 "Manisha Girotra")
Mergers and acquisitions (M&As) continue at a steady pace in India and is more broad-based than before. Not only are deals happening across a multitude of sectors, but also a lot of new long-term money is coming to India, says Manisha Girotra, chief executive officer, Moelis India, in a free-wheeling chat with Malini Bhupta. Edited Excerpts:
Do you see M&As happening in India this year too?
The environment for M&As remains active. The year has been good in value terms despite the number deals being lower in the first half. Structurally, money is going into different sectors and pharmaceutical, financial services and technology will continue to see more money coming in. A lot of foreign capital is waiting to come into India as banks are taking more ownership, with the Reserve Bank of India pushing them. Banks are proactively getting engaged and loans are being restructured and sold to new entities. Apart from fresh capital coming to India, we have seen fruitful exits, too.
What kind of global buyers are showing interest in these stressed assets?
There are private equity (PE) funds which are focused on stressed assets. Other than this, there are new pockets from which money is coming into the system such as China. Looking at deals that have happened recently, such as Fairfax acquiring a 33 per cent stake in GVK's Bangalore International Airport, infrastructure seems to be gaining interest. We were advisors to Advent for its stake sale in Care Hospitals to Abraaj Group for $255 million. We also advised GMR Energy on the $300 million strategic investment made by Tenaga Nasional Berhad.
What will accelerate the M&A activity in India as far as stressed assets are concerned?
A quick closure of the deal in a time-bound way is what investors are looking at. It is something India needs to work on. Typically, lending in India has happened as a consortium, therefore, 70 banks are involved for a loan of Rs 400 crore. One wants quicker decision making, however, the pace is what frustrates them.
What about domestic deals?
Indian promoters now willing to sell is a big shift we see. Non-core assets are being sold. A lot of PE money is coming into realty. Sectors such as power and cement are seeing consolidation among old economy sectors. In coming months, we also expect deals in the steel sector.
What about the new money that you mentioned, is beginning to come to India?
China's Fosun acquired KKR-backed Gland Pharma for $1.4 billion and Dubai-based Abraaj bought 76 per cent stake in Care Hospitals. Now, we see controlled deals happening across sectors by players who are coming from new geographies. Long-term money such as pension funds and sovereign funds are waiting to come to India.
