GSK’s sale of Unilever stake, Axis Bank & Max Life deal, RBI’s help to Mutual Funds

GlaxoSmithKline will start a sale of its $3.7 billion stake in Unilever’s listed India unit. Axis Bank said it would acquire an additional 29 per cent stake in Max Life Insurance. The US economy shrank at a 4.8 per cent annual rate in the January-March quarter, as analysts warned of a recession. Zomato said it would stop funding discounts offered by its restaurant partners. Here is more on what made news this week.

Business Standard
2nd April

  • The government said people stranded in the lockdown to contain the coronavirus may travel by road between states, promising new guidelines that would from May 4 give “considerable relaxations to many districts”. Letting people travel will help businesses struggling to bring workers back to factories. Trains and flights won’t resume yet.
  • GlaxoSmithKline is preparing to start a sale of its $3.7 billion stake in Unilever’s listed India unit. Glaxo plans to offload part or all of its 5.7 per cent holding in Hindustan Unilever (HUL) through a series of block trades, which could start as soon as the next few days, Bloomberg reported quoting sources familiar with the matter.
  • The US economy shrank at a 4.8 per cent annual rate last quarter as the coronavirus pandemic shut down much of the country and began triggering a recession that will end the longest expansion on record. Forecasters say the drop in the January-March quarter will be only a precursor of a far grimmer GDP report to come on the current April-June period.
  • Axis Bank said it would acquire an additional 29 per cent stake in Max Life Insurance for an estimated Rs 1,592 crore, raising its total holding in the life insurer to 30 per cent. Max Financial Services will hold the remaining 70 per cent in the joint venture. Axis plans to purchase around 556 million shares of Max at a price of Rs 28.61 per share.
  • The Reserve Bank of India (RBI) opened a Rs 50,000-crore special liquidity window to help mutual funds tide over a severe liquidity strain imposed by the coronavirus pandemic and redemption pressures. Fund houses in India have struggled to allay investors’ fears of a flood of redemption requests after Franklin Templeton Mutual Fund said it would wind up six credit funds for lack of liquidity.
  • Zomato will stop from Monday funding discounts offered by its restaurant partners to cut losses and discourage "impulse purchases" during the national lockdown to contain the coronavirus. The move signals the end of hefty discounts for customers and adds to the woes of the beleaguered restaurant industry, said analysts.
  • The income tax department divested three senior officers of the Indian Revenue Service of their responsibilities for their alleged role in framing and making public a paper that advocated measures like a super-rich tax, a Covid-19 cess and reintroduction of wealth tax and inheritance tax. The government disowned the paper, drafted by a group of young officers, fearing it would scare off markets and investors.

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A few links for further reading

Hard path to growth

The signals for the economy are not positive: overall demand is yet to pick up; the share of total exports in India’s GDP is declining, and industrial output pattern remains worrying.

Small savings scheme

Investors breathed a sigh of relief when the government announced that interest rates on these instruments would not be revised for the fourth quarter of the calendar year.

Invest and emigrate

The great Indian dream of settling abroad is achievable if one has a few crores to invest. Rich nations offer a variety of investment options in a quid pro quo arrangement: immigrants get a better quality of life and revenue from them helps these countries’ finances. Wealthy Indians, troubled by polluted cities and the red tape holding up entrepreneurship, may want a quick ticket out of the country. Sanjay Kumar Singh lists a range of options: from a Canadian province’s investor programme to America’s US EB-5 plan.

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