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india: “India is one of the greatest opportunities in the world” – Mintpaisa

US corporate restructuring specialist Houlihan Lokey slowly explores a post-covid investment situation in India, where developers are open to selling, pruning their businesses or partnering with a financial sponsor to develop. As insolvency and bankruptcy processes mature, India’s mid-sized companies are turning more to the global pool of capital, said Scott Adelson, Global Co-Chairman and Co-Head, Corporate Finance. Houlihan Lokey, in an exclusive interview with ET’s Reghu Balakrishnan & Indulal PM. Edited excerpts:

How do you see the investment situation post-covid?

One of the interesting things that came out of Covid-19 is that it reminded people that risk exists and risks don’t always exist where you expect them to. I’ve seen the growth of private equity in the United States and even in Europe. (Earlier) They said we were family businesses, passed down from generation to generation, and didn’t need your American ways. Today there is huge growth in private equity across Europe. I see the same beginning here (in India). We are still in the early days.

What does Houlihan Lokey plan to achieve here in India?
We focus on the mid-cap space. Ninety-eight percent of all global M&A activity involves mid-cap companies and we want to be only in that space.

Where would Houlihan Lokey place India among other markets?

Currently, India is one of the greatest opportunities in the world. We are a very different organization today than we were last time. India is an extremely important market, as we have just said. We’re really talking about it not just as India, but as India as a region of the world that is growing really, really fast…and all the benefits that can be realized by collaborating and working together (with d other regional economies)

Do you see an opportunity in NCLT processes under IBC?

Once an asset enters the IBC, it becomes a very different process. So for us, where we can really add value is before the CWB, especially if there is an external debt component. This is because Houlihan Lokey globally has excellent relationships with all creditors. Complicated balance sheets create an opportunity for growth. There are reasons why businesses find themselves in trouble. When they have complicated balance sheets, people need to figure out who gets what and it’s not just plain and simple. We are literally the world leader in this field.

What are the areas in which HL sees greater interest for investors?

The entire chain of manufacturing and old economy sectors offers a major opportunity. Many of these balance sheets are overleveraged and need to be rethought. We help promoters consider debt as a financing option. In India (for everyone) everything is fairness. But debt is actually a pretty basic tool for what you can do (for acquisitions).

In your opinion, which sectors will be more targeted in the years to come?

We look at it from a five-year perspective. For example, to support the deployment of 5G, we will need massive investments in infrastructure in telecommunications, towers, software and networks. We believe that telecommunications is a booming industry in India. We’re seeing some fantastic brands popping up, whether it’s medical supplements or consumer durables. Technology remains the mainstay for us.

India gets more allocations from the Asian fund of private equity firms. How do you see the trend? Is it sustainable?

I tend to focus more on long-term trends. Faster growing economies benefit from more mature and even declining economies, such as the United States and Europe. We are starting to see an increasing shift of investment to faster growing economies and India is one of those key markets.


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