India Inc's interest in overseas assets growing : Experts

New Delhi, Feb 21 (PTI) Corporate India's emphasis on
mergers and acquisitions as a growth vehicle is back, thanks
to the high liquidity and bounce in the stock markets, but it
will be long before the aggressiveness towards overseas assets
moves to the 2007 levels, experts say.
"No doubt that there is an increase in the cross-border
mergers and acquisitions but they have been primarily in the
mid-market segment. Larger deals require access to financing
and nothing but the strongest balance sheets will be able to
attract financiers," Ernst & Young Partner Transactions
Advisory Services Sailesh Rao told PTI.
Rao added that "with just a couple of big ticket deals
taking place in the last two quarters (against the average of
two big deals a month in 2007 and 2008), one cannot as yet
announce the revival of big-ticket outbound deals by India
Inc."
In recent times there has been a lot of announcements by
Indian firms, including corporate giant Reliance Industries,
software firm Wipro, IT major Infosys Technologies and Jindal
Steel & Power, which are scouting for acquisitions abroad.
Grant Thornton Partner, Specialist Advisory Services C G
Srividya said "interest levels have gone up, and there are
many clients whom we are advising both on the inbound and
cross border (deals), they are much more aggressive than last
year.
"However, it is very important to say that it is going to
take a long time before we return to the 2007 level, when
people were very keen on inorganic growth. While they are
still keen but they are playing safe," Srividya added.
The way it looks the year 2010 is all set to overtake the
M&A deal tally of 2009 by a huge margin. In just 45-days of
this year India Inc has announced M&A deals worth a whopping
USD 14 billion, while in the year 2009, corporate India's
total M&A kitty stood at a modest USD 11.9 billion.
In terms of the sheer deal size the Bharti-Zain deal
would be the third largest deal involving an Indian company
after an estimated USD 13.5 billion offer by Reliance to get
control of the bankrupt petrochemicals firm LyondellBasell
Industries (which is currently, in discussion phase) and the
Tata Steel's takeover of European Corus for USD 12 billion.
Experts believe the reason for this significant rise in
deal activity by India Inc include high liquidity, the
performance of most of these companies have improved, the
world markets have also improved, the stock market has done
much better so the confidence is back from that perspective.
Deloitte India Financial Advisory Leader Avinash Gupta,
however, believes "there is not any major push to do outbound
deals by Indian corporate. Reliance-LyondellBasell and
Bharti-Zain are huge deals but they are not a trend."
Lot of Deloitte clients are contemplating a 'W' scenario
worldwide. Cautiousness is still there, Gupta added.
Going forward, PricewaterhouseCoopers Executive Director
Partner, Transactions Group Sanjeev Krishan said "the very
fact that Indian companies are looking at billion dollar deals
means that the emphasis on M&A as a growth vehicle is back."
"While the financing challenges caused by the squeeze in
the global credit markets have not gone away as yet, things
are definitely improving and this should help outbound M&A,"
he added. PTI DRR
JVN