US corporate restructuring specialist Houlihan Lokey is slowly exploring a post-covid investment situation in India, where promoters are open to sell, prune their businesses or partner with a financial sponsor to grow. As the insolvency and bankruptcy processes mature, mid-sized Indian firms are looking a bit more aggressive towards global capital pool said Scott Adelson, co-president & global co-head, Corporate Finance. Houlihan Lokey, in an exclusive interview with ET’s Reghu Balakrishnan & Indulal PM. Edited excerpts:

How do you see the post-covid investment situation?

One of the interesting things that came out of Covid-19 is that it reminded people that risk does exist, and risks exist not always where you expect. I have watched the growth of private equity in the US and even in Europe. (Earlier) They said we have family businesses, which we hand down from generation to generation and we don’t need your American ways. Now, there is a huge growth in private equity throughout Europe. I am seeing the same thing beginning here (in India). We are still in the early days of it.

What does Houlihan Lokey plan to achieve here in India?
We are focused on the mid-cap space. Ninety eight percent of all the global M&A activity is in mid-cap and we want to be in that space only.

Where would Houlihan Lokey place India among other markets?

Currently, India is one of the greatest opportunities in the world. We’re a very different organisation today than we were the last time. India is an incredibly important market, as we’ve just been talking about. We really are talking about it not just as India, but India as a region of the world that is really growing very rapidly…and all the benefits that can be realised in collaborating and working together (with other regional economies)

Do you see an opportunity in the NCLT processes under IBC?

Once an asset gets into the IBC, it becomes a very different process. So, for us, where we can really add value is pre-IBC, especially if there is a foreign debt component. That’s because, Houlihan Lokey, globally, has tremendous relationships with all the creditors. Complicated balance sheets do create an opportunity for growth. There are reasons why companies end up in trouble. When they have complicated balance sheets, there is a need for people to determine who gets what and it’s not just cut and dry. We literally are the world’s leader in this.

Which are the areas that HL sees a larger investor interest?

The entire chain in manufacturing and old economy sectors provides a major opportunity. A lot of these balance sheets are over-leveraged that need to be relooked. We help promoters think through debt as an option for finance. In India (for everyone) everything is equity. But debt is actually a pretty fundamental tool for what you can do (for acquisitions).

Which sectors that you think will be of more focus in coming years?

We look at it from a five-year lens. For instance, to support 5G rollout, we will need massive infrastructure investments across telecom, towers, software, networks. We feel telecom is a massive sunrise sector in India. We are seeing fantastic brands come up, whether it is healthcare supplements or consumer durables. Technology remains the mainstay for us.

India is getting more allocation from private equity firms’ Asia fund. How do you see the trend? Is it sustainable?

I tend to focus more on the long-term trends. Faster growing economies are benefiting from the more mature and arguably even declining economies like in the US and Europe. We are beginning to see a growing shift of investment to the faster growing economies and India is one among such key markets.