Moneycontrol PRO
you are here: HomeNewsBusiness

All locked down, but dealmakers ensure show must go on; billion-dollar deals aplenty for right business

Asia's oldest bourse BSE is also busy helping several startups and SMEs get listed and also help companies raise more than Rs 50,000 crore through corporate bonds and commercial papers, and all this is happening when there is a nationwide lockdown and virtually the entire world is also locked down.

April 27, 2020 / 10:25 PM IST
Representative Image

Representative Image

A US-based cruise operator raised billions of dollars when its end market is virtually shut, at least for a few months, and a Malaysian oil firm did the same irrespective of what is happening to crude prices, while closer home Reliance Industries has also got billions from Facebook for its Jio Platforms.

Asia's oldest bourse BSE is also busy helping several startups and SMEs get listed and also help companies raise more than Rs 50,000 crore through corporate bonds and commercial papers, and all this is happening when there is a nationwide lockdown and virtually the entire world is also locked down.

Living up to the concept of the new emerging theme of doing business digital way, literally, dealmakers are doing quite a few deals remotely with almost all of them working from home and helping companies raise funds through bonds and equity, and also sign M&A deals without making them feel about disadvantages of not working from physical offices and without those endless face-to-face meetings.

Investment bankers feel nothing can match working from office, but some of them have managed to reach 'work from home' efficiency of as high as 90-95 per cent of what could have been done if they were working from office.

Raj Balakrishnan, Bank of America's investment banking head in India, said he and his colleagues feel "blessed" to be able to work with a great deal of efficiency even from home during the lockdown, as they fully recognise that there is a broader economy and there are people, including doctors, health workers, police and even journalists, and companies providing essential services out there and doing a lot of work.


COVID-19 Vaccine

Frequently Asked Questions

View more
How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

View more

"Fortunately, most large banks and most large companies in India are pretty well equipped to have all their critical functions and departments work from home. All of us have remote access and most records are today stored digitally. And therefore, while it is obviously not the same as working in the office, I guess we in the finance world are lucky that we can work from home and can operate with a great deal of efficiency," Balakrishnan told PTI in an interview over telephone.

Bank of America has managed a number of equity and debt market deals in India in the recent past, including SBI Card IPO, HDFC Life block deal, Avenue Supermarts share placements and a US debt placement worth USD 310 million for Adani Transmission.

Globally, it has helped Petronas and Carnival Cruises raise funds, among other big deals.

Giving a perspective about the lockdown and its impact on investment banking business globally and in India, Balakrishnan said most of the world is under lockdown right now and China is the only place where people have started coming back to office, but they went into lockdown in January itself and they are getting back after more than three months.

"We (in India) have been under lockdown for only one month," he said.

The veteran investment banker said while markets corrected significantly, most companies across the world went out and drew down their credit lines and improved their liquidity positions.

Secondly, as soon as markets started falling, bond markets almost shut down for a while after a very strong bond market activity through January and February, he said.

"But, the bond market rallied quickly around the middle of March. Through the second half of March and April, we had a very strong period for global investment grade bonds. Highly rated companies with investment grade ratings, went out and tapped the bond market and raised liquidity. So, after drawing on revolving credit lines, bond market fund raising happened," he said.

Similarly, deal activity began in the US and spread to Europe and then to other places. Last week, Bank of America helped Petronas -- despite the stress in oil prices -- successfully raise USD 6 billion from the bond market. This indicates that for a quality issuer, even for a hard hit sector, a large bond offering even now, Balakrishnan said.

He further said the leveraged finance market has also begun seeing a revival, while companies have started raising equity and doing other equity-linked transactions.

"One major transaction Bank of America did in this space recently is for a US-based cruise company, Carnival Cruises," he said.

"In India, we have had an excellent run in the last four months. In March, we successfully reopened the Indian equity capital markets by pricing a USD 300 million block trade in HDFC Life for Standard Life Aberdeen on a sole basis.

"Also, we helped SBI Cards raise USD 1.4 billion via an IPO, which was the largest in the last ten years. In February also, we had helped D-Mart raise over USD 1 billion through a QIP and an OFS route," he said.

Balakrishnan said many companies are right now waiting to declare their results and after that they will look to raise funds through equity or bonds and shore up their capital structure. At the same time, M&A dialogues continue as companies evaluate assets and deals which are of strategic importance.

"Deals which made strategic sense before COVID-19 will do so even after COVID-19 too," he added.

Disclaimer: “Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.”
first published: Apr 27, 2020 10:20 pm
ISO 27001 - BSI Assurance Mark