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This article, like many others, was first published exclusively for long-term supporters, 4300 hours before everyone else got to read it.

InLegal 50: The biggest M&A & insolvency deals in a year of plenty

The last financial year of M&A, VC and PE activity had been record-setting for Indian and foreign law firms
What made up the Legally India InLegal 50 corporate rankings
What made up the Legally India InLegal 50 corporate rankings

2018-19 Market Overview

“M&A is the mainstay of any small or large corporate firm’s practice,” states Shardul Amarchand Mangaldas Delhi corporate partner Amit Khansaheb, one of the InLegal 50’s top dealmakers of the financial year 2018-19. “M&A is always happening – bear or bull market – although valuations may differ, expectations may vary and people may put off plans from time to time,” he adds.

In the 2018-19 Financial Year (FY), India has been nearly nothing but bullish on M&A, with the 12 months to 31 March 2019 having been one of the busiest years of mergers and acquisitions on record. According to Thomson Reuters, the 2018 calendar year had seen companies announce $129.4bn of India-related M&A activity, handily beating the previous record of $67.4bn from 2007.

A year of exits (and entries)

The numbers have been buoyed by a raft of much-overdue exits by long-time investors and activity in the infrastructure and telecoms sector.

You could almost hear the collective sigh of relief from venture capital (VC) and private equity (PE) funds that made good on their investments via M&A, with the capital markets all but shut down in the 2018-19 financial and other financing hard to come by (see capital markets analysis below).

Walmart’s high-profile buy of e-commerce major Flipkart may, in retrospect, have resulted in some buyer’s remorse after it was quickly followed by the government’s kneecapping of global players Walmart and Amazon by regulation to protect the domestic market. But it did little to reduce appetites (see our feature on largest deals below).

“There was a lot of activity in the M&A space – valuations were a little low, the capital markets were slow, and whenever capital markets is slow the entire market fundamentals changes,” says a corporate partner.

But besides driving M&A, venture capital (VC) and private (PE) also provided lawyers with significant opportunities to work on new investments. Ignoring acquisitions by hungry funds, we have also captured 254 VC and PE investments in and relating to India, with values of nearly $15bn. At least 19 of those investments were larger than $200m, with two rounds – Swiggy and Star Health – exceeding $1bn.

Insolvent green

Second, the 2016 Insolvency and Bankruptcy Code (IBC) has begun to come into its own, despite some problems for early birds. The IBC was responsible for a smorgasbord of lucrative M&A activity in the last financial year: we tracked at least 17 insolvency mandates under the IBC framework, gifting law firms M&A deals with values of more than $20bn. They made up more than 20% of the total M&A values captured in our tables (see our full analysis ohere).

The time for stupid prices is over

The Indian legal market has remained very price conscious and highly competitive on fees, according to most partners we’ve spoken to, though the days of intense underbidding following the earthquakes the Amarchand Mangaldas split have now passed.

“From 2015, and even part of 2017 saw a lot of stupidity because of personal egos and the obvious ramifications of the largest firm splitting in two and going at each others’ throats,” muses one partner. “2018 saw an end to the pricing stupidity because people were too busy to do stuff for stupid prices.”

Legal outlook Rosy

While some trepidation over the elections had led to investors covering the brakes, fearing a hung parliament, the results have buoyed the markets and the legal fraternity. Every single partner we’ve spoken to was optimistic, at least about the economy for the next few years, and are not expecting a recession any time soon.

[Note: These interviews were carried out in early 2019]

“I don’t think so,” says Link Legal India Law Services partner Manish Gupta about whether a crash is impending. “Indian market has done really well in terms of giving exit to investors. Even if we ignore the bigger thing of Flipkart, otherwise also, India has bettered its reputation in terms of giving exit and returns to investors; this has become more evident in the last two or three years.”

“The long term fundamentals are there,” adds Vishnu Jerome, partner of Jerome Merchant + Partners, but adds that “there’s genuinely – if you see the debt market – a lack of liquidity. A lot of investments are not domestic money, but in domestic money there’s a paucity of funds wanting to deploy.”

“There are positive signs,” opines Khaitan & Co partner Haigreve Khaitan about how Narendra Modi’s uncontested win has been received by the business community. “One major multinational, which was looking at divesting and diluting, in fact decided not to divest.” He adds that another financial sponsor told him recently to “please keep your team available now” for the next two years, in anticipation of a stream of upcoming deal activity.

