16 March 2019

Regulator regulate yourself

I have an op-ed in today's Economic Times. In summary I believe that interim ex parte orders though useful should be used very rarely and narrowly by SEBI. Here is the piece from the paper and linked here:
While appearing in the securities appellate tribunal for a matter, I saw aperson upset. He was the CEO of a large company that had been barred by Sebi by way of an ex parte interim order — that is, his company was barred without hearing, without as much of an investigation. All its demat account and bank accounts had been frozen. To top it all, the CEO’s personal bank accounts and demat accounts had also been frozen, even though there was no allegation of any personal misconduct.
I later reviewed the order passed by Sebi that reflected injustice in the way the regulator rather regularly passes ex parte interim orders. To be sure, these powers can be very effective in preventing harm. For instance, where a massive fraud is underway and third party rights are being created, Sebi would rightly block the transfer of securities by way of such an order.
An ex parte interim order virtually freezes the business, securities and bank accounts of dozens of people in one swift order. Few facts are available and the order is passed on merely a prima facie view. Since the order is passed without a hearing, a hearing is given within a few weeks.
Once this hearing is given, again, without any additional facts, Sebi often confirms the barring order.
So, a person presumably not guilty is barred from accessing his own bank account. Sometimes, such orders extend to the entire family of the promoter of a company. After this ‘confirmatory order’, Sebi goes into ‘fact-finding’ mode, which can last well over a year. If the interim freeze order has not been qualified or raised, a person must suffer the freezing of his bank accounts and mutual fund/demat accounts till the time Sebi completes its investigation, gives another hearing to the accused and passes a final order.
This process currently takes 1-3 years. In an ordinary criminal case, an accused is usually given bail, a chance to defend himself before a final conviction. In ex parte interim cases, Sebi first passes the economic ‘beheading’ order, gives a hearing and then investigates whether the beheading was justified.

Three issues are at play. One, that once you have ‘beheaded’ someone, it is difficult to justify letting that person off. That would suggest that the interim action was wrong in the first place. Two, the availability of such orders gives Sebi the appearance of being a merciless regulator even when it is not needed to be merciless.
Three, the interim order gives Sebi afree pass to investigate for an indefinite period, all the time barring the suspected violator not just from acting in the market, but also restricting any withdrawal of personal bank funds.
The longer the order stays, the more harsh the penal consequences. So, should the process be consigned to the dustbin of history? Not at all.
We have seen cases where the powers have been effectively used to prevent further harm to the market. Almost none of these cases relied on freezing bank accounts and securities accounts, and powers used have been very specific in their scope. For instance, where bogus securities are created, afreezing order of those counterfeit securities is in order to prevent third party victims.
Second, apart from in the most exceptional cases, freezing of bank accounts, particularly personal bank accounts, is almost always disproportionate. In most cases where some violation has occurred — say, insider trading — the promoters have a lot of skin in the game, and there is almost no chance of them running away to Antigua or London to evade paying whatever amount they are alleged to have made, assuming they have committed the violation.
Finally, in the few cases where such an order is warranted, Sebi should set an internal deadline of finishing its investigation within two weeks, or lift the interim order automatically. In short, Sebi should stop behaving like a swashbuckling Tarantino character.

20 December 2018

I have an op-ed piece in today's Economic Times which defends Credit Rating agencies from much of the criticism they are currently facing. Hiding the mirror does not make you more beautiful:

It is easy to blame credit rating agencies for the current problems of the debt markets. But much of the opprobrium investors heap on them is undeserved. They are indeed behind the curve when it comes to critical information about defaults. But that is a design problem. The system is designed to fail investors. In tech jargon, it is a feature not a bug.

Clearly no one can sit on a computer inside a building and start getting visions of default. Rating agencies are no oracles of Greek mythology. Even oracles were somewhat overrated. Croesus, king of Lydia in 560 B.C., tested the oracles of Greece to discover which of them gave the most accurate prophecy. He sent out emissaries to seven sites who were each to ask the oracles on the same day what the king was doing at that very moment. Croesus proclaimed the oracle at Delphi to be the most accurate. He then consulted Delphi before attacking Persia, and according to Herodotus was advised: "If you cross the river, a great empire will be destroyed". Believing the response favourable, Croesus attacked, but it was his own empire that ultimately was destroyed by the Persians.

