Foreign banks are fuelling India’s recent burst of overseas takeover bids, offering cheap US dollar loans to Indian corporates expanding beyond their home states.
The stream of financing offers from banks such as Standard Chartered, Citigroup and Deutsche Bank comes after some US and European lenders pulled back from the Indian market last year as the country suffered through an economic slump.
Apollo Tyres (advised by Deutsche Bank and Morgan Stanley), for instance, was granted $2.5 billion to buy out New York-listed Cooper Tire & Rubber Co (advised by Bank of America), a company nearly three times the size of its Indian suitor.
Bankers said lenders were taking advantage of a window of opportunity that exists while monetary policy remains loose, before any sort of scaling back by central banks happens.
Indian companies are bidding for at least $10 billion worth of deals and, if successful, even push up to $13 billion -- the highest since a record year in 2010, analysis shows.
But the revival of M&A activity is good news for foreign investment banks operating in the country, which for years have struggled with wafer-thin margins.
"The debt market is back today," said Venkat Anantharaman, South Asia Co-Head for wholesale banking at Standard Chartered. He was referring to the US high yield market and opportunity to provide companies with the money needed to grow.