India Business Law Journal celebrates the top transactions and cases of 2009 and reveals the law firms that guided them to fruition
India Business Law Journal’s third annual Deals of the Year Awards differs markedly from its predecessors. While the 2007 edition celebrated huge M&A deals and blockbuster IPOs and the 2008 edition wallowed in the relative gloom of the economic downturn, many of this year’s winning deals may be seen as the green shoots of recovery.
Dealmakers have proven that transactions need not be huge in value to be challenging. Indeed, several of this year’s winning deals have set new standards in terms of their complexity, innovative structuring and international scope.
Following a lengthy period of research and consultation, India Business Law Journal has selected 18 landmark deals closed between December 2008 and December 2009 that showcase transactional talent at its best. The winning deals, which are divided into the categories of finance, capital markets and mergers and acquisitions (M&A), have been chosen subjectively based on numerous submissions received from Indian and international law firms, a range of interviews conducted with India-focused legal and corporate professionals and transactional data supplied by Mergermarket and Thomson Financial. An additional category of “Disputes of the Year” has been included to recognize the considerable achievements made by lawyers in contentious fields during 2009.
In arriving at its final decisions on the winning deals and cases, India Business Law Journal’s editorial team evaluated the significance of all shortlisted transactions from a legal and regulatory standpoint. The value, complexity and uniqueness of each deal or case was considered, as were any precedents that may have been established for future transactions.
This year’s coverage paints a vastly different picture from the mega-deals of 2007 but, as the success of Tata Motors’ Nano illustrates, there is a place for smaller and understated ingenuity. Strangely though, now that the unabridged deal fever of 2007 has passed, there are some notable and peculiar absentees among the list of law firms that worked on the winning deals.
Where were the UK magic circle firms in 2009?
Of London’s finest, only Allen & Overy has worked on any of the 18 deals ranked as this year’s winners. Compare that to last year, when Allen & Overy was joined on the winners’ tables by Clifford Chance and Linklaters, or to 2007 when all five UK magic circle firms (Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters and Slaughter and May) worked on at least one winning deal.
Nevertheless, firms such as Linklaters and Clifford Chance have capitalized on their referral relationships in India to win important mandates and establish a strong presence in the country. Each has its preferred local firm in India and the associations, say partners, are slowly paying dividends. Jones Day and P&A Law Offices, which have a long-standing relationship, have consistently performed well in the deal tables for both M&A and capital markets transactions, and this year Trilegal gained the role as adviser to Telenor on its acquisition of Unitech Wireless, partly on the strength of a recommendation from its international partner Allen & Overy.
Looking at India Business Law Journal winning transactions over the last three years, Amarchand Mangaldas, AZB & Partners, Desai & Diwanji, J Sagar Associates, Khaitan & Co, Luthra & Luthra, P&A Law Offices, Talwar Thakore & Associates and Trilegal emerge as being among the leading domestic M&A advisers in the country. It is hard to draw similar conclusions for international law firms as their advisory roles on landmark Indian M&A deals tend to be more intermittent.
For capital markets deals, the picture is much clearer. Dorsey & Whitney, Jones Day and Linklaters have been the dominant international firms on Indian equity offerings (although Linklaters is absent from the list this year). These three firms have consistently demonstrated their capabilities in both bulge-bracket IPOs and more modest deals, including qualified institutional placements (QIPs).
In the project finance sector, domestic firms have been preeminent over the last year thanks in part to the financial crisis. Indian banks have demonstrated their robustness through dominance in lending, leaving foreign international counsel with little part to play, as this year’s deals indicate.
Domestic firms are clearly being awarded greater responsibility on multibillion-dollar transactions, illustrating their ability to deliver strategic advice with international applicability. This phenomenon is not restricted to the project finance arena. On Telenor’s acquisition of a majority stake in Unitech Wireless, a transaction valued at US$1.2 billion, domestic firms Amarchand Mangaldas and Trilegal were appointed as sole counsel to the two respective telecoms operators.