“I think it’s going to be a busy time and a good time for India,” said Khaitan.

For the law firms profiled in the following pages, those good times have already arrived in the 2018-19 fiscal.

Top M&A Deals of the Year

WalKart broke records

The Indian M&A deal of the year, both in terms of size and profile, was undoubtedly Walmart’s acquisition of Indian Amazon-challenger Flipkart for $16bn, giving investors a record payout and the market a major boost (despite the government unleashing restrictive e-commerce rules, making the deal a bit less attractive in the short-term than it had seemed).

Khaitan & Co’s Bangalore partner Ganesh Prasad, a long-time adviser of the company, bagged the instruction for Flipkart.

Shardul Amarchand Mangaldas’ (SAM) corporate partner Raghubir Menon led the juicy mandate for Walmart - a deal that occupied at least 14 partners; international firm Hogan Lovells acted from San Francisco and Singapore.

A number of law firms also hovered around the periphery, with work coming from exiting investors (Trilegal for Naspers on its $2.2bn payday, Argus Partners for TR Capital, and J Sagar Associates (JSA) for eBay), and Cyril Amarchand Mangaldas provided some competition advice for Flipkart.

Bharti deal towers above rest

Bharti Infratel kept the Bharti group’s trusted long-time adviser AZB & Partners Delhi and partner Gautam Saha and his team on call when it merged with Indus Towers – jointly owned by Bharti, Vodafone, Idea Group and Providence – to create a $14.6bn giant with more than 160,000 telecoms towers across India.

S&R Associates and partner Rajat Sethi benefited from their long-standing relationship with Vodafone yet again, alongside Slaughter and May. Bharucha & Partners advised Idea and Nishith Desai Associates got the piece for minority shareholder Providence.

LIC takes on IDBI Bank

The two Amarchands – Shardul and Cyril – both acted on Life Insurance Corporation of India’s (LIC) $4.4bn mega buy of IDBI Bank, via an open offer.

UPL’s Stateside foray

One of the largest outbound M&As from India saw agrochemicals player UPL buy the US’ Arysta LifeScience Inc for $4.2bn in cash.

J Sagar Associates (JSA) and Jones Day were drafted in by UPL; Platinum Partners and Cleary Gottlieb acted for the target.

HUL aims for Horlicks

When Hindustan Unilever decided to swallow GSK’s Indian Horlicks brand and business for $3.8bn, Cyril Amarchand Mangaldas (CAM) was ready, with AZB advising GSK; foreign firms Baker & McKenzie and Slaughter and May also got their dues.

Disney goes Fox

The $71bn Disney buy of Fox could have involved more than $1bn of assets in India, but its value is not reflected by our methodology at present, since no local valuation is available. But its local advisers – AZB (advising both sides from Mumbai and Delhi) and Talwar Thakore & Associates on competition law would have had a meaty mandate from it.

Other mega deals

$3bn Gruh Finance-Bandhan Bank merger, with Argus, SAM and AZB.

$2.1bn Schneider sale to Larsen & Toubro, with Trilegal, AZB, Khaitan, SAM and Economic Laws Practice (ELP), and foreign advice by Cleary Gottlieb Steen & Hamilton and Bredin Prat.

$2.1bn intra-PSU sale of Rural Electrification Corporation by Power Finance Corpation, with CAM, JSA and L&L Partners.

$1.66bn ReNew Power Ventures buy of Ostro Energy with Trilegal and CAM.

$1.37bn 3-way merger between Baroda, Vijaya and Dena banks involved both CAM and SAM.

$1.2bn buy of Ultratech Cement of Century Textiles’ cement operations, with Khaitan, Trilegal and Vaish Associates.

$1.16bn Tata-GIC-SSG consortium buy into GMR Airports, with Link Legal India Law Services, SAM, L&L, CAM, JSA, Nishith Desai, Trilegal and Vaish Associates.

$1bn buy by France’s Teleperformance of India’s Intelenet from Blackstone, saw Platinum Partners, JSA, Paul Hastings and Simpson Thacher & Bartlett benefit.

$1bn Radian Life Care – Max Healthcare merger drafted in L&L and AZB.

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