international finance for indian companies - wirc finance_wirc... · international finance for...

36
International Finance for Indian Companies Workshop on Project Finance Organised by WIRC of ICAI Shailendra Jindal C.E.O., Continental Capital Advisors Mumbai, November 12, 2011

Upload: vutuyen

Post on 05-Jul-2018

219 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

International Finance for Indian Companies

Workshop on Project FinanceOrganised by WIRC of ICAI

Shailendra JindalC.E.O., Continental Capital AdvisorsMumbai, November 12, 2011

Page 2: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Agenda

Overview of International Finance

Convertible Bonds

Debt for Indian Companies

Q & A

Equity for Indian Companies

Page 3: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Overview of International Finance

Page 4: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Overview of International Finance

Private Equity

GDRS

Overseas Listing

FDI from other sources

ConvertibleEquityDebt

Syndicated Loans

Project Finance

Mezzanine Debt

International Bonds

Medium Term Notes

Floating Rate Notes

Short-term Borrowings

FCCB

Page 5: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Why International Finance?

Diversify investor base

Saturation of limits with the Domestic investors

To reduce financing costs

Create International/ Global Profile

Preserve scarce Domestic bank lines

Flexibility in terms of shifting between fixed/floating rates

and switching between currencies

Lower costs for servicing the debt

Help minimize time commitment from management

Refinance existing debt at competitive cost

Longer debt maturity profile -10 years and more

Create benchmark for future capital markets’ financing

Diversify investor base

Saturation of limits with the Domestic investors

To reduce financing costs

Create International/ Global Profile

Preserve scarce Domestic bank lines

Flexibility in terms of shifting between fixed/floating rates

and switching between currencies

Lower costs for servicing the debt

Help minimize time commitment from management

Refinance existing debt at competitive cost

Longer debt maturity profile -10 years and more

Create benchmark for future capital markets’ financing

Page 6: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Debt for Indian Companies

Page 7: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

External Commercial Borrowings (ECB’s)- Legal Framework

External Commercial borrowings are one of the modes for sourcing of funds for corporate. ECB can be accessed under two routes, viz., (i) Automatic Route and (ii) Approval Route.ECB for investment in real sector-industrial sector, infrastructure sector-in India, and specific service sectors as indicated are under Automatic Route, i.e. do not require the Reserve Bank / Government of India approval. In case of doubt as regards eligibility for the Automatic Route, Approval Route may be taken.

External Commercial borrowings are one of the modes for sourcing of funds for corporate. ECB can be accessed under two routes, viz., (i) Automatic Route and (ii) Approval Route.ECB for investment in real sector-industrial sector, infrastructure sector-in India, and specific service sectors as indicated are under Automatic Route, i.e. do not require the Reserve Bank / Government of India approval. In case of doubt as regards eligibility for the Automatic Route, Approval Route may be taken.

Automatic Approval

Page 8: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

ECB – Eligible Borrowers

Exim bank for specific purposesBanks/ FIs for textile or steelsector restructuring packageInfrastructure Finance NBFC’sFCCBs by HFCs satisfyingspecified critriaSPV’s notified by RBI forfinancing infrastructure Multi-state Co-op Soc in mfgSEZ developersCorporate in service Sector formore than US$ 200 mErring corporateCases falling outside AR

Banks

Financial institutions

Housing Finance Companies

NBFC’s

Individuals

Trusts

Non-Profit making Organizations

Not EligibleApproval RouteAutomatic Route

Indian Corporate including those in hotel, hospital and softwaresectorsInfrastructure Finance Cos

Units in SEZ

NGOs engaged in micro finance

Page 9: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

ECB’s – Amount and Maturity

5NGO’s in Micro finance

750Other Corporate

200Hotel, Hospital and Software cos.

Max amount in US $ million

Borrower under Automatic Route

5NGO’s in Micro finance

1000ECB in RMB by Infrastructure sector

250Additional ECB by other corporate with average maturity of more than 10 years

750Other Corporate

200Hotel, Hospital and Software cos.

Max amount in US $ million

Borrower under Approval route

1. ECB up to USD 20 m in a financial year should have a minimum average maturity of 3 years.

2. ECB above USD 20 m should have minimum average maturity of 5 Years

Page 10: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

ECB’s and Trade Credits- All-in-cost ceilings

* For the respective currency of borrowing or applicable benchmark.

1. Overseas Borrowings for 3 years or more are ECB’s and Less than 3 years are Trade Credits extended for imports.

2. All-in-cost includes rate of interest, other fees and expenses in foreign currency

3. All-in-cost does not include commitment fee, pre-payment fee and fees payable in Indian rupees

4. All-in-cost does not include withholding taxes payable in Indian rupees

6 Month Libor + 500 bpsMore than 5 years

6 Month Libor + 300 bpsBetween 3 and 5 Years

All-in-cost Ceilings over 6 months LIBOR*ECB Maturity

6 Month Libor + 200 bpsLess than 3 years

All-in-cost Ceilings over 6 months LIBOR*Trade Credits Maturity

Page 11: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

ECB – End Use

Import of Capital GoodsNew ProjectsModernization/ ExpansionInfrastructure sectorService Sector viz. Hotels, Hospitals, SoftwareOverseas Direct investmentRefinancing of payment forSpectrumTake out financing forInfrastructureFirst Stage acquisition of disinvestment process in PSU’s and also themandatory second stage offer

On- lending

Investment in Capital Market

Acquiring a Company in India

Money market Mutual Funds

Real Estate Sector

Working Capital

General Corporate Purpose

Repayment of existing Rupee

loans

Not allowedApproval RouteAutomatic Route

Import of Capital GoodsNew Projects

Modernization/ Expansion

Infrastructure sector

Service Sector viz. Hotels,

Hospitals, Software

Overseas Direct investment

First Stage acquisition of

disinvestment process in PSU’s

Micro Credit

Payment for Spectrum

Infrastructure Finance Cos

Page 12: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

C

Ba, B, Caa, Ca

Baa

A

Aa

Aaa

Moody’s Rating

In defaultD

Speculative grade. Major risk exposureBB, B, CCC

Adequate capacity to repay. Adverse economic conditions could hurt

BBB

Strong capacity to repay, somewhat susceptible to change in economic conditions

A

Very strong capacity to repayAA

Extremely strong ability to pay principal and interest

AAA

DenotesS&P Rating

Ratings for International Finance

•Moody’s appends numerical modifiers 1, 2 and 3 and S & P appends + or -signs to show relative standing within the major rating categories.

•Fitch has rating parameters similar to S & P

Page 13: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Syndicated Loans - Snapshot

Maturity Up to 7 years (Usually 5 years)

Lenders Entirely Banks - relationship oriented

Pricing The lowest priced option for offshore

borrowing

Liquidity Low

Ratings Not necessary

Documentation Mostly standard with some variations

Disclosure Basic

Timing 6-8 weeks

Advantages Lower Costs and Quicker disbursals

Disadvantages Only Commercial banks, limited appetite and

lower tenure

Page 14: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Project Finance

Financing structure for a green field project.

Generally Project Specific, SPV level.

Can be procured directly from Foreign Banks, Multilateral

Financial Institutions.

Must be physically isolated and provide the lender some type of

tangible security

Overseas banks may secure the assets directly or through

custodians.

Used heavily for high dollar projects in oil, gas, power,

infrastructure etc

Used extensively in infrastructure and large Greenfield projects

Financing structure for a green field project.

Generally Project Specific, SPV level.

Can be procured directly from Foreign Banks, Multilateral

Financial Institutions.

Must be physically isolated and provide the lender some type of

tangible security

Overseas banks may secure the assets directly or through

custodians.

Used heavily for high dollar projects in oil, gas, power,

infrastructure etc

Used extensively in infrastructure and large Greenfield projects

Page 15: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Mezzanine Debt

Mezzanine capital, in finance, refers to a subordinated debt or

preferred equity instrument that represents a claim on a company's

assets which is senior only to that of the common shares.

Mezzanine financings can be structured either as debt (typically an

unsecured and subordinated note) or preferred stock.

Mezzanine capital is often a more expensive financing source for a

company than secured debt or senior debt.

Mezzanine financings are often used by smaller companies and may

involve greater overall leverage levels than issuers in the high-yield

market; as such, they involve additional risk.

In compensation for the increased risk, mezzanine debt holders require

a higher return for their investment than secured or other more senior

lenders.

Mezzanine capital, in finance, refers to a subordinated debt or

preferred equity instrument that represents a claim on a company's

assets which is senior only to that of the common shares.

Mezzanine financings can be structured either as debt (typically an

unsecured and subordinated note) or preferred stock.

Mezzanine capital is often a more expensive financing source for a

company than secured debt or senior debt.

Mezzanine financings are often used by smaller companies and may

involve greater overall leverage levels than issuers in the high-yield

market; as such, they involve additional risk.

In compensation for the increased risk, mezzanine debt holders require

a higher return for their investment than secured or other more senior

lenders.

Page 16: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Usually refers to a company in Country A issuing bonds in Country B in

Country B’s currency

Country B = ?

US: Yankee Bonds

Netherlands: Rembrandt Bonds

Japan: Samurai Bonds

UK: Sterling Bonds

Can also mean a company in Country A issuing bonds in Country B not in

Country B’s currency

Term “Euro”may be misleading

Not restricted to European issuers/investors

Usually refers to a company in Country A issuing bonds in Country B in

Country B’s currency

Country B = ?

US: Yankee Bonds

Netherlands: Rembrandt Bonds

Japan: Samurai Bonds

UK: Sterling Bonds

Can also mean a company in Country A issuing bonds in Country B not in

Country B’s currency

Term “Euro”may be misleading

Not restricted to European issuers/investors

International Bonds

Page 17: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Bonds issued internationally outside home country’s market in own or

different currency

For example, a US firm issues a dollar bond outside the US

A firm issuing yen bonds outside Japan

When a Japanese firm issues yen bonds in the Euromarket, it’s a

Sushi bond

Eurobonds are sold in a number of countries by a syndicate of

underwriters

Bonds issued internationally outside home country’s market in own or

different currency

For example, a US firm issues a dollar bond outside the US

A firm issuing yen bonds outside Japan

When a Japanese firm issues yen bonds in the Euromarket, it’s a

Sushi bond

Eurobonds are sold in a number of countries by a syndicate of

underwriters

Euro Bonds

Page 18: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Euro Bonds market- Snapshot

Maturity Up to 10 years

Investors Widespread institutional and retail investor base

outside the U.S.

Pricing Priced over benchmark U.S. Treasuries. Pricing

spread is generally wider for institutional investors

Liquidity Potentially good if well syndicated and distributed

Ratings Advisable but not necessary

Documentation Standard Euromarket

Disclosure Sufficient to meet London or Luxembourg Stock

Exchange requirements

Timing 4-6 weeks

Profile Wide international publicity

End Use Subject to RBI/MoF approval

Maturity Up to 10 years

Investors Widespread institutional and retail investor base

outside the U.S.

Pricing Priced over benchmark U.S. Treasuries. Pricing

spread is generally wider for institutional investors

Liquidity Potentially good if well syndicated and distributed

Ratings Advisable but not necessary

Documentation Standard Euromarket

Disclosure Sufficient to meet London or Luxembourg Stock

Exchange requirements

Timing 4-6 weeks

Profile Wide international publicity

End Use Subject to RBI/MoF approval

Page 19: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

International Bonds

Issuer IDBI

Issue Size US$250 Million

Issue Format Reg S

Issue Type Senior Unsecured

Issue Ratings Baa3 (Moody’s) /BB Stable (S&P) / BB+ Stable (Fitch)

Reoffer Spread 5-year UST + 162.5 bps (Mid-swap + 125 bps)

Coupon 5.125% (semi-annual)

Price 99.695%

Listing Singapore

Pricing Date December 17 2004

Settlement Date December 23 2004

Maturity Date December 23 2009

Page 20: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Medium Term Notes

Senior debt securities with fixed coupons and investment grade

ratings

Non-callable and unsecured

Differ from bonds

Money raised in small pieces

Money raised in a continuous process with a shelf offering

Issuers announce a schedule of yields and maturities

While not always medium term, they tend to have maturity of 1 to

10 years

Market making activity

Senior debt securities with fixed coupons and investment grade

ratings

Non-callable and unsecured

Differ from bonds

Money raised in small pieces

Money raised in a continuous process with a shelf offering

Issuers announce a schedule of yields and maturities

While not always medium term, they tend to have maturity of 1 to

10 years

Market making activity

Page 21: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Floating Rate Notes

Maturity Up to 7 years (although 5 years is a more

popular maturity)

Investors Banks and Institutional Investors

Pricing FRN Investors normally demand approx. 20-50

bps more than Syndicated Loans

Ratings Not necessary but can help

Documentation Euromarket Standard

Disclosure Sufficient to meet London or Luxembourg SE

requirements (more accommodating than SEC)

Timing 4-6 weeks

Profile Wide international publicity

End Use Subject to RBI/MoF approval

Page 22: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Short-term Borrowings- Trade credits

Trade Credits’ (TC) refer to credits extended for imports directly by

the overseas supplier, bank and financial institution for maturity of

less than three years. AD banks are permitted to approve trade

credits for imports up to US$ 20 m per transaction.

Depending on the source of finance, such trade credits include

suppliers’ credit or buyers’ credit.

Suppliers’ credit relates to credit for imports into India extended by

the overseas supplier, while buyers’ credit refers to loans for

payment of imports into India arranged by the importer from a bank

or financial institution outside India for maturity of less than three

years.

It may be noted that buyers’ credit and suppliers’ credit for three

years and above come under the category of External Commercial

Borrowings (ECB) which are governed by ECB guidelines.

Trade Credits’ (TC) refer to credits extended for imports directly by

the overseas supplier, bank and financial institution for maturity of

less than three years. AD banks are permitted to approve trade

credits for imports up to US$ 20 m per transaction.

Depending on the source of finance, such trade credits include

suppliers’ credit or buyers’ credit.

Suppliers’ credit relates to credit for imports into India extended by

the overseas supplier, while buyers’ credit refers to loans for

payment of imports into India arranged by the importer from a bank

or financial institution outside India for maturity of less than three

years.

It may be noted that buyers’ credit and suppliers’ credit for three

years and above come under the category of External Commercial

Borrowings (ECB) which are governed by ECB guidelines.

Page 23: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Equity for Indian Companies

Page 24: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Eligible instruments for FDI

Only equity shares, fully, compulsorily and mandatory convertible

debentures and fully, compulsorily and mandatory convertible

preference shares, with no in-built options of any type, would qualify as

eligible instruments for FDI.

Equity instruments issued/transferred to non-residents having in-built

options or supported by options sold by third parties would lose their

equity character and such instruments would have to comply with the

extant ECB guidelines.

Other types of Preference shares/Debentures i.e. non-convertible,

optionally convertible or partially convertible for issue of which funds

have been received on or after May 1, 2007 are considered as debt.

Accordingly all norms applicable for ECBs relating to eligible borrowers,

recognized lenders, amount and maturity, end-use stipulations, etc.

shall apply.

Only equity shares, fully, compulsorily and mandatory convertible

debentures and fully, compulsorily and mandatory convertible

preference shares, with no in-built options of any type, would qualify as

eligible instruments for FDI.

