Outlook for India is very positive: J.P. Morgan’s Paul Uren

A lot has been said about India in terms of a special place in The APAC region or just the kind of money that’s being raised. Also, on inbound or outbound activity, one has seen a surge in the ticket size. How do you explain this?

We have always believed the investment banking market would continue to grow in India, but it’s probably developed at a quicker pace because of a number of factors. First, the government has been very supportive of the continued growth of the economy. Investments are being made into infrastructure, there’s an expansion of the middle class, and the continued attractiveness of India’s GDP growth (both on an absolute and a relative basis). I also want to highlight the continued development of the public equity markets.

Would you believe that M&A activity across sectors has been encouraging?

Yes. The pick-up has been broad-based. While healthcare and tech services have dominated for a while, you’re now seeing more companies from a wider range of industries-like energy transition-looking at opportunities to grow.

Let’s flip that. Are there any sectors where the level of activity has come as a surprise?

There’s not one particular sector I would call out. Globally, there are three big themes driving markets from a long-term secular point of view. One is de-globalisation, which India is clearly a beneficiary of, particularly as supply chains get realigned. The second is decarbonisation, where there’s been a lot happening around energy transition and a lot of capital coming in. The third is digitisation, and India has always been a leader in tech and digital services. India will continue to benefit from these themes.

Apart from government support, have any other factors helped?

It takes more than capital to make successful investing work. It requires talented management teams, and fortunately there is an enormous pool of world-class management talent in India.

A lot has been said about technological disruption and how it has had an impact on valuations. What is your view?

It comes down to the quality of the business model, quality of management teams, and growth. For many investors globally, it’s very difficult to find markets that offer long-term sustainable growth.

India has become one of the most attractive and one of the most important IPO markets because of that long-term sustainable growth. It’s easy to look at valuation multiples one year forward and say, this looks expensive, but when you look at it three or four or five years forward, as most investors are doing, then these companies grow into their valuation multiples fairly quickly.

Are there any areas of concern for growth?

The geopolitical environment is a challenge and I think that will remain, making it difficult to complete cross-border deals. The other is regulatory environment around antitrust.

For India, it’s really deal specific. Outbound M&A is not going to be hampered and there is also a lot of foreign capital that wants access to the market. We have been involved in a number of transactions where large corporations outside India are looking to make meaningful investments into Indian companies.

When corporates pursue M&A, they want to do it with a high degree of confidence that the transaction will get to the finish line. Companies don’t want to go through a regulatory approval process that will go on for 1-2 years. We have now seen, even between the US and Europe, it’s taking a long time to get transactions approved.

There’s been a lot of talk on large-scale listings in India. What is your view?

The emergence of large-scale listings is really very exciting for the continued development of the Indian capital markets. Obviously, there are a number of multinationals that have built very large Indian businesses. Those businesses are very attractive in their own right, and in many cases, that value may not be reflected in the value of the listed parent. So, there’s a great opportunity for companies to take their Indian business public, where they will be more appropriately valued.

For your organisation, what is the outlook in India for the next 4 or 5 years?

The outlook for India is very positive for J. P. Morgan, both for the broader business and also for investment banking. Today Japan is the largest investment banking market in the Asia-Pacific region and there is no reason why India can’t challenge that in the next 5 years.

@krishnagopalan