Arvind's Newsletter

1.Wanted: A new owner for Yes Bank

Private sector lender Yes Bank Ltd is looking for a new promoter to sell up to 51% stake, and has hired Citigroup’s India unit to find a buyer. The bank has also invited some Indian lenders, including some of its existing shareholders, to join as promoter.

Yes Bank, India’s sixth largest private lender by assets, is seeking a valuation of $8-9 billion, which would be 20-25% above its current market capitalization of $7.2 billion, the people said on condition of anonymity.

“Some banks and financial institutions in Japan, West Asia and Europe have been approached with an offer to sell at least 51% in Yes Bank.”

To be sure, any new promoter holding more than 26% stake will require special approval from the Reserve Bank of India (RBI), the second person added. This is because central bank rules say that normally, a promoter can hold up to 26% in a private bank, but it may also permit a higher shareholding under circumstances such as relinquishment by existing promoters, supervisory intervention, reconstruction/restructuring of banks, entrenchment of existing promoters or any other action in the interest of the bank.

A stake sale will provide a much-awaited exit to Yes Bank’s big shareholders including State Bank of India (SBI), Life Insurance Corp. Of India (LIC), HDFC Bank Ltd and ICICI Bank.

2.Reliance to buy Paramount's entire 13.01% stake in Viacom18 for $517 mn

After the completion of this transaction, Reliance's equity stake in Viacom18 will increase to 70.49% on a fully diluted basis. At present, Reliance holds Compulsorily Convertible Preference Shares of Viacom18, representing a 57.48% equity stake.

Viacom18, primarily owned by Reliance, operates a network of 40 television channels, featuring popular brands such as Comedy Central, Nickelodeon, and MTV.

Paramount has affirmed its commitment to continue licensing its content to Viacom18 following the completion of the deal. Paramount's content is currently available for streaming on Reliance's JioCinema platform.

Furthermore, the completion of the transaction is contingent upon Reliance's previously disclosed merger with Walt Disney concerning their television and streaming media assets in India.

3.TikTok’s Race Against Time (in USA)

As expected, the US House of Representatives overwhelmingly approved the ‘ultimatum bill’ against the world’s most popular short-form video app. TikTok will be banned in its largest market unless ByteDance divests it in 180 days.

Despite assurances about storing data locally and intense lobbying, TikTok was up against lawmakers who believe the app’s Chinese parent poses a national security threat—enough to influence the 2024 elections that’ll be contested between President Biden and former President Trump.

The development will intensify tensions between Washington and Beijing. China will either block a sale or make ByteDance—which also operates Douyin, the ‘Chinese TikTok’—suffer consequences if it transfers ownership.

The bill faces an uphill climb in the US Senate, where reservations remain about the ultimatum. But ByteDance hasn’t helped its case: by investing in a Beijing-backed semiconductor firm during the thick of the US-China chip wars, it’s also alienated its already spooked US shareholders.

The app is hugely popular, but its growth has plateaued, and “TikTok’s best days in the U.S. may be behind it,” an internet culture writer argued in The Atlantic. A ban could lead American users to simply move on to other apps, the way Indians reacted when TikTok was blocked there in 2020.

4.Malaysia revives ‘ambitious’ high-speed rail plan to Singapore amid hurdles

The idea was first floated in 2013, but the two countries’ governments could not agree. Now Malaysia has received proposals from seven groups, including a Chinese state-backed consortium and South Korea’s Hyundai. The project hopes to cut the 350 km journey to about 90 minutes, from about four hours by car, and boost investment in Malaysia’s southern state Johor. 

The latest iteration of the project comes against a backdrop of new high speed rail lines in south-east Asia. In October, Indonesia officially opened the region’s first high-speed railway, connecting 140km between Jakarta and Bandung in less than an hour. The $7bn line was built by a consortium of Indonesian and Chinese state-owned companies, with government support for land acquisition.

5.Steve Levitt, who is the William B. Ogden distinguished service professor of economics at the University of Chicago, as well as the co-author with Stephen Dubner of the best-selling book Freakonomics, is to retire from academics at young age of 57 ( and I thought US academics never retired).

John Hartley in his podcast, The Capitalism and Freedom in the 21st Century Podcast, interviews Steve Levitt to discuss his career, including being an early leader in applied microeconomics and how the Freakonomics media empire got started, along with his recent decision to retire from academic economics.

Read the transcript of the interview here: