JP Morgan is positioning for a larger role in M&A financing in India after the Reserve Bank of India (RBI) allowed domestic lenders to fund acquisitions, according to Business Today. The relaxation arrives as Indian corporates return to banks from capital markets, in keeping with a global trend.
RBI opens local acquisition financing
Previously, local acquisition financing by domestic banks was constrained, so JP Morgan facilitated such deals through offshore structures or FPI routes, said Kerwin Clayton, APAC head of corporate banking at JP Morgan. "Now, with onshore banks being allowed to provide local acquisition finance by RBI, we can offer both onshore and offshore capabilities," Clayton told Business Today.
"It provides another corporate-friendly avenue for growth," Clayton added. At JP Morgan, the corporate bank and investment bank operate under a single umbrella, enabling collaboration between global corporate banking and investment banking teams.
Financing options across onshore and offshore structures
| Financing route | Structure | Role in M&A |
|---|---|---|
| INR-denominated funding | Onshore via JP Morgan India branch | Local acquisition financing in rupees |
| ECB dollar financing | External commercial borrowing | Dollar-denominated offshore funding |
| FPI structures | Foreign portfolio investor route | Offshore investment route |
| GIFT City mechanisms | GIFT City structures | Additional financing routes |
Clayton said the choice of structure depends on the sector's risk and maturity profile. "Having all structural options under one firm is a distinct advantage," he said.
Healthy balance sheets and a deep capital market
"Indian corporate leverage levels have been coming down and remain healthy," Clayton said. Corporates have 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," he said.
Growth across multinationals, mid-caps and the innovation economy
India's roughly 7% growth, rising overseas expansion, manufacturing and capex are driving corporate banking opportunities, according to Business Today. JP Morgan sees 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," Clayton said.
M&A expansion at scale
Indian companies are expanding through global supply chains, overseas operations and M&A, and there have been substantial-sized M&A deals where JP Morgan participated, according to Business Today. There has also been healthy mid-cap M&A activity, with companies reaching a scale where they have more confidence and familiarity with international markets. Capex is substantial, with demand spread across sectors.
Business Today did not disclose specific M&A deal values or a timeline for JP Morgan's expanded financing push in India.
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