- Domestically financed Leveraged buyouts are not possible because banks cannot finance for the purpose of takeovers. While this prudent guideline set by the Indian banking regulator RBI has doubtless saved banks from succumbing to the bubbles(dotcom, IT, realty, plantation), it also means that the market for corporate control is limited
- Takeover law in India(mainly SEBI SAST guidelines) for listed companies prohibits poison pills etc. However, the need for Government/Regulatory approval hangs like a sword of Damocles over any prospective hostile(or even friendly acquirer). The example of this is the Cairn India buyout by Vedanta, which took nearly 1yr to get cabinet approval, which was witheld ostensibly on security concerns, but the open secret is that this was done to settle political issues. Political issues can still stall deals.
- Indifferent investors:- Investor activism in India is rare. Barring Ms Sucheta Dalal and a few investor associations, nobody looks out for the interests of the small investor. Even SEBI can only do so much. It is known that few investors bother to open the annual reports and other corporate information mailed to them.
- Insolvency proceedings are infamously slow, and even the laws giving teeth to secured debt holders(SAFESI Act, CDR mechanism) are open to judicial scrutiny.
- Independent and critical media is rare. Mint, Tehekla, Money Life, firstpost and a few others valiantly strive to report objectively and do investigative reporting. But otherwise, most financial papers/media limit thenselves to broadcasting corporate press releases. Hence, even when the rare analyst digs out some dirt, very little publicity is given.
What is it in for me? Since I would like to dabble in this field(whether it be as personal investing, career choice, writing etc), this would hopefully help reach out to like minded people.