disinvestment

  • 02 April 2014

    Luthra, Perkins do Rs 3,000 cr Gov disinvestment in 10 PSUs through unique mutual fund structure

    Luthra & Luthra and Perkins Coie acted for the Government of India in the first-of-its-kind central public sector enterprise (CPSE) exchange traded fund (ETF), which offered stakes in 10 public sector undertakings (PSUs) through a mutual fund structure.

  • 21 October 2010

    AMSS, CB, FML, L&L, S&R, pitch for SAIL disinvestment

    Five law firms including Amarchand & Mangaldas, Luthra & Luthra, S & R Associates, Crawford Bayley & Co and Fox Mandal have been selected to pitch for the SAIL (Steel Authority of India) first phase 10 per cent share disinvestment, expecting to enrich the Exchequer by Rs 8,000 crores, reported the Economic Times.

  • 26 August 2010

    Amarchand, Dorsey win Power Grid FPO over Luthra, FoxMandal

    power-line-by_abooth202power-line-by_abooth202Amarchand Mangaldas and Dorsey & Whitney have won the government's mandate on the $1.8bn follow-on public offer (FPO) by Power Grid Corporation of India.
    Power linePower lineAmarchand Mangaldas and Dorsey & Whitney have won the government's mandate on the $1.8bn follow-on public offer (FPO) by Power Grid Corporation of India.

    Amarchand Delhi capital markets parter Prashant Gupta and Mumbai capital markets partner Yash Ashar, assisted by principal associate Aarti Joshi led the team that won the competitive tender.

    Dorsey & Whitney Sydney-based partner John Chrisman and London and Sydney-based special counsel Jamie Benson were part of the Amarchand bid consortium.

    "I think there is probably going to be one PSU [public sector undertaking] deal coming to market every month for the next four to five," commented one disinvestment partner. "The problem is that some of them (Coal India, Power Grid, Hindustan Copper) are very large which sucks the liquidity out of the Indian market."

    Amarchand and Dorsey were shortlisted against FoxMandal Little and Hogan Lovells, as well as Luthra & Luthra together with DLA Piper.

    As part of the request for proposals for Power Grid it was a requirement that the foreign firm had completed on Indian public offering of Rs 1,000 crore in the past three years.

    It is understood that Luthra & Luthra and DLA Piper's joint bid was rejected because although the two firms had together completed Engineers India initial public offering (IPO), which raised just under Rs 1,000 crore, the disinvestment ministry disqualified the firms.

    Luthra & Luthra had also filed the prospectus in the Coal India IPO, which could raise up to Rs 17,700 crore but has not yet been issued and was therefore not counted by the disinvestment ministry for the purpose of the tender.

    The disinvestment ministry confirmed Amarchand and Dorsey's appointment but declined to comment further.

    Goldman Sachs, SBI Caps, JP Morgan and ICICI Securities are the banks that are managing the issue.

    Last week FoxMandal and Gide Loyrette Nouel won the mandate to advise the government on its Manganese Ore IPO.

    This is a longer version of an article that first appeared on Bloomberg News.

    Photo by abooth202

  • 18 August 2010

    FoxMandal, Gide win latest disinvestment as fee quotes hit record low

    miningminingFoxMandal Little and French international firm Gide Loyrette Nouel won the government's mandate to take Manganese Ore (India) Ltd (MOIL) to its initial public offering (IPO) by putting in the lowest bid-price yet compared to recent disinvestments.
    miningminingFoxMandal Little and French international firm Gide Loyrette Nouel won the government's mandate to take Manganese Ore (India) Ltd (MOIL) to its initial public offering (IPO) by putting in the lowest bid-price yet compared to disinvestments.

    The FoxMandal team was led by Delhi senior partner Ajit Yadav and partner Sumes Dewan.

    "The market is really picking up and in fact we have a couple of disinvestments coming up," said Dewan, who joined FoxMandal earlier this year from KR Chawla & Co. "We handled one at the beginning of the year with SJVN – one of the first disinvestments - that started in December."

    "It seems like it is on the right track, now that the government is proposing to get a couple of more IPOs and disinvestments."

    Dewan confirmed that the two law firms together quoted a flat fee of Rs 1.05 crore for advising on MOIL's disinvestment.

    FoxMandal's fee quote is understood to have made up between Rs 25 and 30 lakh of that total, although Dewan declined to confirm the figure.

