Things we are reading today - April 4th, 2024

Jonathan Gray, President and COO of Blackstone Inc., plans to invest $17 billion in fresh private equity in India, citing the country’s highest returns in private equity over 19 years. Blackstone has over $50 billion assets under management in India, focusing on real estate and PE investments in sectors like healthcare and software.

Gray sees India as an increasingly attractive market for global investors, with plans to expand investments annually. Blackstone eyes infrastructure and growth equity sectors, emphasizing an active management approach and appreciating government reforms.

Kunal Kashyap, former risk head at Cred, has left to join competitor Slice, which is poised to become a bank pending regulatory approval for its merger with North East Small Finance Bank. Kashyap will lead part of the credit business in the newly-formed bank once the merger clears regulatory hurdles. His departure coincides with Cred’s focus on expanding its credit business, seen as a key revenue stream

PhonePe and Paytm are considering running audio advertisements on the millions of sound boxes deployed across retail outlets, including grocery stores, with the participation of FMCG companies like Mondelez and Tata Consumer Products Ltd.

These 4-5 second audio spots would play after transactions, potentially providing a new revenue stream for fintech firms and offering a platform for brand advertising and impulse buying.

However, the mechanics and frequency of these ads are still being finalized, with possibilities of discounted device rentals or revenue sharing with merchants

Domestic fund managers are investing heavily in equities, with March 2024 marking a record-breaking net investment of ₹45,298 crore, triple the average of the past year.

This surge in investment includes various equity instruments like equity funds, ETFs, and index funds. Despite concerns about market froth, particularly in small-cap stocks, domestic funds have remained bullish, reflected in a 16-month high cumulative investment of ₹2.1 lakh crore.

March also saw a decrease in redemptions, improving the gross buy-to-sell ratio to a 22-month high of 1.32.

The share of local funds in total institutional equity AUM has expanded by 400 basis points over three years, reaching around 20% by February 2024, indicating a significant presence in the market.

NBFCs have increased the borrowing costs for stock brokers by 25-30%, making margin funding, a short-term loan for buying shares, costlier for clients. This surge in interest rates, now ranging from 10-11% previously at 8-8.5%, is attributed to directives from the RBI regarding leverage concerns in the stock market and as a risk-tightening measure post a regulatory crackdown on JM Financial Products.

The total quantum of margin funding stands at ₹57,000 crore, with NBFCs being a significant source of funding alongside scheduled commercial banks and debt market instruments like commercial papers. The increase in margin funding is spurred by the market’s outperformance, particularly in mid-cap and small-cap stocks, leading to more individual investors leveraging their positions.

In anticipation of heightened volatility surrounding elections, some brokers have already raised margin funding rates, aiming to allow retail investors to deleverage their positions as a precautionary measure.


Who is Zerodha’s partner for the upcoming MTF feature? You guys are funding it yourself through your NBFC?

We’ll be funding it ourselves.