We have of course our companies, banks, NBFCs, mutual funds and many other borrowers and lenders who lend to each other on the basis of rated paper. Much of debt paper is traded and listed, though the listing is nominal. The rating is sought by the borrower, because most lenders insist on buying rated paper. Many regulators and internal charters prohibit investing in non rated paper. This is important, because the borrowers don’t really want a rating, they are expected to get it.

Move to the future when one of the rated paper defaults, the lender could be a bank, NBFC, mutual fund, insurance company or one of the many large investors. Before the borrower defaults on interest or principal, there are usually hectic parleys between the borrower and lender to resolve, restructure or re-define their relationship. Clearly, the lender wants its money back. But it is smart enough not to want egg on its face and even smarter, not to trigger other events which will make the borrower’s situation worse and thus repayment more remote. The borrower’s interest is of course not to disclose the default. As things go downhill, what is a little lie to your rating agency? Not a big deal. It’s merely a contractual violation.

What about the lender? Clearly the lender, wants to push the can down the road. In the case of public sector or even private sector bank, a restructured loan, is a good way to make an additional loan to enable the borrower to meet the interest payment. Voila, no non performing asset for a few years. The bank is healthy, but with an even bigger debt. Gamblers don’t often give up their game, they usually double up. This is a commercial lending equivalent. In addition, the current MD of the bank has a clean NPA record, and the problem is of a future hapless MD, who discovers this albatross across her neck. Thus the incentives at play, ensure that neither borrower nor lender inform the rating agency about the default. Borrower happy, check, lender happy, check, regulator also relatively happy with the NPA issues pushed down the road. Of course, it is not all black and white and all cynical. Many restructuring exercises are done in good faith and many of the companies which are given a lifeline, do indeed overcome the temporary liquidity crunch and pay back the money. Which gets us to the question of why not just do the restructuring above board, and inform the rating agencies of the issues. RBI’s concern does have some validity though. Financial intermediaries are highly leveraged and almost all of them including banks and NBFCs have by the nature of their funding, have an asset liability mis-match.

There is clearly a need to move a contractual arrangement between the issuer company and the rating agency, to a legal obligation to disclose. This would push much of the ‘adjustments’ bilaterally achieved into public domain.

Here, the vision of financial regulators come into play. While SEBI has been batting for prompt disclosure at the first sign of default, RBI has pushed back, believing this would cause panic in the market. Though SEBI’s circular of last year was indeed over-broad, as every delay or payment could fall within the scope of default, the absence of a new circular is problematic. RBI’s view that immediate disclosure of every default situation will cause panic is too simplistic. It assumes the marketplace is not smart enough to figure out the distinction between a short term liquidity crunch and a life threatening event for a company. Indeed, companies can while disclosing default explain its position, so that there is no run on the company. Similarly, the norm of immediate reporting can be relaxed to a few months, and subsequently tightened.

Just as an opaque system which pushes the can down for years, creates a larger problem for the successor, enables crony capitalism, makes for an uncertain position on what the networth of an organization is, an immediate reporting may cause panic. There is a need for an Aristotelian mean, where defaults are disclosed with a short cooling off period. And while we are at it, let’s stop blaming all problems on the rating agencies. Hiding the mirror does not make us more beautiful.

17 December 2018

Side pocketing mutual fund units

I have a piece today in today's Economic Times on side-pocketing in mutual funds linked here. Where a mutual fund holding defaulted debt paper, is able to create two units one 'good' one 'bad' where one existed. The enablement not only creates new liquidity for investors, but also closes classes of investors. In other words, it minimises windfall to new investors and losses to existing investors. The unedited piece is copied below:

"If you are an investor, why should you care about a sartorial concept of storage and where it is located? In fact you should if you are a mutual fund investor. In plain English, side pocketing is the splitting of a mutual fund unit into a bad unit and a good unit when part of the investment of a mutual fund goes sour. More specifically, when your investment in a mutual fund gets invested in debt securities of a corporate, and that corporate defaults to the fund, you are left holding a unit with, say a clean 95% and a dubious 5%. While the 95% is almost certain to give you back your money, the other may be say the IL&FS group's commercial paper.

