Two years ago, there were hardly any Indian entities merging with or acquiring American or European companies. In the last 2 years however, there has been a big change in the Indian corporate scenario. The number of mergers and acquisitions (M&A) taking place have suddenly shot up to a point where we now often find Indian companies negotiating M&A deals worth billions of US dollars. The big Indian companies are now aggressively looking at North American and European markets to spread their wings and become global players.
Growing economy, surplus cash with Indian companies, favorable government policies, attractive valuations and the availability of lucrative investment opportunities abroad have contributed to this phenomenon. European and American entrepreneurs are keener on selling businesses as they face a lot of competition from their counterparts in high growth Asian economies like India and China. The outsourcing phenomenon exposed Indian managers to Western work standards contributing to India’s image as a reliable, low-cost yet high-quality service provider. This has made Indian companies highly profitable and the net result is that Indian companies are now eyeing domestic as well as global markets to move up the value chain.
According to a report, India has recorded a 126% jump in the amount spent on M&A deals outside the Asia Pacific region last year. The report expects the second half of 2007 to be better than the first, which should bring the total investment in India to more than 100 billion USD by the year end, a five fold increase over last year.
With this acquisition spree forecasted to continue, many Indian companies are sitting pretty and are all set to become global players in the coming years. Horizons 2007 will bring together people from the industry to discuss the Indian growth story, trends in M&As and what else needs to be done to Unleash India Inc.
– Gopalakrishnan Hariharan ,2nd yr PGDM IIMK
