India Loan House

IFR Asia Awards 2016
2 min read
Asia
Chien Mi Wong

Citigroup cemented its leading position in the Indian loan market in 2016, sealing mandates for noteworthy event-driven deals, project financings and winning repeat business from high-profile borrowers.

The US bank was especially strong in cross-border financings, leading complex deals for international investors and helping its Indian clients expand overseas.

Citigroup showed its ability to solve funding challenges in some key transactions, notably in Fiat India Automobiles’ US$250m 7.6-year brownfield project financing, where the bank was the original mandated lead arranger and bookrunner. The deal came with a unique structure for an Indian borrowing – the assets and cashflows of the new plant were ring-fenced to support the new borrowing, but lenders rank alongside the operating company’s existing creditors.

The brownfield project financing is non-recourse to either of the shareholders – Fiat Chrysler Automobiles and Tata Motors. FCA drove the borrowing as it came with cross-default provisions that have thresholds stipulating that the Italian carmaker will cure any covenant breaches or defaults. FCA did not provide any guarantee on the new project financing, but is the offtaker for the Jeep vehicles the plant will produce under a ‘take-or-pay’ arrangement that ensures the coverage of repayments on the loan.

Citigroup also successfully identified opportunities in M&A.

Acting as MLAB, Citigroup provided two bridge loans – a US$875m six-month facility in October and a US$1.268bn nine-month deal in May – to ONGC Videsh for its purchase of stakes in Russian oilfields. The bank was also a MLAB on Indian Oil Corp’s US$300m bridge maturing in March 2017 for the same purpose.

In the healthcare sector, Citigroup was a prominent player in Lupin’s acquisition of US firm Gavis Pharmaceuticals, coordinating and arranging the US$800m club for the borrower. It also played a key role in Cipla’s purchase of Invagen and Exelan Pharmaceuticals, with the provision of the US$550m club and execution of the M&A deal.

Towards the end of the review period, Citigroup scored another mandate in the sector, financing Intas Pharmaceutical’s £603m (US$770m) acquisition of the UK and Irish assets of Israel’s Teva Pharmaceutical Industries.

Amid lacklustre economic activity and shrinking credit growth, Citigroup recognised that the loan markets have primarily been driven by refinancing, working hard to allow borrowers to achieve more flexible terms and lower pricing. The bank was MLAB on ONGC Videsh’s US$1.775bn term loan facility, the largest refinancing from India this year, and Bharat Petroleum’s US$330m financing.

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