PORTFOLIO Investements

8/9/2019 PORTFOLIO Investements

1/12

PORTFOLIO

INVESTEMENT

S


2/12

Passive investment for the sole-purpose of deriving income, as opposed to

participating in the management of the investee firm under a direct investment.

The purchase of stocks, bonds, and money market instruments by foreigners

for the purpose of realizing a financial return, which does not result in foreign

management, ownership, or legal control.

Some examples of portfolio investment are:

purchase of shares in a foreign company.

purchase of bonds issued by a foreign government.

acquisition of assets in a foreign country.

purchase of stocks in a foreign company.


3/12

Factors affecting international portfolio investment:

Tax rates on interest or dividends (investors will normally prefer countries where the tax

rates are relatively low).

Interest rates (money tends to flow to countries with high interest rates).Exchange rates (foreign investors may be attracted if the local currency is expected to

strengthen).

Portfolio investment is part of the capital account on the balance of payments statistics.

In finance, a portfolio is an appropriate mix or collection of investments

held by an institution or an individual.

Holding a portfolio is a part of an investment and risk-limiting strategy

called diversification. By owning several assets, certain types of risk (in

particular specific risk) can be reduced. The assets in the portfolio could

include stocks, bonds, options, warrants, gold certificates, real estate,

futures contracts, production facilities, or any other item that is expectedto retain its value.


4/12

Portfolio management involves deciding what assets to include in the portfolio,

given the goals of the portfolio owner and changing economic conditions. Selection

involves deciding what assets to purchase, how many to purchase, when to

purchase them, and what assets to divest. These decisions always involve some

sort of performance measurement, most typically expected return on the portfolio,

and the risk associated with this return (i.e. the standard deviation of the return).

Typically the expected return from portfolios of different asset bundles are

compared.


5/12

FIIs include Asset Management Companies, Pension Funds, Mutual Funds, and Investment

Trusts as Nominee Companies, Incorporated / Institutional Portfolio Managers or their

Power of Attorney holders, University Funds, Endowment Foundations, Charitable Trusts

and Charitable Societies.

SEBI acts as the nodal point in the registration ofFIIS. RBI has granted General Permission

to SEBI Registered FIIs invest in India under the Portfolio Investment Scheme.

All FIIs and their sub-accounts taken together cannot acquire more than 24% of the paidup capital of an Indian Company. Indian Companies can raise the above mentioned 24%

ceiling to the Sectoral Cap / Statutory Ceiling as applicable by passing a resolution by its

Board of Directors followed by passing a Special Resolution to that effect by its General

Body.

Regulations regarding Portfolio Investments by Foreign Institutional Investors (FIIs)


6/12

Regulations for Foreign Venture Capital Investment

A Foreign Venture Capital Investor registered with SEBI may make investment in a Venture

CapitalFund for an Indian Venture Capital Undertaking, in the manner and subject to the

terms and conditions specified by the RBI.

Regulations regarding Portfolio Investments by NRIs/PIOs

Non Resident Indian (NRIs) and Persons of Indian Origin (PIOs) can purchase/sell

shares/convertible debentures of Indian companies on Stock Exchanges under Portfolio

Investment Scheme. For this purpose, the NRI/PIO has to apply to a designated branch of

a Bank which deals in Portfolio Investment. All sale/purchase transaction is to be routed

through the designated branch.


7/12

Investments by NRIs

NRIs can invest on repatriation and non-repatriation basis under PIS route upto 5% of the

paid up capital / paid up value of each series of debentures of listed Indian companies,

within overall permissible limits, subject to compliance of RBI guidelines, which may

change from time to time. The NRI investor has to take delivery of the shares purchased

and give delivery of shares sold.

On Repatriation basis

The investment on repatriation basis has to be made by way of funds from inward

remittance of foreign exchange through normal banking channels or out of funds held in

NRE/FCNR account maintained in India.

On Non-repatriation basisThe investment shares on non-repatriation basis, can additionally be made by utilizing

funds in NRO account.

Restrictions about Sale/Transfer

Shares purchased by NRIs on the stock exchange under PIS cannot be transferred by way

of sale under private arrangement or by way of gift to a person resident in India or outside

India without prior approval of RBI.


