Facebook's Lending Initiative to MSMEs

 

Facebook India announced a new program called "Small Business Lending Initiative", in partnership with online lending platform Indifi, to help small and medium-sized businesses (SMEs) advertising on Facebook to get quick access to credit from through independent loan partners.

The social giant said its new program, ‘the Small Business Loan Initiative’, addresses some of the biggest hurdle point small businesses face when borrowing.

The company, which last year announced a $ 4.3 million grant for small businesses in India.

 

Indifi:

Indifi, a Gurgaon-based company backed by the CDC Group, is the first loan partner Facebook has partnered with.

Indifi disbursed more than 25,000 loans, served more than 200 clients, more than 80 active partners, more than 12 industries served and 15 lending partners to date.

 

Facebook and Indifi:

India is the first country where Facebook implements this program in partnership with the Indifi online lending platform.

As part of a new partnership with Indifi, an online lending platform at 200 locations in India,

Facebook will help businesses to discover and apply to Indifi for a loan that can help your business get through these tough times. Facebook does not receive income through this association.

 

Benefits of this programme:

• INR 5 lakh - INR 50 lakh loans: either for cash flow management or expansion

• Unsecured and fast-paced - If approved, get your loan within 3 business days of completing all paperwork.

• Predefined interest range: the interest range will be between 17% and 20% per year.

• Support for women: if your company is wholly or partially owned by women, Indifi will grant you a 0.2% reduction on the applied loan interest rate.

• Quick support

• MSME’s applying for this loan will not be charged a processing fee by Indifi.

 

Eligible business:

• Be located in an eligible Indian city. To see the list of eligible Indian cities, click here.

• Have been an advertiser in the Facebook family of applications for at least 180 days at the time of application.

 

This will help Indian MSMEs to get quick financial support for their business needs.

India’s First aircraft leasing company

 

Although it is among the fastest growing aviation markets in the world and with the second largest aircraft order book in the world, India has never had a leasing company.

India currently has 700 (commercial) aircraft and 800 aircraft currently on order to be delivered in the next 4-5 years. Until now, not a single one of them was rented in India.

The total value of the backlog of commercial aircraft orders from India is $ 19.32 billion.

Why suddenly now Indian  companies started Aircraft leasing business?

The Union budget had proposed the tax holiday for capital gains and tax exemption on aircraft rentals paid to foreign lessors to IFSC-based leasing companies in the GIFT city of Ahmedabad.

So who are going to start/started this ?

To capitalize on this opportunity, the first company to go with is the private charter provider. The JetSetGo aircraft leasing unit will begin operations from GIFT City.

The founder and CEO of the company is Kanika Tekriwal.

The airline plans to bring in six planes by the end of the 2021-21 year, at least two of which can be rented through the next unit.

The service provider plans to purchase used aircraft in the US and Europe through its leasing subsidiary, allowing it the flexibility to access customers both in India and abroad.

Used jets could cost between $ 2 million and $ 15 million.

Urban air mobility is likely to only take off via aggregators through asset-heavy business models, unlike Old / Uber, which operate light-asset models in the automobile segment.

"The first aircraft (Hawker 800XP) will be leased to Info Pacific Aviation Pvt Ltd, a subsidiary company of JetSetFleet."

To lease the aircraft, the company is experimenting with a novel financing strategy in which JetSetFleet plans to use the pay-as-you-go arrangement and is also looking into a revenue sharing arrangement.

The aircraft acquired under the GIFT City scheme operates with an Unscheduled Operation Permit (NSOP), intended to be used by corporations or business leaders.

Facilitating the purchase of less-used aircraft by registering within the country will save valuable foreign currency in terms of leasing, which previously had to be deposited in the foreign country where the company was registered.

So far, Indian airlines lease planes to lessors in Ireland, Hong Kong and Singapore. Currently, it is 48 percent more expensive to do this from India than from Ireland.

SpiceJet, HAL, Acumen Aviation, VMan Aero, Investec are the other companies seeking to open aircraft leasing services in India, based at GIFT City in Ahmedabad.

Global Aircraft leasing industry:

Globally, the largest independent aircraft leasing company is the Irish company AerCap.