Equity instruments issued/transferred to non-residents having in-built

options or supported by options sold by third parties would lose their

equity character and such instruments would have to comply with the

extant ECB guidelines.

Other types of Preference shares/Debentures i.e. non-convertible,

optionally convertible or partially convertible for issue of which funds

have been received on or after May 1, 2007 are considered as debt.

Accordingly all norms applicable for ECBs relating to eligible borrowers,

recognized lenders, amount and maturity, end-use stipulations, etc.

shall apply.

Page 25: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

FDI limits – Illustrative list

Existing Airports 100%

ARC’s 49%

Titanium Minerals 100%

Tea plantations 100%

Broadcasting*

Courier 100%

Print Media* 26%

Single brand retailing 51%

Cigars & Cigarettes

Atomic energy

Retail trading*

Lottery, betting and gambling

Chit fund, Nidhi company

Trading in TDR’s

Negative ListApproval RouteAutomatic Route

NBFC * IT / ITes

Financial services*

Telecom Sector (74% cap)*

Insurance (26 % cap)*

Real Estate*

Special Economic Zones

Infrastructure

Shipping

Manufacturing sector

Hotels and tourism

Agriculture

* Subject to conditions

Page 26: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Equity for Indian Companies ( FDI)

Private Equity

American Depository Receipts (ADR’s)

A negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange.

ADR’s are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas.

ADR’s help to reduce administration and duty costs that would otherwise be levied on each transaction

Global Depository Receipts (GDR’s)

A bank certificate issued in more than one country for shares in a foreign company.

The shares are held by a branch of an international bank.

The shares trade as domestic shares, but are offered for sale globally through the various bank branches.

A financial instrument used by private markets to raise capital denominated in either U.S. dollars or euros

Overseas Listing

FDI from Other Sources

Private Equity

American Depository Receipts (ADR’s)

A negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange.

ADR’s are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas.

ADR’s help to reduce administration and duty costs that would otherwise be levied on each transaction

Global Depository Receipts (GDR’s)

A bank certificate issued in more than one country for shares in a foreign company.

The shares are held by a branch of an international bank.

The shares trade as domestic shares, but are offered for sale globally through the various bank branches.

A financial instrument used by private markets to raise capital denominated in either U.S. dollars or euros

Overseas Listing

FDI from Other Sources

Page 27: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Convertible Bonds

Page 28: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Foreign Currency Convertible Bonds (FCCB) are

Type of convertible bond issued in a currency different than the issuer's

domestic currency.

A convertible bond is a mix between a debt and equity instrument.

It acts like a bond by making regular coupon and principal payments, but

these bonds also give the bondholder the option to convert the bond into

stock.

Foreign Currency Convertible Bonds (FCCB) are

Type of convertible bond issued in a currency different than the issuer's

domestic currency.

A convertible bond is a mix between a debt and equity instrument.

It acts like a bond by making regular coupon and principal payments, but

these bonds also give the bondholder the option to convert the bond into

stock.

What are FCCBs ?

Page 29: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

FCCBs – Snapshot

FCCBs are very effective instruments for raising funds overseas

FCCBs represent an unsecured debt obligation for the Corporate.

Investors have the option to convert them into GDRs or underlying shares

at a predetermined future conversion price.

If investors prefer to hold the Bonds till maturity date, the Corporate has to

redeem the Bonds on that date.

FCCBs are unrated.

FCCBs can be issued only by listed companies except those restrained by

SEBI, otherwise a prior or simultaneous listing in required on Indian Stock

Exchanges.

FCCBs are very effective instruments for raising funds overseas

FCCBs represent an unsecured debt obligation for the Corporate.

Investors have the option to convert them into GDRs or underlying shares

at a predetermined future conversion price.

If investors prefer to hold the Bonds till maturity date, the Corporate has to

redeem the Bonds on that date.

FCCBs are unrated.

FCCBs can be issued only by listed companies except those restrained by

SEBI, otherwise a prior or simultaneous listing in required on Indian Stock

Exchanges.

