Indian cos. acquire 60 overseas firm in 2004

By agencies   |   Tuesday, 08 February 2005, 20:30 IST
Printer Print Email Email
NEW DELHI: Armed with a desire to go global, cash rich Indian companies expanded overseas in 2004 by entering into with 60 acquisition deals abroad. This compares with 28 overseas buyout deals inked by Indian companies in 2002 and 49 in 2003, according to India Advisory Partners, a London-based database firm on mergers and acquisitions. In dollar terms, however, there was a marginal fall to $1.79 billion from $1.70 billion in 2003 because of an appreciation in the value of the Indian currency. "Oil and gas sector saw the largest deal as public sector energy giant Oil and Natural Gas Corp (ONGC) acquired 50 percent stake in an offshore block in Angola for $603 million," said Kai Taraporewala. Among other major deals, Tata Steel, the second largest steel maker, acquired the steel business of Singapore's Natsteel for $300 million. Tata Group firm Videsh Sanchar Nigam invested $130 million in acquiring US-based Tyco Global. These acquisitions have now become an integral part in the evolution of the Indian multi-national companies, who till recently shied away from global competition. The acquisition drive in 2004 was not restricted to traditional markets like the US and Britain alone - companies went to markets as diverse as Australia, Romania, Germany, Angola, the Philippines, South Korea and Bosnia. On the domestic front, merger and acquisition activities in 2004 was dominated by the IT and telecom sectors, says the India Advisory Partners. These two sectors contributed as much as 48 percent of the total deal value, with IT contributing 32 percent and telecom 16 percent. In the IT sector, 48 deals worth 74.7 billion were finalized in the last calendar year. The largest deal of 2004 was the acquisition of a 60 percent stake in GE Capital International Services (GECIS) by General Atlantic Partners and Oak Hill Capital Partners. According to Taraporewala, the GECIS deal might prompt a slew of other such deals in the future. "Though smaller in value, several of the deals in 2004 are indicators to future trends." Last year also saw the highest private equity investments in the last three years, over 90 percent of which were from the overseas. "In addition to the business process outsourcing and telecom industries, India now offers private equity firms several emerging sectors to back," said the survey report. Air Deccan, the country's first low-cost airline, inked a private equity deal with Capital International and ICICI Ventures late last year to raise 1.8 billion by offloading a 26 percent stake. According to Taraporewala, with the end of textile quota regime in Dec 2004, larger Indian textile companies like Raymonds, Alok Industries and Arvind Mills will attract private equity investments. "Private equity investments in textile firms are likely to start in 2005 as the forecast that India's share of the US market for textiles will eventually increase to around 15 percent from the present four percent begins to fructify," he said.