In 2020, AerCap's fleet was valued at nearly US $ 29.8 billion.

The company had an estimated fleet size of around 1,074 aircraft in that same year.

In March 2021, GECAS parent company General Electric announced a US $ 30 billion agreement to merge GECAS with AerCap.

The global commercial aircraft leasing market is estimated at US $ 33. 7 billion in 2020, projected to   reach a size of US$ 47.1 billion by 2027 growing at a compound annual rate of 4.9% during the period 2020-2027.

Europe generated the highest revenue in the aircraft rental industry in 2020 due to high disposable income and high living standards in the region. The development of new aircraft, increased air traffic, efficient commercial aircraft operation, and technological advancements have led to a growing adoption of aircraft rental in the region.

India is emerging as a global growth hub has immense potential to for growth, this aircraft leasing will improve domestic business and also lower foreign exchange outflow which are currently high.

Ambani vs Adani

The dispute between Ambani and Adani intensifies after the announcement that Ambani is entering the renewable energy business. So far, neither of them have stepped straight into each other's business.

Renewal Energy:

Ambani:

• On June 24th, when India's richest man, Mukesh Ambani, announced his clean energy business.
• Reliance Industries announced a massive Rs75,000 crore worth of investments in green energy over the next three years
• RIL will create a capacity of producing solar power of 100 Gw in 10 years.
• Reliance is expanding its base in domestic manufacturing of solar cells, modules and battery storage, among other things, and this will strengthen India's contribution to clean energy

Adani:

• Adani Group consists of five large companies: Adani Enterprises, Adani Green Energy, Adani Gas, Adani Ports and SEZ and Adani Power.
• It has strong presence in this with 15,390 MW Renewable Energy Portfolio.
• Meanwhile, concerns are also growing that the two billionaires could work together to form a duopoly that could be difficult to break.

Retail:

Ambani:

• Reliance Retail ranked as the fastest growing retail store in the world.
• Ranks 53rd on the Top Global Retailers list and is the only Indian retailer to be included in the top 100.
• It is the largest and most profitable retailer in India with the greatest reach.
• Reliance Retail has more than 150 million loyal customers shopping in all of its formats. The company had more than 640 million customer visits in all of its stores in fiscal year 20. With over 100,000 transactions per hour, Reliance Retail operated 12,711 stores in over 7,000 cities with over 33.8 million square feet of retail space.

Adani:

• Walmart Inc. e-commerce unit signed a pact with tycoon Gautam Adani to build one of the largest retail warehouses in India as the US giant prepares to battle Amazon.com Inc. and domestic rivals in the country.
• Adani Logistics Ltd., a unit of Adani Ports & Special Economic Zone Ltd., will build a 534,000 sq mtrs fulfilment centre in its future logistics centre in Mumbai and sell it to Walmart’s Flipkart Online Services Pvt. rent,
• This warehouse - about the size of 11 soccer fields - is expected to go into operation in the third quarter of 2022 and store 10 million storage units, the companies said.

Petrochemical:

Ambani:

• Owns the world's largest refining centre with a capacity of 1.4 million barrels per day (mmbpd)
• Reliance Petroleum has a network of more than 1,300 gas stations across the country.

Adani:

• Gautam Adani took a small step into the petrochemicals business on Saturday by becoming a wholly owned entity under Adani Enterprises Ltd.
• Total-Adani Fuels Marketing Ltd applied for licenses to offer the full bouquet of auto fuels in retail stores.
• Total bought 37.4 percent of the shares in Adani Gas, which was produced by billionaire Adani, in order to enter the world's fastest growing fuel market.
• Total-Adani Fuels Marketing Ltd, a subsidiary of Adani Gas, will offer charging facilities for natural gas, gasoline, diesel and electric vehicles.
• Joint venture applied for a license under the liberalized fuel retail system announced by the gov’t.

Digital:

Ambani:

• The fastest growing start up / 4G operator.
• More than 90,000 4 G LTE towers installed
• The network of fibre optic is believed to be 2.5 lakh kilometres across the country.
• Jio is the first and last Exabyte telecom arranger in the world, providing over 100 crore GB of information each month.

