Street signs: IL&FS SPV fallout hurts mkt, brokers-exchange meet, and more

IL&FS SPV fallout hurts market 

A lot of microfinance institutions looking to securitise their loans are finding it difficult to proceed after the Infrastructure Leasing & Financial Services (IL&FS) crisis. Their structure is similar to the special purpose vehicle (SPV) approach that defaulting lender IL&FS followed. The IL&FS subsidiaries have decided to not pay their obligations, citing a National Company Law Appellate Tribunal decision on resolving the debt issue at the parent level. The structure was supposed to ring-fence such entities from their parent's troubles. The hit is said to have resulted in a slowdown for others too. It is likely to pick up only once there is clarity on the issue.

Sachin P Mampatta

Prabhat investors to approach Sebi

Institutional investors at Prabhat Dairy are planning to approach the market regulator, Sebi, regarding the uncertainties surrounding the sale of its dairy business. Investors are concerned over the firm’s move to sell its milk business, which generated bulk of the revenues. Moreover, while the deal is being done at attractive valuations, investors fear little money could come to the minority shareholders. Panicked investors have started selling, resulting in a 25 per cent crash in the stock since the deal was announced.

Sundar Sethuraman

Brokers-exchange meet on trading

The broking community is planning to meet stock exchanges over the issue of cracking down on dubious trades. The move follows notices issued by exchanges to brokers intimating them about 100 per cent penalty for execution of “abnormal trades”. Plus, the onus of detecting and preventing dubious trades carried out by clients has been put on brokers. Sources say brokers are going to ask exchanges to monitor such trades. Brokers have also urged the exchange to rethink the heavy penalty proposed by them.

Sundar Sethuraman