Navigating Indian insolvency for structured products

Author: IFLR Correspondent | Published: 29 Jan 2019

ZBA


Address
412 Raheja Chambers
213 Nariman Point
Mumbai 400 021

Telephone
+91 22 6743 5013/ +91 99206 68000

Visit Website

As any foreign investor will know, India has an ever-changing regulatory framework, as well as a currency, which is not freely convertible. The result of this is that the markets and investors have developed various hybrid instruments with contractual rights to provide desired returns and economic requirements, while being compliant with Indian regulations. Partially convertible instruments, which were originally equity from a foreign investment perspective, have for a long time now been regarded as debt. Therefore any instrument which fixes the return, or exits pricing, also runs into regulatory issues. A permitted and popular instrument is compulsorily convertible debentures (CCDs) from a foreign direct investment perspective. These are routinely used by private equity firms, hedge funds and structured investors investing in India.

So, how does this instrument fare under the...