India

India Attracts Largest E-Commerce Deal

India’s potential for high growth in retail came to the forefront with the acquisition of its biggest homegrown online retail company. The high economic growth prospects were reaffirmed by the IMF. There will be a new system for monitoring of foreign investment in listed entities. The current policy for external commercial borrowings has been further liberalized.

Walmart Acquires Flipkart – Earlier this month, Walmart Inc. announced that it would pay $16 billion for an initial stake of approximately 77% in homegrown e-commerce company Flipkart. The deal valued Flipkart at about $20.8 billion. “India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading the transformation of e-commerce in the market,” said Doug McMillon, Walmart’s president and chief executive officer, in a statement. This is Walmart’s biggest acquisition and the biggest e-commerce deal globally. The deal will need to be approved by India’s anti-trust regulator. The deal will redraw the retail landscape in India as Walmart takes its battle in the US with arch-rival Amazon to the world’s fastest growing major economy. It will also give a massive boost to entrepreneurship and the start-up ecosystem in India, which has struggled to provide exits.

International Monetary Fund – In a reaffirmation of India’s growth forecast made by International Monetary Fund (IMF) in last month’s World Economic Outlook, as reported by Asia Law Portal, the Regional Economic Outlook: Asia Pacific report published by same agency this month, states that in India, growth is expected to rebound to 7.4 percent, following temporary disruptions from the November 2016 currency exchange initiative and the July 2017 rollout of the new Goods and Services Tax (GST). The report further stated that growth rebounded strongly to 7.2 percent in the third quarter of FY2017/18, up from 6.1 percent in the first half of the fiscal year. India’s growth, projected at 6.7 percent in FY2017/18, should recover to 7.4 percent in FY2018/19, making India once again one of the region’s fastest-growing economies. The recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption. Medium-term headline CPI inflation is forecast to remain within but closer to the upper bound of the Reserve Bank of India’s inflation-targeting band (4 percent ±2 percent). Medium-term growth prospects remain positive, benefiting from key structural reforms, including the landmark national GST reform. The current account deficit in FY2017/18 is expected to widen somewhat but should remain modest, financed by robust foreign direct investment inflows.

Growth Estimates in previous quarterIndia’s economy may have expanded by 7.1-7.5% in the January-March quarter – driven by manufacturing and construction – compared with 7.2% in the third quarter. The Central Statistics Office will put out the growth estimates for the fourth quarter and for 2017-18 in the coming days. It pegged FY18 GDP growth at 6.6%, which would suggest growth of 7.1% in the last quarter. The economy expanded 7.1% in FY17. India’s industrial output expanded 4.3% in FY18, with manufacturing growing 4.5%, according to the Index of Industrial Production (IIP). The IIP is a quantity-based measure while GDP is assessed on value added, which means that manufacturing GDP growth can be higher than that measured by IIP.

Monitoring of Foreign Investment in Listed Entities – The Reserve Bank of India (RBI) has recently mandated a new system for monitoring of foreign investment limit in Indian listed companies. In order to enable listed Indian companies to ensure compliance with the various foreign investment limits, RBI in consultation with Securities and Exchange Board of India (SEBI), has decided to put in place a new system for monitoring foreign investment limits, for which the necessary infrastructure and systems for operationalizing the monitoring mechanism, shall be made available by the depositories. The same has been notified by SEBI. The RBI circular further stated that all listed Indian companies are required to provide the specified data/ information on foreign investment to the depositories. The requisite information was required to be provided before May 15, 2018. The listed Indian companies, in non-compliance with the above instructions will not be able to receive foreign investment and will be non-compliant with Foreign Exchange Management Act, 1999 (FEMA) and regulations made thereunder.

Changes to External Commercial Borrowings Policy – The RBI has recently liberalized the External Commercial Borrowings (ECB) policy. ECBs are commercial loans raised by eligible resident entities from recognised non-resident entities and should conform to parameters such as minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc. A uniform all-in-cost ceiling of 450 basis points over the benchmark rate. The benchmark rate will be 6 month USD LIBOR (or applicable benchmark for respective currency) for Track I and Track II, while it will be prevailing yield of the Government of India securities of corresponding maturity for Track III (Rupee ECBs) and RDBs. The ECB Liability to Equity Ratio for ECB raised from direct foreign equity holder under the automatic route was increased from 4:1 to 7:1. This ratio will not be applicable if total of all ECBs raised by an entity is up to USD 5 million or equivalent. The eligible borrowers’ list for the purpose of ECB has been expanded. There will be only a negative end-use list for all tracks instead of positive end-use list for Track I and negative end-use list for Track II and III.

Linklaters secures Chinese law capability

Linklaters has become the first magic circle firm to secure Chinese law capability after receiving government approval for its joint operations in the Shanghai Free Trade Zone (FTZ).

The firm has secured a long-awaited official tie-up with best friend firm Zhao Sheng, a Shanghai-based boutique led by former Linklaters consultant Eric Liu, after approval was granted by the Shanghai Bureau of Justice.

In a statement, the magic circle firm said it would combine ”focused and high-quality PRC law capability with Linklaters’ longstanding international experience”.

