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Mumbai: J. Sagar Associates (JSA) expects a large number of deals to close this year despite it being an election year, its newly elected joint managing partners Amit Kapur and Vivek Chandy said. Traditional sectors, including infrastructure and pharmaceuticals, as well as new economy sectors such as e-commerce and co-working spaces, will see robust transaction activity, they said in an interview. Currently, the law firm has around 86 partners and about 316 lawyers. Edited excerpts:

In the backdrop of the Insolvency and Bankruptcy Code (IBC), how has the deal space performed in stressed assets?

Kapur: Acquisition of distressed assets under the IBC, 2016, is one of the attractive options for mergers and acquisitions (M&A) in India due to the timelines and realistic valuations. The framework in this space is getting clearer since the introduction of the IBC, owing to various judicial precedents and legislative amendments removing lacuna such as debarring the promoters from participating the resolution process of the corporate debtor. The past two years were dominated by the resolution of 12 cases notified by the RBI to be taken under the IBC, which constituted 25% of India’s NPA. We saw four successful resolutions. Going forward, the momentum and thrust of IBC seems to be in sectors such as power, steel, infrastructure and real estate. It is expected that the M&A activity in distressed assets space will pick up pace. The latest initiative of liberalising the ECB (external commercial borrowings) regime will be helpful.

Given that firms across the infrastructure sector have come under insolvency, how do you see new investments in such sectors coming up? How are these sectors likely to come out of the woods?

Kapur: To keep up with its domestic demand and growth targets, India needs investment of about $4.5 trillion in the next 25 years for infrastructure development, that is, $180 billion annually. For the immediate future, we need investments of 50 trillion (over $773 billion) in infrastructure by 2022 for sustainable development. Recognizing the reforms undertaken in arbitration, insolvency and contract enforcement laws in a predictable and stable economy, international institutions have recognized the significant improvement in ‘Ease of Doing Business’, making India an attractive destination for investments. With recognition of funds as an asset class and the IBC-driven refinancing/resolution and sale, it is expected that investment in infrastructure, including FDI, shall rise.

What long-term implications do you see in the recently changed e-commerce norms?

Chandy: The revised norms have gone to the root of the structures of some companies or existing players, so it will take some time for these groups to realign their operations to the new norms. That said, I believe the industry can adapt to these norms in a way that is not detrimental to the consumers or the vendors. As a short-term consequence, we have seen some domestic entities benefit from the norms. India is a huge potential market for the industry, and it is only going to grow. So, the norms should not have the effect of driving FDI away.

What kind of deals are shaping up in 2019-20?

Chandy: There should be a fair amount of focus on e-commerce, infrastructure and pharmaceuticals. We are seeing a lot of interest in companies which operate co-working spaces. I am optimistic about a large number of deals being closed this year despite it being an election year.

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