Page 30: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

FCCBs –Indian Legal Framework

Foreign Direct Investment (FDI) Policy

Relevant provisions of the Companies Act, 1956

Relevant clauses of the Listing Agreements with the Stock Exchanges

Issue of FFCB and Ordinary Shares (Through Depository Receipt Mechanism)

Scheme, 1993

Foreign Exchange Management (Transfer or issue of any Foreign Security)

Regulations, 2004

External Commercial Borrowings (ECB) guidelines

Foreign Exchange Management (Transfer or Issue of Security by a person

resident outside India) Regulations, 2000

Foreign Direct Investment (FDI) Policy

Relevant provisions of the Companies Act, 1956

Relevant clauses of the Listing Agreements with the Stock Exchanges

Issue of FFCB and Ordinary Shares (Through Depository Receipt Mechanism)

Scheme, 1993

Foreign Exchange Management (Transfer or issue of any Foreign Security)

Regulations, 2004

External Commercial Borrowings (ECB) guidelines

Foreign Exchange Management (Transfer or Issue of Security by a person

resident outside India) Regulations, 2000

Issuance of FCCBs are primarily governed by following regulations:

Page 31: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

FCCB Process – Stage 1

ISSUER

Decide on FCCB issue

Seek Board approval

Appoint all participants

Prepare Offer Memorandum Listing Circular - in line with Overseas Stock Exchange regulations

LEAD MANAGER

Liaise with potential investorsOffer MemorandumInvestor conference calls Obtain FCCB Term sheet

Vet listing particularsEnsure it complies with disclosure requirements of Overseas Stock Exchange

Co-ordinate with all participants

Apply to Stock Exchange for in-principle approvalTo RBI for obtaining Loan Number

Page 32: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

FCCB Process – Vetting & Approval

Issuer

• Make changes as required by Stock Exchange

• Obtain approval

Prepare Final listing particulars

LEAD MANAGER

Send Draft listing particulars to Overseas Stock Exchange for Comments and Approval

Feedback fromSE

Open Escrow Account with overseas Bank to collect FCCB proceeds

Circulate Final Listing particulars, subscription letter to all investors

Consult Issuer, all participants and Fix FCCB opening & closing dates

All participants

Page 33: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

FCCB Process – Collection of Application Money and Distribution of FCCBs

Issuer Lead Manager

Escrow Account

Investors

All participants

Trustee BankWire

transfe

r mon

ey

Subscription letter

Closing Date

FCCB distribution details

Transfer Securities

List FCCBs, Authorize release of money to Issuer

FCCB Money

Board Approval, Allot Bonds

Page 34: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

About Continental Capital Advisors (CCA)

Investment Banking firm based at Mumbai with

network partners across the globe

Team of Expert PE advisors and Corporate

Finance Specialists

Services include:

- Raising Private Equity

- Local and Overseas Debt

- Promoter and Acquisition funding

- Overseas Listing/ QIP/ Placements

- Mergers & Acquisitions

- Overseas Business Consulting

- Corporate and Business Advisory Services

Investment Banking firm based at Mumbai with

network partners across the globe

Team of Expert PE advisors and Corporate

Finance Specialists

Services include:

- Raising Private Equity

- Local and Overseas Debt

- Promoter and Acquisition funding

- Overseas Listing/ QIP/ Placements

- Mergers & Acquisitions

- Overseas Business Consulting

- Corporate and Business Advisory Services

Page 35: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

Communications

Email : [email protected]

Continental Capital Advisors

204 B, Town Centre No.2

Andheri Kurla Road, Andheri (E)

Mumbai, India 400069

Mr. Shailendra Jindal

Any clarifications can be addressed to the following:

Page 36: International Finance for Indian Companies - WIRC Finance_WIRC... · International Finance for Indian Companies ... FCCBs by HFCs satisfying ... Advantages Lower Costs and Quicker

C A Shailendra Jindal

Thanks for your patient hearing and Participation