Roadmap for Indian Corporates to Invest in the USA
Friedman LLP Accountants and Advisors’ USIIF, along with the Firm and knowledge partner for the event, Majmudar & Partners, hosted an interactive session – ‘Roadmap for Indian Corporates to Invest in the USA’, on December 16, 2014 at the Mumbai Cricket Association Club. The event was attended by some of India’s leading Corporates, Lawyers , Accounting & Consulting Firms, and followed by networking cocktails and dinner.
On the panel were: Manoj Gursahani, Vice Chairman, USIIF; Akil Hirani, Managing Partner of Majmudar & Partners; Anthony Thomas, Chief Information Officer, Vodafone India; Ms. Jatinder Singh, Business Development Consultant; Michael A. Cohen, Partner, Friedman LLP; Neil Levine, Partner, Friedman LLP; and Mr Mr. D. Muthukumaran , CEO of Aditya Birla’s Private Equity Business who was Chief Guest for the event.
Manoj Gursahani began by talking about USIIF, stating that it works with Lawyers, Accountants and CPAs on both sides to help marry Indian companies with opportunities in the US, and vice versa. “Besides large corporate entities, we also look at trade for SMEs”, he said.
Mr. Gursahani announced the eminent kicking-off of the USIIF’s Bangalore and Delhi Chapters, and the recently established US (North-East) Chapter which would be headed by Jatinder Singh.
Mr. Gursahani said that USIIF would be taking a large contingent to Washington DC for the SelectUSA Summit in March 2015, which would give delegates the opportunity to meet Economic Development Officers from 50 states and business people from 70 countries including the US.
Mr. Gursahani recognised Ms. Jatinder Singh; Kanika Choudhary, Special Envoy to the State of Pennsylvania; Nedthesh Sarma , MD SGG Group India; Shital Kapoor, Principal Client Relations at Majmudar & Partners and Chetan Mehra, MD, Weizmann Ltd, as being big supporters of USIIF.
Talking about overseas acquisitions, Mr. Akil Hirani said “the new government has been building confidence for things to move forward very positively”. He said that the top sectors for outbound investment have been Oil & Gas, Automotive, Auto-ancillaries, Pharmaceuticals, Healthcare, Biotechnology, Real-estate and Telecommunications. He gave a comprehensive summary of the trends and regulatory issues related to Indian outbound investments. Among other issues, Mr. Hirani spoke in brief about: GOI’s Consolidated FDI Policy, which once again allows non-listed companies to raise capital overseas; The process of valuation of shares; Mutual Funds registered with SEBI now being allowed to invest in the shares, bonds, and fixed income securities of a foreign stock exchange; RBI policies about certain moneys earned abroad requiring to be brought into India and taxed here.
Mr. Hirani emphasised the importance of a good business model, and that of due diligence.
Mr. Anthony Thomas spoke about the strengths and similarities of India and the USA. He also touched upon the reasons he felt the relationship has not been explored to its full-potential so far. He said that Indians are highly successful in the US today, and there are a plethora of opportunities to be explored.
Ms. Jatinder Singh said that being a marathon runner has taught her how to “go the distance”. She said that Friedman LLP is in India because there is a “need”. Drawing on how the Company started with something small in China, growing to something “really big”, she said that Friedman sees tremendous potential in India’s growing economy. “We are here to see how we can help this market”, she stated, citing “quality”, “integrity” and a “holding-of-hands” as strengths Friedman would offer.
Speaking about Friedman LLP, Michael A. Cohen said, “We build relationships – we try to understand what our clients’ needs are – where they are and where they want to be. We try to be as responsive as we possibly can”. Mr. Cohen stated Friedman has the capabilities to handle any issue. He said that the Company has International Tax experts who are familiar with US laws as well as those of other countries, and that the company works with overseas partners as well.
“The US presents a large and booming capital market and the opportunities from India are also growing”, Mr. Cohen said.
Mr. Neil Levine used his experiences in China as an example for what Friedman could do for India. He said the Firm carried out “a big job” in 2010 in a matter of weeks, and it is now the fourth largest provider for bringing companies from China into the US. “We work in Canada, Australia, Netherlands, Spain, Italy”, he said. “We will be working with Law Firms here, and accounting firms that will do due-diligence for us”.
Mr. Levine said that Friedman had as clients companies with “zero” revenue and a company with USD 2.5. billion of revenue. He said that as long as governance is honest, Friedman would work with a company. “We have done hundreds of reverse mergers for SEC clients – APLs, IPOs – we have done it before” he said, “We are looking for private companies in India who may want to raise money and go to the US”.
Mr. D. Muthukumaran said that irrespective of the business, it’s a global market now, and one has to look at competition as being the best in the world. “US is a global melting pot” he said.
Speaking about the M&A cycle, Mr. Muthukumaran said, “Everything starts with strategy. By my definition, strategy is the best meeting point of the best opportunity with the best of your capabilities”.
Mr. Muthukumaran spoke about how tactics of negotiation depend on cultural differences, about structuring, regulatory compliance in different markets, liquid financing, back-structuring, debt put down, repatriation, and re-organising business.
“Americans want to date for one year before they get married, but when it comes to company acquisition, you’re not allowed to date even once”, he quipped. “You have to go for an auction if you want to sell in the US”, he said. “You’ve got to be careful – Go through the proper channels – The opportunities make it all worth it”. “If you are an Indian investor you have to open up your mind to a plethora of possibilities of financing and acquisition”, he stated.
Speaking about post-merger integration, Mr. Muthukumaran said that people-integration is the most important factor and that doing so improperly would potentially lead to an existential crisis.
“The US is certainly a very good opportunity for good companies to become better and big companies to become bigger”, he said.
The presentations were followed by a Q&A session, after which Mr. Chetan Mehra offered the vote of thanks. “It took a long time for Indian companies to notice the western world” he said, “but you will find an eager country which is trying to catch up to China”.