MUMBAI: JP Morgan is seeing a bigger role for itself in M&A financing after RBI allowed domestic lenders to fund M&A. The relaxation has come at a time when corporates are returning to banks from capital markets in India, in keeping with a global trend.“It provides another corporate-friendly avenue for growth. At JP Morgan, our corporate bank and investment bank operate under a single umbrella, allowing seamless collaboration (“combustion”) between our global corporate banking and investment banking teams,” said Kerwin Clayton, APAC head of corporate banking at JP Morgan.“Previously, local acquisition financing by domestic banks was constrained, so JP Morgan facilitated these through offshore structures or FPI routes. Now, with onshore banks being allowed to provide local acquisition finance by RBI, we can offer both onshore and offshore capabilities. On overall financing options, with a local JP Morgan India branch and GIFT City mechanisms, we can offer INR-denominated funding, ECB (external commercial borrowing) dollar financing, or FPI structures depending on the sector’s risk and maturity profile. Having all structural options under one firm is a distinct advantage,” he said.“Indian corporate leverage levels have been coming down and remain healthy. Corporates also issued a lot of equity over the past couple of years, which strengthened balance sheets. Capital market windows open and close on a relative basis, but the great news for India is that it possesses both a well-functioning bank market and a deep, corporate-friendly capital market.”India’s roughly 7% growth, rising overseas expansion, manufacturing and capex are driving corporate banking opportunities, with JP Morgan seeing growth across multinationals, large-caps, mid-caps and the innovation economy. “What used to be defined as a small company in India is now much larger. In the venture-backed, fast-growing, disruptive innovation space, it’s hard to find a market globally as attractive as India.“Indian companies are expanding through global supply chains, overseas operations and M&A. “We are seeing expansion happening in specific geographies, and there is M&A happening-there have been some substantial-sized M&A deals where JP Morgan participated. “There has also been healthy mid-cap M&A activity where companies have reached a scale where they have more confidence and familiarity with international markets,” said Clayton. Capex is also substantial, with demand spread across sectors.
