Ex-Lehman banker sees gold mine in India bankruptcy overhaul

There has been an upswing of foreign capital interested in investing in India. Photo: AFP

Hong Kong: Edwin Wong, the chief investment officer of Hong Kong-headquartered SSG Capital Management and an ex-Lehman Brothers Holdings Inc. banker, sees a multitude of opportunities in India as the nation pushes ahead with a bankruptcy system overhaul.

There was further evidence of that this week, with the Reserve Bank of India introducing a time line for the country’s banks to recast bad loans and also scrapping previous methods. Prime Minister Narendra Modi’s government has been trying to clean up $210 billion of bad loans on banks’ balance sheets and that’s attracting global funds.

“The whole world is looking at India now,” said Wong. “It could be a once-in-a-lifetime opportunity.”

Since India passed its new insolvency and bankruptcy code in May 2016, the nation’s so-called dirty dozen—2 large debtors that have been ordered through the bankruptcy courts—have been a focus for funds. Under the new bankruptcy rules, the balance has shifted in favour of the creditor from the borrower, creating greater accountability for family owners of India’s major companies, according to billionaire Uday Kotak.

“It’s getting a lot of attention because there is a timetable for the bankruptcy process,” said Wong. “If the government sticks to what they say they will do, things have to happen.”

Well-positioned investors should be able to make money, he added. SSG Capital raised $2.5 billion across secured lending and special situations and India is one of the firm’s core markets, according to Wong.

There has been an upswing of foreign capital interested in investing in India. A few big distressed situations such as mobile phone operator Reliance Communications Ltd and steel companies are attracting attention from global investors, according to Damien Whitehead, partner at Ashurst.

India’s new bankruptcy regime “created a buzz” for distressed investors when it first came into force, but much remains to be tested under the regime and the infrastructure that supports it, according to Naomi Moore, financial restructuring partner at Akin Gump Strauss Hauer & Feld LLP. Bloomberg