"EDITION 86"

Published: 6/8/2020

Happy Monday, folks - hope you had a great weekend! This is Vedica (@vedicakant) filling in for Anmol today. It really does seem like money grows on trees for Reliance, with the company announcing yet another raise yesterday. And talking of money, capital markets regulator Sebi has released guidelines for its regulatory sandbox.

  • https://bit.ly/3dDlqxz Reliance has closed its 8th deal in 7 weeks with a fund raise from ADIA
  • ➡️ Just two days after Abu Dhabi's sovereign wealth fund Mubadala invested in Jio, the country's Investment Authority (ADIA) has pumped in $750 million for a 1.16% stake.

    ➡️ In total, Jio has now raised ~$13B for 21.06% of equity. It will be interesting to see if any more deals are announced (what about that rumored one with Microsoft?!), but on the whole it seems like Reliance is done with its fundraising spree and will now focus on an IPO for Jio.

    ➡️ By all accounts Reliance is pondering a Jio IPO outside India within the next 12 - 24 months. Last month the government announced that Indian companies might be allowed direct overseas listing, without a simultaneous listing in the Indian market. It will definitely be an interesting twist to Reliance's own history as probably the most influential company in developing a public market culture in India.

    ➡️ It's a good time for Reliance to look at a US listing. With US-China tensions rising, there is a real possibility that Chinese companies listed on US stock exchanges will be delisted. Wall Street investors might be looking for new avenues to invest their $ (despite Cov-19, there's a lot of money splashing around thanks to the Fed's non-stop money printing), and investing in Jio could be a great way for them to get access to India's billion plus consumers.

    2. https://bit.ly/3h5ZCwM SEBI releases guidelines for regulatory sandbox

    ➡️ The country's capital markets regulator, Sebi, has released guidelines for its regulatory sandbox. The sandbox will serve as a testing ground for new business models and technologies that can help further develop and maintain an efficient and transparent securities markets ecosystem.

    ➡️ To begin with Sebi will allow regulated entities to use the sanbox to test new products and services in a live environment on select customers. Depending on the response it gets, it might consider giving fintech start-ups and non-regulated entities access to the sandbox.

    ➡️ Sebi has also decided to follow a cross domain approach for the sandbox, i.e., a regulated entity will be permitted to test solutions even for those activities it is not registered for.

    ➡️ Sebi is a following a three stage approach to give players access to the sanbox. Application → Evaluation → Testing. Application responses are expected within 30 days and will be evaluated on the following criteria (1) Genuineness of the innovation (2) Genuine need to test (3) Limited prior testing (4) Direct benefits to users (5) Risk management (6) Test readiness (7) Deployment post testing

    ➡️ On the whole, this is a great move by the regulator, but as always the devil lies in the details. India's capital markets have a lot of scope to grow and develop, and a smartly deployed regulatory sandbox can be a great tool to incubate new and innovative ideas. However, we will have to wait and see how Sebi applies its evaluation criteria and what kind of use cases and companies it decides to prioritize.

    Feedback & ❤️ always appreciated

    More tomorrow :) BONUS (Tweet of the day): https://twitter.com/ankits_tweets/status/1269581361729298432