According to Rabindra Jhujhunwala, a partner at Khaitan & Co, the greater roles being afforded to domestic firms is part of a growing trend: “We are no longer being looked at purely for domestic advice. Our clients are going overseas and our experience of high-value and complex international transactions has led clients to trust us as primary legal counsel on substantial deals where foreign firms would have traditionally driven the process,” he says.
Finance Deals of the Year
Financing transactions were dominated by a tide of power and infrastructure projects that are urgently being undertaken to help facilitate the steady growth of India’s effervescent economy. Even with much of the rest of the world gripped by a recession, India moved forward, thanks in part to its tightly regulated banking sector. Unlike global investment banks, which were partially paralysed by the credit crisis, Indian banks appeared relatively unaffected by the turmoil and continued to pump significant amounts of money into the domestic economy.
Project finance has dominated many of the financing headlines with a series of multibillion-dollar transactions in the power and infrastructure sectors. With lending coming largely from Indian banks on these project financings, domestic law firms have taken the lion’s share of the primary advisory roles.
1 IOC Paradip Refinery
Principal law firms
Koura & Co
With India’s economy continuing to grow at a considerable rate, much has been made of the demand for power and infrastructure. Government-owned Indian Oil Company’s fuel refinery complex at Paradip in the state of Orissa is one of the centrepieces of India’s infrastructure and power revolution. It is the largest grassroots fuel refinery project to date in India and is owned by one of the largest government companies. A combination of balance sheet and project financing, the deal took on an additionally complex nature with the borrower being a government company.
Amarchand Mangaldas represented the large consortium of lenders with Koura & Co advising the borrower.
The Sasan Ultra Mega Power Project in Madhya Pradesh confirmed the renaissance of the ultra mega power project (UMPP) model after it was so damaged by the saga surrounding the Dahbol plant in the 1990s. In 2008 the 4,000 megawatt (MW) Mundra project achieved a successful financing of US$4.3 billion, and with the ambitious US$3.8 billion financing for the Sasan project in 2009, the UMPP concept seems to be firmly back on track.
The 4,000MW Sasan UMPP will be developed by Reliance Power and will have integrated coal mines for captive use.
Sasan Power used its own in-house legal team on the deal, while Luthra & Luthra (Mohit Saraf, Sameen Vyas and Vijaya Rao) represented the large syndicate of domestic and foreign lenders. Singhania & Co advised India Infrastructure Finance Company (UK).
3 Dahej Ethylene Cracker Plant
Principal law firms
Luthra & Luthra
The Indian petrochemicals sector is comparatively small by global standards, but its development is gathering pace. The financing of this huge petrochemical complex in the Dahej Special Economic Zone (SEZ) is valued at US$2.6 billion and is to be the largest plant of its kind in India. The ethylene cracker plant will be built on a turnkey basis by the Linde Group and Samsung Engineering. The complex will act as an anchor industry in Dahej SEZ and will hopefully encourage plastic processing companies to set up operations within the zone.
A landmark transaction from a legal and regulatory standpoint, it is the only major petrochemicals project in India to be promoted by public sector undertakings and one of few major projects to be built within a special economic zone. The complex is being developed by ONGC Petro-additions and promoted by the Oil and Natural Gas Corporation and Gujarat State Petroleum Corporation. It is being financed entirely through a rupee facility, illustrating the interest among Indian lenders for major infrastructure projects in the country.
Amarchand Mangaldas (Cyril Shroff, L Viswanathan and Amey Pathak) advised the consortium of lenders led by the State Bank of India. Luthra & Luthra represented the borrower, ONGC Petro-additions.
4 Mundra Thermal Power Project, Phase 4
Principal law firm
Luthra & Luthra
The financing for the fourth phase of this large Adani Power project at Mundra in Gujarat was completed in June 2009. It was yet another example of India forging ahead with its ambitions to meet burgeoning power demands. The US$1.5 billion financing was provided to Adani Power (promoted by the Adani Group) for the launch of a 1,980MW power project using super critical technology.
