Snapshot for week beginning 17 January. Earlier this month, the IMF projected an impressive 11.5% growth rate for India in 2021. That makes the country the only major economy to register a double-digit growth this year amidst the Covid-19 pandemic.
Global investors are paying attention.
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Propped this week by a major Indian acquisition, Asia-Pacific tops the deal list with 5 transactions valued at $5.2bn, eclipsing usual favourite North America (2 deals, $191m).
Middle-East and Africa chalked up one deal. (First Abu Dhabi Bank to acquire Bank Audi Egypt from Bank Audi for $700m).
Europe was conspicuously absent from the roster.
The week’s trophy goes to an Indian group for beating an American asset manager to emerge as the preferred bidder to acquire bankrupt mortgage lender Dewan Housing Finance Corporation (DHFL).
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By GlobalDataDeal of the week: Piramal Group wins bid for DHFL with 94% votes
Mumbai-based Piramal Group has won the bid to take over DHFL.
To score the INR372.5bn ($5bn) deal, Piramal received 94% of the votes from the Committee of Creditors. (The minimum requirement for winning a bid is 66% votes.)
The other major contender, US-based Oaktree Capital Management, secured around 45% of the votes.
Piramal Group is a global business conglomerate with diverse interests in Pharma, Financial Services, Real Estate and Glass Packaging. The Group has offices in over 30 countries and a global brand presence in more than 100 markets.
The total offer of Piramal was INR372.5bn, compared to INR384bn crore offered by Oaktree.
However, Piramal had offered a higher upfront cash payment. The total dues of DHFL stands at around INR900bn crore.
DHFL is a deposit-taking housing finance company, headquartered in Mumbai with branches in major cities across India.
DHFL was established to enable access to economical housing finance to the lower- and middle-income groups in semi-urban and rural parts of India.
After a default of over INR870bn, DHFL became the first financial company to be forced into insolvency in November 2019.
Distressed debtors have threatened litigation
Piramal said that its bid for DHFL offers the lenders the highest upfront cash recovery.
The Mumbai-based multinational also said it has the highest score on the evaluation matrix, is fully compliant with all regulatory norms, and is fully and immediately implementable.
Following the transaction, the Piramal group aims to combine its financial services business with DHF.
However, this decision is likely to open up a new litigation process as the global distressed debt investor has publicly stated its displeasure of Piramal being the favourite among the lenders during the entire insolvency process.
India on the growth path
IMF Managing Director Kristalina Georgieva said that India has taken very decisive action to deal with the pandemic and the economic consequences of it.
This bright prospect for growth has potential implications for dealmaking.
Economic growth encourages firms to invest, including investing in other companies, in order to meet future demand. Higher investment increases the scope for future economic growth – creating a virtuous cycle of economic growth/investment.
Already, India has earned its first unicorn of 2021.
The Bengaluru based startup Digit Insurance has been valued at $1.9bn, following a $18.4m (INR1350bn) funding round expected to close later this month.
Startups valued privately at $1bn or more are dubbed unicorns.
The cloud-based general insurance company was founded in 2017. It positioned itself as a new-age insurer, leveraging India’s phenomenal digital expansion. It dramatically simplified operations, introducing processes like smartphone-enabled self-inspection and audio claims.
Much of India’s growth, as well as its attraction to global investors—including deal makers—is attributable to the country’s remarkable digital surge.
