HSBC sees ‘credit’ to drive growth for India M&A deals

Bloomberg

Availability of credit as central banks hike interest rates along with the ability of Indian corporates to tap capital markets to raise funds will be key to driving growth in the local deal market, Amitabh Malhotra, head of global banking for HSBC India, said.
“Indian companies are very robust in terms of their balance sheets, so I feel that availability of credit and ability to tap into market are going to be key criteria from a risk perspective to aid this growth,” Malhotra said.
Indian dealmaking this year was “a bright spot” as globally deals slowed, Malhotra said.
The domestic bond market and lenders have been tapped to finance companies’ capex plans, Malhotra said, adding that he expected that trend to continue. More than 30 initial public offerings raised about $7 billion in capital in India this year, and he thinks “there is going to be an increase in both numbers and value.”
HSBC was a financier in the $1.2 billion acquisition loan for Biocon Biologics Ltd, which acquired assets worth $3.3 billion from its US partner Viatris Inc, this year.
“Acquisition financing, that backstops or supports dealmaking is also going to open up as we believe both debt capital markets and equity capital markets will open up for new issuances,” Malhotra said.
Recent guidelines from the Securities and Exchange Board of India, allowing companies to file confidentially the red herring prospectus will add flexibility for the new economy companies, Malhotra added.
According to him, data centers will be the new sunrise sector for dealmaking in India. There could also be consolidation in the shadow banking sector.
Other sectors for dealmaking include renewables which “took a pause this year but we believe it will garner pace in the new year” and the commercial real estate space,
Malhotra said.