Luthra & Luthra (Vijaya Rao) represented the lenders, which were led by State Bank of India. The borrower did not retain any external legal counsel.
Tata Motors’ headline acquisition of Jaguar Land Rover from the Ford Motor Company in 2008 involved a US$3 billion bridge debt to finance the deal. This was extended by a further US$1 billion in 2009 and involved over 25 lenders. The deal, which was one of the world’s largest refinancings in 2009, was brought to fruition despite the global lending markets being in virtual stasis. Allen & Overy (Thomas Brown) and Amarchand Mangaldas (Cyril Shroff and L Viswanathan) advised the lenders, while AZB & Partners and Herbert Smith were the borrower’s respective Indian and foreign counsel.
Capital markets Deals of the Year
Indian companies continued to raise money through the capital markets even during the worst of the global financial crisis. However, the volume of IPOs that pushed the Indian stock markets into the stratosphere in 2007 did not continue. After Reliance Power’s share price came crashing down following its blockbuster listing in early 2008, Indian companies largely turned their backs on the IPO route. QIPs became the favoured means of raising money by providing fast access to capital through well-timed issuances, even during choppy stock market performances. By the middle of 2009, some faith had been restored in the IPO and a series of successful listings followed.
1 Sterlite Industries’ ADS issue
Principal law firms
Latham & Watkins
Luthra & Luthra
Shearman & Sterling
In the largest equity offering into the US and the first American depositary shares (ADSs) issue for an Indian company since 2007, Sterlite Industries issued US$1.6 billion of New York Stock Exchange-listed ADSs. With the turbulent financial markets and the US still nervous about large issuances, the transaction was a major achievement. “It showed that you could still raise a lot of money in the US even in a tough environment,” says Rajiv Gupta, a Singapore-based partner at Latham & Watkins. The proceeds will go towards financing Sterlite’s ambitious power-generation plans.
According to Matthew Bersani, a partner at Shearman & Sterling in Hong Kong, “this deal demonstrates the benefit of being a US-registered company and how easy that makes it to access the deepest and most liquid market in the world”.
Latham & Watkins (Rajiv Gupta, Michael Sturrock and Jiyeon Lee-Lim) and S&R Associates represented the issuer. Luthra & Luthra (Mohit Saraf and Madhurima Mukherjee) and Shearman & Sterling (Matthew Bersani) represented the underwriters.
2 National Hydroelectric Power Corporation’s IPO
Principal law firms
Dorsey & Whitney
The Indian government finally achieved its long-planned divestment of the National Hydroelectric Power Corporation (NHPC) when it successfully completed its US$1.25 billion IPO in August 2009. A draft prospectus for the transaction was filed with the Securities and Exchange Board of India (SEBI) in August 2008, but the deal was shelved when the financial crisis reached its nadir in the latter part of the year.
This was the largest IPO by an Indian company since Reliance Power’s US$2.93 billion listing in early 2008, itself the largest in Indian history. In addition to the domestic listing, NHPC issued a US Rule 144A and Regulation S offering to international investors.
Unusually for a deal of this size and nature, the issuer instructed only a domestic counsel, Amarchand Mangaldas (Shardul Shroff and Yash Ashar), while the underwriters appointed sole international counsel Dorsey & Whitney (Sydney-based John Chrisman).
Adani Power’s US$625 million IPO in August 2009 is widely credited with re-establishing India’s listing culture. At the time of completion it was the largest IPO for 18 months and was supported by a syndicate of 11 banks. Following new SEBI guidelines, it was also the first deal in India to use the anchor investor concept – in this case six institutional investors which took 18% of the total share issue, providing additional confidence to subsequent investors. “There were a number of significant issues to contend with,” says Manoj Bhargava, of counsel at Jones Day in Singapore. “This was a large deal coming out of India and there were difficult disclosure issues due to the change in the world economic climate.” According to Jeffrey Maddox, a Hong Kong-based partner at Jones Day, had the deal failed it would have caused the IPO market to remain static for the rest of the year. In the event, the transaction paved the way for a sequence of listings such as Oil India’s US$580 million IPO.
