21 Feb 2018

Liquidation of fund started and trading suspended

The Board of Himalayan Fund NV decided to initiate the liquidation of the fund and has suspended the purchase and re-puchase of Ordinary Shares with immediate effect. After over 25 years this will also end the listing on the London Stock Exchange as well as on Euronext Amsterdam. Shareholders will be compensated - pro rato per share - after selling all assets in the fund.

The single country investment fund was established in 1990 and had a listing on both exchanges  from the start. At the launch the Fund had over 100 million US Dollar under management, the last few years this decreased to around USD 9 million. The Board of Directors decided to close down the Fund because the current size of the Fund does no longer sustain all the costs related to governance and regulatory demands.

The Directors have regularly reviewed the strategic options available to the Fund. The primary concern of the Directors has increasingly been the inability, over recent years, to find a new strategic distribution partner that is capable of generating a sustained flow of new cash subscriptions to the Fund.

Reluctantly, the Directors have concluded that without assured new cash inflows, the Board’s ability to manage the Fund with firm control of the expense base is uncertain. Accordingly, against such a background the Directors have concluded that the best course of action is to take the advantage of the current valuation level of the Indian stock markets and to liquidate the Fund. 
To facilitate the liquidation of the Fund there will be a Extraordinary General Meeting of Shareholders in Amsterdam on Thursday 5 April 2018. When this General Meeting agrees with the dissololution of the Fund the portfolio will be liquidated and all existing contracts with services providers and suppliers will be brought to an end. After which all Shareholders will be compensated in cash based on the number of shares they hold. As of today trading in Ordinary Shares of Himalayan Fund NV is suspended on Euronext Amsterdam.

To guarantee the value of the Funds holdings the Board of Directors already moved to concentrate the portfolio in high quality, liquid stocks and feels that the current holdings can all be liquidated efficiently in a short time. The portfolio value is approximately US dollar 9 million. In respect of this, the average daily turnover in Indian stock markets is approximately US dollar 6 to -7 billion.

Liquidation of assets
The underlying portfolio cannot be liquidated until the liquidation resolutions are passed and as a result, there is a market risk arising from this process. The Board has already moved to concentrate the portfolio in high quality, liquid stocks and feels that the current holdings can all be liquidated efficiently in a short time.

Currency risk
There is a currency exchange risk on the conversion of liquidation proceeds to US Dollars. However, the Rupee/Dollar exchange rate has been relatively stable in a trading range of less than 5% and is therefore not deemed a material risk.

Repatriation of asset sale proceeds
The repatriation of proceeds is subject to receiving a tax clearance from the Indian tax authorities. The Fund’s tax advisers have advised that a negative response is unlikely.

Liquidation value
The eventual Liquidation Value may be subject to claims from external parties for settlement of outstanding debts from claimants in The Netherlands and India. The Fund will publish an advertisement of its intention to liquidate in both countries. As the Fund has historically dealt with a limited number of service providers and will make appropriate provisions for known obligations, this is not deemed to be a material risk.

Action to be taken in respect of the General Meeting
Shareholders can receive a Form of Proxy for use at the General Meeting via the Company Secretary.
A shareholder shall only be entitled to attend and vote at the EGMs whether in person or by proxy if such shareholder has deposited documentary proof of his shareholding obtained from their Intermediary, at the Registration Date at the registered office of the Fund (Legmeerdijk 182, 1187 NJ, Amstelveen,The Netherlands) at the latest at Friday 30 March 2018 before 16h00 in respect of which the shareholder shall be issued a receipt. A receipt must be presented to gain entry to the meeting.
All instruments of proxy must be deposited at the registered office of the Fund at the latest at Tuesday 3 April 2018 before 12h30. The lodging of a form of proxy does not prevent a shareholder from attending and voting if he wishes

General Meeting of Shareholders
Te General Meeting of Shareholders will be held at Thursday April 5th, 2018 at Herengracht 124-128, 1015 BT Amsterdam, The Netherlands at 12.30PM.

