Wang Scores an Indian Win

The balance of power, both economically and diplomatically, lies with Dalian Wanda.

While the meek may inherit the earth, the bold and the brazen get to erect tall towers on it. That's probably as true of Asia's second-richest man as it is of U.S. presidential candidate Donald Trump.

When Wang Jianlin isn't channeling Jin Dynasty warriors to take on Disney theme parks in China, scripting plans to invest in Sony productions that highlight the Middle Kingdom, or adding the producer of the Golden Globe Awards to what is an already impressive M&A tally this year, he seems to be pushing the regulatory limits on a $10 billion investment in office towers in India.

Dalian Wanda, according to India's Economic Times, is seeking to finance its entire investment in Wanda Industrial New City via external commercial borrowing. India's limit for infrastructure firms on raising such dollar debt is set at $750 million a year, however. Wang is also reportedly asking for tax and duty breaks, not only for his own companies that will build the 13 square kilometer (five square mile) township, but for tenants as well. Even taxes such as the dividend distribution levy, which all Indian companies have to pay, are on the Chinese tycoon's concession wishlist.

New Delhi can't possibly accede without setting off howls of protest. But Wang can leverage his impossible demands to get authorities, desperate for investment and jobs, to sweeten the deal.

Wanda's Debt Proposal Is Problematic

India wants to cut its reliance on hard-currency debt and borrow more in rupees

Source: Bloomberg

That's a smart thing to do. In India, there's always the risk that once an investor has sunk money into a project, the tables will turn. Land acquisition may become a headache; environmental clearances might be impossible to obtain; tax disputes could crop up. Little wonder that after 11 years, there's no sign of South Korean steelmaker Posco's $12 billion India plant. The new Mumbai airport, conceived in 1997, has become so expensive after two decades of cost overruns no private investor wants to touch it. Vodafone's India IPO has been held back by regulatory uncertainty and a decade-long tax dispute.

Wanda's $10 Billion Matter

Wang Jianlin's investment would equate to 25 percent of foreign direct investment in India last year

Source: Bloomberg

Wang probably won't be allowed to bring a $10 billion foreign-currency loan into the country. Granting him such a privilege would, for one thing, infuriate the Japanese. NTT Docomo, which took a $2.2 billion equity stake in an Indian telco in 2009, had a valid option to limit its loss to half the original value in five years. It hasn't been allowed to exercise that on the laughable excuse that any previously agreed guaranteed return -- negative 50 percent in this case -- would mean the investment is actually debt masquerading as equity.

Wang's advisers likely know this already. If they're still angling for impossible concessions, it's perhaps because the balance of power -- both economically and diplomatically -- is with Wanda. After repeatedly asking the Chinese to plow their trade surplus with India back into the country, it would be embarrassing for New Delhi to let Wanda's billions slip away. If nothing else, the government will probably end up changing some rules to make the economics of the project more attractive.

There's a method in the brazenness of Wang's demands. Maybe the billionaire will get to build those tall towers in India after all.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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    Andy Mukherjee in Singapore at

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