Linklaters China head William Liu said: “Market shifts indicate that outbound work and high-end domestic transactions will become ever more important for our business. The joint operations will help us to protect our competitive advantage both in China and globally,”

The news marks the fifth time an international law firm has gained access to Chinese law via the four-year-old Shanghai FTZ scheme, which allows foreign and Chinese law firms to form joint offices and provide ‘one-stop shop’ legal services.

Linklaters follows Ashurst, Hogan Lovells, Holman Fenwick Willan and Baker McKenzie in launching similar operations.

The magic circle firm has been looking to gain Chinese law capability for several years, and entered into a best friend relationship with Zhao Sheng a year ago.

Linklaters had initially planned for a spin-off with a group of its lawyers launching a separate but affiliated Chinese firm. However, the regulations around joint operations require the Chinese firm to be in existence for three years or more, and so Linklaters then opted for Zhao Sheng and sent several of its own lawyers including Liu, senior lawyer Grace Yu and counsel Zhou Zhirong to be partners at the firm.

Linklaters managing partner Gideon Moore added: “Zhao Sheng shares Linklaters’ quality, culture and values – the aim to be best in class. We want to support our clients on both their inbound and outbound projects and the joint operations will provide the seamless Chinese and international advice required for this.”

William Liu was appointed as head of Linklaters’ China practice in January, succeeding Fang Jian, who left to join domestic firm Fangda Partners.

Major China roles for Linklaters in recent years have included advising on a $2bn (£1.5bn) debt issue last year that saw the Chinese Government sell dollar-denominated bonds for the first time since 2004. Liu led the firm’s team advising China’s Ministry of Finance.

HONG KONG HK

Slaughters adds Hong Kong partner in third-ever lateral hire

Slaughter and May has made its second-ever external partner hire in Hong Kong, and its third-ever globally, as investigations and litigation lawyer Wynne Mok joins as a partner.

Mok arrives from the Hong Kong Securities and Futures Commission–the equivalent of the Securities and Exchange Commission in the Chinese territory–where she was a director of enforcement. In that role, she managed complex litigation and helped shape the commission’s regulatory policy.

Before taking on a role with law enforcement in 2016, Mok was a disputes partner with Norton Rose Fulbright where she handled SFC and Hong Kong Stock Exchange-related litigation and investigations for Hong Kong-listed Chinese companies. Earlier in her career, she practiced with Hong Kong firm Deacons and legacy Barlow Lyde & Gilbert (which merged with Clyde & Co in 2011).

At Slaughters, Mok will focus on regulatory inquiries and investigations and work with the firm’s London, Beijing and Brussels offices on multi-jurisdictional investigations.

Slaughters Hong Kong senior partner Peter Brien said: “Wynne Mok is a highly respected practitioner who brings a combination of regulatory experience at the highest level and an outstanding track record of advising clients on complex litigation and investigations.  She will play a key role in continuing to build our long-established Asian practice.”

Mok is the second lateral partner hire Slaughters has made in Hong Kong after taking on US securities law partner John Moore in 2014 from Morrison & Foerster. Moore had previously worked for the Hong Kong Stock Exchange, Goldman Sachs and Herbert Smith Freehills (HSF).

A&O, CC, CMHM star in $1 bln Laos hydropower project

Allen & Overy has advised Laos’ Phonesack Group and Thailand’s Electricity Generating Public Company Limited (EGCO) as sponsors of the $1 billion Nam Theun 1 hydroelectric power project, with Clifford Chance and Thai law firm Chandler MHM (CMHM) advising the lenders. DFDL advised the sponsors as Laos counsel.

The 670-MW Nam Theun 1 hydroelectric plant will be located on the Nam Kading River, about 33 km upstream from its confluence with the Mekong River in Laos’ Borikhamxai province.  The lenders included Bangkok Bank, Export-Import Bank of Thailand, Siam Commercial Bank and TISCO Bank. Partner Fergus Evans led the transaction for Clifford Chance, while the CMHM team was led by partner Joseph Tisuthiwongse.

CMHM previously represented the lenders on the development of the Nam Theun 2 hydroelectric power project in Laos, which commenced operation in 2010. The Nam Theun 1 project has entered into power purchase agreements with the Electricity Generating Authority of Thailand and Electricité Du Laos to supply 514.3 MW of power to EGAT, and 130 MW to EDL for 27 years, starting from 2022.

Singapore

A&O loses banking duo to Mayer Brown in Singapore

Allen & Overy (A&O) partner Kayal Sachi and counsel Ian Roebuck have exited the firm to join Mayer Brown JSM in Singapore as partners.

The new hires will focus on acquisition and leveraged finance, corporate lending and restructuring in South East Asia and India.

Sachi was a partner at A&O for over 14 years, having joined from Clifford Chance in 2003. Sachi became a partner in 1997 at Clifford Chance, and worked in both Singapore and London for over 15 years.

Roebuck joined Allen & Overy as a trainee in 2001, and has been made a partner through this move.

Mayer Brown has invested in its Asia offering in recent months, hiring former Tokyo managing partner Rupert Burrows from Ashurst to launch its first office in Japan.

In Singapore, its most recent joiners include Angelia Chia and Ben Sandstad in Singapore, who were both global heads of legal at Standard Chartered Bank in the region.