Entrepreneurship is full of blood, sweat and tears – to create something of value or to fail in the attempt to create, says Shyam Maheshwari, Co-founder, SSG Capital. He has been a long-term India fan on the credit and special situation side. He feels that India is perhaps the only emerging market in Asia that has opened the doors to foreigners to participate in the local currency debt and NPA markets. Under the current government, the reforms on IBC have been pathbreaking. Therefore, all the ingredients of regulations, transparency, market access and the need for foreign capital are there. While the NPA pool has declined over the past few years with resolutions and recoveries, the demand for credit and resolution capital far outstrips the supply.
According to Shyam Maheshwari, from days in early 2000 when very few foreign funds participated in India, now have all the foreign players represented in India. The opportunities have become more appealing due to perceptible reduction in the timeframe of recovery (due to IBC) and risk (due to market access). In contrast, one would struggle to have similar access in China where markets are probably multiples of that in India. A similar contrast with Indonesia is warranted where their bankruptcy law PKPU has not met success like IBC. Specifically, he thinks the mid-market corporate may be the opportunity for credit while retail NPL could provide thrust to special situation opportunities.
Shyam Maheshwari also talks about the impact caused by the Russia-Ukraine conflict have on India. Even before the conflict began in Ukraine, the expected rise in US interest rates was creating pressure on emerging markets including India. The hardening of interest rates could cause some stress in the retail credit. The conflict has aggravated the short-term market situation. Russia was investment grade and had a significant presence in most of the bond indices. they are in unchartered waters here whether the sovereign would be able to honor their commitments despite having reserves to do so. Shyam Maheshwari feels this is creating forced liquidation of portfolios, margin calls and low liquidity in secondary markets. However, given the fundamentals of India remain strong, the impact of high oil prices may slow the growth rate but should still keep them at attractive levels. The off-shore credit markets are very attractive at present to acquire India related risk on higher-quality names. As this normalizes, the opportunities in local markets would again become more attractive.
On his advice to young entrepreneurs, Shyam Maheshwari says that Entrepreneurship is full of blood, sweat and tears – to create something of value or to fail in the attempt to create. All he says is that you are special to have the wherewithal to take this on and it does not matter if the outcomes are not what you wanted. The skills you learn and the experience you get in entrepreneurship are applicable to life in general – so you win either way.
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