Most funds would write down the value of the 5% either partially or fully. Seen differently, there is, and rightly so, a discretion as to how much to mark down the 5% portfolio. Fund manager A may believe that a commercial paper may after a year of litigation under the new insolvency regime, return 50% of the paper’s value, while fund manager B may believe the number to be 30%. After a year, once the insolvency process is over, or other compromise is struck, the number recovered will be anywhere from 0% to 100%. If the amount recovered is 40% then the manager who marked it down 30% was too conservative and the one who marked it down 50% was not sufficiently cautious. But that is wisdom gained in hindsight with the omniscience of god. Clearly, any call taken by a fund manager (not living as an Oracle on Mount Delphi) will be wrong in hindsight.

These calculations are important to understand the issue because if the side pocketing is not done, the asset value of the mutual fund unit will be between Rs. 95 and 100, where the value of a unit is say Rs. 100. The price will however be what the fund manager marks it down decides. So if the fund marks down the asset value by 50%, the net asset value per unit will be Rs. 97.5. People will then buy and sell the unit at Rs. 97.5. Theoretically, thousands of investors may come into the fund after the default situation had arisen. After a year of resolution, the actual value of the mutual fund unit recovered is say Rs. 99. The class of investors who sold when the price was Rs. 97.5 will thus have lost money if the value is discovered at Rs. 99, because had they held on to it, it would have given them an extra Re. 1.50. Conversely, any new investor who bought then would get an unfair windfall of Re. 1.50. The situation would reverse if the price was Rs. 96 instead of Rs. 99.

Side-pocketing achieves three benefits. First, it excises the frost-bitten limb from the body of the mutual fund unit. So a person has a choice or an option of selling the good unit at an accurate price while keeping or selling the bad unit. If the person chose to sell both the units immediately, he would be in no worse a position as a person who sold the undivided unit. However that would be one option for the investor who benefits from the side pocket. The investor has three other choices besides selling both units. One, retain both units till maturity. Two, sell the good unit and retain the bad one. Three, sell the bad unit and retain the good one. Clearly a person with 4 choices is better than a person with one choice, specially when those 4 choices include that one choice.

The second benefit of side pocketing is that it freezes the class of investors, so that new investors who did not face the loss and potential recovery do not share in the windfall if there is greater than expected recovery. Clearly, this is not a given and is dependent upon the level of mark-down effected by the fund manager, but it helps in reducing the chances of windfall to a person who didn’t suffer the downside.
The third benefit is systemic. In a situation like the current one where contagion has spread across commercial paper issued by NBFCs, any panic in the liquid funds because investors shun mutual funds which have an exposure to NBFC paper, even if good quality, would freeze credit markets and cause a serious run for withdrawal from such funds. Selling securities in such situations is often met with a frozen market where underlying securities cannot be sold at any price. A side pocket would reduce a run on the system, though not by any means eliminate the problem.

The only downside of a side pocket in theory is that it may encourage fund managers to buy riskier securities because they can always chop off the bad part when things get tough. This is an unlikely outcome, because the stigma attached to holding defaulted paper is huge and funds which held IL&FS paper recently were penalised through large redemptions even though they bought triple A rated paper, as it was before the default. It must be said that this is an experiment by SEBI, as few countries have enabled side pocketing outside of the world of hedge funds. But it is a good experiment with little expected downside. Indian securities market regulations have been pioneers in many global best practices and there is no reason we should always copy other models, rather than start regulatory trends."

05 November 2018

Aadhaar ruling a blow to microfinance industry

I have a piece with Jagadish Ramadugu, MD of Vaya Finserv Pvt. Ltd. in today's Financial Express on the adverse impact of the Supreme Court of India's ruling on the micro-finance industry - linked here and provided below:

