How funds are boosting legal firepower in India
As offshore investors increase their India play, they are setting up inhouse teams here to advise them on local laws and regulatory nitty gritty.
Recently, L&L Partners’ merger & acquisition and PE partner Amit Shetye joined a local subsidiary of New York-based infrastructure investor Global Infrastructure Partners. Last year, Jigar Shah joined KKR & Co to head its legal and compliance activities after a five-year stint at the local unit of JPMorgan Chase. Around the same time, Swati Singh Baghel was made an assistant vice president at the Blackstone Group. She was previously part of the legal team at Piramal Enterprises. In June this year, Tata Sons senior legal counsel Prateek Shroff and Tanya Mehta of law firm Trilegal joined as vice presidents for investment and renewable power at Brookfield Asset Management.
“Broadly, we are seeing two categories of hires happening in the fund’s space,” said Suren Sundaram, a vice president at legal recruitment firm Vahura. “Firstly, at a mid-level, where the fund has an existing senior lawyer, the hiring is mainly to manage the investment in their portfolio companies, and secondly, at a senior level, where the fund doesn’t have a lawyer, the hiring is more strategic to deal with various stakeholders including the investment committee, promoters of a target company and regulators.” Also, lawyers are now no longer seen as a cost centre. The heft they bring in, by giving specialised inputs, have vaulted some of them into the investment boards of global funds. “In February, the local subsidiary of a US-based PE major decided to pass a transaction in a commercial realestate project in the Delhi-NCR region after its in-house counsel raised red flag and put his foot down against the deal,” said a person privy to the development. “Such assertiveness among in-house lawyers were rare just a few years back.”
According to Anshul Lodha, the regional director at recruitment agency Michael Page India, the stakes have become too high for foreign funds as they are going for large deals now. In this situation, for Indian fund managers, it is logical to have a general counsel or an in-house legal expert rather than calling up their offices in the US, UK or Singapore for legal assistance. As per Venture Intelligence, a data firm that tracks PE and VC deals, funds have so far in 2019 invested $19.9 billion in India through 75 deals. Canadian fund Brookfield, which hired Shroff from Tata Sons and Mehta from Trilegal, alone has invested around $3.66 billion in Reliance Jio Infratel and $1.9 billion in Reliance Industries’ pipeline businesses since the beginning of the year.
“In-house lawyer can help investors understand local nuances, not just from a law and regulatory point of view but also in terms of the promoter’s mindset and the way of doing business,” said Lodha. “The firm is currently working on about half a dozen mandates from large funds and PEs for their in-house positions,” he added. Some of these funds have operations here while the others are in the process of setting shop in the region. Increasing amount of litigation, particularly with the advent of Insolvency & Bankruptcy Code, too is driving funds to hire legal experts in India with experience in dispute resolution, Sundaram of Vahura said. According to Himanshu Dodeja, the managing director and head of legal and compliance at Blackstone India, foreign funds have evolved over time and from picking minority stakes in the early 2000s, they have gained in confidence and are now acquiring controlling stakes.
“Two broad reasons for more and more hiring by foreign funds can be attributed to the fact that PEs have now matured and secondly the everevolving nature of laws and regulations in India,” said Dodeja, who was a corporate partner at Cyril Amarchand Mangaldas and joined Blackstone in 2016 as the first in-house counsel for the fund. There has been a lot of movement in the industry, of such migration after Dodeja’s joining Blackstone. “Funds are not relying on in-house counsel for compliance work but for critical and strategic advisories to the business, including M&A, restructuring, capital markets and taxation,” he said. Among foreign funds, Blackstone has done the largest number of control deals in India.
The need for an in-house lawyer is also felt by VC funds. In June this year, South African media and venture capital major Naspers, which has invested in startups including Byju’s and Swiggy, hired Shamin Shah as the M&A Legal counsel from law firm Trilegal. In January, Ankita Kansil joined another VC firm, Elevar Equity, from law firm L&L Partners.
Email queries to GIP, Brookfield and Elevar Equity remained unanswered till the time of filing the story. Naspers declined to comment. A spokesperson for KKR said Jigar Shah had featured on Chambers & Partners Asia Pacific’s list featuring 25 “most influential in-house lawyers” working in the Indian market. We are lucky to have him,” the spokesperson said in an email response to ET’s request for comment.
“Having in-house or engaging local law firms also makes it easier for lean investment teams of foreign funds to make decisions faster compared to dealing with their legal desks in the UK or the US,” said Khusnuma Nagwaswalla, an advocate practising M&A, PE and VC advisory with law firm IndusLaw. “Domestic lawyers will always have a better understanding of local law along with practicality to apply the same, which is one of the reasons why foreign funds are suddenly hiring law firms or in-house lawyers in India.”