As resolution of stressed assets gain momentum, the key for India would be to demonstrate that legal and judicial processes keep pace for ensuring timely resolution and liquidation, a top official of Kroll said.
“Confidence in the process will bring in more investors. On the other hand, if the process becomes long, tedious and winding, then investors will lose interest and look at alternate markets,” said Tarun Bhatia, managing director & head of South Asia, Kroll.
“We believe that the distressed M&A (mergers and acquisitions) market in India has just started and has a long way to go. In any market, a new bankruptcy law has taken 4-5 years to stabilise. India has seen significant movements in two years, and we believe the code will stabilise further with more cases being resolved. Every case sets a precedent for others,” he said.
Attractive destination
Mr. Bhatia said India remained an attractive investment destination for global investors, especially when compared with some other markets – a strong 7%-plus growth and a large market.
“Global investors are keenly observing the distressed M&A space and are likely to be active players once the top 10-20 accounts are resolved. These investors have deep pockets and will be willing to take a long term view on India. They may either partner with local companies or go on their own or bring an independent management,” he said.
Kroll, a division of Duff & Phelps, has released a report called Distressed M&A in India: A risk worth taking?
In this report, it said since the inception of India's Insolvency and Bankruptcy Code (IBC) more than two years ago, distressed M&A values in India have totaled $14.3 billion and a promising pipeline of opportunities continues to build.
“What has been unclear is which sectors will provide the most opportunities for investors – particularly international funds and corporations – and which best practices should be adopted to navigate the oftentimes complex Indian market,” it said.