The financial industry is waiting for RBI, UIDAI and National Payments Corporation of India to come out with clarifications on what processes need to be modified based on the Supreme Court’s ruling on Aadhaar. They are likely to continue to wait. None of these entities will likely come out with a clear way forward in the short run. The review will probably need to be done at the highest levels of the government which will need to review all the issues of privacy, data protection and legitimate concerns flagged by the Supreme Court. There will need to be a comprehensive relook at the legislative and delegated laws.
This piece looks at the state of play of the financial markets and more specifically the microfinance industry after the ruling. In short, the Supreme Court ruling will have a hugely adverse impact on the entire financial industry, which, after decades of paper pushing, had managed to streamline its KYC process. As the first author realised on joining IIM-A as a full time faculty member in 2008, employment proof and a dozen ID proofs were not good enough to open a simple savings account in Ahmedabad. Just a kilometre from the campus, one Roopalben Panchal had previously created over 25,000 bogus bank and demat accounts.
Imagine the plight of tens of millions of migrant workers, who do not work near where they were born. They did not win the ovarian lottery of being born where work is plentiful, and were, as a consequence, excluded from the formal financial world. Till a decade back, half of Indian households did not have a simple banking account. This was an embarrassingly poor show by India after nearly two decades of super growth.
For all its warts, Aadhaar changed this scenario. People could easily open a bank account with an Aadhaar card or participate in the hitherto unknown utopia of borrowing a thousand rupees for an agricultural equipment, repayable to the microfinance entity over a year’s time or access capital in ways they could only dream of previously. Today, the microfinance industry reaches an estimated 35 million households. These are some of the most disadvantaged people of the country, who would like to dig themselves out of the hole of poverty with a lot of hard work and the little capital being made available to them.
VayaFinserv, of which the second author is the CEO, is one of the most digitally enabled microfinance entities in India. Today, or more accurately, till last month, they could, after meeting her for the first time, take her Aadhaar card, authenticate her online by a biometric validation and credit the borrower’s bank account with a priceless `10,000 she needed for loading her small tea shop with tea and biscuits. All of this in a matter of minutes, not days, weeks or months. The only data from Aadhaar received additionally was the borrower’s name, address and age all of which anyway, as a lender, they would capture as part of the loan application.
After the Supreme Court ruling, the private sector cannot use the seamless Aadhaar authentication of an individual the way they have till now. Authentication records in any case cannot be stored for more than 6 months. However, the Supreme Court has ruled that the Aadhaar card can be linked to one’s Income tax (PAN) card. It also allows the use of Aadhaar for providing direct subsidies to the poor, including gas subsidies, rations, MNREGA wages, etc. However, mandatory linking of Aadhaar with banks is no longer kosher. The Court has briefly stated that, “If such a person voluntary wants to offer Aadhaar card as a proof of his/her identity, there may not be a problem”. Further, while discussing the misuse of Aadhaar by corporate and/or individual, the Court held that Aadhaar can only be used as a proof of identity when the purpose of using it is provided by law.
The ‘little person’ now has to prove his identity at a significant time and cost to both the parties involved. The alternatives of providing a passport, driving licence, PAN card, which any middle or higher income customer can easily provide, is not easily available with the working rural populace, especially women, whom microfinance caters to. Sometimes, getting a simple photocopy of an ID proof involves a half-day trip to the nearby suburban centre. These photocopy proofs are not always fully reliable and are subject to misuse. In addition, the regulator has provided a maximum exposure available to a household, so that problems of over-indebtedness are not faced. After much efforts in last few years, reliable credit bureau information with Aadhaar linkage was developed by lenders and CICs for small ticket microfinance loans.
In the absence of Aadhaar, the system can be gamed with a person providing multiple IDs, each authentic, with a variation of names. This could, again, lead to unintentional over-lending to vulnerable customers possibly causing repayment stress and increased frauds due to the unsecured nature of these loans. Most microfinance organisations in order to reduce risk would likely stick to their existing customer base rather than go deeper and find new credit customers who may be needing it the most.The government and the regulators should come out with clear laws and procedures on how non-governmental entities can use the Aadhaar architecture to ensure bottom-of-pyramid customers are able to find a simple and fool-proof way of identifying themselves. Issues of privacy, data protection and state surveillance can be addressed. After all, there is no reason that people receiving subsidies should be enabled for financial inclusion, but the same class, who would like to work hard, should be excluded from the benefits which come out of financial inclusion.
On a lighter note, if the Supreme Court wanted to be a luddite in technological matters, it could have hand written the 1,500 page ruling on Aadhaar, which would have shrunk its size by 90%. We mortals would have been thankful.

11 September 2018

SEBI's anti-fraud and insider prohibition laws need a wholesome rehaul

I have a rather strong piece in today's Economic Times linked here. I discuss how the committee set up to review the law on securities market fraud, manipulation and insider trading has not done the rehaul that was required of the law, but rather tinkers with minutiae of the law. Copied below is the piece:

‘If it ain’t broke, don’t fix it’ has a corollary: ‘if it’s badly broken, redo it, don’t fix it’. This is why the approach of the Viswanathan Committee to improve Sebi’s regulations on fraud, manipulation and insider trading falls short.

