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Conversation with Sandip Bhagat (pictured left) Co-Founder of S & R Associates.
Bar & Bench: What kind of capital markets transactions did S & R advise in the last financial year? Any interesting trends?
Sandip Bhagat: Since April 1, 2010, S & R has continued to advise on a full range of capital markets transactions, including the SEC-registered IPO on the Nasdaq Global Market by MakeMyTrip, the listing on the AIM market of the London Stock Exchange by Jubilant Energy, several IPOs and QIP issues in India by companies such as SKS Microfinance, A2Z Engineering & Maintenance Services, Eros International Media, IndusInd Bank and IDFC, a significant bulk deal and other transactions such as FCCBs and rights issues.
Some of the interesting trends:
(a) The success of MakeMyTrip’s U.S. listing, where we acted as Indian counsel to the issuer, appears to have boosted capital raising plans by companies looking to tap the U.S. markets, particularly involving the listing of the overseas entity (with an Indian presence). These companies are in areas focusing on the India consumption and growth story, including in the Internet, technology and media-related sectors. Also, if the company is well prepared (especially with its financial statements), the offering process can be relatively rapid – for example, the MakeMyTrip listing in the U.S. was completed in approximately six months, which is probably faster than most IPOs in India.
(b) The Government continued to undertake divestment efforts through the capital markets, which helped in meeting its budget targets. Certain large transactions were completed, although some other transactions have been deferred until the next fiscal year.
(c) Banks and financial institutions have looked to arm themselves with sufficient capital to address capital adequacy requirements and increase their funding to meet expected demand. However, changes to the regulations impacting the microfinance sector, including the enactment of stringent laws in one state, have led to uncertainty in investments and exposure to this sector.
(d) Capital markets activity has slowed towards the end of last year, in part due to market volatility and a somewhat flat trend. This has slowed the offering process for some issuers and re-calibrated market expectations.
(e) There have been increased efforts to improve the debt capital markets. Also, some leading corporates have successfully issued instruments such as bonds and non-convertible debentures to retail investors.
(f) The Government and the SEBI have continued to introduce changes that have impacted capital markets offerings – for example, the introduction of the minimum 25percent public float requirement was a major change last year; others were 100% payment by QIBs upfront, ASBA for all investors, etc. Standard Chartered completed the first offering of IDRs last summer.
S & R set up a new office in the financial hub of the country in 2010. What has been the impact and advantage of such a move?
Sandip Bhagat: We opened an office last summer at One Indiabulls Centre in Mumbai’s central business district. The firm will continue servicing longstanding Indian and global corporate, investment banking and private equity clients in Mumbai across its practice areas of mergers and acquisitions; capital markets; financing; general corporate; and litigation and arbitration. While we work on transactions across India, it was an obvious and natural next step to be present in India’s financial capital where we already carried on a substantial portion of our work earlier. Our new office works closely with our Delhi team as one firm for our clients and provides a full range of services.
I have relocated full-time to Mumbai to lead our new office. Our work in the past year has involved a combination of M&A, general corporate and capital markets matters (as I’ve mentioned before, capital markets is less than a quarter of our business). We’ve got a team of senior, mid-level and junior associates together, and are geared to service clients across our practice areas.
Your key clients on capital markets transactions seem to be investment banks. What about S & R do you think attracts bankers?
Sandip Bhagat: Our firm seeks to distinguish itself on the basis of the quality of our services. In addition, many of our lawyers have previously practised law in other jurisdictions as well, such as the United States, the United Kingdom and Singapore. This has given them the experience and depth to deliver quality execution and I think clients, particularly those accustomed to a high-quality environment and complex transactions, respond to these factors. These include Fortune 500 companies and global private equity firms, in addition to investment banks.
Also, we have seen some significant issuer-side representations in the past year, including for MakeMyTrip and A2Z. Typically, even if we are involved as counsel to the investment banks, our role as drafting counsel and our involvement in the transaction tends to be substantial. One point to note – relative to the size of our firm, our involvement in large deals, including in capital markets, has been disproportionately high.
Which capital markets transaction was the most challenging last year, and why?
Sandip Bhagat: MakeMyTrip was an interesting deal that involved three jurisdictions – the United States, Mauritius and India. In the IPO by SKS, our challenge was to present the first microfinance issuer to the market. Offerings by financial institutions, such as our work on QIPs for IndusInd and IDFC, are always interesting given the regulations governing banking in India.
Click here to download last years report
Click here for the interview of Madhurima Mukherjee
Click here for the interview of Raj Rani Bhalla
Click here for the interview of Ajay Vaidya
Click here for the interview of Arun Balasubramanian and Pooja Sinha