    A disinvestment ministry source who declined to be named told Legally India that the tender for MOIL had taken place along the same basis as Engineers India Limited and Coal India Limited, where a number of law firms that had advised on the largest number of capital markets deals in the previous quarter were invited to tender.

    Amarchand Mangaldas, Dua Associates, FoxMandal, Khaitan & Co and Luthra & Luthra all gave presentations to the department of disinvestment on 2 August 2010.

    Dewan said that quality scores awarded to FoxMandal and Gide after their joint presentation meant that the firms' financial bids were opened, which were lower than other shortlisted firms.

    Amarchand last month won the Hindustan Copper disinvestment with a joint fee-quote with Dorsey & Whitney of around Rs 1.26 crore, while Luthra & Luthra and DLA Piper won the Engineers India IPO mandate with a total bid of around Rs 1.36 crore.

    MOIL's IPO is expected to raise around Rs 1,500 crore, according to Bloomberg, with bankers having pitched fee-quotes as low as Rs 150 to advise on the IPO.

    A version of this article was first published by Bloomberg.
  • 09 August 2010

    Amarchand-Dorsey underbid Luthra-Jones Day to score Hindustan Copper sale

    copper-wire-by_samcatchesidescopper-wire-by_samcatchesidesAmarchand Mangaldas' Delhi office and Dorsey & Whitney have won the bid on the Hindustan Copper divestment while Khaitan & Co bagged the underwriter's mandate.

    Amarchand also won the role for the underwriters on the mammoth Coal India stake sale with Ashurst as international counsel while Luthra had won the tender to advise the company.
    Copper wireCopper wireAmarchand Mangaldas' Delhi office and Dorsey & Whitney have won the bid on the Hindustan Copper divestment while Khaitan & Co bagged the underwriter's mandate.

    Amarchand also won the role for the underwriters on the mammoth Coal India stake sale with Ashurst as international counsel while Luthra had won the tender to advise the company.

    Amarchand's Delhi office, led by partner Prashant Gupta and principal associate Aarti Joshi fielded the team in the Hindustan Copper pitch facing Luthra & Luthra in the final selection round.

    Amarchand had paired up with Dorsey & Whitney Sydney partner John Chrisman and Hong Kong partner Liza Mark, while Luthra & Luthra had teamed up with Jones Day.

    Khaitan & Co meanwhile won the instruction for the Hindustan Copper underwriters, according to sources familiar with the matter.

    It is understood that Amarchand had submitted a fee-quote of around Rs 46 lakh ($100,000) for the Hindustan Copper divestment with Dorsey quoting around $175,000 (Rs 80 lakh), according to a source familiar with the bidding process.

    Luthra & Luthra is understood to have bid around Rs 63 lakhs ($136,800) with Jones Day coming in with a proposal of $375,000 (Rs 170 lakh).

    Amarchand was selected according to the lowest-bidder principle.

    Earlier this year the government's ministry of disinvestment trialled a new bidding approach where it invited top law firms according to league tables to tender for the Coal India and Engineers India public offerings.

    Hindustan Copper's divestment is being led by the company rather than the ministry of disinvestment because Hindustan's issue involved a fresh issue and not only an offer for sale.

    The government was looking to raise about Rs 6,000 crore ($1.3bn) from the sale of 20 per cent in Hindustan Copper although bankers cited by the Economic Times said that this overvalued the company.

    Pricing strategies

    Amarchand and Ashurst have also won the underwriters' mandate on the Rs 12,000 crore Coal India disinvestment, which filed its draft prospectus today. Ashurst Hong Kong partner Stuart Rubin is understood to be leading the international advice for the underwriters alongside Amarchand.

    Luthra & Luthra and DLA Piper had won the Coal India and Engineers India Limited company instructions over Amarchand in May 2010 by putting in the lowest bid.

    In the bid for Engineers India Limited, Luthra & Luthra and DLA Piper are understood to have come in with a joint heavily discounted price of around Rs 136 lakh against Amarchand and Jones Day's price of around Rs 150 lakh, with Luthra's bid in the Coal India share sale being even lower according to sources.

    Amarchand Mangaldas and Luthra & Luthra are currently tied in the 2010-11 financial year first quarter initial public offering league table, compiled by Legally India.

    All firms declined or were unavailable for comment when contacted.

