Deals and investments in areas such as electric vehicles and renewable hydrogen will emerge...
Digital Desk: Bank of America Corp.'s senior executives in the nation reported that India might attract up to $10 billion in renewable energy investment by 2023, a bright light while public markets remain mostly closed to large-ticket capital raising.
Deals and investments in areas such as electric vehicles and green hydrogen will continue to flow, according to Kaku Nakhate, the lender's president and India country head, in an interview, as investors seek to reflect the energy transformation in their portfolios.
"If you really need to get your ESG story correct, and if you're into energy," Nakhate says, "you can do bulk of work in India."
Renewable energy and retail are expected to benefit as India outperforms its developing market competitors in luring foreign investors. Even as rising interest rates and market volatility have hampered global dealmaking, the South Asian nation's geopolitical stability helps position it for increased inflows.
According to Nakhate, investors and companies who attended the bank's recent North American roadshow were impressed by the Indian government's clear targets to attain net zero carbon.
"People respect us," she remarked. "That is why we are witnessing an increase in the number of sustainability funds looking to invest in India."
She stated that the bank will continue to expand its distressed debt finance business in the renewable energy industry, which has earned double-digit returns.
Along with green investment, Nakhate anticipates an increase in consumer brand dealmaking, which will be aided by increased per capita income and consumption.
"If you want to play the India story, you'll need a diverse set of brands to enjoy the distribution story," Nakhate explained.
As said by Nakhate, the bank also expects India to profit from so-called friend-shoring by corporations that are rethinking their supply chains, which have been affected by Covid and the Ukraine war. Nakhate believes that India, with its democratic traditions and solid domestic markets, is ideally positioned to attract this capital.
According to Subhrajit Roy, India head for global capital markets at Bank of America, large IPOs of $1 billion or more are unlikely to reappear before the end of 2023 or early 2024. Nonetheless, he believes the market could see medium-sized listings as early as the middle of next year.
"We are in the early stages of a shift in risk appetite for both companies and investors," Roy added.
There is some movement in the market. According to Bloomberg data, over $6.6 billion in block deals have been announced in India this year, accounting for nearly 28% of the total in Asia.
According to Roy, Asian investors and developing market funds were showing substantial interest in secondary share offers. Bank of America advised Uber Technologies Inc. on its $390 million stake sale in Indian food-delivery business Zomato Ltd., and Softbank Group Corp. on its approximately $200 million block sale of Indian digital payments company Paytm.
He expects five or six technology companies to go public in the second half of 2023.
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