India's bad debts draw early bets
India’s recently revised bankruptcy regime
ISûOPENINGûUPûNEWûlNANCINGûOPPORTUNITIESû
for foreign banks, although only a few are
ready to jump in while the system is being
tested.
Among these early movers, NOMURA
and DEUTSCHE BANK say they are ready to
COMMITûSIGNIlCANTûTIMEûANDûCAPITALûTOûTHEû
distressed debt market.
“India is among the very few countries
in Asia outside of developed markets
where there is an insolvency resolution
framework now and this helps us look at
distressed debt investing in a very different
way as opportunities emerge,” said Rahul
Gupta, head of illiquid credit trading for
Asia ex-Japan at Nomura.
The country introduced a new, less
debtor-friendly insolvency and bankruptcy
code in 2016. Then, last summer, the
Reserve Bank of India forced lenders to
begin insolvency proceedings against a
dozen major defaulters in the NationalCompany Law Tribunal, providing the
lRSTûTESTûOFûRECOVERYûRATESûUNDERûTHEû
new regime. It has since added 28 morecompanies to that list in a bid to force
lenders, especially Indian state-owned
banks, to deal with non-performing assets.
Describing the twin developmentsas “game-changing for India”, Aadit
Seshasayee, head of Nomura’s special
situations group for Asia ex-Japan, says a
quarter or more of his group’s portfolio is
likely to come from India in the next 6-
months. “We could have an exposure of
close to a few hundred million dollars in
the next couple of years compared to a
small book size currently,” he said.
Deutsche Bank is also bullish, saying the
new IBC regime has created opportunities
TOûhBEûACTIVEûINûALLûKINDSûOFûlNANCINGû
opportunities,” according to Amit Khattar,
co-head of global credit trading for Asia
0ACIlCûh7EûAREûWORKINGûONûlVEûTOûSIXûDEALSû
in the distressed space right now.”‘THAT SCARES PEOPLE’
The bankruptcy regime gives creditors a
quicker way of resolving their claims, and
comes as the RBI is pushing banks to clean
up an estimated US$150bn of troubled
loans.
Deutsche’s Khattar says the moves
represent “a massive change in way people
think of businesses”. The controllingPeople
&Markets
UBS beefs up for Asia-US listings
IB head reaffirms focus on ECM after recent upheaval
UBS is counting on equity underwriting and
its Chinese joint venture to drive growth in
Asia after a tumultuous couple of years, its
top regional investment banker told IFR.
David Chin, head of corporate client
SOLUTIONSûFORû!SIAû0ACIlC ûSAIDûTHEûBANKûHADû
drawn a line under recent departures and
was looking to grab more market share in
ECM, particularly from Asia-to-US listings.
“We’ve been adding to the cash ECM
team over the last two or three months,”
Chin said. “We have a full team in place
now.”
“When it comes to both winning deals
ANDûRUNNINGûTHEM û)MûVERYûCONlDENTûWITHû
the talent that we’ve brought in.”
Last week, UBS hired two ECM bankers
from JP Morgan in Hong Kong. Chang Liu
and Warren Wu both joined as executive
directors, according to an internal memo
seen by IFR.
Liu has joined the syndicate desk and
will focus on growing the bank’s China
business, while Wu has joined in ECM
origination with a focus on Asia-to-US
listings and new economy business.
The appointments come after a periodof relatively high turnover at the Swiss
investment bank. Chin, who rejoined UBS
last September after a two-year sojourn
in academia, was the third head of CCS in
APAC in just over a year.
Under the leadership of his predecessor
Sam Kendall, several senior bankers left
including Joseph Chee, previously head
of CCS for Asia, and Damien Brosnan,formerly co-head of ECM for Asia.
Chin is adamant that the string of high-
PROlLEûDEPARTURESûHASûNOWûCOMEûTOûANûEND
“It’s the nature of our business,” he said.
“Sometimes there’s turnover and it just
so happens that in the last 18 months, we
went through a few changes.”
“We have a settled team now that is up
to full strength.”TOP STORY BANK STRATEGYASIAN EXPORTS
US EQUITY OFFERINGS FROM ASIA ARE RISING (US$BN)Source: Thomson Reuters SDC051015202530352013 2014 2015 2016 2017 2018YTD
Follow-On Convertible IPO“India is among the very few
countries in Asia outside of
developed markets where there
is an insolvency resolution
framework now and this helps
us look at distressed debt
investing in a very different way
as opportunities emerge.”