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Torrence has been awarded with mandates to raise funds over US $ 2 billion cumulatively via equity and debt route in the most upcoming sectors of hospitality, healthcare, oil & gas, power, real estate etc and Mr Das, CEO of Torrence Capital, recently participated in a  panel discussion on “Green Innovation” organized by Country’s leading management institute, IIM Ahmedabad on October 23, 2010.


What is ECB?

ECB stands for External Commercial Borrowings. It is a term used to refer to Commercial Loans availed from Foreign Lenders in the form of Bank Loans, Buyers Credit, Suppliers Credit and Securitized Instruments. For example, floating rate notes and fixed rate bonds.

Why ECB?

The ECB route provides an Indian company with Foreign Currency Funds that may not be available in India and cost of funds is cheap as compared to the cost of rupee funds.

Who can avail an ECB?

An Indian company can raise ECB from any internationally recognized lenders such as Banks, Export Credit Agencies, Suppliers of Equipments, Foreign Collaborators, Foreign Equity Holders, International Capital Markets, etc. NGOs’ engaged in Micro Finance activities have also been permitted to raise ECB up to $5 million.

What is FCCB?

A type of convertible bond issued in a currency different than the issuer's domestic currency. In other words, the money being raised by the issuing company is in the form of a foreign currency. A convertible bond is a mix between a debt and equity instrument. It acts like a bond by making regular coupon and principal payments, but these bonds also give the bondholder the option to convert the bond into stock.

Who can raise FCCB?

• Indian Corporates except financial intermediaries such as banks, FIs, NBFCs.
• NGOs engaged in micro finance activities.
• Individuals, Non Profit making organizations and trusts are not eligible.
What is ADR/GDR?

A negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. ADRs help to reduce administration and duty costs that would otherwise be levied on each transaction. A GDR is very similar to an American Depositary Receipt except that it is issued outside USA.

What is FDI?

Foreign direct investment (FDI) refers to long-term participation by a foreign company by way of Equity or any similar class of instrument in a domestic entity. It usually involves participation in management, joint-venture, transfer of technology and "know-how". Eligible sectors with sector caps on investment is spelt out in FDI policy.

What is the difference between Private equity and venture capital?

Venture capital is a subset of a larger private equity asset class. Historically, Venture Capital investors have provided high risk equity capital to start-up and early stage companies whereas private equity firms have provided secondary tranches of equity and mezzanine investments to companies that are more mature in their corporate lifecycle.

What is Mezzanine Capital?

A hybrid of debt and equity financing that is is typically used to finance the expansion of existing companies. Mezzanine financing is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full. It is generally subordinated to debt provided by senior lenders such as banks and venture capital companies.

What are QIP and QIB?

A designation of a securities issue given by the Securities and Exchange Board of India (SEBI) that allows an Indian-listed company to raise capital from its domestic markets without the need to submit any pre-issue filings to market regulators. The SEBI instituted the guidelines for this relatively new Indian financing avenue on May 8, 2006.

Qualified Institutional Buyers are those institutional investors who are generally perceived to possess expertise and the financial muscle to evaluate and invest in the capital markets such as Commercial Banks. FIIs, Insurance Companies, Mutual Funds etc.

What is IPO?

An Initial Public Offering (IPO) referred to simply as an "offering" or "flotation," is when a company (called the issuer) issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.

What is AIM?

The Alternative Investment Market (AIM) is a sub-market of the London Stock Exchange, allowing smaller companies to float shares with a more flexible regulatory system than is applicable to the main market. The AIM was launched in 1995 and has raised almost £24 billion for more than 2,200 companies. Flexibility is provided by less regulation and no requirements for capitalization or number of shares issued. Some companies have since moved on to join the Main Market, although in the last few years, significantly more companies transferred from the Main Market to the AIM.

What is NASDAQ?

The NASDAQ Stock Market, known as NASDAQ, is an American stock exchange. NASDAQ originally stood for "National Association of Securities Dealers Automated Quotations," but the exchange's official stance is that the acronym is obsolete. It is the largest electronic screen-based equity securities trading market in the United States. With approximately 3,700 companies and corporations, it has more trading volume than any other stock exchange in the world.

What is Sensex?

