Foreign Investors Remain Focused on Long-term Opportunities in India

by CFO Innovation Asia Staff, 11 June 2012

0 comments

Facebook

Digg

Twitter

topics:
Finance and Banking Mergers and Acquisitions

tags:
corruption inflation M&A

Thumbnail:

India has been tested recently, from battling a slowing global economy and harnessing inflation to mobilising a budding democratic government toward further development and reform. However, strategic international investors remain focused on the long-term growth story, says a joint report by Kroll Advisory Solutions and mergermarket.

Twelve-month M&A activity ending 30 April 2012 saw 154 transactions worth a total of US$16 billion. After a dip in deal volume in late 2011, early 2012 has seen an uptick in deal activity as foreign investors continue to seek out buys in the country.

Interestingly, bidders have scaled back deal values resulting in an average deal size of US$128m from January through April 2012, perhaps a way to gain a strategic foothold in the region during times of uncertainty.

In terms of bidder geography, inbound deal flow was dominated by the US acquirers who transacted 56 times over the 12 month period, accounting for 36% of total activity by deal volume and spending US$2.9 billion. UK bidders were the top geography as measured by deal value with US$6.5 billion in acquisitions.

The largest deal for the period was a US$5.5 billion stake acquisition of Vodafone Essar, as UK-based Vodafone increased its stake in the company, despite a tax battle with the Indian government over the stake acquired in 2007.

“Despite some near-term challenges, India is a promising place to invest and foreign perceptions remain strong on a macro level," says Reshmi Khurana, India country head for Kroll Advisory Solutions.

Khurana notes that corruption and legal battles are nothing new in India, but they are now coming to the forefront as the economy slows. "The bottom line is that fundamentals are strong and acquisitive investors will stay focused on the fundamentals," adds Khurana.

Investors have been increasingly cautious about investing in India, paying particular attention to economic growth, government bureaucracy and corporate governance issues.

While the business environment is changing, bribery and corruption still pervade the business system in India and mitigating this requires careful due diligence and constant monitoring.

“It is important to remember that this is not a black and white market. There are many shades of gray in India, which is why thorough investigative due diligence is

important to understand each item in the context of the business environment,” said Khurana.

According to Khuarana, the deals that succeed are those where senior heads of companies make the long flights, meet the people, visit the plants unannounced and understand the business environment from the ground.

MORE ARTICLES ON M&A

Orignal Author:

CFO Innovation Asia Staff

Quote Image:

Comment on this article

Your name: *

E-mail: *

The content of this field is kept private and will not be shown publicly.

Homepage:

Comment: *

Web page addresses and e-mail addresses turn into links automatically.
Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd> <a> <p> <span> <div> <h1> <h2> <h3> <h4> <h5> <h6> <img> <img /> <map> <area> <hr> <br> <br /> <ul> <ol> <li> <dl> <dt> <dd> <table> <tr> <td> <em> <b> <u> <i> <strong> <font> <del> <ins> <sub> <sup> <quote> <blockquote> <pre> <address> <code> <cite> <embed> <object> <strike> <caption>
Lines and paragraphs break automatically.
Use  to create page breaks.

More information about formatting options

Verification Code

This question is for testing whether you are a human visitor and to prevent automated spam submissions.

What is the second word in the phrase "nodeqes cuxa ilazi paz xoriwaf"?: *

Accounting and Regulations

CFO innovation Asia Accounting and Regulation the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Accounting Regulation, IFRS, US GAAP, Tax, investor relations, corporate governance, Corporate Law, Financial Regulators, Internal Audit, Audit, Corporate Law.

Auditing, Investor Relations, Law and Compliance, Tax

Finance and Banking

CFO innovation Asia, Finance and Banking the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Corporate Finance, trade finance, treasury and risk management, capital expenditure, Banking, mergers and acquisitions

Cash and Liquidity Management, Corporate Finance, Insurance, Treasury Management

Management

CFO innovation Asia the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Finance Management, Corporate Governance, Human Resource Management, Compensation and Benefits, Mergers and Acquisitions, Professional Development, Corporate Real Estate, Risk Management, Budgeting and Forecasting, Business Process Management, Business Process Reengineering, Outsourcing.

Budgeting and Planning, Business Expense Management, Human Capital Management, Outsourcing and Shared Services, Risk Management

Metrics

Corporates, Financial Services

Technology

CFO innovation Asia Technology the Asia Pacific resource center for senior finance executives, daily news, analysis, best practice and case studies in Finance Systems, Business Intelligence, EPR, Accounting software, CRM, Cloud Computing, Telecommunications, Business Process Outsourcing, Business Process Management Software.

Business Intelligence, Enterprise Software and Systems, Financial Systems, Security