Foreign debt keeps M&A on its toes

At the time, he was busy advising on some of India's biggest overseas acquisitions. But that didn't stop him predicting that all those ambitious, debt-fuelled deals would later translate into troubled companies and rich pickings. Two years down the line, his analysis looks bang on.

Wockhardt, a medical group that carried off a string of heavily leveraged deals in 2006, is considering selling both a stake in its hospital company and its biggest acquisition, Ireland's Pinewood Healthcare. Others, including Suzlon, Tata Steel, Tata Motors and smaller companies in the pharmaceuticals and auto-components industries, are working all hours to restructure their heavy foreign debt. More forced asset sales look inevitable.

What I didn't know back in 2007 was that US investor Wilbur Ross had already had a Mumbai office for a year. Ross — who hates being called a "vulture investor" but is the master of the craft — waited until the middle of last year to make his first major move, investing in budget airline SpiceJet. This month, he swooped with a vengeance. In the last few weeks, he's emerged as a bidder for fraud-hit IT firm Satyam, and reportedly also for Cobra Beer. He has said he sees SpiceJet as only his first step into airlines.

All this means investment bankers here have almost as much work as they did during India's corporate buying spree. One tells me: "A year ago I'd have called myself an M&A banker — now I'd say I'm a corporate financier. Debt advisory and restructuring is keeping us very busy at the moment."

* The announcement by US student loans provider Sallie Mae last week that it was pulling 2000 of its offshore jobs in India back to the US confirmed the worst fears of India's IT companies. But it's too early to sound the death-knell for bank outsourcing. In Bangalore last week, a group of British executives from the London office of a European bank cheerily informed me that they were in town to arrange for their own jobs, in the derivatives back office, to be sent to Bangalore. "We knew our roles were due to be outsourced," one reasoned, "so we thought our best bet was to join management in helping to arrange it."