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Queen bee of M&A deal space : Manisha Girotra

Published on Sat, Aug 25, 2007 at 12:30 | Source : Moneycontrol.com

Updated at Mon, Aug 27, 2007 at 15:32

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Manisha Girotra has done some of the biggest transactions of the year. She has advised Vodafone in the acquisition of the Hutch' s stake in Hutch-Essar. She's worked with Hindalco in acquisition of Novelis with UB in the acquisition of Whyte and Mackay and with Essar on the acquisition of Algoma.

She's the queen bee of the deals space this year and she's on rules of the M&A game.

In a world of suites, she is breath of fresh air. Warm, friendly and star deal maker. Manisha Girotra first job was with Grindlays in 1992, a year later she was at Barclays and in 1996 she moved to Swiss bank UBS. 15-years and the deal she is proud of is one of her first disinvestments of government owned petrochemicals firm IPCL .

Manisha Girotra: It was the first deal when Arun Shourie and Pradeep Baijal took over as Minister and Secretary - Disinvestments and this was really the first strategic scale that they were going to do. So it involved huge learning for the government because this is the first time they were talking about doing M and A. Government till then had only done deals like GAIL and MTNL which was just peace meal listing on UK markets or Indian markets, so it was very exciting because it involved engaging and educating about 8 bureaucrats across various ministries and various division.II became a PRO of Shastri Bhavan and North Block and I knew every monkey in north block because I've been there so many times but it was great to be part of what at that time seen as huge change for Indian mindset.

Q: A lot people now when they look back at the disinvestments that were done and specifically for IPCL seem to think that they got sold cheap. Would you because the process was so new for, as we were doing clutch of so many big disinvestments as opposed to the peace meals ones that we may not didn't push as hard as we should have?

Girotra: I don't think so at all, infact the base value that we recommended to the government was half of what was finally paid by the successful bidder which was Reliance and the value that we had recommended we had really pushed our DCF and NAV values because that time don't forget the cycle was at an all time low and there was no visibility of the cycle turning.

So when we had to recommend the number which I remember was about Rs 130 per share we really pushed our valuations so when we got the value which we got which was about Rs 220 from Reliance . Reliance was also the second highest bidder compared to the nearest bidder which was Indian Oil Corporation and we thought it was great deal and ever since cycles have turned and memory seem to short when the cycle turns upturns it suddenly those same numbers do look like you sold out cheap 2 years later but if the cycle turns again it will look like a great sale.

Q: You are investment banking favourite cover page girl more so this year with UBS bagging India's biggest ticket transactions. Vodafone's USD 12 billion purchase of Hutchison's stake in Hutch-Essar, Hindalco's USD 6 billion buyout of Novelis. Essar's deals USD 1.6 billion purchase of Algoma and UB's USD 1.2 billion takeover of Whyte and Mackay. From flamboyant Vijay Malya to the conservative Kumar Mangalam Birla, you have dealt them all.

Manisha Girotra: Some tend to be more institutional and take more of their management along whereas some tend to be one-man driven and that's true across whether in these deals or whether it is the equity markets deals that we've done. You see some people just becoming more like global organization where they are conglomerates or they are very large organizations, so the decision making tends to be far more institutionalized to just go to one person and get him to buy company that you are selling or peddling. You need to have commitment from the CFO itself because he is the one who is going to finally sign off on the financing as well as from the sponsor and CEOs of the companies while sometimes you have to be more individual driven so its been deferent.

Q: In terms of instances how is Kumar different form Vijay Mallya?

Girotra: In the Novelis deal, Debu Bhattacharya, the CEO Hindalco ran the whole process. He and Sumath were then looking at more of the corporate finance and are the ones who started the deal. It took about 18 months and Kumar sort of took more of a back seat and let these two drive the process till it got to a time when the deal was really going to materialize.

Vijay I think tends to more hands on though in this case the deal was different because it was a privately held company on the other hand he acquired. So it was very personality driven from the seller side too. So Vijay really had to drive the whole process himself far more than UBS did.

Q: Was there any dissuasion involved when it came to Hindalco-Novelis because it was a really big target. We are at the peak of metal prices and lets say late last year and this year when they were doing the deal, it was a very expensive transaction. Hindalco goes from being almost zero debt company to now having over close to USD 2.5-2.6 billion on their balance sheet. At any point did you feel this was a bit too much for the company?

Girotra: No, I think for the group, it's not too big to swallow. They already have companies in the group, which are USD 6-8 billion, ideas about USD 8 billion in market cap and look there is point in time in history when you have to do these deals. It's not always that these opportunities are available, you see 3-months later what the state of the markets is and to doing a deal like this would have been challenging at this time. What Kumar and Debu are trying to do is trying to transform the group and if you are trying to do that and if you pay for something 10% or 20% extra in any of these deals, then you know that's not the driving factor. The driving factor is, is this core? Is this strategic? Is this going to put Hindalco on global platform?

Q: What's the moral obligation because there is so much deal making that's happened in the past 2 years and it's been a bigger boom than the previous one which 1999-2000. So much liquidity I mean every CEO we speak to says that there's often this little buzz that goes around in the markets X-companies buying Y-company and so you call up the promoter and he says listen I've got a line of investment bankers outside my office. So much money so much pressure on CEOs from bankers from peer groups saying that if some X is buying I need to buy as well to keep up with him. Where is the moral obligation that what you are recommending to your client is really going to work out?

Girotra: I think while the investment banking landscape in India in the last one year has really become hotter and every one set up shop here. Basically on the back of these 5 or 6 large M an A and several other small M and A, the sense amongst the investment banking community is that a lot more of this will happen so everyone is peddling around ideas to all clients but I think the credit news should be given to Indian clients and I don't think that the competitive pressure you see among the banks is there in Indian corporate too.

Indian CEOs are still trading cautiously they are not taking on huge amounts of debt and they're doing deals that have strategic fit for them. Look at Wipro , it's done a string of pearls of acquisition and now done USD 5 million but till now it had done USD 30-40 million. What does stop Wipro or Infosys or TCS to go and acquire an EDS or Accenture with the way the markets caps are but they haven't done it because they know they're integrations are huge and they know what you are offering as Wipro or Infosys in terms of brand is as powerful as an Accenture today. But I think more than investment banker, credit needs to be given to the companies and also amongst the investment bankers there are few who will take ideas which are thought because at the end of the day this is not a one time relationship.

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