India a preferred destination to attract capital
ECONOMY & POLICY

India a preferred destination to attract capital

Signs of stress in balance sheets have showed early sparks of larger global situation, yet, India appears fundamentally solid, says Shivam Bajaj, Founder & CEO, Avener Capital.As a financial advisor, what has been the most prestigious transaction in infrastructure for Avener ...

Signs of stress in balance sheets have showed early sparks of larger global situation, yet, India appears fundamentally solid, says Shivam Bajaj, Founder & CEO, Avener Capital.As a financial advisor, what has been the most prestigious transaction in infrastructure for Avener thus far?Every transaction that we work on is relatively large and complex transaction, and each of them has its fair share of complexity. One of the most prestigious transactions that I have worked on was the investment of Cintra and GIC into IRB which amounted to Rs 53.47 billion. This transaction was significant because it marked the first time that a foreign multinational invested in a listed Indian infrastructure company as a minority investment. Although it was a complex transaction, continuous efforts were made to simplify the process and address any bottlenecks related to transaction structure or data understanding.What is general assessment of investors considering early signals of another global recession?Interest rates have been on the rise for a considerable period. The Fed has been raising interest rates as a result investors and banks are facing significant mark-to-market losses. Signs of stress in balance sheets such as the rescue of Credit Suisse by UBS and the potentially SVB falling have overall showed early sparks and signs of larger global situation. Despite this, India appears fundamentally solid and the country continues to remain a preferred destination to attract capital.What are the factors that led to structural changes in financing valuation?The COVID-19 pandemic led to a significant decrease in interest rates, resulting in a substantial influx of liquidity into the market. However, the overall liquidity position has since tightened and valuations in India have corrected. Due to increased interest rates, a considerable number of Foreign Institutional Investors (FIIs) have sold equities, leading to outflows and a corresponding correction in valuations. In the private markets, valuations were initially expensive, driven primarily by liquidity and have since undergone significant cuts to reflect more realistic fundamentals.With credit growth and economic development being inter-connected, what will be the impact of technological advancements in the financial segment?I believe that credit growth and economic development combined with technological advancements, will have a significant impact especially in the financial services sector. With these advancements, there will be a deeper penetration of credit in areas where banks and Non-Banking Financial Companies (NBFCs) have struggled to serve, particularly in MSME credit. Technological advancements will enable quicker turnaround times and improve credit analysis and evaluation. Similarly, in the cross-border payment, insuretech, and the payment spaces, technology will play a crucial role as a massive enabler, reducing turnaround times and enhancing overall efficiency.What is the future of InvITs in India? Are there any loopholes that need to be rectified to flourish?InvITs have a very bright future as they provide investors with risk-adjusted returns that are particularly favourable to yield investors. For InvITs to continue to thrive, it is essential to maintain a stable policy regime. With the National Monetisation Pipeline and the government's significant investment in infrastructure, InvITs are likely to play a pivotal role. I expect many InvITs to be privately placed, rather than publicly placed.What are the nitty-gritties in debt financing that have often been ignored?In my opinion, more innovative structures need to come out, with a greater appreciation for structured credit and bullet bonds. There is a need for more innovative debt structures to emerge.

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