Understanding structured finance products and loan syndication: A case study cum analysis

Abstract

Specialised products are making a wave in the financial World over conventional products like bonds & debentures, equities and derivatives. Most of these instruments have been floated, supported or raised by the corporate world for a bevy of reasons including financing, M&A takeover or even as solutions for taxation-related issues. Structured Finance products, as they are called, have been evolving with complex designs, litigations and compositions of debt and equity. This paper will capture the essence of Structured Finance products, with a real-life tailored case on one of the Structured products involving Loan Syndication, as well. The case revolves around a Synopsis of Proposal submitted by Volcan Investments Cyprus Limited (a Vedanta Group Entity), for availing a syndicated loan facility with one of the leading Indian PSU banks. It will cover the case history, in brief, an understanding of the various structured finance products, across the world and some specific products that include POEMS (Purchase-of-equity via mandatory securities), as in the case as well as other successful products from the corporate arena. It will also cover briefs on loan syndication activities following a revisit to the case history, and the activities and repercussions that panned out