As one of the worlds' largest, growing economies (Indian growth is widely projected to reach around 5.1% in 2014) and with Indian related businesses accounting for approaching 20% of our income, we have remained committed to this market over recent years. Working with Isle of Man Government, the London Stock Exchange, and both Indian and London based professionals, we have continued to grow this part of our business.
Steve McCafferty, Associate Director commented "Anne Couper Woods, and I have recently returned from one of our regular business trips to Mumbai and Hyderabad, where we visited clients, met with advisers and attended the F.I.T. Conference along with representatives from the Department of Economic Development. Whilst we see these trips as vitally important in terms of client relationships, there is no doubt that the challenges faced by India over recent years, including currency issues, capital restraints and now the looming elections, slowed inward investment.
However, during our time there last month, we experienced a markedly different, very positive engagement from both clients and advisers, despite the uncertainty of the looming elections. Amongst some of the drivers for what Anne and I saw as a marked change in attitude was the recent introduction of legislation and a 2 year pilot that allows unlisted domestic companies to issue ADRs/GDRs without the requirement of prior, simultaneous or subsequent listing on Indian stock exchanges, with capital raised able to be used for offshore purposes.
This in particular is driving high levels of enquiries with the established advisory firms and the common theme from their corporate teams was that their enquiry levels were high from clients considering IPOs and seeking advice on valuations and process. They are actively managing this pipeline and whilst many of these enquiries won't make it past first base, we are currently engaged with a number of established companies, with increasing turnover and a good track record on profitability, who are effectively preparing to come to the market.
Of course there is no guarantee that these new IPOs will come to London to list and whilst we are working with brokers and the LSE on developing these cases, we expect to receive further tangible enquiries on the back of our meetings and ongoing dialogue.
Structured Finance / India appetite
Whilst IPOs very often provide the necessary capital to implement a growth strategy, the absence of active capital markets over the last 6 years has meant that growing businesses have looked to bank debt and private equity. In India private equity is seen as largely fully employed and current bank lending rates are sitting somewhere between 12 to 16%, this coupled with a reluctance from foreign investors has led to growing businesses struggling to find the capital to support those plans.
As part of our approach to supporting our client base we have been working with structured finance firms and are currently engaged in helping both listed and private companies in India to source replacement debt facilities and equity investment. The appetite from some private equity and venture capital funds based outside of India is changing and our clients with fast growing businesses, from across a number of sectors, are now actively investigating access to this important pool of capital. Profitability is not necessary although capital efficiency is critical. Investments are being made across all growth sectors in the Indian market including:
- Manufacturing and Engineering
- Industrial & Infrastructure services
- Business Services e.g. IT and ITeS
- Advertising and media
- Financial services
- Healthcare and Pharmaceuticals
- Real Estate
Equity investment parameters are broad at US$5m- $300m and cover growth investments in private and listed companies, special situations, carve-outs, joint ventures, etc, co-investments with other private equity firms, management buy-outs / buy-ins.
With its strong relationship with both Indian businesses and recognised corporate and capital markets experience, the Isle of Man has much to offer the Indian market, particularly when it comes to structuring and facilitating inward investment.
It remains to be seen how institutional and private investment appetite and activity into India will develop over the next 12-24 months but our experienced corporate team and our partners are actively engaged with clients and the Indian market on a number of transactions. If you think we can assist you or your clients, I would be happy to talk to you."
Talk to IQE for more information by contacting Steve McCafferty on +44 (0)7624 490561 or firstname.lastname@example.org
We have the expertise to assist with multi-jurisdictional fiduciary services for international structures
On a recent transaction we worked closely with IQE to set up and run a corporate structure to facilitate a new residential development in London. We found the IQE team responsive and proactive. It was clear that their property experience added value and understanding of the clients’ requirements on the project. Christine Jackson, Partner, Real Estate Group, Lawrence Graham LLP