Foreign firms prefer Indian acquisitions
By agencies   |   Monday, 05 June 2006, 19:30 IST
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BANGALORE: Aiming at smaller and mid-size companies, Indian IT firms are having a cakewalk in acquiescing companies overseas with great ease. Adopting Wipro’s biz-head, Azim Premji’s strategy of “string-of-pearl-approach”, U.S. and European smaller companies have found a wider platform and Indian companies have found an approach to improve existing portfolios with foreign tech firms turning to Indian IT companies for better valuations vis-à-vis their foreign counterparts. Though small acquisitions offer lower risks, IT companies experience negligible growth in top line or bottom line. While Wipro’s latest acquisition of Enabler stood at $53 million to give it a foothold in the Latin American market, Tata Consultancy Services made its strategic move in November 2005, acquiring the Chilean business process outsourcing company, Comicrom for $23 million. Infosys Technologies’ annual report stated an investment of $248 million and $148 million in fiscal in 2005 and 2006 respectively. With major plans to grow exponentially in China and setting up a campus there, with specific interest in Guangzhou, The COO and Managing Director S. Gopalakrishnan said that the company was looking for acquisitions in specific verticals like banking, health care or life sciences for anything between $50 – 100 million. HCL Technologies is looking towards smaller foreign firms to earn a combined value that grows beyond the independent value of the acquired company. U.K. based Room Solutions and its IT training firm was acquiesced by NIIT technologies earlier this year. NIIT is looking for prospective buy-outs in India as well as U.S. and Europe. Corporate finance house, Close Brothers, states that Indian acquisitions overseas has increased drastically over the last four years and is further set to rise. 101 international companies across all industrial sectors have been acquired for more than £2.9 billion since 2002, of which £1.1 billion worth deals happened in the first four months of 2006 alone.

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