India Inc finalises $26 bn overseas mergers, acquisitions

October 9th, 2008 - 4:39 pm ICT by IANS  

New Delhi, Oct 9 (IANS) India Inc has finalised overseas mergers and acquisitions (M&As) worth $26 billion till September-end this year, notwithstanding a sluggish domestic economy and the global meltdown, according to a leading consultancy firm.Cash-rich Indian companies are doing much better than their global counterparts in the area M&As, IndusView Advisors, which advises multinational corporations on business opportunities in India, said in an assessment report released Thursday.

The consultancy said infrastructure sector dominated the deal street with transactions worth $12 billion, followed by power, oil and gas that saw M&As worth $5 billion.

“The cash-rich acquisitive Indian companies are set to make new acquisitions as target companies are significantly cheaper now than just six months ago,” it said.

Major M&As clinched by Indian firms in the past nine months include acquisition of Citigroup’s captive business process outsourcing (BPO) arm Citigroup Global Services (CGSL) for $505 million by India’s leading IT services exporter Tata Consultancy Services.

ONGC Videsh Ltd, the overseas arm of the state-run Oil and Natural Gas Corp Ltd, acquired Britain’s Imperial Energy Plc with assets in Russia for $2.8 billion, while HDFC Bank Ltd acquired Centurion Bank of Punjab for $2.38 billion.

IndusView said infrastructure-related industries dominated M&As, accounting for 45 percent of the deals at more than $11.8 billion of the total deal value of $26 billion till September this year.

“The traction in the infrastructure merger and acquisitions is symbolic of the need for world class facilities to accelerate growth in the Indian economy,” IndusView Advisors chairman Bundeep Singh Rangar said.

The government has targeted to spend nine percent of the country’s gross domestic product (GDP) or the total value of a nation’s goods and services produced within a year on infrastructure by 2012.

Rangar said the power sector has been the mainstay of this year’s M&As, accounting for $5 billion or 42 percent of the deal value in the infrastructure sector.

“The power sector commanded 19 percent share in the total merger and acquisitions value of $26 billion this year as compared to about $4 billion last year representing a 7.4 percent share of the total deal value of $51 billion,” Rangar said.

Rangar said Britain has been the country of choice for overseas investments by Indian companies that invested $6 billion there during the first half of the current fiscal.

“Investments by India Inc in the UK during 2007-08 created 3,846 jobs, ahead of its rival economy China that was involved in creating only 898 jobs,” said Rangar, citing figures from Britain’s Department of Trade and Industry.

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