IFR Asia – July 06, 2019

Sebi approves

framework for

DVR shares

4HEû3ECURITIESûANDû%XCHANGEû"OARDûOFû)NDIAû

has approved a framework for certain

technology companies to issue shares

with differential voting rights and keep

the voting structure in place for a limited

number of years following an IPO.

The market regulator said at a board

meeting it will allow companies in the

information technology, intellectual

property, data analytics, biotechnology or

nano-technology sectors to launch IPOs in

which their founders have superior voting

rights, as long as the founders do not have

a collective net worth of more than Rs5bn

(US$73m).

4HEûFOUNDERSûCANûHOLDû$62ûSHARESûFORûlVEû

years from the date of a listing, though they

can then apply to the market regulator for

AûlVE

YEARûEXTENSIONûIFûTHEYûGETûSHAREHOLDERû

approval. These shares can have superior

voting rights in a ratio of between 2:1 and

10:1 to ordinary shares.

Shares with superior voting rights will be

treated as ordinary shares post-IPO if they

EXCEEDûûOFûTOTALûSHAREûCAPITALûORûûOFû

the founders’ stakes. They will also lose their

status in voting on key matters, including

when a company appoints or removes an

independent director or auditor, if a founder

transfers control to another entity, if the

founder or company is involved in a third-

party transaction, or if shareholders need to

approve a delisting or buyback of shares.

Previously, DVRs could only be sold

through rights or bonus share offerings that

gave ordinary shares inferior or fractional

VOTINGûRIGHTSûORûLOWERûDIVIDENDSû/NLYûlVEû

companies – Tata Motors, Gujarat NRE Coke,

Future Enterprises, Jain Irrigation Systems

and Stampede Capital – have issued DVRs.

The DVRs issued by these companies had

different layers of dividend payments but no

voting rights.

In 2009, Sebi placed severe restrictions

People

&Markets

Deutsche to cut

investment bank

in overhaul

DEUTSCHE BANK is preparing to unveil a

sweeping, multi-billion euro overhaul within

DAYSûTHATûWOULDûSEEûTHEûAXEûFALLûHEAVIESTûONû

investment bankers, sources familiar with

the matter said.

4HEûREVAMPûISûEXPECTEDûTOûCOSTûTHEûBANKû

up to €5bn (US$5.6bn), one of the sources

said.

#HIEFûEXECUTIVEûOFlCERû#HRISTIANû3EWINGû

mAGGEDûANûEXTENSIVEûRESTRUCTURINGûINû-AYû

when he promised shareholders “tough

cutbacks” to the investment bank. The pledge

came after Deutsche failed to agree a merger

with rival Commerzbank.

The lender, Germany’s largest, is planning

on cutting between 15,000 and 20,000

JOBSûORûMOREûTHANûONEûINûlVEûOFûITSûû

employees.

The bulk of the job cuts will take place

outside Germany, said a person with

knowledge of the plans, as they are mostly

targeting the investment bank, a unit that

HASûSTRUGGLEDûTOûGENERATEûSUSTAINABLEûPROlTSû

SINCEûTHEûûlNANCIALûCRISIS

The overhaul signals that Deutsche is

coming to terms with its failure to keep

pace with Wall Street’s big hitters such as JP

Morgan and Goldman Sachs.

“Sewing really wants to move the needle,”

said another person familiar with the plans.

The price tag for restructuring raises the

probability that the bank will report a loss

for the full year, the person said, meaning

Deutsche will have been in the red for four

OUTûOFûTHEûlVEûLASTûYEARS

"UTûEXECUTIVESûANDûINVESTORSûHOPEûTHEû

overhaul, however costly, will be radical

enough to turn around the bank’s fortunes

after its shares fell to a record low last month.

Other measures under consideration

include a reduction in the size of the nine-

member management board as well as the

creation of a so-called bad bank to hold tens

of billions of euros of non-core assets.

The bank has also held talks with

Citigroup, BNP Paribas and others about the

possible sale of parts of its equities business,

the Wall Street Journal reported. BNP Paribas

and Citigroup declined to comment.

Deutsche declined to comment on its

restructuring. It said it was working on

measures to accelerate its transformation so

ASûTOûIMPROVEûITSûSUSTAINABLEûPROlTABILITY

“We will update all stakeholders if

and when required,” it said. The bank’s

supervisory board was due to meet on Sunday

to discuss the overhaul, people familiar with

the matter said.

The investment bank generates about half

of Deutsche’s revenue but is considered its

Achilles heel.

Revenue at the division is forecast to fall to

€12.4bn this year, according to a consensus

of analysts. That would mark a fourth

consecutive year of decline, down more than

30% from 2015.

In a shift that underscores its waning

internal relevance, the investment bank

Who’s moving where...

„ Kai Fang is joining

CLSA as head of

the newly created

financial sponsors

group, people with

knowledge of the

development have

said.

Fang is likely to join

sometime in July.

Based in Hong Kong,

Fang joins from

China Renaissance,

where he was head of

China equity capital

markets.

CLSA declined to

comment.

„ CREDIT SUISSE has

poached Erica Poon

Werkun from UBS to

run its equity research

division in Asia Pacific

with current head

Ernest Fong due to

retire.

Poon Werkun has

spent the past

15 years at UBS

including the last

three years as head

of research at UBS

Securities, UBS’s

China securities joint

venture, based in

Shanghai.

She was previously

head of Asian

consumer and

internet research at

UBS in Hong Kong

and also worked as

a research analyst

at Goldman Sachs,

covering consumer

and technology.

„ Ankang Li has left

his job as executive

director in Goldman

Sachs’s healthcare

investment banking

group in Hong Kong.

Li, who worked on a

number of biotech

IPOs during his

18-month stint at

Goldman, has joined

pharmaceutical

company TERNS

PHARMACEUTICALS as

chief financial officer.

Li previously worked

as a lawyer at both

Davis Polk and Ropes

& Gray, advising on

capital markets and

M&A transactions.