“The Adani Power IPO really put the recession behind us,” says Rabindra Jhujhunwala, a partner at Khaitan & Co.
Jones Day (Manoj Bhargava and Jeffrey Maddox) represented the underwriters as international counsel, alongside local adviser Khaitan & Co (Nikhilesh Panchal). Amarchand Mangaldas advised Adani Power.
4 Oil India’s IPO
Principal law firms
Luthra & Luthra
This deal confirmed the reawakening of India’s capital markets and the willingness of Indian issuers to raise money through the IPO route. Oil India’s promoter, the Ministry of Petroleum and Natural Gas, divested 10% of its shareholding in the transaction, a further indication of the government’s willingness to liberalize the power and natural resources sectors. The draft prospectus had been filed in 2007, but the transaction was put on hold after India’s stock exchanges took a dramatic dive in 2008.
Amarchand Mangaldas (Shardul Shroff, Prashant Gupta and Yash Ashar) advised the issuer, while Luthra & Luthra (Madhurima Mukherjee) represented the underwriters. Ashurst (Daniel Bushner) was international counsel to both the issuer and the banks.
5 Tata Steel’s GDR offering
Principal law firms
Cleary Gottlieb Steen & Hamilton
Milbank Tweed Hadley & McCloy
Talwar Thakore and Associates
Tata Steel raised approximately US$500 million through its issuance of global depositary receipts (GDRs) in July 2009. It was the largest Indian GDR to be listed in London, a slight diversion from Indian companies’ general preference for Luxembourg as the primary GDR offering location.
As with most capital markets transactions in 2009, this deal was far from straightforward. Cleary Gottlieb partner Raj Panasar explains: “The UK Listing Authority and the London Stock Exchange really helped with the timetable and allowed the transaction to happen within the small available window. The underwriters did a fabulous job in getting the deal away in a market that was in tremendous turmoil.”
M&A Deals of the Year
Multibillion-dollar transactions were in short supply in 2009. India’s largest corporations did not make the audacious acquisitions of previous years and Bharti Airtel’s US$23 billion bid for South Africa’s MTN telecom network failed for a third time. Cross-border transactions continued, but on a smaller scale than that witnessed in previous years. Indian investments by private equity funds have also been modest. Investment houses have reined in their spending but continue to make shrewd acquisitions in India. The Blackstone Group has been particularly active.
1 Reliance Industries’ merger with Reliance Petroleum
Principal law firms
Davis Polk & Wardwell
Reliance Industries, headed by India’s richest man, Mukesh Ambani, merged with its subsidiary Reliance Petroleum in July 2009. The deal was valued at US$1.7 billion and was India’s 10th largest M&A deal according to the Economic Times. It was also the largest court sanctioned scheme of amalgamation in India and resulted in Reliance Industries becoming the world’s biggest petrochemical entity and one of the top 10 refining companies.
Amarchand Mangaldas (Cyril Shroff, Nivedita Rao and Sharad Mathkar) advised both Reliance Industries and Reliance Petroleum on Indian law, while Wall Street stalwart Davis Polk & Wardwell (Kirtee Kapoor) – which previously advised on the ICICI Bank and ICICI Limited reverse merger in 2001 – provided US counsel.
2 Telenor’s acquisition of a majority stake in Unitech Wireless
Principal law firms
Norwegian telecoms giant Telenor acquired a majority stake in Indian mobile services provider Unitech Wireless for US$1.2 billion. The deal illustrates the immense growth opportunities that India offers. Even with heated debate in Norway as to whether acquiring an expensive asset during such economic uncertainty was a shrewd move, the deal was completed smoothly.
