India 2007: League tables

India continues to capture the imagination of international investors. The country’s capital markets are developing almost as quickly as its economy, which is growing at a brisk 8.4%. The headline numbers really do tell the story because Indian companies are not just taking on the world, they are taking over the world as well. Indian companies have pursued overseas acquisitions worth US$19.33bn so far this year, a quadrupling of volumes for the same period last year. Indian companies are also proving equally attractive targets for foreign...

So phenomenal has been the rise in foreign exchange reserves that the Indian Government has had to take steps to temper dollar inflows. Paul Rawkins, sovereign analyst in charge of India at Fitch Ratings in London, for one, believes that “there is a lot of money still to come into India. Many more people have yet to discover India.” Atsi Sheth, chief economist at Reliance Capital in Mumbai, agrees that the Indian growth story remains strong. “We’ve had a good four years, and the long-term outlook is very favorable,” she said. “Even though the...

India Inc has been on a song in the past couple of years with its M&A activity. Data from Thomson Financial shows that Indian M&A deals reached a record US$57.16bn in the year to mid-August. Cross-border M&A by Indian companies in the year to mid-August nearly quadrupled to US$19.33bn, compared to the same period in 2006, while inbound M&A volume increased more than five times to US$32.9bn. (See chart.) This was thanks largely due to the UK’s Vodafone buying Hutchison Essar for US$18.2bn in February. That deal was 2007’s largest Asian (ex-Japan...

In keeping with its traditional approach to regulation, the Reserve Bank of India (RBI) has ensured that developments in the Indian derivatives market during 2007 held few surprises for market players. Yet the appearance of draft guidelines on credit default swaps in May created a bit more of a buzz than normal. The bank issued the draft guidelines requesting feedback from the market, feedback that was received by June. “There were some gaps in the draft [guidelines], but following feedback from the market and from the likes of ISDA, many of...

Up until last year, annual issuance volumes from India were scrappy, with on average around US$500m printing each year from 1994 until 2004, when US$1.6bn got done, followed by US$1.09bn in 2005 and a leap to US$3.4bn last year, from 16 deals. Meanwhile, so far this year US$6.2bn has printed via 17 deals, with bank issuance dominating, led by ICICI which has bought US$3.14bn of deals this year. This borrowing binge has been complemented by the bank’s frequent use of the offshore syndicated loan market. ICICI managed the distinction in January...

Infrastructure – or the lack thereof – is the single biggest constraint on India maintaining its impressive 8%-plus economic growth rate. Poor infrastructure is said to drain as much as 1.5% to 2% off Indian’s GDP growth every year, making it an albatross around the Indian economy’s neck. And even though poor infrastructure has not (so far) proven to be a deterrent to foreign investment in India, few believe such aggressive investment levels can be sustained if the country’s infrastructure needs are not met. These needs span the gamut from...

A handful of large ADS follow-ons from issuers with established ADS programs have underpinned this year’s buoyant offshore issuance. These include ICICI Bank’s US$2.15bn ADS and HDFC Bank’s US$700m ADS. Two exceptions are Sterlite Industries’ NYSE listing, which raised almost US$2bn, including the shoe, and Genpact’s IPO, which raised almost US$500m. These four deals accounted for close to half of the US$11.4bn raised offshore this year. By comparison, GDR issuance remains muted due to the rise of the QIP format. “There has been a slowdown in...

In the 3-1/2 years since opening up, India’s offshore CB market has earned a reputation for intense cyclicality. The market does not coast gently up or down, it lurches from boom to bust. However, at the core is a vast issuer base that sees the CB product as the perfect instrument for capturing equity upside. With the Sensex up about 160% since the CB market opened in January 2004, getting exposure to that upside is no small matter. Investors have largely made money in this market, which has explained continuously keen demand-side interest....

India’s structured finance market has been in a state of inertia since January 2006 after the Reserve Bank of India (RBI) announced restrictive regulations. So when the world of structured finance trembled under worries of a secondary impact of the US sub-prime crisis, there was hardly a hint of nervousness in the Indian market. “The market has been in a hole for a long time and foreigners have not been able to get their hands on Indian structured paper because the paper is still not recognised under law as securities which can be listed,” said...