8/12

Opening of Account under PIS

NRI to open separate PIS account (NRE/NRO) for the purpose of investments in secondary

market on repatriation & non-repatriation basis respectively apart from maintaining

savings NRE/NRO account.NRI to authorize the Bank to debit their SF account under NRE/NRO for transfer of funds to

their PIS account as and when required, towards purchase of shares through secondary

market and for recovery of Bank charges etc. Bank will issue Pay Order/Draft in favour of

the Broker authorized by NRI, based on the contract note submitted by them to the debit of

PIS account.

Procedure for opening of PIS Account

The following documents are required to be submitted for opening of PIS account with

PNBs designated branches.

PIS (NRE) Account

(1) Application for PIS ; (2) Letter of Authority for operating the account ; (3) Acceptance of

Fee Schedule for PIS (4) Form RPI (with Repatriation benefits) ; (5) Annexure-I (For shares

purchased through Primary Market as NRI on Repatriable basis) ; (6) Nomination Form DA-

1.


9/12

PIS (NRO) Account

(1) Application for PIS ; (2) Letter of Authority for operating the account ; (3)

Acceptance ofFee Schedule for PIS (4) Form NPI (without Repatriation benefits) ; (5)

Annexure-II (Shares purchased as NRI through Primary Market on non-repatriation

basis) ; (6) Annexure-III (Shares purchased through Primary/Secondary Market duringresident status/received in inheritance) ; (7) Nomination Form DA-1.

NRI to provide copy of Power of Attorney given to the Registered Broker for undertaking

sale/purchase of shares on his behalf to the designated Branch.

Issue of Authorisation Letter

After completion of formalities & opening of PIS account, Branch will issue a letter to the

NRI conveying permission of the Bank to undertake Sale / Purchase of shares from the

secondary market under PIS through a Broker registered with Stock Exchange. Branch will

allot an authorization No. in the letter i.e. Name of Branch/code allotted by RBI for

PIS/Sr.No./Year (e.g. ECE House/4402/1/ 2008).

Payment / Deduction of Taxes

Branch will deduct Capital Gains Tax at the applicable rates and the sale proceeds net of

taxes will be credited to the PIS account after receipt of funds from the Broker.


10/12

Highlighted Portfolio Companies Software

Software

Pilot Software (acquired by SAP; NYSE: SAP) - Pilot provides operational performancemanagement solutions combining domain expertise, a proven approach and award-

winning software that enable organizations to rapidly align execution with strategy.

Digital Motor works (acquired by ADP; NYSE: ADP) - Enterprise software for information

management solutions in the automotive industry.

Psionic Software (acquired by Cisco Systems; NASDAQ: CSCO) -Provides computer security

software.

Fracta Networks (acquired by Divine; NASDAQ: DIVN) - Web-based peer-to-peer knowledge

management software.

Activerse (acquired by CMGI; NASDAQ: CMGI) - Enterprise software for instant messaging

over the Internet.


11/12

Hardware

Motion Computing - Designs tablet PCs for the way people work. Its customers experience

tangible, measurable advances in productivity, without compromising their work styles to

accommodate a machine.

Augmentix (acquired by Entorian Tech.; NASDAQ: ENTN) - Changing the face of mission-

critical, applied computing with enhanced Dell PowerEdge servers for as little as halfthe price of comparable systems currently on the market.

AuctionDrop (acquired by Eco International)- Originated the eBay "drop off" store concept.


12/12

Internet

Memeo - Focuses on solutions that manage and protect your irreplaceable or sentimental

digital photos and critical data files.

Socialware - Socialware bridges the gap between the enterprise and social networks totransform the way that companies and their employees engage, connect and communicate

with clients, partners and one another.

iTaggit - Provides Web-based services and products designed to help individuals manage

their personal assets.

eRealty (acquired by Prudential; NYSE: PRU) - Internet based real estate brokerage for the

residential market.

Sunset Direct (acquired by Rainmaker; NASDAQ: RMKR) - Direct Telemarketing database

and marketing solutions.

TManage (acquired by MegaPath Networks) - Provider of nationwide remote networking

solutions.

Hire.com (acquired by Authoria) - Enterprise solutions for talent acquisition and retention.

PORTFOLIO Investements

Documents

Transcript of PORTFOLIO Investements