Anand Prasad, a partner at Trilegal and lead adviser to Telenor says: “They believed that the investment would provide extremely large returns over a period of time. The speed of growth in the Indian telecoms sector shows its huge potential. A successful telecoms business in India will contribute significantly to overall profitability.”
Trilegal was recommended to Telenor by London-based international firm Allen & Overy. The two firms have a non-exclusive referral arrangement, but interestingly, neither Telenor nor Unitech Wireless chose to instruct international counsel on the deal, with both Amarchand Mangaldas and Trilegal operating as sole counsel for their clients.
3 Etisalat’s acquisition of a 45% stake in Swan Telecom
Principal law firms
Latham & Watkins
Wadia Ghandy & Co
United Arab Emirates telecoms giant Emirates Telecommunications Corporation (Etisalat) acquired a 45% stake in the newly licensed Indian operator Swan Telecom in December 2008. It was one of a series of significant foreign investments into the Indian telecommunications sector in recent years. Although the deal was valued at US$900 million – a modest sum compared to other acquisitions in the sector – it did convey India’s attractiveness to global telecoms companies. AZB & Partners (Srinath Dasari) and Latham & Watkins advised Etisalat, while Wadia Ghandy & Co represented Swan Telecom.
4 Sanofi Pasteur’s acquisition of Shantha Biotechnics
Principal law firms
Clement Vivien & Associés
The acquisitive Sanofi-Aventis made further inroads into emerging markets, and India specifically, when its vaccines division, Sanofi Pasteur, acquired Indian vaccines maker Shantha Biotechnics in July 2009. The deal valued at US$783 million affords Sanofi control of Shantha Biotechnics, which has been developing vaccines for rotavirus, HPV and conjugated typhoid. Sanofi Pasteur has produced a vaccine for the H1N1 swine flu virus.
French firm Clement Vivien & Associés worked with Desai & Diwanji as chief adviser to Sanofi Pasteur, while Mayer Brown represented Shantha Biotechnics.
Following a billion-dollar fraud by its founder, Satyam was taken over by the Indian government in January 2009. The government installed a new board and sought to sell the company via an auction. This process resulted in the selection of Tech Mahindra after it pledged approximately US$600 million for a 51% stake in the IT and outsourcing company.
Jones Day and P&A Law Offices (Anand Pathak) represented Tech Mahindra as US and Indian counsel respectively, while Latham & Watkins and Amarchand Mangaldas represented Satyam. Talwar Thakore & Associates and Desai & Diwanji represented Satyam’s financial advisers.
“This was a particularly complex transaction because of the fraud involved. We also had to deal with the securities laws of multiple jurisdictions,” says Anand Pathak, a partner at P&A Law Offices. Tech Mahindra had to make a public offer under the Indian takeover code and a tender offer under US securities law. As well as being listed in India, Satyam had listed ADSs in New York and on the Euronext in Amsterdam.
Gupta at Latham & Watkins, who advised Satyam, says: “The SEC [US Securities and Exchange Commission] rules conflicted with the SEBI rules so we had to work with the SEC to get appropriate waivers.”
As a result of this landmark transaction Tata Consultancy Services (TCS) became the world’s second largest business process outsourcing (BPO) provider after IBM. Despite the moribund economic climate, TCS pushed aside heated competition from IBM and Genpact to acquire Citigroup’s India-based back-office operations. As part of the deal, TCS will provide US$2.5 billion worth of outsourcing services to Citigroup and its affiliates for nearly 10 years.
7 3i’s acquisition of a minority stake in Krishnapatnam Port
Principal law firms
Wadia Ghandy & Co
India’s fervent efforts to improve its infrastructure were given a boost by 3i India Infrastructure Fund’s US$161 million investment into Krishnapatnam Port Company (KPCL). The investment will help KPCL to develop, operate and maintain a new port in Krishnapatnam, Andhra Pradesh. KPCL is promoted by the Hyderabad-based Navayuga Group. The deal combined equity and preference shares and was structured to ensure a return on investment.