Adani:

• The Adani Group is ready for a foray into the digital world as the chairman in his first in-house meeting with employees at Adani Digital Labs, the arm of the Adani-controlled conglomerate.
• Said "We have to be the Ferrari of the digital world," said the chairman in front of around 80 young employees.
• We have to develop the app for every person in India in the huge ecosystem.
• It took him less than 30 minutes to decide that they have to be a player in this area, the group has 400 million consumers engaging with multiple levels of Adani products and services.

 Some interesting facts about Ambani and Adani:

Ambani:

• Dropped out of his MBA
• He is owner of the largest refinery in the world
• It accounts for 5% of the country's GDP
• Reliance Fresh consists of over 700 stores
• His house is the most expensive
• He has a custom made bus van

Adani:

• A school dropout
• He paved his own path to growth
• Closed a deal for 6,000 crore within 100 hours
• His company is the country's largest private electricity producer
• With his port project, he has fulfilled his childhood dream
• He is the head behind India's port-rail link policy

 Its interesting to see how this rivalry would turn in future, ultimately the consumers should  win in long run but its important to not ignore the fact that this would create a duopoly in some businesses.

 

IPO - Better luck next time

 

Since last year we are seeing so many companies are coming up with IPO to capitalize the liquidity in the market.

COVID-19 has damaged the economic health also but if we look at capital markets, it seems market is doing good “Running like anything”.

To keep the growth continue a lot of central banks in world is lowered/not changed the interest rates.

People has more money as we are witnessing every IPO is oversubscribed since last year.

Till now the biggest IPO year was 2017, the total money raised through IPO was Rs. 58,075 but average listing gain was just 11.93% and current average gain is 72.88% (based on CMP)

Performance of IPO since 2010

Row Labels	Issue Size (in crores)	Avg Listing Gain (%)	Avg Current Gain (%)
2010	36,618	-10.87	34.34
2011	6,018	-17.26	-32.01
2012	7,044	-17.49	-52.18
2013	1,220	4.45	86.34
2014	1,193	26.08	21.87
2015	12,405	-0.69	24.40
2016	23,527	5.62	114.20
2017	58,075	11.93	72.88
2018	24,546	6.12	63.94
2019	14,272	19.17	202.54
2020	26,185	47.24	201.45
2021*	49,524	32.15	62.45

(* Includes only listed till now)

In 2021 till now we have already seen 38 companies came up with their IPO raising of Rs. 71,833 crores. In 2020, companies had raised of Rs. 26,185 crores.

The Average listing gain in 2021(Till July) and 2020 is 32.15% and 47.24% respectively.

The Average current gain in 2021(Till July) and 2020 is 62.45% and 201.45% respectively.

Now so many companies are in line to come up with their IPO.

But if we look into latest IPOs which are open for subscription now are witnessing lower subscription as compared to last few IPOs because investor’s money is held in last IPOs.

If many IPO open at the same time it’s obvious that companies witness less subscription and eventually lists at less premium.

Top 10 IPO by subscription in 2021

Company Name	Issue Size (Rs Cr)	QIB (x)	NII (x)	Retail (x)	Employee (x)	Total (x)
MTAR Technologies Limited	596	165	651	28		201
Tatva Chintan Pharma Chem Ltd	500	185	512	35		180
Nazara Technologies Limited	583	104	390	75	8	175
Easy Trip Planners Limited	510	78	382	70		159
Rolex Rings Limited	731	144	360	24		130
Shyam Metalics and Energy Limited	909	156	340	12	2	121
Indigo Paints Limited	1,176	190	263	16	3	117
Devyani International Limited	1,838	95	213	39	5	117
Laxmi Organic Industries Limited	600	175	218	20		107
G R Infraprojects Limited	963	169	238	13	1	103

 Lots of new age companies are raising money through IPO for giving exit to their initial investors.

If you see like this OFS, the business is not getting a single penny to run/expand the business but it is embracing the listing costs, post listing compliances, obligation to perform better, risking retail investor’s money and man more.

For now it is wait and watch game for fresh investment in these new age companies (Eg: Zomato, Devyani etc )

“An IPO is not the end but actually the beginning”