The modern origins of addressing securities and financial frauds came from the ‘new deal’ of 1933-34 in the US, where the government rewrote a vast majority of economic laws. Interestingly, the law outlawing fraud did not define the term in any new-age fashion, but relied on what we lawyers call the common law, or judge-made law.

The American parliament, supplemented by a regulatory rule, not only fully adopted this simply phrased, briefly stated and incredibly complex law, but over 80 years has not changed a single word of this definition.

Back in India, the definition does not have such a constant or consistent story.

We have tried to grab the complexity of law by explicitly trying to capture the entire world of fraud in words.

Naturally, that has not worked, and instead of going back to the origins and introducing a simple definition, we have tried to glue plastic leaves to a diseased tree with multiple amendments.

The common law and US definitions of fraud have the following five elements: intention to commit fraud, misrepresentation, materiality, causation and ill-effect (damages).

The Indian definition in the anti-fraud regulation of Sebi, by contrast, does not have even a single of the five ingredients, and specifically say that intention, deceit and damages are irrelevant.

One can mathematically show that under the Indian definition of securities fraud, walking, running and swimming are included. While one can argue that no one walking has yet been charged with securities fraud, one wonders what the point of a definition is, if it is so broad as to be meaningless.

Similarly, there is no need to define manipulation or insider trading, because they have evolved from the same definition against fraud. But in India, we have chosen to define it as broadly as possible, so as to capture either innocent conduct or unfair conduct, not just necessarily what ought to be outlawed. Income inequality is unfair but not illegal. All informational advantage may be unfair but should not be outlawed as insider trading. It is interesting to note that the Indian Parliament has, in the Sebi Act, chosen to replicate the US law on fraud, almost to the word, but the delegated regulations have been chosen unwisely.

The committee report, on the other hand, ignores this elephant in the room and applies copious bandages to the patient in coma. It starts with ‘further strengthening’ of the regulations, by which one can assume that the report further expands the already meaninglessly broad definition. It goes into territories like ‘persistent’ negligence amounting to deemed fraud. Under any definition in the world, negligence can never amount to fraud, as the required degree of intent is missing. Repeated carelessness cannot be fraud.

The other shortcoming of the committee is not looking at the second elephant in the room. This is private enforcement of securities laws by investors. Under current laws, investors are barred from approaching a court where Sebi has power to take action. As a corollary, India will never have a securities class-action lawsuit, as it is prohibited by law. This law was passed to reduce multiplicity of proceedings, but has caused untold misery to investors. In the notorious Satyam scandal, US investors have obtained money as compensation, but Indian investors have received nothing because of this law (disclosure: I was an expert witness for plaintiffs in the New York suit).

The section on improving insider trading laws similarly suffers from definitional inchoateness, which the report reaffirms. In a famous US case of Dirks, a research analyst repeatedly approached the regulator to uncover a fraud, and was rebuffed. He then circulated a newsletter telling his clients about the fraud, leading to its ultimate discovery. He was charged with the offence of tipping inside information instead of being rewarded.

The US Supreme Court came to his rescue. Dirks in today’s India would be a criminal the way the regulations are drafted.

Finally, the report recommends a disturbing recommendation to enable Sebi to tap phones of people. The privacy concerns this raises are huge and no regulator, perhaps besides North Korea’s, has such powers. The famous Rajaratnam-Rajat Gupta phone taps were uncovered in the US as their criminal enforcement agencies suspected money laundering. The US SEC and almost every other jurisdiction’s securities or other regulator has no power to tap phones.

There is merit in some of the microproposals made by the report, but that is not possible unless the big picture issues of definitions and inchoate prohibitions are addressed. And, luckily, one doesn’t need to look beyond the Sebi Act itself that captures these prohibitions of fraud, manipulation and insider trading quite well and in line with hundreds of years of wisdom.

17 May 2018

Designated Offshore Securities Market recognition of BSE

Finsec Law Advisors acted as the sole counsel for BSE in securing the Designated Offshore Securities Market recognition from the US Securities and Exchange Commission (SEC). This makes BSE India’s first and only one of handful internationally. Thanks team BSE India led by Ashish Chauhan and the SEC for their expedited review.

