHARMA SECTOR AND IF MARKET DOES NOT HOLD 5100 GO SHORT IN REALTY SPACE WITH S L OF 5130.
TOTAL O I IS 74 K CR PUT CALL RATIO IS HOVERING AROUND 1.41.
HAVE A NICE TRADING DAY...
-MR. SAM
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