Discover and read the best of Twitter Threads about #promoter

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This post is a crash course on promoter funding, which serves as a bedrock for my next post.

Promoter funding/ financing, is the colloquial term used for raising of debt funds by Promoters of companies usually against the security/ comfort of shares. Thread 1/13
A promoter, many a times, needs money for (a) equity infusion in a new/ growing business, (b) personal use (c) enhancing stake in established business (d) family settlement etc.

If he doesn't have enough cash at his disposal, he borrows from finance firms. 2/13
The most liquid and widely accepted collateral/ security for these borrowings are shares of established (usually listed) companies.

These shares are pledged to the financing firm (or a trustee) to avail of the debt facility. 3/13
Read 18 tweets
Rana Kapoor's Grandstanding

The Economic Times, today, on its front page, carried a news item proclaiming 'Rana Kapoor holding companies pre-pay part of loans'. Nothing can be more misleading than the use of word 'pre-pay'. Thread 1/8

m.economictimes.com/markets/stocks…
The article quotes Mr. Kapoor's statement that bonds issued by promoter hold cos - Yes Capital and Morgan Credits, have been pre-paid ahead of maturity dates i.e. Oct 2020 and Apr 2021 respectively. 2/8
The clever use of 'maturity date' to imply voluntary prepayment hides the fact that these facilities were probably pre-paid owing to the pressure of fund managers (Franklin and Reliance MF) on account of failure of these hold cos to meet the obligations under the facility. 3/8
Read 12 tweets

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