14 May 2018

Bankrupt firms need enabling regulation

I have a piece in today's Economic Times on how companies facing resolution and bankruptcy need a lighter touch regulation from SEBI and the exchanges with respect to listing regulations:

The law applicable to listed companies needs to be relooked at when such companies are going through the near death experience of resolution and insolvency. SEBI has come out with a paper to solicit views on how to deal with various extant regulations in respect to such companies. The companies deserve a light regulation approach. As the poet William Blake said, the same law for the lion and the ox is oppression.

The seven ages of resolution
For a company going through severe distress, it experiences financial haemorrhaging, departure of senior management and lack of compliance with multiple regulations. Clearly, little information about the true condition of the company is available in public domain before and after it enters resolution. A company in such process undergoes several stages, from filing of an application before the company law tribunal for resolution, appointment of a resolution professional (RP) to replace the board of directors, consideration of revival plans by the creditors in consultation with the RP, receiving bids from suitors, choosing the best bidder, restructuring capital based on the bids and injection of capital by the bidder, conversion of some or all debt into new equity and a route back to a smaller but healthier company with new management, or liquidation if revival is impossible.

The RPs are expected to collect information about the company in a matter of weeks and also take it through the resolution/insolvency process within a very aggressive timelines. While the RPs are entitled to appoint financial and legal professionals, their main objective is to revive the company. In many if not most cases top management has departed, the board of directors have by law been superseded by the RPs and much of the information that is relevant to investors does not really exist in a well documented form because of the stress in the company and departure of key people.

Best effort disclosure of past events
A materiality threshold should be applicable on the disclosures which may be lower than regular listed companies. Being price sensitive information, events such as filing of application for initiation of resolution, admission of such application by NCLT, terms of the bids once the winning bid is announced should be mandatorily disclosed by the listed corporate debtor under the listing regulations. Other routine disclosures may be relaxed, for instance quarterly financials. In addition, some level of protection must be provided to RPs for disclosures made in good faith and diligently, as they may not be able to disclose routine information as mandated. They should disclose all relevant information after they have taken over though.

Trading in stock exchanges.
Trading should be allowed to be continued subject to enhanced restrictions, such as intra day circuit filters of 5%, restriction on trading in Futures and Options segment, etc. Trading permits those who wish to exit, to transfer the risk of success  or failure of the company to those who can better bear the risk return mix. There is a risk that trades occur at, above or below fair valuation, but that is a price worth paying. Freezing trading may appear optically sound but will in fact completely block the exit doors when the building is on fire. Other mechanisms could also be used like a ‘call auction’ or batch mode trading, say once a week to focus liquidity. In any case, there should be no inter-day circuit limit as that would also be akin to locking the doors. If the consensus price is say Rs. 50 (based on new information about resolution chances) and the last traded price the previous day was Rs. 30, trade will not edge up slowly within a 5% circuit limit per day, but would completely clot the arteries of stock orders. This is because no seller would sell at Rs. 30, that which they think is worth Rs. 50. Conversely, trading should be stopped for the few days when the bids are received till one has been accepted, as the information asymmetry becomes huge between a handful of RPs with creditors and the rest of the investor community.

Re-classification of Promoters
The existing promoters whose shareholding in the listed corporate debtor undergoing resolution has reduced significantly may be automatically re-classified as public shareholders. Post resolution, there would be various stakeholders including creditors converting their debt into equity, sometimes acting as a group or consortium of investors, who may acquire substantial shareholding of the listed corporate debtor, replacing the erstwhile promoters. It is suggested that SEBI may prescribe a test for determination of ‘promoters’ which is flexible. Typically, there would be mix of new acquirers getting shares and the creditors whose loans would stand converted into shares partially or fully. Ideally, the two should not be clubbed together as they are not acting in concert except for the purpose of taking the corporate debtor out of its near-death existence.

Compliance with Minimum Public Shareholding
Infusion of outside capital during resolution may reduce the public shareholding below the statutory minimum of 25%. The immediate obligation to fulfil the prescribed MPS norms may not be in the interest of a newly revived company. Thus, the period of 1 year for compliance with the required MPS norms should be extended for such companies to 5 years or 10 years. For a company which has gone through the resolution process, the important agenda is to revive the company and for which it would require several years of nurturing. Divestment while the company is still struggling would not be an ideal outcome and for a company in such position to revive and be partially divested would take a minimum of 5 years.