Khaitan & Co (Haigreve Khaitan) advised KPCL and Wadia Ghandy & Co represented 3i India Infrastructure Fund.
8 Blackstone’s acquisition of a majority stake in CMS
Blackstone’s acquisition of a majority stake in CMS Computers in February 2009 demonstrated the continued interest that private equity players have in India. The deal had been carefully structured to allow for the subsequent demerger of the IT division of CMS, which Blackstone successfully carved out in April to form a new company.
According to Jhunjhunwala, “the deal was unique in that the business in which the investment was made by Blackstone was demerged out to a new company. This made the structuring of the transaction particularly challenging.”
Disputes of the Year
With the Ambani brothers dispute rumbling on and the controversial Satyam fraud scandal, there was no shortage of fiery exchanges in India’s courts during 2009.
1 Ambani brothers dispute
Principal law firms
AS Dayal & Associates
Mulla & Mulla & Craigie Blunt & Caroe
Following the death of Reliance Industries’ founder Dhirubhai Ambani in 2002, his sons Mukesh and Anil have continued to run the giant business empire. Initially, Mukesh became chairman and managing director of Reliance Industries (RIL), with his younger brother taking the role of vice-chairman. As the well-publicized feud between the two brothers became increasingly heated, their mother, Kokilaben, brokered a settlement in 2005, with the business empire essentially being split into two parts, each headed by one of the brothers. As part of this pact, Mukesh’s RIL was to supply 28 million units of natural gas for 17 years at US$2.34 per unit to Anil’s Reliance Natural Resources (RNRL) from natural gas fields off the Andhra Pradesh coast. RIL subsequently increased the price to US$4.20 per unit, claiming that this was fixed by the government. Bombay High Court initially ruled in favour of Anil’s RNRL, but RIL challenged the ruling in the Supreme Court.
The dispute had a bizarre twist in November when the presiding Supreme Court judge, Justice RV Raveendran, recused himself from the case on the ground that his daughter was associated with Mumbai-based law firm AZB & Partners, which had represented RIL on other matters.
Darius Kakalia, a litigation partner with Mulla & Mulla & Craigie Blunt & Caroe represented RNRL in Bombay High Court while Atul Dayal, the sole proprietor of AS Dayal & Associates, acted for RIL. High-profile advocate Ram Jethmalani is now appearing for RNRL in the highly charged Supreme Court hearing, while senior counsel Harish Salve is representing RIL. The case continues.
Investors in Satyam Computer Services’ ADRs launched two class actions against the Indian company in 2009. In January, Satyam’s founder and chairman, Ramalinga Raju, admitted that the company had falsely inflated its profits over many years. US law firms Vianale & Vianale and Izard Nobel, both of which are representing the claimants, alleged in separate law suits that Satyam and its senior executives violated US securities laws by issuing false and misleading financial statements. The two lawsuits were filed in the Southern District of New York and the Manhattan federal court respectively.
In September, Jones Day (Geoffrey Stewart, David Carden and Jayant Tambe) and P&A Law Offices (Anand Pathak) replaced Wall Street firm Wachtell Lipton Rosen & Katz and leading Indian firm Amarchand & Mangaldas as defendant counsel to Satyam. Both Jones Day and P&A Law Offices have experience in this sector having previously represented Rediff.com in a headline securities class action lawsuit in 2001. According to Pathak of P&A Law Offices, “it is always a challenge when the jurisdiction is 8,000 miles away and you have to deal with issues relating to disclosure in the US that are much more demanding than in India. You also have the US concept of discovery and the taking of depositions, which does not exist in India.”
3 Clifford Chance’s tax dispute
The case of Clifford Chance v the Deputy Commissioner of Income Tax has captured the attention of the entire legal community. And for good reason: the ruling has the potential to dramatically increase the tax liabilities of international law firms, despite the fact that the case relates to billings made over a decade ago.
Clifford Chance had been appointed English law adviser on a series of Indian infrastructure projects between 1996 and 1998. The majority of the work on these transactions was completed outside India.
