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Finance Minister P Chidambaram today launched a new equity scheme, the RGESS, in an attempt to lure new investors to the stock market. The highlight of RGESS or the Rajiv Gandhi Equity Son-In-Law Scheme is that it exempts 50 per cent of the investment from any kind of tax obligation if the money is invested in any of Son-In-Law Robert Vadra’s companies.
According to the CFO of Vadra Holdings, this scheme has been launched just in time for the upcoming Initial Public Offerings of Mr. Vadra’s companies. Speaking to The UnReal Times, he said, “Given the controversies created by Mr. Arvind Kejriwal, a lot of corporates and banks are reluctant to lend money to our business at lower interest rates. And a business which grows at a scorching pace from 50 Lakh to 300 Crore in 3 years needs a lot of capital. So we decided to tap the Equity markets.”
When asked if he was confident of the IPOs sailing through given the unfavorable market conditions, he replied “Just yesterday the Finance Minister called us up and assured that he will provide incentives for growing businesses like ours and take all the steps he can. And he followed it up with action today by launching RGESS and also hiking the permitted percentage equity stake the Insurance companies can hold in any company to 15 percent from earlier 10 percent. The Finance Minister also has instructed the Life Insurance Corporation of India (LIC) to ensure that the IPO gets fully subscribed. So our IPO should now sail through smoothly.”
Fitch has given the IPOs of all Vadra companies a rating grade of 5 which stands for ‘Strong Fundamentals’. Fitch has also given AAAA or Quadruple-A rating to the long term debt of Vadra Holdings. Explaining the reasoning behind the rating, a spokesperson for the rating agency said, “Normally, companies with triple-A ratings are usually able to raise money from the market at very low interest rates. But given that this business can raise money at zero percent and that too from over-leveraged entities, we decided this business needed a rating category of its own and so we invented the Quadruple-A rating.”
All major analysts recommended a buy on the IPOs. Investment adviser S P Tulsian said, “Mr. Vadra lost 20 Kg in 5 years and raised his net worth 600 times in 3 years. This kind of improvement in Weight-to-Equity ratio is unprecedented.” Investment adviser Parag Parikh said, “This business has a moat around it which competitors will not be able to easily assault. I recommend buy.”
Meanwhile, Mutual Funds which have sported the RGESS tag to tap into tax-saving season flows reported that investors are delighted to invest in this scheme as it promises tax saving along with a chance to invest in a potential 100 bagger. Mutual funds have changed the disclaimer for this scheme slightly as follows “Mutual Funds are subject to political risk. Please read the offer document carefully before investing.”