Photo of Siddharth Anand

Senior Associate in the General Corporate Practice at the Mumbai office of Cyril Amarchand Mangaldas. Siddharth advises on domestic and cross-border PE and VC investments, mergers and acquisitions and corporate and commercial matters. He can be reached at siddharth.anand@cyrilshroff.com

DOWN ROUNDS ARE COMING - ENFORCEMENT OF ANTI-DILUTION ADJUSTMENTS

Introduction

The standstill of global economic activity and consequent market downturn caused by the Covid-19 outbreak has delivered a double whammy of capital scarcity and significant valuation correction across several asset classes. Many Indian companies will be in the race to restructure business and/or raise capital, unfortunately, at reduced enterprise valuations.

For businesses with existing venture capital and private equity investors, the looming slew of ‘down rounds’ will trigger anti-dilution rights attaching to convertible securities held by their existing shareholders.

Anti-dilution adjustments are self-executing rights that offer protection from value erosion in the form of reduction of conversion price of securities, translating into a proportional increase in the number of equity shares issuable to the investor on conversion.
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India’s Foreign Investment Policy on E-commerce Retail

The Indian government has been striving to effectively regulate India’s e-commerce retail market, since its first attempt in 2000. The regulations have been a by-product of the fear of organised global retail with deep pockets adversely affecting scores of unorganised “mom-and-pop shops” and retailers. The Indian foreign direct investment policy on e-commerce retail has been amended several times, and the e-commerce business houses operating in India have restructured themselves to fall in line with every such change in policy without significantly altering their operations.

In the latest episode of this ongoing saga, the Government of India issued a Press Note No. 2 (2018 Series) on December 28, 2018, to effectively legislate against e-commerce entities that disguise their inventory-based business models[1] as marketplaces[2]. Reportedly[3], Walmart-backed Flipkart and Amazon India are undergoing complex structuring and restructuring to align themselves with the amended policy. This to and fro between the Government and e-commerce players has not only been unproductive for the country’s economy, but is also against this Government’s stated objective of certainty and Ease of Doing Business in India. While the effective implementation of the regulations governing e-commerce retail continues to be a significant issue, there are certain other fundamental concerns relating to the approach of the Indian government towards e-commerce retail, which require immediate consideration.    
Continue Reading India’s Foreign Investment Policy on E-commerce Retail: Is the time ripe for a reworking?

Evolving Private Equity Trends in India – Buyout Transactions

INTRODUCTION

Private equity (PE) transactions in India conventionally comprised minority investments in Indian companies. However, maturing market conditions and an increasingly favourable regulatory landscape have been providing tailwinds to PE firms to undertake buyout transactions. Many PE firms investing in India have gained significant experience to deal with the governance and regulatory risks that Indian markets pose. This enables them to leverage their expertise from running businesses globally to managing businesses in India.
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