    Photo by samcatchesides

  • 25 June 2010

    Anatomy of new disinvestment tenders: Near zero fees for lawyers or boon for competition?

    stock_exchange_chartstock_exchange_chartLess than one month ago a financial daily caused a stir in the cozy Delhi capital markets world after reporting that the selection of law firms in the disinvestment of Coal India Limited and Engineers India Limited (EIL) had been discriminatory, alleging political nepotism. But as so often there is more than meets the eye.
    Share salesShare salesLess than one month ago a financial daily caused a stir in the cozy Delhi capital markets world after reporting that the selection of law firms in the disinvestment of Coal India Limited and Engineers India Limited (EIL) had been discriminatory, alleging political nepotism.

    However, the disinvestment ministry's selection of legal advisers has probably never before been as objectively fair as in those two pitches: India's top 15-ranked law firms were invited to pitch for advisory roles in an unprecedented and structured tendering process.

    "We are drawing up a list of the top law firms based on league tables and inviting them to tender. The change we have brought about is to make the process dynamic," explained Sumit Bose, who took over as the Indian government's department of disinvestment secretary on January 22 and is tasked with raising Rs 400 billion ($8.6bn) through asset sales in 2010-11.

    Luthra & Luthra was the first firm to benefit from the changes with DLA Piper on 21 May. Both firms won the EIL and Coal India mandates over duos such as Amarchand Mangaldas pitching with Jones Day and O'Melveny Myers, AZB & Partners with its best friend Clifford Chance and S&R Associates with Dorsey & Whitney.

    Other Indian firms that pitched for EIL or Coal India included Crawford Bayley, Axon Partners LLP, Jurisprudent Consulting Partners and Link Legal.

    Some of these in particular will be less well-known in the capital markets field, which could have been one cause for the raised eyebrows.

    Quoting unnamed sources, the Indian Express on 1 June 2010 wrote: "It is learnt that the Disinvestment Ministry has received a complaint alleging that a discriminatory procedure was adopted while sending request for proposal by law firms for the disinvestment of Engineers India Ltd and Coal India Ltd. Sources said the complaints also accuse the department of trying to favour the law firm set up two years ago by the son of a politician."

    The young law firm with political connections would have been intended to refer to roughly one-year-old Axon Partners LLP.

    The firm was set up by former Shearman & Sterling and Cravath Swaine & Moore associate Abhimanyu Bhandari and ex-Shearman & Sterling Singapore associate and litigator Anubhav Singhvi, who is also the son of well-known Rajya Sabha member and Congress party spokesperson Abhishek Manu Singhvi.

    No one will dispute that the Axon partners' connections have helped them get the foot in the door on some deals and in fact, when coupled with hard work and a good quality product this is the exactly the recipe most start-up law firms and businesses follow to success in India.

    But contrary to the allegations, the reason Axon and three-year old capital markets niche player Jurisprudent Consulting Partners ended up pitching for EIL and Coal India with the established firms was a pure numbers game: in a short time they managed to muscle their way into the league tables of the ultra-competitive capital markets space that has traditionally been dominated by the big firms.

    Evolved anatomy

    It is somewhat ironic that allegations of impropriety were reported after the government's department of disinvestment had for arguably the first time instituted a process where transparency is hard to fault.

    Previously law firms with comparatively limited capital markets experience were occasionally instructed with which the department had some prior connection or that had previously bid or done some work with the department. The reasons were not always clear to outsiders or even insiders.

    "The government has itself become sensitive to that because ultimately you need to get the job done," said one lawyer closely involved in disinvestment pitches. "The persons who suffer at the end of the day [by selecting inexperienced advisers] is no one but the government."

    The new process that was used in EIL and Coal India was therefore very different.

    The disinvestment ministry invited 15 domestic law firms that were listed as the busiest capital markets firms in the 2009-10 financial year according to the Prime Database, which was founded in 1989 by Prithvi Haldea to track the Indian capital markets.

    According to Prime, Amarchand had roles on 31.7 per cent of all tracked deals by value, with Luthra and S&R having respective market shares of 28.3 and 26 per cent.

    Similarly to Legally India's 2009-10 IPO league table, Prime lists Amarchand, Luthra & Luthra, S&R Associates, Crawford & Bayley, Khaitan & Co, AZB, Wadia Gandhy, J Sagar Associates (JSA), Axon Partners, Jurisprudent Consulting Partners, Rajani Associates, Kanga & Co and Vaish Associates as the busiest capital markets firms in order.

    The Prime Database, which tracked 44 completed deals including not just equity but also convertible and debt issuance, also included Link Legal and Desai & Diwanji in eighth and ninth out of top 15 Indian firms.