BSE Sensex or Bombay Stock Exchange Sensitive Index is a value-weighted index composed of 30 stocks that started on January 1, 1986. The Sensex is regarded as the pulse of the domestic stock markets in India. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies account for around fifty per cent of the market capitalization of the BSE. The base value of the sensex is 100 on April 1, 1979, and the base year of BSE-SENSEX is 1978-79. What is LIBOR?

The London Interbank Offered Rate is a daily reference rate based on the interest rates at which banks borrow unsecured funds from other banks in the London wholesale money market (or interbank market).

What is Prime Lending rate?

Prime rate, or Prime Lending Rate, is a term applied in many countries to a reference interest rate used by banks. The term originally indicated the rate of interest at which banks lent to favored customers, i.e., those with high credibility, though this is no longer always the case. Some variable interest rates may be expressed as a percentage above or below prime rate.

What is REIT?

A Real Estate Investment Trust or REIT is a tax designation for a corporation investing in real estate that reduces or eliminates corporate income taxes. In return, REITs are required to distribute 90% of their income, which may be taxable, into the hands of the investors. The REIT structure was designed to provide a similar structure for investment in real estate as mutual funds provide for investment in stocks.

What is Integrated Township?

Integrated township, as the name suggests, is a self-sustained township having a number of real estate developments, including residential, commercial, retail and institutional, as well as industrial areas in some cases. They are sub cities where one can work, live, recreate with access to health and Educational facilities.

What are the FDI norms in the integrated township?

With a view to catalyzing investment in townships, housing, built-up infrastructure and construction-development projects as an instrument to generate economic activity, create new employment opportunities and add to the available housing stock and built-up infrastructure, the Government has vide Press Note No. 2 (2005 series) decided to allow FDI up to 100% under the automatic route in township, housing, built-up infrastructure and construction-development projects (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure), subject to the following guidelines:

» Minimum area to be developed under each project would be as under:

  1. In case of development of serviced housing plots, a minimum land area of 10 hectares
  2. In case of construction-development projects, a minimum built-up area of 50,000 sq. mts
  3. In case of a combination project, any one of the above two conditions would suffice

» The investment would further be subject to the following conditions:

  1. Minimum capitalization of US$ 10 million for wholly owned subsidiaries and US$ 5 million for joint ventures with Indian partners. The funds would have to be brought in within six months of commencement of business of the Company.
  2. Original investment cannot be repatriated before a period of three years from completion of minimum capitalization. However, the investor may be permitted to exit earlier with prior approval of the Government through the FIPB.
Can ECB come in real Estate?

The finance ministry allowed External Commercial Borrowing (ECB) in Indian real estate projects (in 2005) involving integrated townships of 25 acres or 50,000 square metres of more. However, the RBI's position has to be checked on a project by project basis. As of now, only companies which are purely into integrated townships of specified size are eligible to access ECBs.

What is FEMA?

The Foreign Exchange Management Act (1999) or in short FEMA has been introduced as a replacement for earlier Foreign Exchange Regulation Act (FERA). FEMA came into act on the 1st day of June, 2000.

The main objective behind the Foreign Exchange Management Act (1999) is to consolidate and amend the law relating to foreign exchange with objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.

What is SEBI?

SEBI is the regulator for the Securities Market in India. It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament.

What is coupon Rate?

The coupon or coupon rate of a bond is the amount of interest paid per year expressed as a percentage of the face value of the bond. It is the interest rate that a bond issuer will pay to a bond holder.

What is Put Option?

Put option (usually just called a "put") is a financial contract between two parties, the writer (seller) and the buyer of the option. The buyer acquires a short position by purchasing the right to sell the underlying instrument to the seller of the option for specified price (the strike price) during a specified period of time. If the option buyer exercises their right, the seller is obligated to buy the underlying instrument from them at the agreed upon strike price, regardless of the current market price. In exchange for having this option, the buyer pays the seller or option writer a fee (the option premium).

What is a call option?

A call option is a financial contract between two parties, the buyer and the seller of this type of option. It is the option to buy shares of stock at a specified time in the future Often it is simply labeled a "call". The buyer of the option has the right, but not the obligation to buy an agreed quantity of a particular commodity or financial instrument (the underlying instrument) from the seller of the option at a certain time (the expiration date) for a certain price (the strike price). The seller (or "writer") is obligated to sell the commodity or financial instrument should the buyer so decide. The buyer pays a fee (called a premium) for this right.

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