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First private equity financing of its kind in India

 

​Allen & Overy has advised Advent International plc (“Advent”) as the financial sponsor of India’s first synthetic INR denominated margin loan. The reference asset for the loan is Advent's equity shareholding of Crompton Greaves Consumer Electricals Limited (“CGCEL”). CGCEL is listed on India's National Stock Exchange and the Bombay Stock Exchange and is a leading manufacturer of a wide spectrum of consumer products ranging from fans, light sources and luminaires, pumps and household appliances, such as geysers, mixer grinders, toasters and irons. Crompton has been the market leader in India for fans, domestic pumps and street lighting for the last 20 years.

The loan will be borrowed by Advent's offshore holding company that holds its investment in CGCEL. This financing is a first–of-its-kind facility to monetise listed Indian shares, while simultaneously protecting the offshore borrower from the exchange rate fluctuations in relation to its underlying income stream. The loan will be sized and priced synthetically in INR terms, with all cashflows being settled in US dollars.
 
The A&O deal team was led by London finance partner Sanjeev Dhuna, assisted by senior associate Jagannath Iyer. The wider A&O team included senior associates Kunal Katre and Dan Birch, and associates Katie Sullivan and Matthew Short.
 
Commenting on the deal, Sanjeev Dhuna said: “Private equity investment in India has seen a surge in growth since 2012, with 2015 seeing a record USD22.4 billion in investments*. PE houses are continually looking at new ways to finance deals and we are pleased to be involved in the first financing of this kind in India for Advent, a longstanding client. Delivering a bespoke financing solution for our client which included bringing together elements from masala loans, European-style margin loans and equity derivatives into a single loan financing, was our priority during this deal.”
 
For further information, please contact Susanna Robinson, susanna.robinson@allenovery.com on 44 (0)20 3088 3918.
 
* Bain and Co. research
 

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