    All of these firms are understood to have been sent requests for proposals (RFP) for EIL and Coal India by the ministry for disinvestment.

    "The process in the fresh round of disinvestments for shortlisting law firms was fairly transparent and detailed," commented Luthra & Luthra capital markets head Madhurima Mukherjee. "Law firms were invited and judged on objective parameters such as the firms’ capital market experience, profiles and experience of indidivuals, after which they considered the financial bids."

    Axon co-founding partner Bhandari agreed and added: "I hope that going forward niche and small law firms who make it to the league tables are also given a chance."

    Respectfully requested

    For EIL, each firm was understood to have been sent a 10-page letter explaining the mandate and requesting a pitch outlining:
    1. "prior experience and capability of handling public offerings",
    2. "infrastructure and manpower",
    3. "understanding of the regulatory framework" and "indicative timeline", and
    4. "strategy for the public offerings".
    In EIL six Indian law firms, each selecting their own international law firm partner, responded to the above points, which were graded by the department with each accounting for 25 per cent of the firms' final quality score.

    In the EIL pitch Luthra is understood to have been awarded 73 points out of 100, as against Amarchand's 76 points, and in Coal India the roles were reversed with Luthra getting 78 points and Amarchand again scoring 76 points.

    S&R was the only other firm in both disinvestments to have scored in quality above 70, which was the cut-off the disinvestment ministry used.

    Costing the earth

    For those three firms, the department then opened the sealed bids that were submitted together with their proposals. The winning firm was selected on the basis of the lowest price in the envelope – the well-known L1 principle often used by the government in tenders.

    Luthra and DLA Piper are understood to have come in with the lowest heavily discounted price in both pitches, winning with around Rs 136 lakh in EIL against Amarchand and Jones Day's price of around Rs 150 lakh, with Luthra's bid in the mammoth Coal India share sale being even lower according to sources. International firms' fees would make up the lion's share of those quotes.

    One capital markets partner said that overall the new way of selecting firms broadly worked but added: "I think it's a process you're never going to get 100 per cent right."

    However, Amarchand Mangaldas Delhi managing partner Shardul Shroff argued that the department should not employ the lowest financial bid as a final criteria in selecting its legal advisers. "Technical skills, depth and size of team and experience are more important criteria considering the scale of the task."

    "The change in [the government's] norm has made selection somewhat arbitrary especially when public sector disinvestment is getting increasingly more complex and needs 'bodies' on the ground and very high quality technical excellence - which is negated once technical qualifications are met by firms bidding," added Shroff.

    Nevertheless, for better or worse trying out the new process did at least on its face demonstrate transparency and recognises that smaller and newer firms can still break into the capital markets domain, as has happened in corporate, private equity and other specialist areas in the past years too.

    And while the money the government pays will never compete with the private sector especially if L1 bidding continues, law firms will still keep pitching.

    Lawyers, almost like the bankers that have pitched near-zero fees on past government work, are clearly in it for the glory.

    This is an analysis of a shorter article that was first published by Bloomberg.

  • 19 May 2010

    Three old-school firms, three start-ups face-off over Engineers India disinvestment mandate

    Amarchand Mangaldas, Crawford Bayley and Luthra & Luthra, and young firms Axon Partners LLP, Link Legal and S&R Associates, are bidding for the role of legal advisor to the government in the disinvestment of state-owned Engineers India Limited (EIL) which is set to happen through a follow-on public offer in July.

    According to media reports all six law firms are scheduled to make their representations to the Department of Disinvestment on 20 May, as announced by the finance ministry. 

    Meanwhile, the Government has also shortlisted four financial advisors on the EIL disinvestment including HSBC Holdings Plc, ICICI Securities, SBI Capital Markets and IDFC Capital.

    Business Standard reported:
    EIL is likely to come out with a follow-on public offer in mid-July to raise around Rs 1,200 crore.

    Consultancy firm Engineers India Limited (EIL) would be the second company where the government will sell its stake in the current fiscal.

    At the current market price, the government is expected to raise about Rs 1,100-1,200 crore through sale of 10 per cent stake in EIL, which provides design and engineering services to petroleum, power and fertiliser companies.

    Currently, the government holds 90.40 per cent stake in the company.

    The first stake sale of this fiscal -- SJVNL-- has got good response from investors, prompting the government to fix the issue price at the upper end of the band at Rs 26 a share. The stake sale would fetch the Centre over Rs 1,000 crore."

Latest comments