12 Oct 2017

Nestlé India mending fences

In the private sector, Nestle India has been mending fences with the FSSAI: the company will set up a food standards safety institute in Manesar. The company is consolidating product lines and focusing on supporting home cooking. ITC is exploring ways of penetrating the health and wellness sector. The company looking to generate $10bn in revenues from the package foods sector by 2030. In the hospitality field, the company is also planning 40 new hotels with 5,000 rooms in India.GDP growth will be depressed for another couple of quarters as the economy recovers from demonetization and get to grips with the adoption of GST. Against that background, market momentum may be subdued.

11 Oct 2017

Steady interest rates, more tax collection

Initial reports on the GST rollout suggest that collection of the new tax exceeded government expectations by 1.5% in spite of the fact that 36% of projected assessees failed to file. It does appear, however, that some small and medium enterprises are suffering cash flow problems when their input GST rates differ from their output rates, given the delay in recovering input deductions. Meanwhile, Aadhaar-based direct benefit transfers have exceeded $13bn. First quarter GDP growth was a disappointing 5.9%. Manufacturing grew by a mere 1.2% and agriculture just 2.3%. Services grew by 8.7%, with a 6.4% contribution coming from financial services. September’s manufacturing PMI was 51.2, the same as August and the Services PMI recovered from two months of contraction to register 50.7 in September. August CPI inflation was 3.4%, up slightly on firmer food prices, but the WPI number was softer at 3.2%. The RBI monetary policy committee held interest rates steady at its latest review.

10 Oct 2017

Monsoon season closing

The monsoon season has drawn to a close, with aggregate rainfall less than 5% below the long period average, which is defined as a normal monsoon. The dispersion has been very uneven though, with a number of regions in shortfall, yet others reporting late season flooding. As a result, Kharif cropping is about 2-3% down on last year. The late flooding is leaving much improved moisture content in the soil, which will provide well for the Rabi crop. Reservoir levels are still improving though the late moisture retention will help a lot. Overall, expectations for aggregate rural demand through the festive season are good. In order to protect farmers against market risks on their cops, the government is introducing an ambitious crop insurance scheme. This will insure farmers against crop volume risk due to adverse weather conditions.    

9 Oct 2017

Equities: broad upward momentum

Equity markets continue to enjoy broad upward momentum while growth is sustained and, in particular corporate earnings continue to please. Another US interest rate hike this year is now the consensus, even if the underlying inflation expectations are not convincing. Indian markets have been vacillating in a range of 500 points around the 10,000 level without seeing much sustained upward momentum or, indeed downside risk. Has increased by just 1.2% to 9980 after trading in a range of 5.1%. Average daily trading volumes have shifted upwards with a trailing average now at $4.7bn and daily numbers rising every week. Foreign portfolio investors have been consistent sellers of Indian equities on a relative valuation basis for some time now, unloading a net $3,1bn in the latest month. Domestic institutions have largely offset this, buying a net $2.8bn in ash equities but brokers are also reporting a substantial increase in retail buying in the expectation of recent returns being repeated. Volatility remains subdued nonetheless, with the India VIX trading in a narrow range between 9 and 14 before settling at 11. Market breadth is narrow as the market declines but strong on the rise. Nifty futures are typically trading at a premium of 1% to cash.

6 Sep 2017

Corporate news: ITC, Indian Hotels

In the corporate sector, ITC announced a price rise for its premium cigarettes of 20% to absorb the extra tax due to GST. The company also announced that it intended to enter the Healthcare sector by establishing a multi-specialist hospital. Indian Hotels announced a rights issue to raise about $240mil in additional capital. The dilutive effect will depend on the proportional distribution of the proceeds between debt reduction and new investment.

5 Sep 2017

Lawyers have been busy

We have seen a number of interesting legal decisions handed down. In the first, of constitutional significance, the Supreme Court has held that personal privacy is a fundamental right. This was in response to a case brought in protest about the application of the Aadhaar programme. The judgement might restrain the government’s ability to continue to rollout the use of Aadhaar for benefit schemes for its 1.3bn holders. In another judgement, the Court struck down the Muslim divorce process by which a man can easily divorce his wife. This was a very popular decision particularly among women but it will require a statutory response which will be highly controversial. Moving up the geopolitical plain, India has resolved a rumbling dispute with China over disputed building works on the Doklam Plain in Bhutan, India’s client-state. This resolution precedes a state visit to China by Mr. Modi which is to promote the burgeoning trade relations between the two countries.