India’s Income Tax Appellate Tribunal ruled in September 2001 that since the work had a “territorial nexus” with India, the firm would be liable to pay tax on all its fees. However, Bombay High Court ruled in December 2008 that Clifford Chance was only liable to pay tax on work rendered within India, and not on work that was completed outside the country.
The case has now entered the Supreme Court, where Clifford Chance is being represented by advocates Ankur Chawla, Meenakshi Grover, Jayant Mohan and Rahul Pratap. Attorney General GE Vahanvati is acting for the Deputy Commissioner of Income Tax.
4 Foreign law firm liaison offices
Principal law firms
Bhaishankar Kanga & Girdharlal
Kanga & Company
A long-running dispute over “foreign law firm liaison offices” was finally resolved on 15 December. In a landmark ruling Bombay High Court held that the Reserve Bank of India (RBI) had been wrong to allow three foreign firms – Ashurst, Chadbourne & Parke and White & Case – to open offices in India during the early 1990s (see News, page 7).
In 1995 pressure group Lawyers Collective challenged the move before Bombay High Court, which ordered the RBI to review the licences. The three law firms appealed to the Supreme Court, but the case was passed back to the high court where it languished until recently. The new decision upholds the 1995 ruling and clarifies that the practise of non-litigious law by foreign lawyers is prohibited.
Kanga & Company, FoxMandal Little and Bhaishankar Kanga & Girdharlal represented Ashurst, White & Case and Chadbourne & Parke respectively. Firdaus Moosa, an independent advocate, acted for Lawyers Collective.
More deals in the pipeline?
Lawyers are optimistic about the prospects for 2010
With inbound M&A proving somewhat resistant to the economic downturn and capital markets deals gaining momentum, domestic firms are poised for a promising 2010. India’s demand for power and infrastructure is yet to be sated, so projects and project finance work look set to provide some glamorous advisory roles for law firms.
“We are already seeing better days. India remains a jurisdiction which attracts a lot of foreign investment,” says Abhijit Joshi, a partner at AZB & Partners.
Anand Prasad, a partner at Trilegal, says that 2009 was better than expected and he is even more sanguine about 2010: “There were expectations that things would be slow and this was the case for maybe about two weeks, but then it was non-stop all year with people going home regularly at five in the morning. I think 2010 will be even more hectic.” Prasad expects to see growth in most practice areas, but believes that with greater investor confidence, private equity will account for a higher portion of deal activity.
The capital markets sector also offers ground for optimism. Even though the Indian stock markets continue their roller coaster run, Manoj Bhargava, of counsel at Jones Day, believes that this hasn’t necessarily dampened enthusiasm for issuances. He believes that QIPs will generally be preferred to IPOs because they are quicker to issue and therefore enable the issuer to tap into periods of buoyancy. “It’s about fast access to capital. You need to get into the market quickly,” he says. Bhargava suggests that this explains why so few IPOs have successfully closed in recent months, although Jones Day did advise on the listing of Adani Power, at the time the largest IPO for 18 months.
Even with a general preference for QIPs in the current environment, Rajiv Gupta, a Singapore-based partner at Latham & Watkins, expects to see a much greater number of IPOs during 2010: “We are seeing a lot of IPOs being filed which is a positive signal for the market. These transactions take a long time in India so if somebody is starting an IPO now, then they are taking a long-term view of the market and see it still being there in six months from now.”
Rabindra Jhujhunwala, a partner at Khaitan & Co, has similarly high expectations for 2010: “We are very positive. We are investing in people and our workplace because the pipeline of deals is back. M&A activity has already started and we see several private equity players that are interested in the cake here.”
This interest was buoyed by the election of India’s new government earlier in 2009. “The reform process has been accelerated and we can expect widespread sector liberalization,” says Shobhan Thakore, a co-founding partner at Talwar Thakore & Associates.
Watch out for Deals of the Year 2010!